Item 2. Management’s Discussion and Analysis
ITEM 2
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes forward-looking statements that involve inherent risks and uncertainties. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933 (“1933 Act”), as amended and Section 21E of the Securities Exchange Act of 1934 (“1934 Act”), as amended. Those sections of the 1933 Act and 1934 Act provide a “safe harbor” for forward-looking statements in order to encourage companies to provide prospective information about their financial performance as long as important factors that could cause actual results to differ significantly from projected results are identified with meaningful cautionary statements. Words such as “expects,” “anticipates,” “believes,” “projects,” “intends,” and “estimates” or variations of such words and similar expressions, as well as future or conditional verbs preceded by “will,” “would,” “should,” “could” or “may” are intended to identify forward-looking statements. These forward-looking statements are based on certain underlying assumptions and are not guarantees of future performance, as they could be impacted by several potential risks and developments that cannot be predicted with any degree of certainty.
These statements are based on Management’s current expectations regarding economic, legislative, regulatory, and other environmental issues that may affect earnings in future periods. Therefore, actual outcomes and results may differ materially from what is expressed, forecast in, or implied by such forward-looking statements.
A variety of factors could have a material adverse impact on the Company’s financial condition or results of operations and should be considered when evaluating the Company’s potential future financial performance. They include, but are not limited to:
● risks associated with fluctuations in interest rates, including the impact on other comprehensive income, the ability for customers to repay on floating or adjustable rates loans, and the impact on costs and demand of deposits and funding, the impact on interest income on earning assets, the impact on valuations of collateral on loans, and the impact on fair value of longer-term assets;
● risks associated with inflation (including efforts by the FOMC of the FRB to control the same);
● the risk of unfavorable economic conditions in the Company’s market areas, or the impact on the Company’s market areas of national or international economic conditions or changes to economic policies, including tariffs and trade agreements;
● risks associated with a U.S. Government shutdown, including delays in regulatory reviews, approvals, or rulemaking from federal agencies, reduced access to government economic data and reports which could affect our ability to assess risk and make informed investment or risk management decisions, heightened volatility or reduced liquidity in financial markets, credit and counterparty risk exposure in connection with clients or counterparties that rely on government funding or contracts, and diminished investor and consumer confidence which could reduce demand for financial products;
● liquidity risks, including the ability to effectively manage the potential loss of deposits, the ability to maintain funding lines of credit, and the loss of value of unencumbered investment securities;
● increases in nonperforming assets and credit losses that could occur, particularly in times of weak economic conditions or rising interest rates;
● the impact of adverse developments at other banks, including bank failures, which impact general sentiment regarding the stability and liquidity of banks;
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● risks associated with the multitude of, or changes to, current and prospective banking laws and regulations, and related interpretations, to which the Company is and will be subject;
● operational risks including the ability to detect and prevent financial reporting errors, operations errors, and fraud;
● the Company’s ability to diversify and grow its loan portfolio;
● the Company’s ability to attract and retain skilled employees;
● the Company’s ability to successfully deploy new technology and manage cyber security risks;
● the risk to the Company’s operations and ability to serve customers due to the inability of a vendor to meet its service level agreements;
● the outcome of any existing or future legal action for which the Company or Bank is a defendant;
● the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events; and
● the success of acquisitions or branch expansions, closures, or consolidations.
Risk factors that could cause actual results to differ materially from results that might be implied by forward-looking statements include the risk factors detailed in the Company’s Form 10-K for the fiscal year ended December 31, 2024, and in Item 1A, herein. The Company does not update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.
CRITICAL ACCOUNTING POLIC Y AND ACCOUNTING ESTIMATES
The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States. The financial information and disclosures contained within those statements are significantly impacted by Management’s estimates and judgments, which are based on historical experience and incorporate various assumptions that are believed to be reasonable under current circumstances. Actual results may differ from those estimates under divergent conditions.
Critical accounting policies are those that involve the most complex and subjective decisions and assessments which have the greatest potential impact on the Company’s stated results of operations. In Management’s opinion, the Company’s has identified one critical accounting policy:
● the establishment of the allowance for credit losses, including the valuation of individually evaluated loans, as explained in detail in Notes 8 and 10 to the consolidated financial statements and in the “Provision for Credit Losses” and “Allowance for Credit Losses” sections of this discussion and analysis
Critical accounting areas are evaluated on an ongoing basis to ensure the Company’s financial statements incorporate its most recent expectations regarding those areas.
OVERVIEW OF THE RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS SUMMARY
Third Quarter 2025 Compared to Third Quarter 2024
Third quarter 2025 net income was $9.7 million, and $0.72 per diluted share as compared to $10.6 million, and $0.74 per diluted share in the third quarter of 2024. The Company’s annualized return on average equity was 10.81% and annualized return on average assets was 1.04% for the quarter ended September 30, 2025, compared to 11.95% and 1.14%,
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respectively, for the same quarter in 2024. The primary drivers behind the variance in third quarter net income are as follows:
● Net income for the third quarter of 2025 decreased $0.9 million, or 9%, to $9.7 million. Net interest income improved $1.2 million, or 4%, and noninterest income increased $0.3 million. These favorable changes were offset by an increase in the provision for credit losses of $2.3 million, and an increase in noninterest expense of $0.8 million, or 4%.
● The $1.2 million increase in net interest income was due to a 12 basis point increase in net interest margin driven by a 27 basis point decrease in the cost of funds.
● The provision for credit losses was $3.7 million for the quarter, an increase of $2.3 million, primarily due to an increase in individual reserves during the third quarter of 2025, due to a single agricultural production property.
● Noninterest expense was $0.8 million higher in the third quarter over the same quarter last year due to an increase in salaries and benefits, and occupancy costs.
● Included in the line-item changes from the third quarter of 2024 was the increase of $0.3 million in income from corporate owned life insurance income invested to offset the $0.3 million increase in deferred compensation costs.
First Nine Months of 2025 Compared to First Nine Months of 2024
● Net income decreased $0.8 million, or 3%. The decrease was primarily driven by an increase of $4.6 million in provision for credit losses. This decline was partially offset by an increase of $3.1 million in net interest income, due mostly to a 25 basis point decrease in the cost of interest-bearing liabilities. A favorable decrease in the cost of interest-bearing deposits of 29 basis points and decreases in the average balances of those deposits had the biggest impact on the increase in net interest income. While the Company experienced lower yields and balances on investments, this was mostly offset by increases in yields and balances on loans. Noninterest income decreased by $0.8 million and noninterest expense decreased by $0.2 million.
● The provision for credit losses was $7.0 million, an increase of $4.6 million, primarily for the reasons stated above.
● Noninterest income decreased by $0.8 million, or 3%, driven by the net $0.6 million gain from the balance sheet restructuring at the beginning of 2024, with no similar transaction in 2025, and a $0.6 million decrease in service charges and fees on deposit accounts. Partially offsetting these unfavorable variances was a $0.8 million gain on life insurance during the first nine months of 2025.
● Noninterest expense decreased $0.2 million, due mostly to decreases in professional services and lower sundry losses, partially offset by increases in salaries and benefits and occupancy costs.
● Included in the line-item changes from the same period in 2024 was the decrease of $0.5 million in income from corporate owned life insurance income invested to offset the $0.5 million decrease in deferred compensation costs.
FINANCIAL CONDITION SUMMARY
September 30, 2025 Relative to December 31, 2024
The Company’s assets totaled $3.7 billion at September 30, 2025, an increase of $95.1 million, or 3.0% from December 31, 2024. The following provides a summary of key balance sheet changes during the first nine months of 2025:
● Investment securities decreased $70.0 million, or 7.0%, to $891.4 million primarily due to collateralized loan obligations (CLOs), continuing to aggressively payoff due to tightening spreads and the ability of the issuers to reissue with a lower spread. Purchases of mortgage-backed securities and corporate bonds have partially offset
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the run-off of CLOs. Corporate bonds have preferential yields over other types of securities, and fixed rate mortgage-backed securities fit the Company’s asset neutrality position.
● Gross loans increased $160.4 million, due mostly to a $126.3 million increase in mortgage warehouse line utilization, as well as $46.9 million of growth in commercial real estate loans, a $7.9 million increase in other construction loans, and a $7.6 million increase in other commercial loans. This favorable growth was partially offset by an $18.2 million decline in residential real estate loans, a $9.7 million decrease in farmland, and a $0.4 million reduction in consumer loans.
● Deposits totaled $2.9 billion at September 30, 2025, representing a year-to-date increase of $41.1 million, or 1%. The growth in deposits came mostly from a $65.7 million increase in noninterest-bearing deposits and a $60.6 million increase in interest-bearing demand deposits. The increases were partially offset by decreases in customer time deposits and brokered deposits of $57.3 million and $40.0 million, respectively.
● Overnight borrowings increased $55.0 million and customer repurchase agreements increased $16.9 million.
● Total capital of $360.1 million at September 30, 2025, reflects an increase of $2.8 million, relative to year-end 2024. The increase in equity during the first nine months of 2025 was due to the addition of $29.4 million in net income, a $6.1 million favorable swing in accumulated other comprehensive income/loss due principally to changes in investment securities’ fair value, partially offset by $24.3 million in share repurchases and $10.3 million in dividends paid. The remaining difference is related to the impact of equity compensation.
EARNINGS PERFORMANCE
The Company earns income from two primary sources. The first is net interest income, which is interest income generated by earning assets less interest expense on deposits and other borrowed money. The second is noninterest income, which primarily consists of customer service charges and fees but also comes from non-customer sources such as BOLI, equity investments, and investment gains. The majority of the Company’s noninterest expense is comprised of operating costs that facilitate offering a full range of banking services to its customers.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income was $32.0 million for the third quarter of 2025, a $1.2 million increase, or 4% over the third quarter of 2024, and increased $3.1 million, or 3%, to $92.7 million for the first nine months of 2025 relative to the same period in 2024.
For the third quarter of 2025, there was a 35 basis point decrease in the cost of our interest-bearing liabilities combined with a $17.9 million decrease in the average balance of interest-bearing liabilities. Although the balance of average interest-earning assets was $7.2 million higher, the yield was 13 basis points lower as compared to the same period in 2024, which partially offset the favorable variances on the liability side.
Net interest income for the comparative year-to-date periods increased $3.1 million, or 3%, due primarily to a decrease of 25 basis points in the cost of funds of average interest-bearing liabilities combined with an increase in the average balance of interest-earning assets of $43.5 million. There was a $193.8 million, or 9%, increase in average loan balances yielding 19 basis points higher for the same period, while average investment balances decreased $150.3 million, yielding 78 basis points lower for the same period. The decline in average investment balances was mostly due to calls of collateralized loan obligations in 2025. Average interest-bearing liabilities decreased $4.9 million, mostly in higher cost customer time deposits and brokered deposits, offset by an increase in interest-bearing demand deposits and borrowed funds. The cost of interest-bearing liabilities was 25 basis points lower for the comparative periods. The favorable net impact of the mix and rate change was a 7 basis point increase in our net interest margin for the nine months ending September 30, 2025, as compared to the same period in 2024.
Interest expense was $12.0 million for the third quarter of 2025, a decrease of $2.0 million, relative to the third quarter of 2024. For the first nine months of 2025, compared to the same period in 2024, interest expense decreased $4.2 million to
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$35.4 million. The decrease in interest expense for the first nine months of 2025, as compared to the same period in 2024, was attributable to a decrease in higher cost customer time deposits and brokered deposits, along with a net overall interest rate decrease in customer deposit account balances. These decreases were partially offset by increases in other borrowed funds. For the first nine months of 2025, compared to the same period in 2024, the average balance of higher cost customer time deposits and brokered deposits decreased $78.6 million, while low to no cost transaction account balances increased $93.6 million and borrowed funds increased $16.3 million.
The Company had $1.8 billion in adjustable and variable rate loans and $268.0 million in floating rate bonds, as compared to $245.0 million in floating rate CDs and $36.0 million in floating rate trust preferred securities at September 30, 2025. The adjustable-rate loans have repricing frequencies ranging from 30-days to 10-years. Of the $1.8 billion in adjustable and variable rate loans, $779.9 million reprice or mature in the next twelve months. In addition, there were $642.8 million of fixed-term deposits that reprice or mature within twelve months. Based on current rates, of the $779.9 million in adjustable and variable rate loans that reprice or mature over the next twelve months, $117.1 million, or 15%, have a pricing index rate higher than the current index, while $146.1 million, or 19%, have a pricing index rate lower than the current index. The remaining balance of $516.7 million are priced at the current index rate or are expected to mature.
Net interest margin was 3.78% for the third quarter of 2025, as compared to 3.66% for the third quarter of 2024, and 3.73% for the nine months ended September 30, 2025, compared to 3.66% for the same period last year. The main reason for the improvement of net interest margin for both the quarter and year-to-date comparisons was a significant decrease in cost of interest-bearing liabilities. For the quarterly comparison there was a 35 basis point favorable decline in cost of interest-bearing liabilities complemented by a decrease of $17.9 million in the average balance of the same accounts. While the yield of interest-earning assets decreased 13 basis points during the same comparative period, the average balance of interest-earning assets increased $7.2 million.
The level of net interest income recognized in any given period depends on a combination of factors including the average volume and yield for interest-earning assets, the average volume and cost of interest-bearing liabilities, and the mix of products which comprise the Company’s earning assets, deposits, and other interest-bearing liabilities.
The following tables show average balances for significant balance sheet categories and the amount of interest income or interest expense associated with each category for the noted periods. The tables also display calculated yields on each major component of the Company’s investment and loan portfolios, average rates paid on each key segment of the Company’s interest-bearing liabilities, and net interest margin for the noted periods .
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Average Balances and Rates
(dollars in thousands, unaudited)
For the three months ended
For the three months ended
September 30, 2025
September 30, 2024
Assets
Average
Balance (1)
Income/
Expense
Average
Rate/Yield (2)
Average
Balance (1)
Income/
Expense
Average
Rate/Yield (2)
Investments:
Interest-earning due from banks
$
31,672
$
329
4.12%
$
88,509
$
1,225
5.51%
Taxable
731,274
9,104
4.94%
830,054
11,991
5.75%
Non-taxable
196,550
1,580
4.04%
199,261
1,584
4.00%
Total investments
959,496
11,013
4.73%
1,117,824
14,800
5.42%
Loans: (3)
Real estate
1,849,065
22,997
4.93%
1,804,099
21,054
4.64%
Agricultural
70,033
961
5.44%
81,501
1,520
7.42%
Commercial
116,855
1,824
6.19%
76,633
1,101
5.72%
Consumer
2,872
64
8.84%
3,558
78
8.72%
Mortgage warehouse lines
395,940
7,059
7.07%
303,463
6,227
8.16%
Other
2,453
19
3.07%
2,438
18
2.94%
Total loans
2,437,218
32,924
5.36%
2,271,692
29,998
5.25%
Total interest-earning assets (4)
3,396,714
43,937
5.18%
3,389,516
44,798
5.31%
Other earning assets
17,062
17,062
Non-earning assets
297,980
288,975
Total assets
$
3,711,756
$
3,695,553
Liabilities and shareholders' equity
Interest-bearing deposits:
Demand deposits
$
251,719
$
1,617
2.55%
$
169,602
$
1,170
2.74%
NOW
369,586
131
0.14%
393,328
161
0.16%
Savings accounts
356,172
106
0.12%
359,921
93
0.10%
Money market
156,347
745
1.89%
132,804
542
1.62%
Time deposits
496,155
4,078
3.26%
562,251
6,010
4.25%
Brokered deposits
259,624
2,929
4.48%
327,141
4,004
4.87%
Total interest-bearing deposits
1,889,603
9,606
2.02%
1,945,047
11,980
2.45%
Borrowed funds:
Federal funds purchased
30,545
353
4.59%
168
2
4.74%
Repurchase agreements
134,619
68
0.20%
133,280
60
0.18%
Short term borrowings
5,539
68
4.87%
1
—
0.00%
Long term FHLB advances
80,000
788
3.91%
80,000
786
3.91%
Long-term debt
49,447
429
3.44%
49,357
429
3.46%
Subordinated debentures
35,945
657
7.25%
35,767
751
8.35%
Total borrowed funds
336,095
2,363
2.79%
298,573
2,028
2.70%
Total interest-bearing liabilities
2,225,698
11,969
2.13%
2,243,620
14,008
2.48%
Demand deposits - noninterest-bearing
1,048,639
995,326
Other liabilities
81,368
103,571
Shareholders' equity
356,051
353,036
Total liabilities and shareholders' equity
$
3,711,756
$
3,695,553
Interest income/interest-earning assets
5.18%
5.31%
Interest expense/interest-earning assets
1.40%
1.64%
Net interest income and margin (5)
$
31,968
3.78%
$
30,790
3.66%
(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective federal tax rate.
(3) Loans are gross of the allowance for expected credit losses. Loan fees have been included in the calculation of interest income. Net loan costs and loan acquisition FMV amortization were $(0.3) million and $(0.4) million for the quarters ended September 30, 2025 and 2024, respectively.
(4) Nonaccrual loans have been included in total loans for purposes of computing total earning assets.
(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.
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Average Balances and Rates
(Dollars in Thousands, Unaudited)
For the nine months ended
For the nine months ended
September 30, 2025
September 30, 2024
Assets
Average
Balance (1)
Income/
Expense
Average
Rate/Yield (2)
Average
Balance (1)
Income/
Expense
Average
Rate/Yield (2)
Investments:
Interest-earning due from banks
$
34,728
$
1,128
4.34%
$
49,779
$
2,065
5.54%
Taxable
745,614
27,539
4.94%
863,044
38,081
5.89%
Non-taxable
196,820
4,733
4.07%
214,677
5,164
4.07%
Total investments
977,162
33,400
4.74%
1,127,500
45,310
5.53%
Loans:(3)
Real estate
1,841,163
67,576
4.91%
1,804,159
61,706
4.57%
Agricultural
73,071
2,906
5.32%
72,946
4,064
7.44%
Commercial
109,854
4,951
6.03%
77,684
3,458
5.95%
Consumer
3,123
196
8.39%
3,739
238
8.50%
Mortgage warehouse lines
359,564
19,029
7.08%
234,470
14,431
8.22%
Other
2,389
50
2.80%
2,354
46
2.61%
Total Loans
2,389,164
94,708
5.30%
2,195,352
83,943
5.11%
Total interest-earning assets (4)
3,366,326
128,108
5.14%
3,322,852
129,253
5.25%
Other earning assets
17,062
17,155
Non-earning assets
284,071
281,952
Total assets
$
3,667,459
$
3,621,959
Liabilities and shareholders' equity
Interest-bearing deposits:
Demand deposits
$
228,208
$
4,329
2.54%
$
146,443
$
2,601
2.37%
NOW
374,508
390
0.14%
396,644
393
0.13%
Savings accounts
354,551
292
0.11%
369,371
246
0.09%
Money market
149,252
1,925
1.72%
136,652
1,428
1.40%
Time Deposits
514,679
12,774
3.32%
562,571
18,251
4.33%
Brokered deposits
249,584
8,594
4.60%
280,248
9,737
4.64%
Total interest-bearing deposits
1,870,782
28,304
2.02%
1,891,929
32,656
2.31%
Borrowed funds:
Federal funds purchased
25,758
870
4.52%
5,074
249
6.56%
Repurchase agreements
123,954
216
0.23%
125,742
166
0.18%
Short term borrowings
11,439
391
4.57%
14,314
613
5.72%
Long term FHLB advances
80,000
2,339
3.91%
80,000
2,341
3.91%
Long-term debt
49,424
1,289
3.49%
49,335
1,291
3.50%
Subordinated debentures
35,900
1,965
7.32%
35,722
2,261
8.45%
Total borrowed funds
326,475
7,070
2.90%
310,187
6,921
2.98%
Total interest-bearing liabilities
2,197,257
35,374
2.15%
2,202,116
39,577
2.40%
Demand deposits - noninterest-bearing
1,024,278
988,128
Other liabilities
91,709
86,061
Shareholders' equity
354,215
345,654
Total liabilities and shareholders' equity
$
3,667,459
$
3,621,959
Interest income/interest-earning assets
5.14%
5.25%
Interest expense/interest-earning assets
1.41%
1.59%
Net interest income and margin (5)
$
92,734
3.73%
$
89,676
3.66%
(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective federal tax rate.
(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan costs and loan acquisition FMV amortization were $(0.9) million and $(1.1) million for the nine months ended September 30, 2025, and 2024, respectively.
(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.
(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.
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The Volume and Rate Variances table below sets forth the dollar difference for the comparative periods in interest earned or paid for each major category of interest-earning assets and interest-bearing liabilities, and the amount of such change attributable to fluctuations in average balances (volume) or differences in average interest rates. Volume variances are equal to the increase or decrease in average balances multiplied by prior period rates, and rate variances are equal to the change in rates multiplied by prior period average balances. Variances attributable to both rate and volume changes, calculated by multiplying the change in rates by the change in average balances, have been allocated to the mix variance.
Volume & Rate Variances
(dollars in thousands, unaudited)
Three months ended September 30,
Nine months ended September 30,
2025 over 2024
2025 over 2024
Increase (decrease) due to
Increase (decrease) due to
Assets:
Volume
Rate
Mix
Net
Volume
Rate
Mix
Net
Investments:
Federal funds sold/due from time
$
(787)
$
(305)
$
196
$
(896)
$
(624)
$
(448)
$
135
$
(937)
Taxable
(1,427)
(1,657)
197
(2,887)
(5,181)
(6,205)
844
(10,542)
Non-taxable
(5)
18
(17)
(4)
(543)
(2)
114
(431)
Total investments (1)
(2,219)
(1,944)
376
(3,787)
(6,348)
(6,655)
1,093
(11,910)
Loans:
Real estate
525
1,384
34
1,943
1,266
4,511
93
5,870
Agricultural
(214)
(402)
57
(559)
7
(1,163)
(2)
(1,158)
Commercial
578
95
50
723
1,432
43
18
1,493
Consumer
(15)
1
—
(14)
(40)
(3)
1
(42)
Mortgage warehouse
1,898
(817)
(249)
832
7,699
(2,022)
(1,079)
4,598
Other
—
1
—
1
1
3
—
4
Total loans (1)
2,772
262
(108)
2,926
10,365
1,369
(969)
10,765
Total interest-earning assets (1)
$
553
$
(1,682)
$
268
$
(861)
$
4,017
$
(5,286)
$
124
$
(1,145)
Liabilities
Interest-bearing deposits:
Demand deposits
$
566
(80)
(39)
$
447
$
1,452
$
177
99
$
1,728
NOW
(10)
(21)
1
(30)
(22)
20
(1)
(3)
Savings accounts
(1)
14
—
13
(10)
58
(2)
46
Money market
96
91
16
203
132
334
31
497
Time deposits
(707)
(1,388)
163
(1,932)
(1,554)
(4,288)
365
(5,477)
Brokered deposits
(827)
(313)
65
(1,075)
(1,066)
(87)
10
(1,143)
Total interest-bearing deposits (1)
(883)
(1,697)
206
(2,374)
(1,068)
(3,786)
502
(4,352)
Borrowed funds:
Federal funds purchased
362
—
(11)
351
1,015
(78)
(316)
621
Repurchase agreements
1
7
—
8
(2)
53
(1)
50
Short term borrowings
—
—
68
68
(123)
(124)
25
(222)
Long-term FHLB Advances
—
2
—
2
—
(2)
—
(2)
Long term debt
1
(1)
—
—
2
(4)
—
(2)
Subordinated debentures
4
(98)
—
(94)
11
(305)
(2)
(296)
Total borrowed funds (1)
368
(90)
57
335
903
(460)
(294)
149
Total interest-bearing liabilities (1)
(515)
(1,787)
263
(2,039)
(165)
(4,246)
208
(4,203)
Net interest income (1)
$
1,068
$
105
$
5
$
1,178
$
4,182
$
(1,040)
$
(84)
$
3,058
(1) Subtotals are a sum of the categories above and are not recalculated on the portfolio totals.
The volume variance calculated for the third quarter of 2025 relative to the third quarter of 2024 was a favorable $1.1 million; this is primarily from the net impact of a favorable loan volume variance of $2.8 million offset by an unfavorable volume reduction in investment securities of $2.2 million. This was augmented by a favorable net volume reduction in interest-bearing liabilities. There was an unfavorable rate variance on investment securities, which was mostly to the variable rate investments, in the form of CLOs, substantially offsetting the favorable rate variances in loans and interest-bearing liabilities.
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The net interest income variance calculated for the first nine months of 2025 relative to the first nine months of 2024 reflects a favorable volume variance of $4.2 million, an unfavorable rate variance of $1.0 million, and an unfavorable mix variance of $0.1 million. There were increases in loan balances for a favorable volume variance of $10.4 million which more than offset a $6.3 million volume decrease in investments, due to calls and pay-offs of CLOs. There was a $1.1 million decrease in interest-bearing deposits, partially offset by a $0.9 million increase in borrowed funds. There was an unfavorable rate variance on interest earning assets of $5.3 million for the first nine months of 2025 partially offset by a favorable $4.2 million rate decrease in interest earning liabilities.
Average interest earning cash balances for the quarterly and year-to-date comparisons have decreased and have a positive impact on the net interest margin since cash balances have been earning approximately 4.34% and have been deployed into mortgage warehouse line advances yielding 7.08%. Average interest-earning cash and due from banks was $31.7 million, a decrease of $56.8 million for the third quarter of 2025 as compared to the same period last year.
Overall average investment securities decreased by $101.5 million for the third quarter of 2025, as compared to the same period in 2024, as paydowns and maturities exceeded purchases, with the excess used to partially offset brokered deposit maturities. The overall investment portfolio had a tax-equivalent yield of 4.73% at September 30, 2025, with an average life of 6.01 years and average effective duration of 2.42 years for available-for-sale securities. Approximately $230.1 million of investment securities reprice every 90 days and $80.2 million are subordinated debt with an initial fixed rate period of 5 years and floating thereafter.
Variances in interest expense were the result of changes discussed under the “Net Interest Income and Net Interest Margin” heading.
PROVISION FOR CREDIT LOSSES ON LOANS
Credit risk is inherent in the business of making loans. The Company sets aside an allowance for credit losses on loans, a contra-asset account, through periodic charges to earnings, which are reflected in the income statement as the provision for credit losses on loans. Specifically identifiable and quantifiable loan losses are immediately charged off against the allowance, with subsequent recoveries reflected as an increase to the allowance. The Company recorded a provision for credit losses of $3.7 million in the third quarter of 2025, as compared to $1.2 million in the third quarter of 2024. The year-to-date provision for credit losses on loans was $6.9 million in 2025, as compared to $2.3 million for the same period in 2024. The $2.5 million increase in the provision for credit losses on loans in the third quarter of 2025, as compared to the third quarter of 2024, and the $4.6 million year-to-date increase in the provision for credit losses on loans, compared to the same period in 2024, was primarily due to the addition of $3.5 million in individual reserves mostly related to a single agricultural production loan, in the third quarter of 2025. At September 30, 2025, such agricultural production loan had a remaining book balance of $3.5 million with an associated individual reserve of $3.5 million fully offsetting such loan. See “Allowance for Credit Losses – Loans” for additional information on this credit.
The allowance for credit losses on loans is at a level that, in Management’s judgment, is adequate to absorb probable credit losses on loans related to individually identified loans as well as probable credit losses in the remaining loan portfolio.
The Company’s policies for monitoring the adequacy of the allowance, determining loan balances that should be charged off, and other detailed information with regard to changes in the allowance are discussed in Note 10 to the consolidated financial statements, and below, under “Allowance for Credit Losses.” The process utilized to establish an appropriate credit allowance for losses on loans can result in a high degree of variability in the Company’s credit loss provision, and consequently in net earnings.
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NONINTEREST INCOME AND NONINTEREST EXPENSE
Noninterest Income/Expense
(dollars in thousands, unaudited)
Three months ended September 30,
For the nine months ended September 30,
Noninterest income:
2025
2024
2025
2024
Service charges and fees on deposit accounts
$
6,065
$
6,205
$
17,501
$
18,114
Net gain (loss) on sale of securities available-for-sale
—
73
124
(2,810)
(Loss) gain on sale of fixed assets
—
—
(22)
3,799
Increase in cash surrender value of life insurance
410
252
991
733
Earnings on separate account life insurance
608
288
1,078
1,545
Other
975
971
3,580
2,628
Total noninterest income
$
8,058
$
7,789
$
23,252
$
24,009
As a % of average interest-earning assets (1)
0.94%
0.91%
0.92%
0.97%
Noninterest expense:
Salaries and employee benefits
Salaries and benefits
12,728
12,286
38,132
37,264
Deferred compensation
$
99
$
77
$
243
$
325
Occupancy and equipment costs
3,234
2,995
9,354
9,173
Advertising and marketing costs
403
381
1,156
1,061
Data processing costs
1,518
1,555
4,582
4,744
Deposit services costs
2,134
2,150
6,243
6,302
Loan services costs
Loan processing
173
184
425
424
Foreclosed assets
1
—
3
—
Other operating costs
901
959
2,905
2,980
Professional services costs
Legal and accounting services
641
547
1,712
1,976
Director's costs
332
327
951
1,018
Deferred directors' fees
438
174
942
1,383
Other professional services
763
775
2,180
2,167
Stationery and supply costs
102
120
335
382
Sundry and tellers
168
280
656
829
Total noninterest expense
$
23,635
$
22,810
$
69,819
$
70,028
As a % of average interest-earning assets (1)
2.76%
2.68%
2.77%
2.82%
(1) Annualized
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Noninterest Income:
Total noninterest income increased $0.3 million, or 3%, for the quarter ended September 30, 2025, as compared to the same quarter in 2024, and decreased $0.8 million, or 3%, for the year-to-date period ended September 30, 2025, as compared to the same period in 2024. The year-to-date decline was impacted by a decrease in service charge income on deposit accounts, unfavorable fluctuations in income on Bank Owned Life Insurance (BOLI) with underlying investments mapped directly to the Company’s deferred compensation plan and a net gain on the balance sheet restructure in early 2024 with no similar transaction in 2025. Offsetting these unfavorable variances was an increase in other income which was related to life insurance proceeds received in 2025 with no like proceeds in 2024.
The Company maintains a non-qualified deferred compensation plan for officers and directors, which allows the participant to defer a portion of their earnings tax-free. Participants are allowed to choose different hypothetical investment alternatives to determine their individualized return on their deferred compensation. The Company has chosen to offset the cost of this liability with a BOLI Policy, which is funded based on deferral elections from the participants. Although the BOLI is not directly tied to the deferred compensation plan, the BOLI is invested in similar fund types as those selected by the participants. There is some inefficiency in net earnings of the BOLI asset as compared to the deferred compensation liability created by the cost of insurance, differences in balances, and differences in individual fund performance. During the third quarter, and first nine months of 2025, earnings from the BOLI were $0.6 million, and $1.1 million, respectively, while additional expense from the related deferred compensation liability was $0.5 million, and $1.2 million, respectively. The majority of this expense is reported as professional fees under directors’ fees as it is related to deferral of past directors’ fees. Specifically, $0.4 million for the quarterly comparison, and $0.9 million for the year-to-date comparison, respectively, was reflected as directors’ fees as part of the overall professional fees expense line item. The tax benefit of having tax-free earnings with tax-deductible expense was $0.3 million during the third quarter of 2025, and $0.7 million for the first nine months of 2025.
Service charges and fees on customer deposit accounts declined by $0.1 million, or 2%, to $6.1 million in the third quarter of 2025 as compared to the third quarter of 2024, and declined by $0.6 million, or 3% for the year-to-date comparison. Lower analysis fees, returned check charges, and interchange on debit cards were the primary drivers of the unfavorable variance in both the quarterly and year-to-date variances.
In the “other” category of noninterest income there was no change in the third quarter of 2025 as compared to the third quarter of 2024, and a $1.0 million increase for the first nine months of 2025 as compared to the same period in 2024. Life insurance proceeds received in 2025 accounted for most of the favorable variance for the year-to-date comparison.
Noninterest Expense:
Total noninterest expense increased by $0.8 million, or 4%, in the third quarter of 2025, relative to the third quarter of 2024, and decreased by $0.2 million for the first nine months of 2025, as compared to the same period in 2024.
Salaries and Benefits were $0.5 million, or 4%, higher in the third quarter of 2025 as compared to the third quarter of 2024, and $0.8 million higher for the first nine months of 2025, as compared to the same period in 2024. The Company implemented a strategic reorganization at the end of the third quarter of 2025 which resulted in a reduction in force, accompanied by $0.2 million in severance payments. The remaining increase for both the quarter and year-over-year periods was mostly due to a change in composition in the workforce. There were 476 full-time equivalent employees at September 30, 2025, as compared to 485 at December 31, 2024.
Occupancy expenses increased by $0.2 million for the third quarter, and the first nine months of 2025 as compared to the same periods in 2024. The increases in both comparisons were primarily due to increased property taxes related to the updated assessed values of the properties involved in the sale/leaseback transaction in early 2024.
Other noninterest expense was relatively unchanged for the third quarter 2024, as compared to the third quarter in 2024, and decreased $1.2 million, or 5%, for the first nine months of 2025, as compared to the same period in 2024. For the year-over-year comparison the decrease was primarily driven by decreases in directors’ deferred compensation expense and
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legal and accounting services of $0.5 million and $0.3 million, respectively. The remaining decrease was related to lower data processing costs and reduced debit card losses.
PROVISION FOR INCOME TAXES
The Company sets aside a provision for income taxes on a monthly basis. The amount of that provision is determined by first applying the Company’s statutory income tax rates to estimated taxable income, which is pre-tax book income adjusted for permanent differences, and then subtracting available tax credits. Permanent differences include, but are not limited to, tax-exempt interest income, BOLI income, and certain book expenses that are not allowed as tax deductions. Tax credits consist primarily of those generated by investments in low-income housing tax credit funds. The Company's provision for income taxes was 23.6% of pre-tax income in the third quarter of 2025, relative to 26.4% in the third quarter of 2024, and 24.9% of pre-tax income for the first nine months of 2025 relative to 26.8% for the same period in 2024.
The decrease in effective tax rate for both the quarterly and year-to-date comparisons was due to the tax credits and tax-exempt income representing a larger percentage of total taxable income.
BALANCE SHEET ANALYSIS
EARNING ASSETS
The Company’s interest-earning assets are comprised of loans and investments, including overnight investments and surplus balances held in interest-earning accounts in its FRB account. The composition, growth characteristics, and credit quality of both of those components are significant determinants of the Company’s financial condition. Investments are analyzed in the section immediately below, while the loan portfolio and other factors affecting earning assets are discussed in the sections following investments.
INVESTMENTS
The Company’s investments may at any given time consist of debt securities and marketable equity securities (together, the “investment portfolio”), investments in the time deposits of other banks, surplus interest-earning balances in its FRB account, and overnight fed funds sold. The Company’s investments can serve several purposes, including the following: 1) they can provide liquidity for potential funding needs; 2) they provide a source of pledged assets for securing public deposits, bankruptcy deposits and certain borrowed funds which require collateral; 3) they constitute a large base of assets with structural characteristics that can be changed more readily than loan or deposit portfolios, as might be required for interest rate risk management purposes; 4) they are another interest-earning option for the placement of surplus funds when loan demand is light; and 5) they can provide partially tax exempt income.
The investment portfolio is reflected on the balance sheet as investment securities and totaled $891.4 million, or 24% of total assets at September 30, 2025, and $961.5 million, or 27% of total assets at December 31, 2024. The decrease was due to maturities and paydowns, partially used to offset brokered deposit maturities.
The Company carries “available-for-sale” investments at their fair market values and “held-to-maturity” investments at amortized cost, net of allowance for credit losses. The Company currently has the intent and ability to hold investment securities to maturity, but the securities are all marketable. The expected effective duration was 2.4 years for available-for-sale investments and 5.9 years for held-to-maturity investments at September 30, 2025, as compared to 1.5 years for available-for-sale investments and 6.0 years for held-to-maturity investments at December 31, 2024.
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The following table sets forth the carrying amount for available-for-sale securities, at fair value, and held-to-maturity securities, at amortized cost, net of the allowance for credit losses of the Company’s investment portfolio by investment type as of the dates noted:
Investment Portfolio
(dollars in thousands, unaudited)
September 30, 2025
December 31, 2024
Carrying Amount
Percent
Carrying Amount
Percent
Available for sale
U.S. government agencies
$
42,183
4.73%
$
50,153
5.22%
Mortgage-backed securities
198,600
22.28%
93,503
9.72%
State and political subdivisions
45,797
5.14%
40,803
4.24%
Corporate bonds
80,217
9.00%
58,562
6.09%
Collateralized loan obligations
230,136
25.82%
412,946
42.95%
Total available for sale
596,933
66.97%
655,967
68.22%
Held to maturity
U.S. government agencies
4,545
0.51%
4,819
0.50%
Mortgage-backed securities
118,836
13.32%
128,974
13.41%
State and political subdivisions
171,130
19.20%
171,721
17.87%
Total held to maturity
294,511
33.03%
305,514
31.78%
Total securities
$
891,444
100.00%
$
961,481
100.00%
Investment securities pledged as collateral for borrowings and/or potential borrowings from the FHLB and the FRB, customer repurchase agreements, and other purposes as required or permitted by law totaled $403.7 million at September 30, 2025, and $403.4 million at December 31, 2024, leaving $487.7 million in unpledged debt securities at September 30, 2025, and $558.1 million at December 31, 2024. Securities pledged in excess of actual pledging needs and thus available for liquidity purposes, if needed, totaled $230.6 million at September 30, 2025, and $242.2 million at December 31, 2024.
ALLOWANCE FOR CREDIT LOSSES – AFS INVESTMENT SECURITIES
The allowance for credit losses on AFS investment securities, a contra-asset, is established through periodic provisions for credit losses on AFS investment securities. It is maintained at a level that is considered adequate to measure expected losses across the classes of major investment security types related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value. The Company maintains it has intent and ability to hold these securities until the amortized cost basis of each security is recovered and likewise concluded as of both September 30, 2025 and December 31, 2024, that it was not more likely than not that any of the securities in an unrealized loss position would be required to be sold. The following bullets outline additional support for Management’s conclusion that no amount of the unrealized loss of the securities in an unrealized loss position as of September 30, 2025, and December 31, 2024, was attributable to credit deterioration and a risk of loss, requiring an allowance for credit losses.
● U.S. government agencies are supported by the full faith and creditworthiness of the U.S. federal government and Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either September 30, 2025, or December 31, 2024.
● Mortgage-backed securities issued by government-sponsored enterprises (“GSEs”) carry an implicit guarantee by the U.S. federal government, as the GSEs can draw funds from the U.S. federal government up to a limit, with an implied ability to draw funds beyond the limit. Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either September 30, 2025, or December 31, 2024.
● Management routinely monitors third party credit grades of the municipal issuers in the Company’s state and political subdivisions portfolio. On a quarterly basis Management receives financial information from a third-party service in order to monitor the underlying issuer’s financial stability. In addition, Management performs annual reviews of the underlying municipal issuers financial statements in order to evaluate stability and
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repayment capacity and has noted no concerns with any of the bonds in the Company’s state and local portfolio. As of both September 30, 2025 and December 31, 2024 Management concluded that no allowance for credit losses was warranted on any of the Company’s municipal securities and the unrealized loss position of each of the securities reflected fluctuations in market conditions, primarily interest rates, since the time of purchase.
● The Company has invested in corporate debt issuances of other financial institutions. Various financial metrics, including credit quality, reserve adequacy, profitability and capital, of each of the issuing financial institutions are reviewed by Management quarterly. Following review of the financial metrics available for each of the underlying institutions as of September 30, 2025, and December 31, 2024, Management concluded the unrealized loss position of these securities were related exclusively to the fluctuation in market conditions, primarily interest rates, from the date of purchase, and were not reflective of any credit concerns with the issuing financial institution. These bonds were subject to a credit review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews.
● The Company has invested exclusively in AA and AAA tranches of various collateralized loan obligations, which are securitizations of commercial loans. Each purchase is subject to a credit, concentration, and structure review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews. Management monitors the credit rating, in addition to various performance metrics available through a third-party informational service, of these investments on a quarterly basis. Following review of financial metrics as of both September 30, 2025, and December 31, 2024, Management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rate spreads due to changes in supply or demand, from the date of purchase, and were not reflective of any credit concerns with the tranches comprising the Company’s investments.
LOAN PORTFOLIO
A distribution of the Company’s loans showing the balance and percentage of loans by type is presented for the noted periods in the table below. The balances in the table are after deferred or unamortized loan origination, extension, or commitment fees, and deferred origination costs. While not reflected in the loan totals and not currently comprising a material segment of lending activities, the Company also occasionally originates and sells, or participates out portions of loans to non-affiliated investors.
Loan Distribution
(dollars in thousands, unaudited)
September 30, 2025
December 31, 2024
Amount
Percent
Amount
Percent
Real estate:
Residential real estate
$
364,277
14.62%
$
382,507
16.41%
Commercial real estate
1,404,681
56.37%
1,357,833
58.25%
Other construction/land
13,420
0.54%
5,472
0.23%
Farmland
67,860
2.72%
77,547
3.33%
Total real estate
1,850,238
74.25%
1,823,359
78.22%
Other commercial
185,958
7.46%
178,331
7.64%
Mortgage warehouse lines
452,683
18.17%
326,400
14.00%
Consumer loans
2,909
0.12%
3,344
0.14%
Total loans
$
2,491,788
100.00%
$
2,331,434
100.00%
Gross loans held at amortized cost totaled $2.5 billion, an increase of $160.4 million, or 7%, during the first nine months of 2025. Organic loan growth contributed to increases of $46.8 million in commercial real estate loans, $7.9 million in construction loan balances, and $7.6 million in other commercial loans. Mortgage warehouse line utilization increased $126.3 million, or 39%. Consumer loans had a modest decline, while residential real estate loans decreased $18.2 million, and farmland loans decreased $9.7 million.
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As indicated in the loan rollforward table below, new credit extended for the third quarter of 2025, remained flat on a linked-quarter basis, decreased $13.2 million over the same period in 2024, and increased $26.1 million for the year-to-date comparisons. The Company had $121.5 million in loan paydowns and maturities; however, mortgage warehouse utilization of $126.3 million had a positive impact in the first nine months of 2025.
LOAN ROLLFORWARD
(Dollars in Thousands, Unaudited)
For the three months ended:
For the nine months ended:
9/30/2025
6/30/2025
9/30/2024
9/30/2025
9/30/2024
Gross loans beginning balance
$
2,434,605
$
2,306,762
$
2,234,528
$
2,331,341
$
2,090,075
New credit extended
48,065
48,147
61,239
162,582
136,518
Changes in line of credit utilization (1)
2,628
2,587
11,572
(6,914)
(23,768)
Change in mortgage warehouse
50,787
118,665
61,718
126,283
219,778
Pay-downs, maturities, charge-offs and amortization
(44,306)
(41,556)
(48,428)
(121,513)
(101,974)
Gross loans ending balance
$
2,491,779
$
2,434,605
$
2,320,629
$
2,491,779
$
2,320,629
(1) Change does not include new balances on lines of credit extended during the respective periods as such balances are included as part of “New credit extended” line above.
At September 30, 2025, the total regulatory CRE concentration ratio of total CRE over Tier 1 Capital plus allowance was 242.7% as compared to 236.3% at December 31, 2024. The overall level of construction and land development lending was 2.9% of regulatory capital plus allowance for credit losses at September 30, 2025. At September 30, 2025, non-owner occupied commercial real estate includes $306.8 million of retail; $143.5 million of warehouse/industrial; $157.5 million of office; and $231.3 million of hospitality. Approximately $34.6 million, or 22% of the office real estate matures or reprices in less than two years.
Unused commitments, excluding mortgage warehouse and overdraft lines, were $263.1 million at September 30, 2025, compared to $256.9 million at December 31, 2024. Total line utilization, excluding mortgage warehouse and overdraft lines, was 57.9% at September 30, 2025, and 57.0% at December 31, 2024. Mortgage warehouse utilization increased to 59.4% at September 30, 2025, as compared to 51.2% at December 31, 2024.
The mortgage warehouse lines are structured as repurchase agreement lines. The repurchase agreement structure provides stronger credit protection to the Company, as well as more favorable regulatory capital treatment, as these repurchase lines are not considered off-balance sheet commitments for regulatory capital purposes as they are unconditionally cancellable.
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NONPERFORMING ASSETS
Nonperforming assets are currently comprised of loans for which the Company is no longer accruing interest and foreclosed assets.
Nonperforming assets
(dollars in thousands, unaudited)
September 30, 2025
December 31, 2024
September 30, 2024
Nonperforming Loans:
Real estate:
Residential real estate
$
218
$
23
$
42
Commercial real estate
—
—
2,655
Other construction/land
—
—
—
Farmland
1,717
5,105
7,528
Total Real Estate nonperforming loans
1,935
5,128
10,225
Other commercial
12,071
14,540
123
Consumer loans
—
—
—
Total nonperforming Loans
14,006
19,668
10,348
Foreclosed assets
1,839
—
—
Total Nonperforming Assets
$
15,845
$
19,668
$
10,348
Nonperforming loans as a % of total gross loans
0.56%
0.84%
0.45%
Nonperforming assets as a % of total gross loans and foreclosed assets
0.64%
0.84%
0.45%
Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, improved with a favorable decline of $3.8 million to $15.8 million for the first nine months of 2025. The Company's ratio of nonperforming loans to gross loans decreased to 0.56% at September 30, 2025, from 0.84% at December 31, 2024. This favorable year-to-date decline resulted from a decrease in non-accrual loan balances, due mostly to the partial charge-off of one agricultural production loan in the second quarter of 2025. All the Company's nonperforming assets are individually evaluated for credit loss quarterly and Management believes the established allowance for credit loss on such loans is appropriate.
Foreclosed assets had a carrying value of $1.8 million at September 30, 2025 comprised of one property classified as Other Real Estate Owned (OREO). There were no foreclosed assets at December 31, 2024. All foreclosed assets are periodically evaluated and written down to their fair value less expected disposition costs, if lower than the then-current carrying value.
An action plan is in place for each non-accruing loan, and they are all being actively managed. Collection efforts are continuously pursued for all nonperforming loans, but the Company cannot provide assurance that they will be resolved in a timely manner or that nonperforming balances will not increase.
The Company had $0.2 million in loans past due 30-89 days and still accruing at September 30, 2025. This was a decrease of $1.2 million over the balance at December 31, 2024. All of these past due loans are under Management supervision and every effort is being taken to assist the borrowers and manage credit risk in this regard.
ALLOWANCE FOR CREDIT LOSSES – LOANS
The allowance for credit losses on loans, a contra-asset, is established through periodic provisions for credit losses on loans. It is maintained at a level that is considered adequate to measure expected losses on individually identified loans, as well as expected losses inherent in the remaining loan portfolio. Specifically identifiable and quantifiable losses are immediately charged off against the allowance; recoveries are generally recorded only when sufficient cash payments are received subsequent to the charge-off.
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The Company's allowance for credit losses on loans and leases was $25.2 million at September 30, 2025, as compared to $24.8 million at December 31, 2024. The increase resulted from a $3.5 million increase in specific individual reserves on impaired loans on a single agricultural production loan in the third quarter of 2025, offset by a $5.3 million partial charge-off on the same loan in the second quarter of 2025, which had a $3.0 million specific individual reserve at December 31, 2024. Such agricultural production loan was in the wine grape industry and had a remaining book balance of $3.5 million at September 30, 2025, with a full individual reserve of $3.5 million offsetting the remaining balance. In addition to this loan, the Bank had $19.2 million in outstanding agricultural production loans in the winery and grape industry at September 30, 2025, of which $1.7 million were grapes. None of the remaining $19.2 million in wine and grape production loans were classified as special mention or substandard.
The allowance as a percentage of gross loans was 1.01% and 1.07%, at September 30, 2025 and December 31, 2024, respectively. Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover credit losses for the life of the loans outstanding as of September 30, 2025, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the credit loss allowance for loans. The total allowance for credit losses on loans of $25.2 million at September 30, 2025, included $0.5 million of allowance related to $452.7 million of mortgage warehouse lines. A separate allowance of $0.8 million for potential credit losses inherent in unused commitments is included in other liabilities at September 30, 2025, an increase of $0.1 million, from December 31, 2024.
Allowance for Credit Losses on Loans
(dollars in thousands, unaudited)
For the three
months ended
For the three
months ended
For the nine
months ended
For the nine
months ended
For the year ended
September 30,
September 30,
September 30,
September 30,
December 31,
Balances:
2025
2024
2025
2024
2024
Average gross loans outstanding during period (1)
$
2,437,218
$
2,271,692
$
2,389,164
$
2,195,352
$
2,225,402
Gross Loans outstanding at end of period
$
2,491,779
$
2,320,629
$
2,491,779
$
2,320,629
$
2,331,341
Allowance for credit losses on loans:
Balance at beginning of period
$
21,680
$
21,640
$
24,830
$
23,500
$
23,500
Provision charged to expense
3,709
1,240
6,880
2,258
4,593
Charge-offs
Real estate
Commercial real estate
18
(30)
1,165
2,438
2,438
Farmland
—
—
—
410
410
Total real estate
18
(30)
1,165
2,848
2,848
Other commercial
31
39
5,506
365
529
Consumer loans
231
388
727
1,126
1,484
Total
$
280
$
397
$
7,398
$
4,339
$
4,861
Recoveries
Real estate
Residential real estate
$
—
$
—
$
—
$
60
$
60
Commercial real estate
—
—
—
—
—
Farmland
—
—
410
—
—
Total real estate
—
—
410
60
60
Other commercial
11
16
34
559
655
Consumer loans
60
211
424
672
883
Total
$
71
$
227
$
868
$
1,291
$
1,598
Net loan charge-offs
$
209
$
170
$
6,530
$
3,048
$
3,263
Balance at end of period
$
25,180
$
22,710
$
25,180
$
22,710
$
24,830
RATIOS
Net charge-offs to average loans (annualized)
0.03%
0.03%
0.37%
0.18%
0.59%
Allowance for credit losses on loans to gross loans at end of period
1.01%
0.98%
1.01%
0.98%
1.07%
Net loan charge-offs to allowance for credit losses on loans at end of period
0.83%
0.75%
25.93%
13.42%
13.14%
Net loan charge-offs to provision for credit losses on loans
5.63%
13.71%
94.91%
134.99%
71.04%
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(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
OFF-BALANCE SHEET ARRANGEMENTS
The Company maintains commitments to extend credit in the normal course of business, as long as there are no violations of conditions established in the outstanding contractual arrangements. It is unlikely that all unused commitments will ultimately be drawn down. Unused commitments to extend credit, which included standby letters of credit, totaled $641.8 million at September 30, 2025, and $641.5 million at December 31, 2024, representing approximately 26% of gross loans outstanding at September 30, 2025, and 28% at December 31, 2024. Included in unused commitments are mortgage warehouse lines, which are mostly in the form of repurchase lines and are unconditionally cancellable. Unused commitments on mortgage warehouse lines were $308.8 million at September 30, 2025, and $311.6 million at December 31, 2024, while mortgage warehouse utilization was 59% and 51%, respectively.
The increase in mortgage warehouse utilization during the first nine months of 2025 was due to new customers added in the mortgage warehouse product that ramped up their utilization. Unused commitments, exclusive of mortgage warehouse lines and overdraft lines of credit, increased to 58% at September 30, 2025 from 57% at December 31, 2024. Total mortgage warehouse commitments increased by $25.0 million and $123.5 million for the three-and-nine-month periods ending September 30, 2025, respectively.
The Company also had undrawn letters of credit issued to customers totaling $4.3 million at September 30, 2025, and $5.0 million at December 31, 2024. The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of commitments to provide credit cannot be reasonably predicted because there is no guarantee that the lines of credit will ever be used. However, the “Liquidity” section in this Form 10-Q outlines resources available to draw upon should the Company be required to fund a significant portion of unused commitments.
In addition to unused commitments to provide credit, the Company is utilizing a $125 million letter of credit issued by the FHLB on the Company’s behalf as security for certain local agency deposits which totaled $85.3 million at September 30, 2025. That letter of credit is backed by loans pledged to the FHLB by the Company. For more information on the Company’s off-balance sheet arrangements, see Note 7 to the consolidated financial statements located elsewhere herein.
OTHER ASSETS
Interest-earning cash balances were discussed above in the “Investments” section, but the Company also maintains a certain level of cash on hand in the normal course of business, as well as non-earning deposits at other financial institutions. The Company’s balance of cash and due from banks depends on the timing of collection of outstanding cash items (checks), the amount of cash held in the branches, and the reserve requirement among other things, and it is subject to significant fluctuations in the normal course of business. While cash flows are normally predictable within limits, those limits are fairly broad and the Company manages its short-term cash position through the utilization of overnight loans to, and borrowings from, correspondent banks, including the FRB and the FHLB. Should a large “short” overnight position persist for any length of time, the Company typically raises money through focused retail deposit gathering efforts or by adding brokered time deposits. If a “long” position is prevalent, the Company could let brokered deposits or other wholesale borrowings roll off as they mature, or invest excess liquidity into investments or loans, subject to the Company’s risk tolerances. The Company’s balance of non-earning cash and due from banks was $81.8 million at September 30, 2025, relative to $79.6 million at December 31, 2024.
Foreclosed assets are discussed above in the section titled “Nonperforming Assets.”
Net premises and equipment decreased by $0.4 million during the first nine months of 2025, to $15.1 million. This decline was mostly a result of depreciation in the first nine months of 2025.
Goodwill was $27.4 million at September 30, 2025, unchanged during the first nine months of 2025. Goodwill is tested for impairment annually, unless events and circumstances exist which indicate that an impairment test should be performed. The annual goodwill impairment test was last performed on October 1, 2025, and it was determined that no impairment existed. Management continues to evaluate whether or not a triggering event occurs, or circumstances change
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that would more likely than not reduce the fair value of the Company below its carrying amount before the next annual test in 2025.
Bank-owned life insurance, with a balance of $68.7 million at September 30, 2025, increased $15.6 million during the first nine months of 2025, primarily due to the purchase of additional life insurance policies. Additional details are discussed above in the “Noninterest Income and Noninterest Expense” section.
The remainder of other assets consists primarily of right-of-use assets tied to operating leases, accrued interest receivable, deferred taxes, investments in bank stocks, prepaid assets, investments in low-income housing credits, investments in SBA loan funds, and other miscellaneous assets. Bank stocks include Pacific Coast Bankers Bank (PCBB) stock (marked to market value annually) and restricted stock related to the Federal Home Loan Bank of San Francisco (FHLB SF) stock held in conjunction with our FHLB borrowings. Both the PCBB and FHLB SF stock are not deemed to be marketable or liquid. Our net deferred tax asset is evaluated as of every reporting date pursuant to FASB guidance, and we have determined that no impairment exists.
DEPOSITS AND INTEREST-BEARING LIABILITIES
DEPOSITS
Deposits represent a key balance sheet category impacting the Company’s profitability metrics. Deposits provide liquidity to fund growth in earning assets, and the Company’s net interest margin is improved to the extent that growth in deposits is concentrated in less volatile and typically less costly non-maturity accounts, such as demand deposit accounts, NOW accounts, savings accounts, and money market demand accounts. Information concerning average balances and rates paid by deposit type is included in the Average Balances and Rates tables appearing above, in the section titled “Net Interest Income and Net Interest Margin.” A distribution of the Company’s deposits by type, showing the period-end balance and percentage of total deposits, is presented as of the dates indicated in the following table.
Deposit Distribution
(dollars in thousands, unaudited)
September 30, 2025
December 31, 2024
Amount
Percent
Amount
Percent
Noninterest-bearing demand deposits
$
1,072,927
36.57%
$
1,007,208
34.83%
Interest-bearing demand deposits
267,349
9.12%
206,766
7.15%
NOW
367,930
12.55%
380,987
13.18%
Savings
357,107
12.18%
347,387
12.01%
Money market
156,255
5.33%
140,793
4.87%
Time
476,242
16.24%
533,577
18.45%
Brokered deposits
234,950
8.01%
274,950
9.51%
Total deposits
$
2,932,760
100.00%
$
2,891,668
100.00%
Deposit balances reflect growth of $41.1 million, or 1%, during the first nine months of 2025. Core non-maturity deposits increased by $138.4 million, or 7%, while customer time deposits decreased by $57.3 million, or 11%. Wholesale brokered deposits decreased by $40.0 million, or 15%. Overall noninterest-bearing deposits as a percentage of total deposits at September 30, 2025, increased to 36.6%, as compared to 34.8% at December 31, 2024.
Overall uninsured deposits are estimated to be $748.1 million, or 26% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $285 million of combined pass-through FDIC insurance which would more than cover each of the Bank’s deposit customers if a customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At September 30, 2025, the
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Company had approximately 117,000 accounts, and the 25 largest deposit balance customers had balances of approximately 11% of overall deposits .
OTHER INTEREST-BEARING LIABILITIES
Customer repurchase agreements were $125.7 million at September 30, 2025, as compared to $108.9 million at December 31, 2024. Customer repurchase agreements allow customers to sweep excess deposit balances over the FDIC insurance limit each day into a separate repurchase agreement account. Monies in that account are used daily by the customer to purchase specific government debt securities from the Company under an agreement from the Company to repurchase the same securities from the customer on the next business day. These accounts are not deposits and are not FDIC insured. However, the repurchase agreement provides a customer with a larger account balance to have their account effectively secured with US government securities.
The Company’s non-deposit borrowings may, at any given time, include fed funds purchased from correspondent banks, borrowings from the FHLB, advances from the FRB, securities sold under agreements to repurchase, subordinated notes and/or junior subordinated debentures. The Company uses short-term FHLB advances and fed funds purchased on unsecured lines to support liquidity needs created by seasonal deposit flows, to temporarily satisfy funding needs from increased loan demand, and for other short-term purposes. The FHLB line consists of both a secured and unsecured component. The secured component depends on the level of pledged collateral.
At September 30, 2025 the Company had $55.0 million in overnight borrowings, and $80.0 million of term FHLB borrowings, as compared to $80.0 million of term FHLB borrowings on December 31, 2024.
Long-term debt at September 30, 2025, consisted of $49.5 million of subordinated debt. This remained relatively unchanged from December 31, 2024. Subordinated debentures related to $36.0 million of trust preferred securities at September 30, 2025, was $0.1 million higher than at December 31, 2024. The small increase resulted from the amortization of the discount on junior subordinated debentures that were part of the Company’s acquisition of Coast Bancorp in 2016. Trust preferred securities are variable rate instruments benchmarked against the Secured Overnight Financing Rate (SOFR).
OTHER NONINTEREST-BEARING LIABILITIES
Other liabilities are principally comprised of operating lease right-of-use liabilities, accrued interest payable, other accrued but unpaid expenses, and certain clearing amounts. The Company’s balance of other liabilities was $69.6 million at September 30, 2025, as compared to $90.5 million at December 31, 2024, a decrease of $20.9 million or 23%. The decrease was primarily driven by investment security purchases in process that settled, ICS transactions in process that settled, funds advanced on low-income housing tax credit investments, and a decrease in accrued interest on time deposits.
LIQUIDITY AND MARKET RISK MANAGEMENT
LIQUIDITY
The Company continues to have substantial liquidity through unencumbered assets and available borrowings. In addition, the Company’s loan-to-deposit ratio was 85% at September 30, 2025, and 81% at December 31, 2024, compared to an internal policy guideline of less than 90%.
Liquidity management refers to the Company’s ability to maintain cash flows that are adequate to fund operations and meet other obligations and commitments in a timely and cost-effective manner. Detailed cash flow projections are reviewed by Management on a monthly basis, with various stress scenarios applied to assess the Company’s ability to meet liquidity needs under unusual or adverse conditions. Liquidity ratios are also calculated and reviewed on a regular basis. While those ratios are merely indicators and are not measures of actual liquidity, they are closely monitored, the Company is committed to maintaining adequate liquidity resources to draw upon should unexpected needs arise.
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The Company, on occasion, experiences cash needs as the result of loan growth, deposit outflows, asset purchases or liability repayments. To meet these short-term needs, the Company can borrow overnight funds from other financial institutions, draw advances via FHLB lines of credit, or solicit brokered deposits if customer deposits are not immediately obtainable from local sources.
At September 30, 2025, and December 31, 2024, the Company had the following sources of primary and secondary liquidity (dollars in thousands):
Primary and secondary liquidity sources
9/30/2025
12/31/2024
Cash and cash equivalents
$
95,501
$
100,664
Unpledged investment securities
487,710
552,098
Excess pledged securities
230,581
242,519
FHLB borrowing availability
623,774
629,134
Unsecured lines of credit
460,785
479,785
Secured lines of credit
25,000
25,000
Funds available through fed discount window
266,419
298,296
Totals
$
2,189,770
$
2,327,496
Available funding sources, detailed above, of $2.2 billion represented 75% of total deposits and 293% of estimated uninsured and/or uncollateralized deposits as of September 30, 2025. Unpledged investment securities include $71.9 million of CLOs. As CLO rates reset every 90 days to current rates, the volatility of pricing of these securities is limited and the Company could sell such securities for liquidity at a significantly lower loss than selling lower-rate fixed term securities such as US government bonds or municipal bonds.
The Company performs regular stress tests on its liquidity, and at this time, Management believes it has sufficient primary and secondary liquidity sources for operations.
The Company has a higher level of actual balance sheet liquidity than might otherwise be the case since the Company utilizes a letter of credit from the FHLB rather than investment securities for certain pledging requirements. That letter of credit, which is backed by loans pledged to the FHLB by the Company, totaled $125 million at September 30, 2025, and December 31, 2024. Other sources of liquidity include the brokered deposit market, deposit listing services, Intrafi, and the ability to offer local time-deposit campaigns. Management is of the opinion that available investments and other potentially liquid assets, along with standby funding sources it has arranged, are more than sufficient to meet the Company’s current and anticipated short-term liquidity needs.
The Company’s primary liquidity ratio was 18% at September 30, 2025, as compared to an internal policy guideline of “greater than 15%” Ratios and sub-limits for the various components comprising wholesale funding, which were all well within policy guidelines at September 30, 2025, are also periodically reviewed by Management and the Board. The Company has been able to maintain a robust liquidity position in recent periods, but no assurance can be provided that the liquidity position will continue at current strong levels.
The holding company’s primary uses of funds include operating expenses incurred in the normal course of business, interest on trust preferred securities and subordinated debt, shareholder dividends, and share repurchases. Its primary source of funds is dividends from the Bank since the holding company does not conduct regular banking operations. As of September 30, 2025, the holding company maintained a cash balance of $8.4 million. Management anticipates that the holding company has sufficient liquidity to meet its funding requirements for the foreseeable future. Both the holding company and the Bank are subject to legal and regulatory limitations on dividend payments, as outlined in Item 5(c) Dividends in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC.
INTEREST RATE RISK MANAGEMENT
Market risk arises from changes in interest rates, exchange rates, commodity prices and equity prices. The Company does not engage in the trading of financial instruments, nor does it have exposure to currency exchange rates. The Company’s market risk exposure is primarily that of interest rate risk and has established policies and procedures to monitor and limit earnings and balance sheet exposure to changes in interest rates. The principal objective of interest rate risk management
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is to manage the financial components of the Company’s balance sheet in a manner that will optimize the risk/reward equation for earnings and capital under a variety of interest rate scenarios.
To identify areas of potential exposure to interest rate changes, the Company utilizes a third-party that uses commercially-available modeling software to perform monthly earnings simulations using a dynamic balance sheet and calculate the Company’s market value of portfolio equity under varying interest rate scenarios. The model imports relevant information for the Company’s financial instruments and incorporates Management’s assumptions on pricing, duration, and optionality for anticipated new volumes. Assumptions regarding deposit betas in the up cycles can range from 25% to 100% and from 0% to 75% in the down cycles, depending on the deposit type. Deposit decay rate assumptions range from 5% to 26% and are based on the Company’s own historical averages. Prepayment speeds are based on actual three-year historical averages. Various rate scenarios consisting of key rate and yield curve projections are then applied in order to calculate the expected effect of a given interest rate change on interest income, interest expense, and the value of the Company’s financial instruments. The rate projections can be shocked (an immediate and parallel change in all base rates, up or down), ramped (an incremental increase or decrease in rates over a specified time period), economic (based on current trends and econometric models) or stable (unchanged from current actual levels).
In addition to a stable rate scenario, which presumes that there are no changes in interest rates, the Company typically uses at least eight other interest rate scenarios in conducting rolling 12-month net interest income simulations: upward shocks of 100, 200, 300, and 400 basis points, and downward shocks of 100, 200, 300, and 400 basis points. Those scenarios may be supplemented, reduced in number, or otherwise adjusted as determined by Management to provide the most meaningful simulations considering economic conditions and expectations at the time. The Company’s guideline is to limit any projected decline in net interest income relative to the stable rate scenario to no more than 10% for a 100 basis point interest rate shock, 15% for a 200 basis point shock, 20% for a 300 basis point shock, and 25% for a 400 basis point shock.
The Company had the following estimated net interest income sensitivity profiles over one year, without factoring in any potential negative impact on spreads resulting from competitive pressures or credit quality deterioration (dollars in thousands, unaudited):
September 30, 2025
September 30, 2024
Immediate change in Interest Rates (basis points)
% Change in Net Interest Income
$ Change in Net Interest Income
% Change in Net Interest Income
$ Change in Net Interest Income
+400
4.0%
$
5,530
9.0%
$
12,006
+300
3.2%
$
4,440
6.9%
$
9,153
+200
2.3%
$
3,179
4.7%
$
6,295
+100
1.3%
$
1,776
2.5%
$
3,385
Base
-100
(4.8)%
$
(6,675)
(5.2)%
$
(6,954)
-200
(10.0)%
$
(13,817)
(10.4)%
$
(13,795)
-300
(15.0)%
$
(20,825)
(15.4)%
$
(20,469)
-400
(17.3)%
$
(23,992)
(18.4)%
$
(24,467)
The above table is for parallel interest rate shocks for all rate curves and represents an extreme scenario. Management utilizes this as a starting point for determining its overall interest rate risk strategy. Based on the interest rate shocks, for the period ending September 30, 2025, Management believes that the Company is asset sensitive and is slightly less asset sensitive than the same period a year ago.
The incremental changes in net interest income are similar between the up 100, 200, 300, and 400 basis point scenarios. If there were an immediate and sustained upward adjustment of 100 basis points in interest rates, all else being equal, net interest income over the next 12 months is projected to increase by $1.8 million, or 1.3%, relative to a stable interest rate scenario, with the favorable variance increasing as interest rates rise higher.
If there was an immediate downward adjustment of 100 basis points in interest rates for all rate curves, net interest income would drop $6.7 million, or a negative variance of 4.8% over 12 months. The change in net interest income in the down 200 basis point scenario is a decrease of $13.8 million or 10.0%. As a significant portion of the Company’s deposits remain in noninterest-bearing accounts or low-cost deposit accounts, in a downrate scenario, these rates would not change or only change slightly. However, floating rate earning assets (loans and deposits) would reprice downward more than the decline in floating rate liabilities. All interest rate shock scenarios are within internal policy guidelines.
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Management also models other interest rate scenarios that do not assume a simultaneous and parallel shock of all points on the yield curve including short-term and long-term rates. One of these alternate rate change scenarios uses rate forecasts, from a known economist over the next twelve months, which reflect overnight rates moving differently than longer-term treasury rates. Using this forecast of interest rates, net interest income models close to the base case scenario, indicating that based on a most-likely interest rate forecast the Company’s net interest income is expected to be close to the same level modeled in an unchanged rate environment. This use of a most-likely interest rate forecast suggests we are less sensitive to interest rate changes, when compared to use of an interest rate shock.
As the Company utilizes a dynamic balance sheet for its interest rate modeling, the Company also uses a static, or no-growth, balance sheet to assess the reasonableness of the interest rate sensitivity in the dynamic balance sheet model; no significant changes in interest rate risk outside of the base case were noted. In addition, the Company runs stress scenarios for stresses to average deposits, higher deposit betas than the base case, deposit migration from low-cost to high-cost deposits, and both higher and slower prepayment speeds. The most significant impact to net interest income in the net interest income simulations is the reduction or migration of low-cost deposits.
CAPITAL RESOURCES
The Company had total shareholders’ equity of $360.1 million at September 30, 2025, comprised of $104.0 million in common stock, $5.1 million in additional paid-in capital, $276.2 million in retained earnings, and accumulated other comprehensive loss of $25.2 million. At the end of 2024, total shareholders’ equity was $357.3 million.
The $2.8 million, or 1%, increase in equity during the first nine months of 2025 was due to the addition of $29.4 million in net income, a $6.1 million favorable change in accumulated other comprehensive loss, due principally to changes in investment securities’ fair value, partially offset by $24.3 million in share repurchases, and $10.3 million in dividends paid. The remaining difference is related to the impact of equity compensation.
At September 30, 2025, the Company had a 2024 Share Repurchase Plan authorizing 1,000,000 shares of common stock, with an expiration date of October 31, 2025. At September 30, 2025, there were no shares of common stock remaining available for repurchase under the 2024 Share Repurchase plan.
The Company uses a variety of measures to evaluate its capital adequacy, including the leverage ratio which is calculated separately for the Company and the Bank. Management reviews these capital measurements on a quarterly basis and takes appropriate action to help ensure that they meet or surpass established internal and external guidelines. As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital. The following table sets forth the Company’s regulatory capital ratios as of the dates indicated:
Regulatory Capital Ratios
Minimum
Minimum
Requirement
Required
September 30,
December 31,
to be
Community Bank
2025
2024
Well Capitalized
Leverage Ratio (1)
Bank of the Sierra
Tier 1 Capital to Adjusted Average Assets ("Leverage Ratio") (2)
11.73
%
11.80
%
9.00
%
9.00
%
Sierra Bancorp
Tier 1 Capital to Adjusted Average Assets ("Leverage Ratio") (2)
10.65
%
10.93
%
9.00
%
N/A
(1) If the subsidiary bank’s leverage ratio exceeds the minimum ratio under the community bank leverage ratio framework, it is deemed to be “well capitalized” under all other regulatory capital requirements. The Company may revert back to the regulatory framework for Prompt Corrective Action if the subsidiary bank’s leverage ratio falls below the minimum under the community bank leverage ratio framework.
(2) The Company has elected to phase in the impact of implementing CECL on regulatory capital over a three-year period, which ended December 31, 2024.
The federal banking agencies provide a simplified measure of capital adequacy for qualifying community banking organizations by allowing such banking organizations to opt into the community bank leverage ratio framework. The Company’s subsidiary has opted into the community bank leverage ratio framework. This means that if the Company’s
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subsidiary maintains a leverage ratio greater than 9%, it will be considered to have met the minimum capital requirements, the capital ratio requirements for the well capitalized category under the Prompt Corrective Action framework, and any other capital or leverage requirements to which the qualifying banking organization is subject. A qualifying community banking organization with a leverage ratio of greater than 9% may opt into the community bank leverage ratio framework if has average consolidated total assets of less than $10 billion, has off-balance-sheet exposures of 25% or less of total consolidated assets, and has total trading assets and trading liabilities of 5% or less of total consolidated assets. Further, the bank must not be an advanced approaches banking organization.
PART I – FINANCIAL INFORMATION
ITEM 3
QUANTITATIVE & QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
The information concerning quantitative and qualitative disclosures about market risk is included in Part I, Item 2 above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Market Risk Management.”
PART I – FINANCIAL INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.