What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 403 added, 387 removed, 605 unchanged (57% of the section changed)

32 unchanged sentences

Allowance for Credit Losses and Valuation of Foreclosed Assets

On January 1, 2021, the Company adopted the new accounting standard related to the allowance for credit losses.

This standard eliminates the probable initial recognition threshold in GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses.

See Note 6 “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements included in this report for additional information.

The Company believes that the determination of the allowance for credit losses involves a higher degree of judgment and complexity than its other significant accounting policies.

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The Company defines reporting units as a level below each of its operating segments for which there is discrete financial information that is regularly reviewed.

As of June 30 , 2025, the Company had one reporting unit to which goodwill has been allocated – the Bank.

As of September 30 , 2025, the Company had one reporting unit to which goodwill has been allocated – the Bank.

If the fair value of a reporting unit exceeds its carrying value, then no impairment is recorded.

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Intangible assets that are not amortized are tested for impairment at least annually by comparing the fair values of those assets to their carrying values.

At June 30 , 2025, goodwill consisted of $5.4 million at the Bank reporting unit, which included goodwill of $4.2 million that was recorded during 2016 related to the acquisition of 12 branches and the assumption of related deposits in the St.

At September 30 , 2025, goodwill consisted of $5.4 million at the Bank reporting unit, which included goodwill of $4.2 million that was recorded during 2016 related to the acquisition of 12 branches and the assumption of related deposits in the St.

Louis market.

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The Company expects to amortize the naming rights intangible assets through non-interest expense over a period not to exceed 15 years.

At June 30 , 2025, the amortizable intangible assets included the arena naming rights of $4.5 million, which are reflected in the table below.

At September 30 , 2025, the amortizable intangible assets included the arena naming rights of $4.4 million, which are reflected in the table below.

These amortizable intangible assets are reviewed for impairment if circumstances indicate their value may not be recoverable based on a comparison of fair value.

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This judgment may include developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables and incorporating general economic and market conditions.

Management does not believe any of the Company’s goodwill or other intangible assets were impaired as of June 30 , 2025.

While management believes no impairment existed as of June 30 , 2025, different conditions or assumptions used to measure fair value of the reporting unit, or changes in cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the outcome of the Company’s impairment evaluation in the future.

Our regular annual impairment assessment occurs in the third quarter of each year.

The Company performed this annual review as of September 30, 2025 and concluded that no impairment of its goodwill or other intangible assets had occurred as of that date.

While management believes no impairment existed as of September 30, 2025, different conditions or assumptions used to measure fair value of the reporting unit, or changes in cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the outcome of the Company’s impairment evaluation in the future.

A summary of goodwill and intangible assets as of the dates indicated is as follows:

September 30,

(In Thousands)

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In November 2021, the Federal Reserve began to taper its quantitative easing (QE), winding down its bond purchases with its final open market purchase conducted on March 9, 2022.

The federal government deficit was $2.8 trillion in fiscal 2021, close to $1.4 trillion in fiscal 2022, $1.7 trillion in fiscal 2023 and $1.8 trillion in fiscal 2024.

The Federal Reserve aggressively raised the federal funds interest rate from early 2022 through mid - 2023, pushing the federal funds rate to more than 5.50%, its highest level in 22 years.

The federal government deficit was $2.8 trillion in fiscal 2021, close to $1.4 trillion in fiscal 2022, and $1.7 trillion in fiscal 2023.

The Federal Reserve aggressively raised the federal funds interest rates from early 2022 through mid - 2023, pushing the federal funds rate to more than 5.50%, its highest level in 22 years.The federal funds rate range was 5.25% to 5.50% until mid-September 2024.The range has steadily lowered since the high in mid-2023.The target range in 2025 until mid-September was 4.25% to 4.50%, at which point it was lowered to 4.00% to 4.25%.

In late October 2025, the target range was lowered again, to 3.75% to 4.00%.

The Federal Reserve’s actions were motivated by surging inflation in 2021 caused by pandemic-fueled spending, which outpaced the ability of producers to supply goods and services after having been impacted by COVID-related shutdowns and clogged transportation systems.

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The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, eased from its peak of 7.1% in June 2022 to 2.9% in December 2023.

At June 30, 2025, Core PCE, which excludes food and energy prices, rose 2.8% from one year ago, above the Federal Reserve’s target of 2%.

At September 30, 2025, Core PCE, which excludes food and energy prices, rose 3.0% from one year ago, above the Federal Reserve’s target of 2%.

Based on Moody’s U.S.

Baseline Outlook and Alternative Scenarios Analysis dated June 2025, real GDP in 2025 is projected to rise 1.5% on an annual average basis;

Baseline Outlook and Alternative Scenarios Analysis dated September 2025, real GDP in 2025 is projected to rise 1.8% on an annual average basis;

this is an increase to prior GDP forecasts for 2025, which anticipated growth of 1.1%.

The new outlook on GDP growth for 2026 and 2027 is 1.4% and 1.7%, respectively, which is a slight decrease from the previous projection of 1.4% and 1.8%.

The national unemployment rate decreased slightly to 4.1% for June 2025 compared to 4.2% for March 2025.

The number of unemployed individuals was 7.0 million as of June 2025, with 147,000 jobs added during that month.

In June 2025, healthcare, social assistance and state and local governments contributed 128,000 of total job gains.

As of June 2025, the labor force participation rate (the share of working-age Americans employed or actively looking for a job) remained stable at 62.3%.

The unemployment rate for the Midwest, where the Company conducts most of its business, was 4.2% for both the quarter ended June 30, 2025 and the quarter ended March 31, 2025.

Unemployment rates for June 2025 in the states where the Company has a branch or a loan production office were:

The national unemployment rate increased slightly to 4.3% for August 2025 compared to June 2025 at 4.1%.The number of unemployed individuals was 7.4 million as of August 2025.

In August 2025, healthcare, social assistance, and nonfarm payroll employment contributed 69,000 of total job gains.

As of August 2025, the labor force participation rate (the share of working-age Americans employed or actively looking for a job) remained stable at 62.3%.

The unemployment rate for the Midwest, where the Company conducts most of its business, was unchanged from the quarter ended June 2025 to the month ended August 2025 at 4.2%.Unemployment rates for August 2025 in the states where the Company has a branch or a loan production office were:

Arizona at 4.1%, Arkansas at 3.8%, Colorado at 4.2%, Georgia at 3.4%, Illinois at 4.4%, Iowa at 3.8%, Kansas at 3.8%, Minnesota at 3.6%, Missouri at 4.1%, Nebraska at 3.0%, North Carolina at 3.7%, and Texas at 4.1%.

These rates were relatively unchanged for a majority of the states compared to March 2025.

It is unknown whether actions being taken to reduce federal employment levels will impact the unemployment rates in these states.

These rates were relatively unchanged for a majority of the states compared to June 2025.

Single Family Housing

Existing-home sales decreased 2.7% in June 2025 to a seasonally adjusted annual rate of 3.93 million.

No change occurred in year-over-year existing home sales.

In the Midwest, existing-home sales slowed to 4% in June 2025 at an annual rate of 950,000, up 2.2% from one year earlier.

The median existing-home sales price rose 2% from June 2024 to $435,300 in June 2025.

The median price in the Midwest in June 2025 was $337,600, up 3.4% from June 2024.

Existing-home sales increased 1.5% in September 2025, compared to August 2025, to a seasonally adjusted annual rate of 4.06 million;

year-over-year existing home sales increased 4.1%.

In the Midwest, existing-home sales slowed to 2.1% in September 2025 at an annual rate of 940,000, up 2.2% from one year earlier.

The median existing-home sales price rose 2.1% from September 2024 to $415,200 in September 2025.

The median price in the Midwest was $320,800, up 4.7% from September 2024.

All regions reported median price increases when compared to the prior year.

Total housing inventory registered at the end of June 2025 was 1.53 million units, down .6% from May 2025 and up 15.9% from one year ago.

Unsold inventory sat at a 4.7-month supply at the end of June 2025, up from 4.6 months at the end of May 2025 and 4.0 months at the end of June 2024.

Total housing inventory registered at the end of September 2025 was 1.55 million units, up 1.3% from August 2025 and 14.0% from one year ago.

Unsold inventory sat at a 4.6-month supply at the end of September 2025, no change from August 2025, and up from 4.2 months at the end of September 2024.

New home construction dropped precipitously after the financial crisis of 2007-2008 and has yet to fully recover.

Issues contributing to the country’s current housing shortage include increasing labor and materials costs, availability of building materials, increased interest rates and tighter lending underwriting standards.

Single-family housing starts in June 2025 were at a rate of 1.3 million, 4.6% above the revised estimate for May 2025 but 0.5% below June 2024.

Sales of new single‐family houses in June 2025 were at a seasonally adjusted annual rate of 627,000 according to the U.S.

Single-family housing starts in August 2025 were at a rate of 890,000, 7% below the revised figure for July 2025 of $957,000 but 11.7% below August 2024.

Sales of new single‐family houses in August 2025 were at a seasonally adjusted annual rate of 800,000 according to the U.S.

Census Bureau and the Department of Housing and Urban Development.

This was 13.3% below the May 2025 rate of 623,000 and 6.6% below the June 2024 rate of 671,000.

The median price of new houses sold in June 2025 was $401,800, which is lower than the May 2025 median price of $422,700.

The seasonally‐adjusted estimate of new houses for sale at the end of June 2025 represented a supply of 9.8 months at the current sales rate.

According to Freddie Mac, the average commitment rate for a 30-year, fixed-rate mortgage was 6.75% as of June 30, 2025, down from 6.77% one year ago.

This was 20.5% above the July 2025 rate of 664,000 and 15.4% above the August 2024 rate of 693,000.

The median sales price of new houses sold in August 2025 was $413,500, which is 4.7% above the July 2025 median price of $395,100.

The seasonally‐adjusted estimate of new houses for sale at the end of August 2025 represented a supply of 7.4 months at the current sales rate.

According to Freddie Mac, the average commitment rate for a 30-year, fixed-rate mortgage was 6.19% as of October 23, 2025, down from 6.54% one year ago.

Other Residential (Multi-Family) Housing and Commercial Real Estate

multi-family market experienced a continued strong recovery in demand through the first half of 2025, driven by stable economic growth plus a continued slowing of renter households making the jump to home ownership and creating fewer units to backfill.

Excluding pandemic level absorption, first-quarter 2025 was the strongest absorption period on record with nearly 130,000 units.

Large markets in the South and Southwest, such as Dallas and Phoenix, were absorption leaders.

Absorption increases are also fueled by generational transitions – older members of Gen Z as well as Baby Boomers are making their way to rental properties rather than home ownership.

Overall vacancy in the multi-family market was 8.2% as of June 2025 and is forecasted to fall below this level by the end of 2025.

Vacancies among 4 and 5 Star buildings could decline quickly throughout the remainder of the year as recent developments enter the lease-up phase.

Market conditions could stimulate an increase in rent growth across all quality segments due to above average wage growth and changes in supply and demand.

The Midwest and Northeast regions have fared the best over the past two years in terms of rent growth.

Rents are still down year over year as of June 2025 in 14 of the largest 50 markets, primarily in areas where supply significantly outpaced demand.

Controlled increase in projected new supply is expected to keep Midwestern markets more balanced, thereby avoiding the oversupply conditions that contributed to weaker rent growth.

Kansas City and Chicago continue to lead the nation in rent growth, each displaying 3% growth in the first quarter of 2025.

Our market areas reflected the following apartment vacancy levels as of June 2025:

According to CoStar, the U.S.

apartment market’s supply-demand balance is ready for a rebalancing.

Annual absorption is projected to exceed net deliveries over the next year, for the first time since Q1 2022.

This turning point in the supply/absorption balance should accelerate overall vacancy declines, supported by a shrinking construction pipeline and robust renter demand.

However, vacancy compression appears to have stalled in 2025, with vacancy holding steady at its current rate of 8.2% since the beginning of the year.

This stability reflects rising vacancy of lower quality segments offsetting declines in the higher quality, 4- and 5-Star apartment segment, where absorption has outpaced supply.

As a result, vacancy for 4- and 5-Star apartments has declined from a peak of 11.8% to 10.9%, and is forecasted to continue falling through year-end.Large markets in the South and Southwest, such as Dallas and Atlanta, were absorption leaders.Absorption increases are also fueled by generational transitions – older members of Gen Z as well as Baby Boomers are making their way to rental properties rather than home ownership.

Absorption in upcoming quarters is expected to gradually chip away at the nation’s elevated overall vacancy rate, which is forecasted to fall to 8.1% by year-end and below 7.9% by the fourth quarter of 2026.

Quarterly net deliveries have fallen approximately 25% over the year to approximately 140,000 units in the third quarter of 2025.

Fewer apartments are projected to reach completion over the remainder of the year, with the forecast expected to fall below 75,000 units by the fourth quarter of 2025 based on a thinning construction pipeline.

Construction starts have fallen to a decade-plus low due to extended lease-up periods, higher capital costs, and stricter lending.

While overall vacancy is expected to decline, stabilized vacancy is forecasted to increase through 2027, reflecting ongoing efforts to absorb the supply overhang built up over the past two years.

While vacancies have surged in the South and Southwest due to oversupply, most Midwest and Northeast markets have seen only moderate supply increases, leading to more favorable prospects for rent growth in those regions.

In contrast, rents have fallen in markets across states in the South, Arizona, and Texas.

Among the 50 largest markets, vacancy is highest in Memphis, Austin, and San Antonio.

This variance of declining overall vacancy alongside persistently elevated stabilized vacancy suggests rent growth improvement will be gradual.

Recent lease-up activity has helped reduce vacancy among 4- and 5-Star buildings, reinforcing the recovery in this segment.

However, stabilized vacancy is projected to end the year above its starting point – in the upper 6% range – pointing to slow but stable rent growth, in line with the second quarter’s 0.5%.

In contrast to the high-end building segment, vacancies in mid and lower-quality buildings remain more limited.

wage growth running above average, there is room for rents to increase by 0.6% in 3 Star buildings and by 1.3% year-over-year in 1- and 2-Star buildings, both outpacing the overall average.

Rent growth across all quality segments is forecasted to reach the mid-1% range by mid-year 2026 as vacancies continue to tighten.

Our market areas reflected the following apartment vacancy levels as of September 2025:

Springfield, Missouri at 7.1%, St.

Louis at 10.6%, Kansas City at 8.7%, Minneapolis at 6.6%, Dallas-Fort Worth at 11.8%, Chicago at 4.6%, Atlanta at 11.8%, Phoenix at 12.4%, Denver at 11.6% and Charlotte, North Carolina at 12.1%.

Preliminary data suggested that net absorption for the office industry remained positive through the second quarter of 2025.

Revisions have confirmed that occupancy losses accelerated, though less severely compared to 2023 and 2024.

Through the second quarter of 2025, space for lease increased more than 10 million square feet.

A decrease in demand combined with a geographically focused increase in leasing drove the vacancy rate up slightly to 14.1% in June 2025, compared to 13.9% in March 2025.

The market vacancy rate is the result of multiple factors.

The supply pipeline is diminishing faster than previously expected, currently representing the lowest supply since 2012, with 63.5 million square feet under construction.

Construction delays led to under 5 million square feet of new supply in the first half of 2025.

Positive absorption across some of the largest office markets, combined with a diminishing pipeline of supply, is expected to continue to hold the national vacancy rate steady.

Various indicators show office attendance trending upward in the first half of 2025, albeit slowly.

But while attendance was rising, office-using job growth nearly stalled.

Transaction volume continued to gain positive momentum in the second quarter of 2025, with $13.8 billion in office sales – up 55% from the same period last year.

The market still has not returned to its peak, but the year-over-year surge indicates that buyers are willing to engage in transactions even with macro uncertainties.

CoStar reported that office asking rents have remained flat over the past four years.

An uncertain economic outlook dampened the office sector’s momentum through the first nine months of 2025.The national vacancy rate remained at its all-time high at 14.1% at September 30, 2025.On an encouraging note, supply growth has diminished to a historically low level.

Also, positive absorption in the third quarter of 2025 and the re-entry of institutional buyers into the market suggest that a turning point may be near.

The demand recovery is complex and variable both across and within the country’s major cities, according to CoStar.

Only about half of major metro areas have posted occupancy gains in the past 12 months, a historically unique occurrence which indicates the fragmented nature of the market.

One impediment to recovery is the stalling out of office-using job growth.

The hiring slowdown has been mitigated somewhat by a meaningful increase in office attendance.

However, much return-to-office momentum seems to be driven by an increase in in-office work by “hybrid” employees.

These attendance and employment trends are now interacting with a lack of desirable new supply in many markets to bring availability meaningfully down.

The overall availability rate for space is about 80 basis points below its peak at 16.5% in early 2024.

Availability at four- and five-star buildings is down even more, with the current rate of 23.4% about 120 basis points below peak.

The slowdown in construction means that tenants looking for large blocks of space have fewer options.

CoStar reported that office asking rents have remained flat for nearly five years.

A looming lack of available space in premium new buildings and an ongoing minimal amount of sublease inventory is expected to keep office asking rent growth nominally positive for the near future.

As of June 2025, national office vacancy rates remained stable at 14.1%, while our market areas reflected the following vacancy levels:

Through the first nine months of 2025, investment activity was up by approximately 36% from the same period last year.

The acceleration was not just evident in sales volume.

The number of office deals that traded during the first nine months of 2025 were 16% above last year’s pace.

Even as fundamentals remain fluid, investors are monitoring a potential change in leasing demand.

The third quarter of 2025 posted the first positive net absorption since 2021, just as the national vacancy rate appears to be reaching its projected peak.

With approximately $6 billion in acquisitions year-to-date, institutional capital has been more active in the first nine months of 2025 than what was observed in the same period of the prior two years.

The next several quarters may prove to be a pivotal time for restoring confidence in the office market.

If current projections play out, the market could witness the convergence of peaking vacancies, steady leasing activity, a trough in rent growth, and accelerating capital flows.

At the same time, the climb in CMBS delinquency rates in recent years suggests that an office recovery may be in its early stages and require a multi-year period of incremental progress to fully regain its footing.

As of September 2025, national office vacancy rates remained stable at 14.1%, while our market areas reflected the following vacancy levels:

Springfield, Missouri at 4.4%, St.

Louis at 10.1%, Kansas City at 10.8%, Minneapolis at 11.7%, Dallas-Fort Worth at 17.8%, Chicago at 16.6%, Atlanta at 16.9%, Denver at 17.7%, Phoenix at 16.3% and Charlotte, North Carolina at 14.3%.

As of June 2025, the U.S.

retail market witnessed the highest level of store closures and bankruptcy filings since 2020.

Significant competition from e-commerce retailers, rising costs, restricted access to capital and multiple years of below-average closures, all contribute to the uptick in store closures.

In 2025, the U.S.

retail market has witnessed the highest level of store closures and bankruptcy filings since 2020.

Significant competition from e-commerce retailers, rising costs, restricted access to capital and multiple years of below-average closures, have all contributed to the uptick in store closures.

Bankruptcy filings are correlated to low home sales, which have weighed heavily on furniture, retail, appliance, and home improvement sales.

While store closures weigh on net demand formation, they also provide much-needed supply for those tenants looking to expand.

Market participants reported exceptionally strong demand to backfill spaces as they go dark, with some able to secure rent increases of 40% or more.

Over half of the leases signed during the first half of the year were for spaces on the market for less than ten months, while 30% of leased spaces were on the market for less than five months.

Increased competition for space has been largely driven by the limited amount of space developed across the U.S.

From 2000 to 2009, approximately 300 million square feet of retail space was delivered annually, of which nearly 40% was available for lease.

Just 81 million square feet of new retail space has been delivered annually since the start of 2020, with the vast majority comprised of build-to suit projects.

This has left minimal second-generation space for tenants looking to expand.

Per CoStar, most tenants and brokerage reps continue to report substantial competition for quality available space, resulting in availabilities backfilling at the fastest pace in nearly 15 years.

During the second quarter of 2025, national retail vacancy rates remained steady at 4.3% while our market areas reflected the following vacancy levels:

From 2000 to 2009, approximately 300 million square feet of retail space was delivered annually, of which nearly 40% was available for lease.Just 85 million square feet of new retail space has been delivered annually since the start of 2020, with the vast majority comprised of build-to-suit projects.

This has left minimal second-generation space for tenants looking to expand.Per CoStar, most tenants and brokerage reps continue to report substantial competition for quality available space, resulting in availabilities backfilling at the fastest pace in nearly 15 years.

During the third quarter of 2025, national retail vacancy rates remained steady at 4.3% while our market areas reflected the following vacancy levels:

Springfield, Missouri at 2.3%, St.

Louis at 3.8%, Kansas City at 4.1%, Minneapolis at 2.7%, Dallas-Fort Worth at 4.9%, Chicago at 4.9%, Atlanta at 4.2%, Phoenix at 4.7%, Denver at 4.3%, and Charlotte, North Carolina at 3.2%.

industrial market performance continues to favor the tenant, reporting a decade-long high vacancy rate of 7.4%.

Deliveries continued to outpace net absorption in the first half of 2025 and impending supply additions will pressure vacancy higher, in conjunction with pressure from ongoing concerns regarding consumer spending.

Industrial market weakness is directly impacted by 12-year lows in home sales, which lowered sales of furniture, building materials, and appliances, leading to large distribution center closures by tenants including Big Lots, Ashley Furniture, and Home Depot.

The forecast is for weaker absorption and higher near-term vacancy reflecting a projected slowdown in U.S.

retail spending growth, which Oxford Economics expects to remain positive but slow considerably in 2025.

industrial market performance continues to favor the tenant, reporting a decade-long high vacancy rate of 7.5%.Deliveries continued to outpace net absorption in 2025 and impending supply additions should push vacancy higher, in conjunction with pressure from ongoing concerns regarding consumer spending.Industrial market weakness is directly impacted by 12-year lows in home sales, which lowered sales of furniture, building materials, and appliances, leading to large distribution center closures by tenants including Big Lots, Ashley Furniture, and Home Depot.The forecast is for weaker absorption and higher near-term vacancy reflecting a projected slowdown in U.S.

retail spending growth, which Oxford Economics expects to remain positive but slow considerably in the remainder of 2025.

industrial market may be nearing the end of a record development surge.

Higher interest rates have caused construction starts on new industrial projects to fall over the past two and a half years.

Tariffs present a risk to demand for logistics buildings, particularly in major West Coast port-dependent markets, as import traffic and U.S.

consumer spending could slow.

While industrial building deliveries are set to moderate further as the construction pipeline thins, supply growth will still likely outpace net absorption in upcoming quarters.

As of June 30, 2025, the amount of vacant space among existing Phoenix logistics properties 50,000 square feet or larger has increased by 19 million square feet, primarily due to speculative development since 2019 pushing the vacancy rate among these buildings over 20%, while another 8.2 million square feet of unleased space remained under construction.

Nationally, year-over-year industrial rent growth slowed to 1.6% in June 2025, its lowest rate since 2012.

Leasing activity increased in the first quarter of 2025 ahead of tariff escalations, with some markets increasing leasing volume by 50% above two-year averages.

Rents for big-box logistics buildings have declined, while rent growth for small bay buildings remains positive.

Due to record rent growth during the pandemic, many leases are still renewing at higher rates after being marked to market.

Large industrial buildings in markets most saturated with speculative development, such as Austin, Indianapolis, Greenville/Spartanburg, Phoenix, and San Antonio, may be most at risk.

For the second quarter of 2025, national industrial vacancy was 7.4%.

Our market areas reflected the following industrial vacancy levels for the second quarter of 2025:

Quarterly net supply additions are on pace to fall below the pre-pandemic three-year average in 2025 and continue declining into 2026 when supply growth is projected to hit an 11-year low.

The gradual but persistent decline in speculative development completions has been underway for about 12 months.

While new deliveries have peaked, several Sunbelt and Midwest markets with fewer constraints on new development are still in the midst of a record supply wave that could take tenants more than two years to fully absorb.

Austin, Indianapolis, Phoenix, and San Antonio stand out as markets with risks of prolonged higher availability rates, particularly among logistics properties between 100,000 and 500,000 square feet.

Most speculative construction has consisted of projects in this size range in recent years and these properties also face competition from projects larger than 500,000 square feet that can demise their space to broaden their list of potential tenants.

Due to elevated vacancy and spaces leasing at a slower pace, year-over-year rent growth has slowed to 1.4%, its lowest rate since 2012.

Nevertheless, due to the record rent growth during the pandemic, many leases are still renewing at higher rates after being marked to market.

This is much more easily achieved in the small bay industrial market, where, thanks to minimal recent development, vacancy remains near pre-pandemic record lows of 5%.

In contrast, the stock of logistics buildings from 100,000 square feet to 500,000 square feet has grown by more than 14% over the past four years, and the vacancy rate among them stands at around 10%, hitting its highest level in over a decade.

Per CoStar, third-quarter 2025 transaction volume held steady compared to the previous quarter and the same period in 2024, suggesting a pause in momentum as investors digest the implications of the second quarter’s negative net absorption for the first time since 2010.

On the investment side, yields for stabilized, multi-tenant warehouses above $10 million bottomed in 2021 around the mid-4% range.

Since then, cap rates have expanded roughly 150 basis points and now typically hover near 6%.

Single-tenant deals, offering durable contractual income, may garner more attention from investors in the near term given the recent slowdown in leasing momentum.

Looking ahead, pricing risk remains as the market will need to see an increase in leasing momentum and sales velocity to gain confidence about the near-term outlook.

Once the current stint of uncertainty fades, capital should continue to favor industrial assets, supported by the sector’s historically strong rent growth and predictable capital expenditures compared to other property types.

For the third quarter of 2025, national industrial vacancy was 7.5%.

Our market areas reflected the following industrial vacancy levels for the third quarter of 2025:

Springfield, Missouri at 1.8%, St.

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When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest income.

Great Southern’s total assets decreased $127.0 million, or 2.1%, from $5.98 billion at December 31, 2024, to $5.85 billion at June 30, 2025.

Details of the current period changes in total assets are provided below, under “Comparison of Financial Condition at June 30, 2025 and December 31, 2024.”

Net outstanding loans decreased $156.1 million from December 31, 2024, to $4.53 billion at June 30, 2025.

The decrease was primarily in construction loans, commercial real estate loans, commercial business loans and one- to four- family residential loans, partially offset by increases in other residential (multi-family) loans.

Great Southern’s total assets decreased $243.8 million, or 4.1%, from $5.98 billion at December 31, 2024, to $5.74 billion at September 30, 2025.

Details of the current period changes in total assets are provided below, under “Comparison of Financial Condition at September 30, 2025 and December 31, 2024.”

Net outstanding loans decreased $222.7 million from December 31, 2024, to $4.47 billion at September 30, 2025.

The decrease was primarily in construction loans, other residential (multi-family) loans, one- to four- family residential loans and commercial real estate loans.

As loan demand is affected by a variety of factors, including general economic conditions, and because of the competition we face and our focus on pricing discipline and credit quality, no assurance can be given that our loan growth will match or exceed the average level of growth achieved in prior years.

The Company’s strategy continues to be focused on maintaining credit risk and interest rate risk at appropriate levels.

Recent growth has occurred in some loan types, primarily other residential (multi-family) loans and in most of Great Southern’s primary lending locations, including Springfield, St.

Over the past several years, growth has occurred in some loan types and in most of Great Southern’s primary lending locations, including Springfield, St.

Louis, Kansas City, Des Moines and Minneapolis, as well as our loan production offices in Atlanta, Charlotte, Chicago, Dallas, Denver, Omaha, and Phoenix.

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We consider these lending practices to be consistent with or more conservative than what we believe to be the norm for banks our size.

At both June 30, 2025 and December 31, 2024, 0.2% of our owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination.

At June 30, 2025, 0.3% of our non-owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination, compared to 0.4% at December 31, 2024.

At both September 30, 2025 and December 31, 2024, 0.2% of our owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination.

At both September 30, 2025 and December 31, 2024, 0.4% of our non-owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination.

The level of non-performing loans and foreclosed assets affects our net interest income and net income.

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Available-for-sale Securities.

In the six months ended June 30, 2025, available-for-sale securities decreased $5.8 million, or 1.1%, from $533.3 million at December 31, 2024, to $527.5 million at June 30, 2025 due to monthly principal payments on investment securities, partially offset by purchases of investment securities and increases in market value of the available-for-sale securities.

In the nine months ended September 30, 2025, available-for-sale securities decreased $2.0 million, or 0.4%, from $533.3 million at December 31, 2024, to $531.3 million at September 30, 2025 due to monthly principal payments on investment securities, partially offset by purchases of investment securities and increases in market value of the available-for-sale securities.

For further information on investment securities, see Note 5 to the accompanying financial statements contained in this Report.

Held-to-maturity Securities.

In the six months ended June 30, 2025, held-to-maturity securities decreased $4.3 million, or 2.3%, from $187.4 million at December 31, 2024, to $183.1 million at June 30, 2025, due to principal payments on mortgage-backed securities and collateralized mortgage obligations.

In the nine months ended September 30, 2025, held-to-maturity securities decreased $6.1 million, or 3.3%, from $187.4 million at December 31, 2024, to $181.3 million at September 30, 2025, due to principal payments on mortgage-backed securities and collateralized mortgage obligations.

The Company attracts deposit accounts through its retail branch network, correspondent banking and corporate services areas, internet channels and brokered deposits.

The Company then utilizes these deposit funds, along with FHLBank advances and other borrowings, to meet loan demand or otherwise fund its activities.

In the six months ended June 30, 2025, total deposit balances increased $78.6 million, or 1.7%.

Compared to December 31, 2024, transaction account balances increased $35.5 million, or 1.2%, to $3.09 billion at June 30, 2025, and retail certificates of deposit decreased $18.1 million, or 2.3%, to $757.7 million at June 30, 2025.

In the nine months ended September 30, 2025, total deposit balances decreased $77.5 million, or 1.7%.

Compared to December 31, 2024, transaction account balances increased $66.7 million, or 2.2%, to $3.12 billion at September 30, 2025, and retail certificates of deposit decreased $52.1 million, or 6.7%, to $723.7 million at September 30, 2025.

The increase in transaction accounts was primarily a result of an increase in various money market accounts.

Retail time deposits decreased due to a net decrease in retail certificates generated through the banking center network.

Retail time deposits decreased due to a decrease in retail certificates generated or maintained through the banking center network.

Competition for time deposits has been, and remains, significant in many of our markets.

Brokered deposits, including IntraFi program purchased funds, were $833.3 million and $772.1 million at June 30, 2025 and December 31, 2024, respectively.

Brokered deposits, including IntraFi program purchased funds, were $680.0 million and $772.1 million at September 30, 2025 and December 31, 2024, respectively.

The Company uses brokered deposits of select maturities from time to time to supplement its various funding channels and to manage interest rate risk.

The additional brokered deposits were used to repay some of the Company’s short-term borrowings.

Our deposit balances may fluctuate depending on customer preferences and our relative need for funding.

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While we do not currently anticipate that our ability to access these sources will be reduced or eliminated in future periods, if this should happen, the limitation on our ability to fund additional loans could have a material adverse effect on our business, financial condition and results of operations.

See “Results of Operations and Comparison for the Three and Six Months Ended June 30 , 2025 and 2024 – Liquidity” below for further information on funding sources.

See “Results of Operations and Comparison for the Three and Nine Months Ended September 30 , 2025 and 2024 – Liquidity” below for further information on funding sources.

Securities sold under reverse repurchase agreements with customers.

Securities sold under reverse repurchase agreements with customers decreased $9.6 million from $64.4 million at December 31, 2024 to $54.8 million at June 30, 2025.

Securities sold under reverse repurchase agreements with customers decreased $21.8 million from $64.4 million at December 31, 2024 to $42.6 million at September 30, 2025.

These balances fluctuate over time based on customer demand for this product.

Short-term borrowings and other interest-bearing liabilities .

Short term borrowings and other interest-bearing liabilities decreased $144.3 million from $514.2 million at December 31, 2024 to $369.9 million at June 30, 2025, primarily due to the repayment of borrowings under the Federal Reserve Bank BTFP funding program and the Company’s utilization of brokered deposits as an alternative source of funding.

Short term borrowings and other interest-bearing liabilities decreased $88.3 million from $514.2 million at December 31, 2024 to $425.9 million at September 30, 2025, primarily due to the repayment of borrowings under the Federal Reserve Bank BTFP funding program and the Company’s utilization of brokered deposits as an alternative source of funding.

The Company may, from time to time, utilize overnight borrowings, short-term FHLBank advances, and borrowings from the Federal Reserve Bank of St.

Louis (FRBSTL), depending on relative interest rates.

The Company’s FHLBank term advances were $-0- at both June 30, 2025 and December 31, 2024.

At June 30, 2025 and December 31, 2024, there was $369.0 million and $333.0 million, respectively, in overnight borrowings from the FHLBank, which were included in short term borrowings.

The Company’s FHLBank term advances were $-0- at both September 30, 2025 and December 31, 2024.

At September 30, 2025 and December 31, 2024, there was $425.0 million and $333.0 million, respectively, in overnight borrowings from the FHLBank, which were included in short term borrowings.

In January 2024, the Bank borrowed $180.0 million under the Federal Reserve Bank’s Bank Term Funding Program (BTFP).

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In 2024, the FRB implemented rate decreases of 0.50%, 0.25% and 0.25% in September, November, and December, respectively.

At December 31, 2024, the Federal Funds rate was 4.50%, and remained at that level at June 30 , 2025.

Financial markets now expect the possibility of further decreases in Federal Funds interest rates in 2025 to be likely, but at a methodical pace and with interest rate decisions being made at each FRB meeting based on economic data available at the time.

Great Southern’s loan portfolio includes loans ($1.60 billion at June 30, 2025) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after June 30, 2025.

At December 31, 2024, the Federal Funds rate was 4.50%.

In 2025, the FRB implemented a rate decrease of 0.25% in September, which brought the Federal Funds rate to 4.25% at September 30, 2025, and another rate decrease of 0.25% in October.

Great Southern’s loan portfolio includes loans ($1.54 billion at September 30, 2025) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after September 30, 2025.

All of these loans have interest rate floors at various rates.

Great Southern also has a portfolio of loans ($731.1 million at June 30, 2025) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.

Great Southern also has a portfolio of loans ($666.4 million at September 30, 2025) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.

All of these loans had interest rate floors at various rates.

In addition, Great Southern has a portfolio of loans ($10.3 million at June 30, 2025) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the rate of interest on this index.

In addition, Great Southern has a portfolio of loans ($10.6 million at September 30, 2025) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the rate of interest on this index.

All of these loans had interest rate floors at various rates.

At June 30, 2025, nearly all of these SOFR, “prime rate” and AMERIBOR loans had fully-indexed rates that were at or above their floor rate and so are expected to move fully with future market interest rate increases, and most are expected to move fully with future market interest rate decreases as many of these loans have floor rates well below their current index rate.

At September 30, 2025, nearly all of these SOFR, “prime rate” and AMERIBOR loans had fully-indexed rates that were at or above their floor rate and so are expected to move fully with future market interest rate increases, and most are expected to move fully with future market interest rate decreases as many of these loans have floor rates well below their current index rate.

A rate cut by the FRB generally would be expected to have an immediate negative impact on the Company’s interest income on loans due to the large total balance of loans tied to the SOFR indexes or the “prime rate” index and will be subject to adjustment at least once within 90 days or loans which generally adjust immediately as the Federal Funds rate adjusts.

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Loans at their floor rates are, however, subject to the risk that borrowers will seek to refinance elsewhere at the lower market rate.

There may also be a negative impact on the Company’s net interest income if the Company is unable to significantly lower its funding costs due to a highly competitive rate environment for deposits, although interest rates on assets may decline further.

This negative impact may partially be offset by the Company’s ability to lower its funding costs in response to an FRB rate cut.

However, the Company may be unable to significantly lower its funding costs due to a highly competitive rate environment for deposits.

Conversely, market interest rate increases would normally result in increased interest rates on our SOFR-based, prime rate-based and AMERIBOR-based loans.

As of June 30 , 2025, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to have a modestly positive impact on the Company’s net interest income, while declining interest rates are expected to have a mostly neutral impact on net interest income.

As of September 30 , 2025, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to have a modestly positive impact on the Company’s net interest income, while declining interest rates are expected to have a mostly neutral impact on net interest income.

Any negative impact of a falling Federal Funds rate and other market interest rates also falling could be more pronounced if we are not able to decrease non-maturity deposit rates accordingly.

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Operating expenses consist primarily of salaries and employee benefits, occupancy-related expenses, expenses related to foreclosed assets, postage, FDIC deposit insurance, advertising and public relations, telephone, professional fees, office expenses and other general operating expenses.

Details of the current period changes in non-interest income and non-interest expense are provided below, under “Results of Operations and Comparison for the Three and Six Months Ended June 30 , 2025 and 2024.”

Details of the current period changes in non-interest income and non-interest expense are provided below, under “Results of Operations and Comparison for the Three and Nine Months Ended September 30 , 2025 and 2024.”

Effect of Federal Laws and Regulations

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Business Initiatives

Technology updates and advancements continue with the Company’s current core provider.

Projects involving a full array of products and services are moving forward, with completions expected beginning in the third quarter of 2025 and continuing into 2026.

The Company installed 10 ITM units in the St.

market, replacing existing end-of-life ATM units.

The ITMs, all located at banking center locations, offer customers live teller services, extended banking hours, and services beyond those traditionally available via an ATM.

Technology initiatives and advancements continue with the Company’s current core provider.Projects to improve customer-facing online services and deliver a full overhaul of the Company’s treasury management services platform have moved, or are soon scheduled to move, to the trial phase, while foundational projects focused on fostering system efforts and innovations have launched.

Construction of the Company’s new banking center at 723 N.

Benton in Springfield, Mo., to replace the existing facility at that location, began in March 2025 and is on schedule for completion in the fourth quarter of 2025.

The new facility, designed as a next-generation banking center, will allow for flexibility in testing new designs, processes, technology and tools, balanced with customer convenience.

The Company has 11 other banking centers and an Express Center in Springfield.

Benton in Springfield, Mo., is complete, with a grand opening held in late October 2025.

The new facility, designed as a next-generation banking center to replace a facility previously existing at that location, features customer-centered designs, tools and technology, and will allow the Company to test new processes and innovations.

The location is one of 12 banking centers the Company operates in Springfield, in addition to a drive-thru Express Center.

Headquartered in Springfield, Missouri, Great Southern offers a broad range of banking services to customers.

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is listed on the Nasdaq Global Select Market under the symbol “GSBC.”

Comparison of Financial Condition at June 30, 2025 and December 31, 2024

During the six months ended June 30, 2025, the Company’s total assets decreased by $127.0 million to $5.85 billion.

The decrease was primarily in loans, partially offset by an increase in cash and cash equivalents.

Cash and cash equivalents were $245.9 million at June 30, 2025, an increase of $50.2 million, or 25.6%, from $195.8 million at December 31, 2024.

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

During the nine months ended September 30, 2025, the Company’s total assets decreased by $243.8 million to $5.74 billion.

The decrease was primarily due to a decrease in net loans.

Cash and cash equivalents were $196.2 million at September 30, 2025, an increase of $479,000, or 0.2%, from $195.8 million at December 31, 2024.

The Company’s available-for-sale securities decreased $2.0 million, or 0.4%, compared to December 31, 2024.

This decrease is related to monthly principal payments on investment securities, partially offset by purchases of investment securities and increases in market value of the available-for-sale securities.

The available-for-sale securities portfolio was 9.0% of total assets at June 30, 2025 and 8.9% of total assets at December 31, 2024.

The available-for-sale securities portfolio was 9.3% of total assets at September 30, 2025 and 8.9% of total assets at December 31, 2024.

The Company’s held-to-maturity securities decreased $6.1 million, or 3.3%, compared to December 31, 2024.

The decrease was primarily due to normal monthly payments received related to the portfolio of mortgage-backed securities and collateralized mortgage obligations.

The held-to-maturity securities portfolio was 3.1% of total assets at both June 30, 2025 and December 31, 2024.

Net loans decreased $156.1 million from December 31, 2024, to $4.53 billion at June 30, 2025.

This decrease was primarily in construction loans ($79.1 million decrease), commercial real estate loans ($56.1 million decrease), commercial business loans ($25.2 million decrease) and one- to four-family residential loans ($23.0 million decrease), partially offset by an increase in other residential (multi-family) loans ($28.7 million increase).

The decrease in construction loans primarily related to the completion of projects, with the loans then being paid off or retained by the Bank and moving to other loan categories.

The decrease in commercial real estate loans was primarily related to a few large loan payoffs in 2025.

The pipeline of the unfunded portion of loans and formal loan commitments remained strong at June 30, 2025, with the largest portion of these unfunded balances represented by the unfunded portion of outstanding construction loans ($626.0 million).

Total liabilities decreased $149.8 million from December 31, 2024, to $5.23 billion at June 30, 2025.

This decrease was primarily due to the repayment of the BTFP borrowings in January 2025 and the repayment of subordinated notes in June 2025, partially offset by an increase in transaction account deposits and brokered deposits.

Total deposits increased $78.6 million, or 1.7%, from $4.61 billion at December 31, 2024 to $4.68 billion at June 30, 2025.

Transaction account balances increased $35.5 million, from $3.06 billion at December 31, 2024 to $3.09 billion at June 30, 2025.

This decrease was primarily due to normal monthly payments received related to the portfolio of mortgage-backed securities and collateralized mortgage obligations.

The held-to-maturity securities portfolio was 3.2% of total assets at September 30, 2025 and 3.1% of total assets at December 31, 2024.

Net loans decreased $222.7 million from December 31, 2024, to $4.47 billion at September 30, 2025.

This decrease was primarily in construction loans ($122.7 million decrease), other residential (multi-family) loans ($63.7 million decrease), one- to four-family residential loans ($36.6 million decrease) and commercial real estate loans ($12.8 million decrease).

The decrease in construction loans primarily related to the completion of projects, with the loans then being paid off or retained by the Bank and moved to other loan categories.

The decrease in other residential (multi-family) loans was primarily related to a few large loan payoffs in 2025.

The pipeline of the unfunded portion of loans and formal loan commitments remained strong at September 30, 2025, with the largest portion of these unfunded balances represented by the unfunded portion of outstanding construction loans ($582.4 million).

Total liabilities decreased $277.1 million from December 31, 2024, to $5.10 billion at September 30, 2025.

This decrease was primarily due to the repayment of the BTFP borrowings in January 2025, the repayment of subordinated notes in June 2025, and a decrease in the balance of time deposits, partially offset by an increase in transaction account deposits.

Total deposits decreased $77.5 million, or 1.7%, from $4.61 billion at December 31, 2024 to $4.53 billion at September 30, 2025.

Transaction account balances increased $66.7 million, from $3.06 billion at December 31, 2024 to $3.12 billion at September 30, 2025.

Total interest-bearing checking accounts and non-interest-bearing checking accounts increased $54.3 million and $12.4 million, respectively.

Retail certificates of deposit decreased $18.1 million compared to December 31, 2024, to $757.7 million at June 30, 2025, due to competition for these types of deposits.

Brokered deposits increased $61.2 million to $833.3 million at June 30, 2025, compared to $772.1 million at December 31, 2024.

Retail certificates of deposit decreased $52.1 million compared to December 31, 2024, to $723.7 million at September 30, 2025, due to competition for these types of deposits.

Brokered deposits decreased $92.1 million to $680.0 million at September 30, 2025, compared to $772.1 million at December 31, 2024.

Brokered deposits were utilized to offset reductions in other deposit categories and to repay BTFP borrowings.

The Company has the capacity to further expand its use of brokered deposits if it chooses to do so.

Of the total brokered deposits at June 30, 2025, $300.0 million were floating rate deposits, which adjust daily, based on the effective federal funds rate index.

Of the total brokered deposits at September 30, 2025, $300.0 million were floating rate deposits, which adjust daily, based on the effective federal funds rate index.

The Company also utilized brokered deposits with maturities within six months as part of its interest rate risk management strategies.

The Company’s term FHLBank advances were $-0- at both June 30, 2025 and December 31, 2024.

At June 30, 2025 and December 31, 2024, there were no borrowings from the FHLBank, other than overnight borrowings, which are included in the short-term borrowings category.

The Company’s term FHLBank advances were $-0- at both September 30, 2025 and December 31, 2024.

At September 30, 2025 and December 31, 2024, there were no borrowings from the FHLBank, other than overnight borrowings, which are included in the short-term borrowings category.

The Company may utilize both overnight borrowings and short-term FHLBank advances depending on relative interest rates.

Short-term borrowings and other interest-bearing liabilities decreased $144.3 million from $514.2 million at December 31, 2024 to $369.9 million at June 30, 2025.

At June 30, 2025, $369.0 million of this total was in overnight borrowings from the FHLBank, which were used to purchase investment securities and to redeem the subordinated notes, compared to $333.0 million of overnight borrowings from the FHLBank at December 31, 2024.

At June 30, 2025 and December 31, 2024, there was $-0- and $180.0 million, respectively, in BTFP borrowings.

Short-term borrowings and other interest-bearing liabilities decreased $88.3 million from $514.2 million at December 31, 2024 to $425.9 million at September 30, 2025.

At September 30, 2025, $425.0 million of this total was in overnight borrowings from the FHLBank, which were used to purchase investment securities and to offset decreases in time deposits and brokered deposits, compared to $333.0 million of overnight borrowings from the FHLBank at December 31, 2024.

At September 30, 2025 and December 31, 2024, there was $-0- and $180.0 million, respectively, in BTFP borrowings.

The BTFP borrowing, which had a fixed interest rate of 4.83%, was repaid in full upon maturity in January 2025.

Securities sold under reverse repurchase agreements with customers decreased $9.6 million, or 15.0%, from $64.4 million at December 31, 2024 to $54.8 million at June 30, 2025.

Securities sold under reverse repurchase agreements with customers decreased $21.8 million, or 33.8%, from $64.4 million at December 31, 2024 to $42.6 million at September 30, 2025.

These balances fluctuate over time based on customer demand for this product.

Total stockholders’ equity increased $22.8 million, from $599.6 million at December 31, 2024 to $622.4 million at June 30, 2025.

Stockholders’ equity increased due to net income of $36.9 million for the six months ended June 30, 2025 and rose by $2.0 million due to stock option exercises during the period.

Accumulated other comprehensive loss (a reduction in equity) decreased $13.0 million during the six months ended June 30, 2025 (thereby increasing total stockholders’ equity), primarily due to increases in the fair value of available-for-sale investment securities and the fair value of cash flow hedges, as a result of decreased market interest rates.

Total stockholders’ equity increased $33.3 million, or 5.6%, from $599.6 million at December 31, 2024 to $632.9 million at September 30, 2025.

Stockholders’ equity increased due to net income of $54.7 million for the nine months ended September 30, 2025 and rose by $4.2 million due to stock option exercises during the period.

Additionally, accumulated other comprehensive loss (a reduction in equity) decreased $18.5 million during the nine months ended September 30, 2025 (thereby increasing total stockholders’ equity), primarily due to increases in the fair value of available-for-sale investment securities and the fair value of cash flow hedges, as a result of decreased market interest rates.

Partially offsetting these changes were repurchases of the Company’s common stock totaling $30.0 million and dividends declared on common stock of $14.0 million.

Comparison of Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Net income was $19.8 million for the three months ended June 30, 2025 compared to $17.0 million for the three months ended June 30, 2024.

This increase of $2.8 million, or 16.5%, was primarily due to an increase in net interest income of $4.2 million, or 8.9%, and a decrease in non-interest expense of $1.4 million, or 3.9%, partially offset by a decrease in non-interest income of $1.6 million, or 16.5%, an increase in income tax expense of $633,000, or 16.4%, and an increase in provisions for credit losses and unfunded commitments of $497,000, or 81.9%.

Net income was $36.9 million for the six months ended June 30, 2025 compared to $30.4 million for the six months ended June 30, 2024.

This increase of $6.5 million, or 21.6%, was primarily due to an increase in net interest income of $8.7 million, or 9.5%, a decrease in non-interest expense of $1.0 million, or 1.4%, and decreases in provisions for credit losses and unfunded commitments of $481,000, partially offset by an increase in income tax expense of $1.8 million, or 25.1%, and a decrease in non-interest income of $1.8 million, or 11.0%.

Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Net income was $17.8 million for the three months ended September 30, 2025 compared to $16.5 million for the three months ended September 30, 2024.

This increase of $1.3 million, or 7.7%, was primarily due to an increase in net interest income of $2.8 million, or 5.8%, a decrease in provisions for credit losses on loans and unfunded commitments of $1.5 million, or 133.3%, and an increase in non-interest income of $70,000, or 1.0%, partially offset by an increase in non-interest expense of $2.4 million, or 7.1%, and an increase in income tax expense of $723,000, or 20.0%.

Net income was $54.7 million for the nine months ended September 30, 2025 compared to $46.9 million for the nine months ended September 30, 2024.

This increase of $7.8 million, or 16.7%, was primarily due to an increase in net interest income of $11.5 million, or 8.2%, and decreases in provisions for credit losses on loans and unfunded commitments of $2.0 million, or 172.2%, partially offset by an increase in income tax expense of $2.5 million, or 23.3%, an increase in non-interest expense of $1.4 million, or 1.3%, and a decrease in non-interest income of $1.8 million, or 7.5%.

Total Interest Income

Total interest income increased $48,000, or 0.1%, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

The increase was due to a $513,000, or 7.7%, increase in interest income on investment securities and other interest-earning assets, mostly offset by a $465,000, or 0.6%, decrease in interest income on loans.

Interest income from investment securities and other interest-earning assets increased during the three months ended June 30, 2025 compared to the same period in 2024 due to higher average balances and average rates of interest.

Interest income from loans decreased during the three months ended June 30, 2025 compared to the same period in 2024 due to lower average rates of interest, partially offset by higher average balances.

Total interest income increased $2.9 million, or 1.8%, during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase was due to a $1.5 million, or 1.1%, increase in interest income on loans and a $1.4 million, or 10.6%, increase in interest income on investment securities and other interest-earning assets.

These increases were due to higher average balances for both loans and investment securities, along with higher average rates of interest on investment securities.

Total interest income decreased $4.7 million, or 5.6%, during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease was due to a $4.4 million, or 5.8%, decrease in interest income on loans and a $320,000, or 4.3%, decrease in interest income on investment securities and other interest-earning assets.

Interest income from loans decreased during the three months ended September 30, 2025 compared to the same period in 2024 due to lower average balances and average rates of interest.

Interest income from investment securities and other interest-earning assets decreased during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to lower average balances.

Total interest income decreased $1.8 million, or 0.8%, during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The decrease was due to a $2.9 million, or 1.3%, decrease in interest income on loans, partially offset by a $1.1 million, or 5.2%, increase in interest income on investment securities and other interest-earning assets.

Interest income from loans decreased during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to lower average rates of interest.

Interest income from investment securities increased during the nine months ended September 30, 2025 compared to the same period in 2024 due to both higher average rates of interest and higher average balances.

Interest income from other interest-earning assets decreased during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to lower average rates of interest.

Interest Income – Loans

During the three months ended June 30, 2025 compared to the three months ended June 30, 2024, interest income on loans decreased $465,000.

Interest income on loans decreased $943,000 due to a decrease in average yield on loans from 6.37% during the three months ended June 30, 2024 to 6.26% during the three months ended June 30, 2025.

During the three months ended September 30, 2025 compared to the three months ended September 30, 2024, interest income on loans decreased $4.4 million.

Of the $4.4 million decrease in interest income on loans, $2.5 million was due to a decrease in average yield on loans, from 6.44% during the three months ended September 30, 2024 to 6.21% during the three months ended September 30, 2025.

This decrease was primarily due to a reduction in the federal funds rate in the latter portion of 2024.

Partially offsetting this decrease, interest income on loans increased $478,000 due to higher average balances, which grew from $4.69 billion during the three months ended June 30, 2024, to $4.73 billion during the three months ended June 30, 2025.

The remaining decrease in interest income on loans of $1.9 million was due to lower average loan balances, which fell from $4.72 billion during the three months ended September 30, 2024, to $4.60 billion during the three months ended September 30, 2025.

Since the end of 2022, loan originations and net loan growth have been muted;

however, some loan growth has come as a result of the funding of previously approved but unfunded balances on construction loans and a slowdown in loan prepayments since 2023, due to higher market interest rates.

During the six months ended June 30, 2025, compared to the six months ended June 30, 2024, interest income on loans increased $1.5 million.

Higher average loan balances, which grew from $4.68 billion during the six months ended June 30, 2024, to $4.74 billion during the six months ended June 30, 2025, accounted for $1.6 million of the increase in interest income on loans.

Partially offsetting that increase, interest income on loans decreased $95,000 due to a decrease in average interest rates on loans from 6.25% during the six months ended June 30, 2024, to 6.24% during the six months ended June 30, 2025.

however, some loan growth has come as a result of the funding of previously approved but unfunded balances on construction loans.

Loan payoffs increased in the second and third quarters of 2025.

During the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, interest income on loans decreased $2.9 million.

Interest income on loans decreased $3.0 million due to a decrease in average interest rates on loans from 6.31% during the nine months ended September 30, 2024, to 6.23% during the nine months ended September 30, 2025.

Partially offsetting that decrease, interest income on loans increased $101,000 due to higher average loan balances, which grew from $4.69 billion during the nine months ended September 30, 2024, to $4.70 billion during the nine months ended September 30, 2025.

In October 2018, the Company entered into an interest rate swap transaction which was terminated in March 2020.

Upon termination, the Company received $45.9 million, inclusive of accrued but unpaid interest, from its swap counterparty.

The net amount, after deducting accrued interest and deferred income taxes, is being accreted to interest income on loans monthly until the originally scheduled termination date of October 6, 2025.

After this date, the Company will no longer have the benefit of that income from the terminated swap.

The Company recorded interest income related to the interest rate swap of $2.0 million in each of the three months ended June 30, 2025 and 2024.

The Company recorded interest income related to the interest rate swap of $4.0 million and $4.1 million during the six months ended June 30, 2025 and 2024, respectively.

At June 30, 2025, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income ratably in future periods through October 6, 2025, after which no further interest income will be realized.

The net amount, after deducting accrued interest and deferred income taxes, was accreted to interest income on loans monthly until the originally scheduled termination date of October 6, 2025.

After this date, the Company no longer has the benefit of that income from the terminated swap.

The Company recorded interest income related to the interest rate swap of $2.0 million in each of the three months ended September 30, 2025 and 2024.

The Company recorded interest income related to the interest rate swap of $6.1 million in each of the nine months ended September 30, 2025 and 2024, respectively.

In March 2022, the Company entered into another interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.

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If one-month USD-LIBOR/SOFR exceeded the fixed rate of interest, the Company paid net settlements to the counterparty and recorded those net payments as a reduction of interest income on loans.

The Company recorded a reduction of loan interest income related to this swap transaction of $1.9 million in the six months ended June 30, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $1.9 million in the nine months ended September 30, 2024.

Since reaching its contractual termination date on March 1, 2024, there has been no further interest income impact related to this swap.

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If the floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to the counterparty and records those net payments as a reduction of interest income on loans.

The Company recorded a reduction of loan interest income related to these swap transactions of $1.8 million and $2.8 million in the three months ended June 30, 2025 and 2024, respectively.

The Company recorded a reduction of loan interest income related to these swap transactions of $3.5 million and $5.5 million in the six months ended June 30, 2025 and 2024, respectively.

At June 30, 2025, the USD-Prime rate was 7.50% and the one-month USD-SOFR OIS rate was 4.31926%.

The Company recorded a reduction of loan interest income related to these swap transactions of $1.8 million and $2.7 million in the three months ended September 30, 2025 and 2024, respectively.

The Company recorded a reduction of loan interest income related to these swap transactions of $5.3 million and $8.3 million in the nine months ended September 30, 2025 and 2024, respectively.

At September 30, 2025, the USD-Prime rate was 7.25% and the one-month USD-SOFR OIS rate was 4.30757%.

If market interest rates remain near or above their current levels, the Company’s interest rate swaps will continue to have a negative impact on net interest income.

Market interest rate decreases will reduce the negative impact of these swaps.

Interest Income – Investments and Other Interest-earning Assets

Interest income on investments increased $752,000 in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Average balances increased from $696.2 million during the three months ended June 30, 2024, to $727.3 million during the three months ended June 30, 2025 resulting in an increase in interest income of $251,000.

Average balances of securities increased primarily due to investment securities purchases in 2024 and 2025, partially offset by normal monthly payments received related to the portfolio of U.S.

Interest income on investments decreased $11,000 in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Average balances decreased from $758.8 million during the three months ended September 30, 2024, to $722.9 million during the three months ended September 30, 2025, reducing interest income by $216,000.

Average balances of securities decreased primarily due to normal monthly payments received related to the portfolio of U.S.

Government agency mortgage-backed securities and collateralized mortgage obligations.

Interest income on investments also increased $501,000 as a result of higher average interest rates, from 3.09% during the three months ended June 30, 2024, to 3.36% during the three months ended June 30, 2025.

The securities purchased in 2024 and 2025 had higher interest rates than the rest of the portfolio.

Interest income on investments increased $1.8 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Average balances increased from $683.0 million during the six months ended June 30, 2024, to $732.7 million during the six months ended June 30, 2025, resulting in an increase in interest income of $772,000.

Interest income on investments increased $205,000 as a result of higher average interest rates, from 3.19% during the three months ended September 30, 2024, to 3.34% during the three months ended September 30, 2025.

Securities purchased in 2024 and 2025 had higher interest rates than the average rates for the portfolio.

Interest income on investments increased $1.8 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Interest income on investments increased $1.3 million as a result of higher average interest rates, from 3.10% during the nine months ended September 30, 2024, to 3.35% during the nine months ended September 30, 2025.

Average balances increased from $708.4 million during the nine months ended September 30, 2024, to $729.4 million during the nine months ended September 30, 2025, increasing interest income by $493,000.

Average balances of securities increased primarily due to investment securities purchases in 2024 and 2025, partially offset by normal monthly payments received related to the portfolio of U.S.

Government agency mortgage-backed securities and collateralized mortgage obligations.

Interest income on investments also increased $1.0 million as a result of higher average interest rates, from 3.05% during the six months ended June 30, 2024, to 3.35% during the six months ended June 30, 2025.

Interest income on other interest-earning assets decreased $239,000 in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Average interest rates decreased from 5.31% during the three months ended June 30, 2024, to 4.30% during the three months ended June 30, 2025 resulting in a decrease in interest income of $241,000.

The decline in the average interest rate was directly attributable to the decrease in the federal funds rate in the latter portion of 2024.

Interest income increased $2,000 as a result of an increase in average balances from $97.3 million during the three months ended June 30, 2024, to $97.5 million during the three months ended June 30, 2025.

Interest income on other interest-earning assets decreased $445,000 in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Average interest rates fell from 5.26% during the six months ended June 30, 2024, to 4.27% during the six months ended June 30, 2025, resulting in a decrease of $508,000 in interest income.

Partially offsetting this decrease, interest income increased $63,000 as a result of an increase in average balances, from $98.9 million during the six months ended June 30, 2024, to $101.2 million during the six months ended June 30, 2025.

Interest income on other interest-earning assets decreased $309,000 in the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Average interest rates decreased from 5.27% during the three months ended September 30, 2024, to 4.14% during the three months ended September 30, 2025, reducing interest income by $263,000.

The decline in the average interest rate was directly attributable to the decrease in the federal funds rate in the latter portion of 2024 and during the three months ended September 30, 2025.

Interest income decreased $46,000 as a result of a decrease in average balances from $96.6 million during the three months ended September 30, 2024, to $93.0 million during the three months ended September 30, 2025.

Interest income on other interest-earning assets decreased $753,000 in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Average interest rates fell from 5.26% during the nine months ended September 30, 2024, to 4.23% during the nine months ended September 30, 2025, resulting in a decrease of $766,000 in interest income.

Partially offsetting this decrease, interest income increased $13,000 as a result of an increase in average balances, from $98.2 million during the nine months ended September 30, 2024, to $98.5 million during the nine months ended September 30, 2025.

Total Interest Expense

Total interest expense decreased $4.1 million, or 12.0%, during the three months ended June 30, 2025, when compared with the three months ended June 30, 2024.

Interest expense on deposits decreased $3.4 million, or 12.3%, interest expense on short-term borrowings decreased $399,000, or 9.1%, interest expense on subordinated notes decreased $196,000, or 17.7%, interest expense on subordinated debentures issued to capital trusts decreased $65,000, or 14.3%, and interest expense on securities sold under reverse repurchase agreements decreased $22,000, or 5.6%.

Total interest expense decreased $5.8 million, or 8.6%, during the six months ended June 30, 2025, when compared with the six months ended June 30, 2024.

Interest expense on deposits decreased $6.5 million, or 11.6%, interest expense on subordinated notes decreased $196,000, or 8.9%, interest expense on subordinated debentures issued to capital trusts decreased $137,000, or 15.1%, interest expense on short-term borrowings increased $1.0 million, or 13.6%, and interest expense on securities sold under reverse repurchase agreements increased $16,000, or 2.2%.

Total interest expense decreased $7.5 million, or 21.0%, during the three months ended September 30, 2025, when compared with the three months ended September 30, 2024.

Interest expense on deposits decreased $4.5 million, or 15.8%, interest expense on short-term borrowings decreased $1.8 million, or 32.9%, interest expense on subordinated notes decreased $1.1 million, or 100.0%, interest expense on securities sold under reverse repurchase agreements decreased $88,000, or 22.9%, and interest expense on subordinated debentures issued to capital trusts decreased $49,000, or 10.7%.

Total interest expense decreased $13.3 million, or 13.0%, during the nine months ended September 30, 2025, when compared with the nine months ended September 30, 2024.

Interest expense on deposits decreased $11.0 million, or 13.1%, interest expense on subordinated notes decreased $1.3 million, or 39.3%, interest expense on short-term borrowings decreased $763,000, or 6.0%, interest expense on subordinated debentures issued to capital trusts decreased $186,000, or 13.6%, and interest expense on securities sold under reverse repurchase agreements decreased $72,000, or 6.5%.

Interest Expense – Deposits

Interest expense on demand and savings deposits decreased $2.0 million during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

Average rates of interest decreased from 1.76% in the three months ended June 30, 2024 to 1.40% in the three months ended June 30, 2025, resulting in a $2.0 million decrease in interest expense.

Interest expense on demand and savings deposits decreased $1.7 million during the three months ended September 30, 2025, when compared to the three months ended September 30, 2024.

Average rates of interest decreased from 1.80% in the three months ended September 30, 2024 to 1.46% in the three months ended September 30, 2025, resulting in a $1.9 million decrease in interest expense.

Interest rates paid on demand deposits were lower in the 2025 period due to the Company strategically lowering rates throughout the second half of 2024 and all of 2025, as market rates decreased.

The average balances of demand and savings deposits decreased from $2.23 billion in the three months ended June 30, 2024 to $2.22 billion in the three months ended June 30, 2025, resulting in a decrease in interest expense on demand and savings deposits of $39,000.

Interest expense on demand and savings deposits decreased $3.7 million during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The average rates of interest decreased from 1.74% in the six months ended June 30, 2024 to 1.41% in the six months ended June 30, 2025, resulting in a $3.6 million decrease in interest expense.

The average balances of demand and savings deposits decreased from $2.23 billion in the six months ended June 30, 2024, to $2.22 billion in the six months ended June 30, 2025, resulting in a decrease of $48,000 in interest expense.

Interest expense on time deposits decreased $2.6 million during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average balances of time deposits decreased from $894.5 million during the three months ended June 30, 2024 to $757.6 million in the three months ended June 30, 2025, resulting in a decrease in interest expense of $1.3 million.

The average rates of interest on time deposits decreased from 4.08% in the three months ended June 30, 2024, to 3.45% in the three months ended June 30, 2025, resulting in a decrease in interest expense of $1.3 million.

Partially offsetting this decrease, the average balances of demand and savings deposits increased from $2.21 billion in the three months ended September 30, 2024 to $2.26 billion in the three months ended September 30, 2025, resulting in an increase in interest expense on demand and savings deposits of $215,000.

Interest expense on demand and savings deposits decreased $5.4 million during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The average rates of interest decreased from 1.76% in the nine months ended September 30, 2024 to 1.43% in the nine months ended September 30, 2025, resulting in a $5.6 million decrease in interest expense.

Partially offsetting this decrease, the average balances of demand and savings deposits increased from $2.22 billion in the nine months ended September 30, 2024, to $2.24 billion in the nine months ended September 30, 2025, resulting in an increase of $161,000 in interest expense.

Interest expense on time deposits decreased $2.4 million during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

The average balances of time deposits decreased from $856.4 million during the three months ended September 30, 2024 to $746.5 million in the three months ended September 30, 2025, resulting in a decrease in interest expense of $1.0 million.

The average rates of interest on time deposits decreased from 4.02% in the three months ended September 30, 2024, to 3.34% in the three months ended September 30, 2025, resulting in a decrease in interest expense of $1.3 million.

A large portion of the Company’s certificate of deposit portfolio matures within six months and therefore reprices fairly quickly;

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Competition for time deposits remains significant in our market areas, and upon maturity, a portion of these deposits may be redeemed by customers.

Interest expense on time deposits decreased $5.0 million during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The average balances of time deposits decreased from $916.1 million during the six months ended June 30, 2024 to $764.8 million in the six months ended June 30, 2025, resulting in a decrease in interest expense of $2.8 million during the period.

Interest expense on time deposits decreased $2.2 million as a result of a decrease in average rates of interest from 4.00% in the six months ended June 30, 2024, to 3.49% in the six months ended June 30, 2025.

Interest expense on time deposits decreased $7.4 million during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The average balances of time deposits decreased from $896.1 million during the nine months ended September 30, 2024 to $758.6 million in the nine months ended September 30, 2025, resulting in a decrease in interest expense of $3.8 million during the period.

Interest expense on time deposits decreased $3.5 million as a result of a decrease in average rates of interest from 4.01% in the nine months ended September 30, 2024, to 3.44% in the nine months ended September 30, 2025.

As noted above, a large portion of the Company’s certificate of deposit portfolio matures within six months and therefore reprices fairly quickly.

Older certificates of deposit that renewed or were replaced with new deposits generally resulted in the Company paying a lower rate of interest compared to the year-ago period.

Interest expense on brokered deposits increased $1.1 million during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average balance of brokered deposits increased from $683.3 million during the three months ended June 30, 2024 to $895.3 million during the three months ended June 30, 2025, resulting in an increase in interest expense of $2.1 million during the period.

Partially offsetting this increase, interest expense on brokered deposits decreased $957,000 due to average rates of interest that decreased from 5.25% in the three months ended June 30, 2024 to 4.50% in the three months ended June 30, 2025.

Brokered deposits added in the second half of 2024 and the first half of 2025 were at lower market rates than brokered deposits previously issued.

Interest expense on brokered deposits decreased $406,000 during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

Interest expense on brokered deposits decreased $1.9 million due to average rates of interest that decreased from 5.23% in the three months ended September 30, 2024 to 4.51% in the three months ended September 30, 2025.

Brokered deposits added in the second half of 2024 and throughout 2025 were at lower market rates than brokered deposits previously issued.

The Company uses brokered deposits of select maturities and interest rate structures from time to time to supplement its various funding channels and to manage interest rate risk.

A portion of the Company’s brokered deposits are floating rate, and the rate resets with changes to the effective federal funds rate.

Interest expense on brokered deposits increased $2.2 million during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

Interest expense on brokered deposits increased $4.0 million due to an increase in average balances from $686.1 million during the six months ended June 30, 2024 to $894.0 million during the six months ended June 30, 2025.

Partially offsetting this increase, interest expense on brokered deposits decreased $1.8 million due to average rates of interest that decreased from 5.25% in the six months ended June 30, 2024 to 4.54% in the six months ended June 30, 2025.

Partially offsetting this decrease, the average balance of brokered deposits increased from $745.4 million during the three months ended September 30, 2024 to $826.0 million during the three months ended September 30, 2025, resulting in an increase in interest expense of $1.5 million during the period.

Interest expense on brokered deposits increased $1.8 million during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

Interest expense on brokered deposits increased $4.3 million due to an increase in average balances from $706.0 million during the nine months ended September 30, 2024 to $871.1 million during the nine months ended September 30, 2025.

Partially offsetting this increase, interest expense on brokered deposits decreased $2.5 million due to average rates of interest that decreased from 5.24% in the nine months ended September 30, 2024 to 4.53% in the nine months ended September 30, 2025.

As noted above, brokered deposits added during 2024 and 2025 were at lower market rates than brokered deposits previously issued.

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Subordinated Debentures Issued to Capital Trusts and Subordinated Notes

FHLBank term advances were not utilized during the three or six months ended June 30, 2025 and 2024.

Interest expense on reverse repurchase agreements decreased $22,000 during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average balance of repurchase agreements decreased from $77.0 million in the three months ended June 30, 2024 to $65.6 million in the three months ended June 30, 2025, due to changes in customers’ desire for this product, which can fluctuate, resulting in a decrease in interest expense of $75,000 during the period.

Interest expense on reverse repurchase agreements increased $53,000 due to higher average interest rates during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average rate of interest was 2.06% for the three months ended June 30, 2024 compared to 2.27% for the three months ended June 30, 2025, due to changes in the mix of customer balances in these products.

Interest expense on reverse repurchase agreements increased $16,000 during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

Interest expense on reverse repurchase agreements increased $21,000 due to higher average interest rates during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The average rate of interest was 1.93% for the six months ended June 30, 2024 compared to 2.03% for the six months ended June 30, 2025, due to changes in the mix of customer balances in these products.

The average balance of repurchase agreements decreased from $75.7 million in the six months ended June 30, 2024 to $74.0 million in the six months ended June 30, 2025, due to changes in customers’ desire for this product, which can fluctuate, resulting in a decrease in interest expense of $5,000.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities decreased $399,000 during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average rate of interest on short-term borrowings and other interest-bearing liabilities decreased from 5.18% for the three months ended June 30, 2024 to 4.59% for the three months ended June 30, 2025, resulting in a decrease in interest expense of $502,000 during the period.

Interest rates on borrowings decreased in the latter portion of 2024 after the federal funds rate was cut by 100 basis points from September to December 2024.

Partially offsetting this decrease, interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities increased $103,000 due to higher average balances during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The average balance of short-term borrowings and other interest-bearing liabilities increased from $339.3 million in the three months ended June 30, 2024 to $347.3 million in the three months ended June 30, 2025.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities increased $1.0 million during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The average balance of short-term borrowings and other interest-bearing liabilities increased from $290.4 million in the six months ended June 30, 2024 to $369.8 million in the six months ended June 30, 2025, resulting in an increase in interest expense of $1.6 million during the period.

Partially offsetting this increase, interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities decreased $634,000 due to lower average rates of interest during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The average rate of interest was 5.14% for the six months ended June 30, 2024, compared to 4.59% for the six months ended June 30, 2025.

During the three months ended June 30, 2025, compared to the three months ended June 30, 2024, interest expense on subordinated debentures issued to capital trusts decreased $65,000 due to lower average interest rates.

The average interest rate was 6.05% in the three months ended June 30, 2025 compared to 7.08% in the three months ended June 30, 2024.

The subordinated debentures are variable-rate debentures, which bear interest at an average rate of three-month SOFR (originally LIBOR), plus 1.60%, adjusted quarterly, which was 6.14% at June 30, 2025.

FHLBank term advances were not utilized during the three or nine months ended September 30, 2025 and 2024.

Interest expense on reverse repurchase agreements decreased $88,000 during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

The average balance of repurchase agreements decreased from $76.6 million in the three months ended September 30, 2024 to $56.8 million in the three months ended September 30, 2025, due to fluctuations in customers’ desire for this product, resulting in a decrease in interest expense of $103,000 during the period.

Interest expense on reverse repurchase agreements increased $15,000 due to higher average interest rates during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

The average rate of interest was 2.00% for the three months ended September 30, 2024 compared to 2.08% for the three months ended September 30, 2025, due to changes in the mix of customer balances in these products.

Interest expense on reverse repurchase agreements decreased $72,000 during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The average balance of repurchase agreements decreased from $76.0 million in the nine months ended September 30, 2024 to $68.2 million in the nine months ended September 30, 2025, due to fluctuations in customers’ desire for this product, resulting in a decrease in interest expense of $422,000.

Interest expense on reverse repurchase agreements increased $350,000 due to higher average interest rates during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The average rate of interest was 1.95% for the nine months ended September 30, 2024 compared to 2.04% for the nine months ended September 30, 2025, due to changes in the mix of customer balances in these products.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities decreased $1.8 million during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities decreased $1.1 million due to lower average balances during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

The average balance of short-term borrowings and other interest-bearing liabilities decreased from $408.7 million in the three months ended September 30, 2024 to $315.4 million in the three months ended September 30, 2025.

The Company chose to utilize more brokered deposits versus short-term borrowings in the 2025 period.

The average rate of interest on short-term borrowings and other interest-bearing liabilities decreased from 5.24% for the three months ended September 30, 2024 to 4.55% for the three months ended September 30, 2025, resulting in a decrease in interest expense of $649,000 during the period.

Interest rates on borrowings decreased after the federal funds rate was cut by 100 basis points from September to December 2024 and 25 basis points in September 2025.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank and BTFP borrowings from FRBSTL) and other interest-bearing liabilities decreased $763,000 during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

Interest expense on short-term borrowings and other interest-bearing liabilities decreased $1.7 million due to lower average rates of interest during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The average rate of interest was 5.18% for the nine months ended September 30, 2024, compared to 4.58% for the nine months ended September 30, 2025.

The average balance of short-term borrowings and other interest-bearing liabilities increased from $330.2 million in the nine months ended September 30, 2024 to $351.5 million in the nine months ended September 30, 2025, resulting in an increase in interest expense of $963,000 during the period.

During the three months ended September 30, 2025, compared to the three months ended September 30, 2024, interest expense on subordinated debentures issued to capital trusts decreased $49,000 due to lower average interest rates.

The average interest rate was 7.04% in the three months ended September 30, 2024, compared to 6.26% in the three months ended September 30, 2025.

There was no change in the average balance of the subordinated debentures between the 2024 and 2025 three-month periods.

During the six months ended June 30, 2025, compared to the six months ended June 30, 2024, interest expense on subordinated debentures issued to capital trusts decreased $137,000 due to lower average interest rates.

The average interest rate was 6.03% in the six months ended June 30, 2025 compared to 7.08% in the six months ended June 30, 2024.

During the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, interest expense on subordinated debentures issued to capital trusts decreased $186,000 due to lower average interest rates.

The average interest rate was 7.07% in the nine months ended September 30, 2024 compared to 6.11% in the nine months ended September 30, 2025.

The subordinated debentures are variable-rate debentures, as stated above.

There was no change in the average balance of the subordinated debentures between the 2024 and 2025 six-month periods.

There was no change in the average balance of the subordinated debentures between the 2024 and 2025 nine-month periods.

In June 2020, the Company issued $75.0 million of 5.50% fixed-to-floating rate subordinated notes due June 15, 2030.

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On June 15, 2025, the Company redeemed all $75.0 million aggregate principal amount of these subordinated notes.

Interest expense on subordinated notes decreased $196,000 when compared to the prior-year three and six month periods, primarily due to the redemption of the subordinated notes.

Interest expense on subordinated notes decreased $1.1 million and $1.3 million, respectively, when compared to the prior-year three- and nine-month periods, due to the redemption of the subordinated notes.

Net Interest Income

Net interest income for the three months ended June 30, 2025 increased $4.2 million to $51.0 million, compared to $46.8 million for the three months ended June 30, 2024.

Net interest margin was 3.68% in the three months ended June 30, 2025, compared to 3.43% in the three months ended June 30, 2024, an increase of 25 basis points, or 7.3%.

The Company experienced an increase in interest income on investment securities, a decrease in interest income on loans, a decrease in interest expense on deposits, a decrease in interest expense on short-term borrowings, a decrease in interest expense on subordinated notes, a decrease in interest expense on subordinated debentures issued to capital trust and a decrease in interest expense on securities sold under reverse repurchase agreements with customers.

Net interest income for the six months ended June 30, 2025 increased $8.7 million to $100.3 million, compared to $91.6 million for the six months ended June 30, 2024.

Net interest margin was 3.63% in the six months ended June 30, 2025, compared to 3.38% in the six months ended June 30, 2024, an increase of 25 basis points, or 7.4%.

The Company experienced an increase in interest income on loans, an increase in interest income on investment securities, a decrease in interest expense on deposits, a decrease in interest expense on subordinated notes, a decrease in interest expense on subordinated debentures issued to capital trust, an increase in interest expense on short-term borrowings and an increase in interest expense on securities sold under reverse repurchase agreements with customers.

The Company’s overall average interest rate spread increased 32 basis points, or 11.5%, from 2.77% during the three months ended June 30, 2024 to 3.09% during the three months ended June 30, 2025, due to a 42 basis point decrease in the weighted average rate paid on interest-bearing liabilities, partially offset by a 10 basis point decrease in the weighted average yield earned on interest-earning assets.

Net interest income for the three months ended September 30, 2025 increased $2.8 million to $50.8 million, compared to $48.0 million for the three months ended September 30, 2024.

Net interest margin was 3.72% in the three months ended September 30, 2025, compared to 3.42% in the three months ended September 30, 2024, an increase of 30 basis points, or 8.8%.

The Company experienced decreases in all interest income and interest expense categories, with the total decreases in interest expense outpacing the declines in interest income, primarily due to decreases in market interest rates.

Net interest income for the nine months ended September 30, 2025 increased $11.5 million to $151.1 million, compared to $139.6 million for the nine months ended September 30, 2024.

Net interest margin was 3.66% in the nine months ended September 30, 2025, compared to 3.39% in the nine months ended September 30, 2024, an increase of 27 basis points, or 8.0%.

The Company experienced an increase in interest income on investment securities and a decrease in interest income on loans.

In the nine-month period, the Company experienced decreases in all interest expense categories, with the total decreases in interest expense outpacing the declines in interest income, primarily due to decreases in market interest rates.

The Company’s overall average interest rate spread increased 39 basis points, or 14.2%, from 2.74% during the three months ended September 30, 2024 to 3.13% during the three months ended September 30, 2025, due to a 58 basis point decrease in the weighted average rate paid on interest-bearing liabilities, partially offset by a 19 basis point decrease in the weighted average yield earned on interest-earning assets.

In comparing the two periods, the yield on loans decreased 23 basis points, the yield on investment securities increased 15 basis points and the yield on other interest-earning assets decreased 113 basis points.

The rate paid on deposits decreased 49 basis points, the rate paid on reverse repurchase agreements increased 8 basis points, the rate paid on short-term borrowings and other interest-bearing liabilities decreased 69 basis points and the rate paid on subordinated debentures issued to capital trust decreased 78 basis points.

Interest rates earned on loans and paid on deposits are affected by the mix of the loan and deposit portfolios, the duration of loans and time deposits, the amount of fixed-rate and variable-rate loans and other repricing characteristics.

Average interest rates earned on loans and paid on deposits are affected by the mix of the loan and deposit portfolios, the duration of loans and time deposits, the amount of fixed-rate and variable-rate loans and other repricing characteristics.

In 2023, overall competition for deposits intensified as a few banks experienced significant liquidity issues in March and April 2023 and market rates moved higher more rapidly.

Overall competition for deposits remained elevated in 2024 and market interest rates were higher in 2024, until the federal funds rate was reduced in late 2024.

This resulted in lower market interest rates into the first half of 2025.

The Company’s overall average interest rate spread increased 34 basis points, or 12.5%, from 2.71% during the six months ended June 30, 2024 to 3.05% during the six months ended June 30, 2025.

The increase was due to a 34 basis point decrease in the weighted average rate paid on interest-bearing liabilities.

The weighted average yield earned on interest-earning assets was 5.83% in both periods.

In comparing the two periods, the yield on loans decreased one basis point, the yield on investment securities increased 30 basis points and the yield on other interest-earning assets decreased 99 basis points.

This resulted in lower market interest rates into 2025.

The federal funds rate was further reduced by 0.25% in September 2025 and by 0.25% in October 2025.

The Company’s overall average interest rate spread increased 36 basis points, or 13.2%, from 2.72% during the nine months ended September 30, 2024 to 3.08% during the nine months ended September 30, 2025.

The increase was due to a 42 basis point decrease in the weighted average rate paid on interest-bearing liabilities, partially offset by a six basis point decrease in the weighted average yield earned on interest-earning assets.

In comparing the two periods, the yield on loans decreased 8 basis points, the yield on investment securities increased 25 basis points and the yield on other interest-earning assets decreased 103 basis points.

The rate paid on deposits decreased 41 basis points, the rate paid on reverse repurchase agreements increased 9 basis points, the rate paid on short-term borrowings and other interest-bearing liabilities decreased 60 basis points and the rate paid on subordinated debentures issued to capital trust decreased 96 basis points.

8 unchanged sentences

Management determines which loans are non-homogeneous or collateral-dependent, evaluates risk of loss and makes additional provisions to expense, if necessary, to maintain the allowance at a satisfactory level.

During the three months ended June 30, 2025 and June 30, 2024, the Company did not record a provision expense on its portfolio of outstanding loans.

During the six months ended June 30, 2025, the Company did not record a provision expense on its portfolio of outstanding loans.

During the six months ended June 30, 2024, the Company recorded provision expense of $500,000 on its portfolio of outstanding loans.

Net recoveries were $111,000 for the three months ended June 30, 2025, compared to net recoveries of $168,000 in the three months ended June 30, 2024.

Net recoveries were $55,000 for the six months ended June 30, 2025, compared to net recoveries of $85,000 in the six months ended June 30, 2024.

The provision for losses on unfunded commitments for the three months ended June 30, 2025 was a negative provision of $110,000, compared to a negative provision of $607,000 for the three months ended June 30, 2024.

The provision for losses on unfunded commitments for the six months ended June 30, 2025 was a negative provision of $458,000, compared to a negative provision of $477,000 for the six months ended June 30, 2024.

During the three months ended September 30, 2025, the Company did not record a provision expense on its portfolio of outstanding loans, compared to a provision expense of $1.2 million recorded during the three months ended September 30, 2024 on its portfolio of outstanding loans.During the nine months ended September 30, 2025, the Company did not record a provision expense on its portfolio of outstanding loans, compared to a provision expense of $1.7 million during the nine months ended September 30, 2024 on its portfolio of outstanding loans.

Net charge-offs were $66,000 for the three months ended September 30, 2025, compared to net charge-offs of $1.5 million in the three months ended September 30, 2024.

Net charge-offs were $11,000 for the nine months ended September 30, 2025, compared to net charge-offs of $1.5 million in the nine months ended September 30, 2024.

The provision for losses on unfunded commitments for the three months ended September 30, 2025 was a negative provision of $379,000, compared to a negative provision of $63,000 for the three months ended September 30, 2024.

The provision for losses on unfunded commitments for the nine months ended September 30, 2025 was a negative provision of $837,000, compared to a negative provision of $540,000 for the nine months ended September 30, 2024.

General market conditions and unique circumstances related to specific industries and individual projects contribute to the determination of the levels of provisions and charge-offs in each period.

The Bank’s allowance for credit losses as a percentage of total loans was 1.41% and 1.36% at June 30, 2025 and December 31, 2024, respectively.

Management considers the allowance for credit losses adequate to cover losses inherent in the Bank’s loan portfolio at June 30, 2025, based on recent reviews of the Bank’s loan portfolio and current economic conditions.

The Bank’s allowance for credit losses as a percentage of total loans was 1.43% and 1.36% at September 30, 2025 and December 31, 2024, respectively.

Management considers the allowance for credit losses adequate to cover losses inherent in the Bank’s loan portfolio at September 30, 2025, based on recent reviews of the Bank’s loan portfolio and current economic conditions.

However, if challenging economic conditions persist or worsen, or if management’s assessment of the loan portfolio changes, additional provisions for credit loss may be required, which could adversely impact the Company’s future results of operations and financial condition.

1 unchanged sentence

As a result of changes in loan portfolio composition, changes in economic and market conditions and other factors specific to a borrower’s circumstances, the level of non-performing assets will fluctuate.

At June 30, 2025, non-performing assets were $8.1 million, a decrease of $1.5 million from $9.6 million at December 31, 2024.

Non-performing assets as a percentage of total assets were 0.14% and 0.16% at June 30, 2025 and December 31, 2024, respectively.

Compared to December 31, 2024, non-performing loans decreased $1.5 million, to $2.0 million at June 30, 2025.

Compared to December 31, 2024, foreclosed assets increased $47,000 to $6.0 million at June 30, 2025.

At September 30, 2025, non-performing assets were $7.8 million, a decrease of $1.8 million from $9.6 million at December 31, 2024.

Non-performing assets as a percentage of total assets were 0.14% and 0.16% at September 30, 2025 and December 31, 2024, respectively.

Compared to December 31, 2024, non-performing loans decreased $1.8 million, to $1.7 million at September 30, 2025.

Compared to December 31, 2024, foreclosed assets increased $90,000 to $6.1 million at September 30, 2025.

Non-performing Loans .

Activity in the non-performing loans category during the six months ended June 30, 2025 was as follows:

Activity in the non-performing loans category during the nine months ended September 30, 2025 was as follows:

Repossessions

9 unchanged sentences

Total non-performing loans

At June 30, 2025, the non-performing one- to four-family residential category included eight loans, three of which were added in the six months ended June 30, 2025.

The largest relationship in the category totaled $614,000, or 30.3% of the category, and was added to non-performing loans in 2024.

It is collateralized by a single-family residential property in the Sarasota, Florida area.

During the six months ended June 30, 2025, one- to four-family residential loans experienced two loan pay-offs totaling $896,000 and another loan had a principal pay-down totaling $320,000.

At September 30, 2025, the non-performing one- to four-family residential category included six loans, two of which were added in the nine months ended September 30, 2025.

The largest relationship in the category totaled $614,000, or 36.0% of the category at September 30, 2025.

This relationship was added to non-performing loans in 2024 and is collateralized by a single-family residential property in the Sarasota, Florida area.

During the nine months ended September 30, 2025, non-performing one- to four-family residential loans experienced four loan pay-offs totaling $1.4 million.

Additionally, the only loan in the non-performing land development category at the beginning of the period paid off.

The non-performing consumer category included three loans at June 30, 2025.

The non-performing consumer category included four loans at September 30, 2025.

Potential Problem Loans.

Potential problem loans increased $144,000, to $7.2 million at June 30, 2025 from $7.1 million at December 31, 2024.

Potential problem loans decreased $5.7 million, to $1.4 million at September 30, 2025 from $7.1 million at December 31, 2024.

Potential problem loans are loans which management has identified through routine internal review procedures as having possible credit problems that may cause the borrowers difficulty in complying with the current repayment terms.

These loans are not reflected in non-performing assets.

Activity in the potential problem loans category during the six months ended June 30, 2025 was as follows:

Activity in the potential problem loans category during the nine months ended September 30, 2025 was as follows:

Repossessions

9 unchanged sentences

Total potential problem loans

At June 30, 2025, the commercial real estate category of potential problem loans included three loans, all of which are part of one relationship and were added to potential problem loans in 2024.

At September 30, 2025, the one- to four-family residential category of potential problem loans included 13 loans, six of which were added to potential problem loans in the nine months ended September 30, 2025.

The largest relationship in this category totaled $225,000, or 19.4% of the total category.

During the nine months ended September 30, 2025, one loan relationship in the one- to four-family category ($963,000), which was reclassified from the consumer category earlier in 2025, was upgraded from the substandard category to non-classified, removing it from the potential problem loan list.

This relationship is collateralized by multiple single-family residential properties in Indiana and Florida.

During the nine months ended September 30, 2025, one loan relationship in the commercial real estate ($4.3 million) and consumer ($784,000) categories was upgraded from the substandard category to the special mention category, removing it from the potential problem loan list.

This relationship is collateralized by three nursing care facilities located in southwest Missouri.

The borrower’s business cash flow was negatively impacted by a reduction in available labor and increased operating costs, as well as ongoing changes to the Missouri Medicaid reimbursement rate.

Monthly payments were timely made prior to the transfer to this category and have continued to be paid timely.

At June 30, 2025, the one- to four-family residential category of potential problem loans included ten loans, three of which were added to potential problem loans in the six months ended June 30, 2025.

The largest relationship in the one- to four-family category, which was reclassified from the consumer category earlier in 2025, totaled $963,000 and is collateralized by multiple single-family residential properties in Indiana and Florida.

The consumer category of potential problem loans included 14 loans, eight of which were added during the six months ended June 30, 2025.

The largest loan in the consumer category of potential problem loans is a home equity loan, totaling $784,000, related to the nursing care facility relationship, noted above.

The consumer category of potential problem loans included 14 loans, seven of which were added during the nine months ended September 30, 2025.

Other Real Estate Owned and Repossessions.

All of the $6.0 million of other real estate owned and repossessions at June 30, 2025 were acquired through foreclosure.

Activity in foreclosed assets and repossessions during the six months ended June 30, 2025 was as follows:

All of the $6.1 million of other real estate owned and repossessions at September 30, 2025 were acquired through foreclosure.

Activity in foreclosed assets and repossessions during the nine months ended September 30, 2025 was as follows:

(In Thousands)

8 unchanged sentences

Total foreclosed assets and repossessions

At June 30, 2025, the commercial real estate category of foreclosed assets consisted of two foreclosed properties, the largest of which, totaling $6.0 million, was an office building located in Clayton, Mo.

This asset was foreclosed upon in the fourth quarter of 2024.The additions and sales in the consumer category were due to the volume of repossessions of automobiles, which generally are subject to a shorter repossession process.

At September 30, 2025, the commercial real estate category of foreclosed assets consisted of two foreclosed properties, the largest of which, totaling $6.0 million, was an office building located in Clayton, Missouri.

This asset was foreclosed upon in the fourth quarter of 2024.

The additions and sales in the consumer category were due to the volume of repossessions of automobiles, which generally are subject to a shorter repossession process.

Loans Classified “Watch” and “Special Mention”

2 unchanged sentences

Loans classified as “Watch” are being monitored due to indications of potential weaknesses or deficiencies that may require future reclassification as special mention or substandard.

Loans classified as “Watch” increased $10.5 million, from $15.9 million at December 31, 2024 to $26.4 million at June 30, 2025, primarily due to the addition of one loan totaling $11.0 million that is secured by a nursing care facility located in southwest Florida.

Loans classified as “Watch” increased $9.5 million, from $15.9 million at December 31, 2024 to $25.4 million at September 30, 2025, primarily due to the addition of one loan totaling $10.5 million that is secured by a nursing care facility located in southwest Florida.

The loan was downgraded due to the borrower’s financial performance and delinquent taxes (which have since been paid).

While loans classified as “Special Mention” are not adversely classified, they are deserving of management’s close attention to ensure repayment prospects and that the credit positions of the assets do not deteriorate and expose the institution to elevated risk, which might warrant adverse classification at a future date.

In the six months ended June 30, 2025, loans classified as “Special Mention” decreased $1.4 million, to $32,000, primarily due to the repayment in full of two loans totaling $1.4 million.

In the nine months ended September 30, 2025, loans classified as “Special Mention” increased $3.7 million, to $5.2 million, primarily due to one loan relationship, totaling $5.2 million, being upgraded from substandard, partially offset by the repayment in full of two loans totaling $1.4 million.

See Note 6 “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements included in this report for further discussion of the Company’s loan grading system.

Non-interest Income

For the three months ended June 30, 2025, non-interest income decreased $1.6 million, to $8.2 million, when compared to the three months ended June 30, 2024, primarily as a result of the following items:

For the three months ended September 30, 2025, non-interest income increased $70,000, to $7.1 million, when compared to the three months ended September 30, 2024.

The largest individual change in the various non-interest income categories in comparing the two periods was an increase of $206,000 in commission income.

For the nine months ended September 30, 2025, non-interest income decreased $1.8 million, to $21.9 million, when compared to the nine months ended September 30, 2024, primarily as a result of the following items:

Other income :

Other income decreased $1.6 million compared to the prior-year period.

In the 2024 three-month period, the Company recorded $2.7 million of other income, net of expenses and write-offs, related to the termination of the master agreement between the Company and a third-party software vendor for the intended conversion of the Company’s core banking platform.

Separately, in the three months ended June 30, 2025, the Company recorded income of $1.1 million related to exits from, and other activities of, its investments in tax credit partnerships.

Other income decreased $1.7 million, or 31.2%, compared to the prior-year period.

In the 2024 nine-month period, the Company recorded $2.7 million of other income, net of expenses and write-offs, related to the termination of the master agreement between the Company and a third-party software vendor for the intended conversion of the Company’s core banking platform.

Separately, in the nine months ended September 30, 2025, the Company recorded income of $1.1 million related to exits from, and other activities of, its investments in tax credit partnerships.

Net gains on loan sales :

Net gains on loan sales decreased $234,000 compared to the prior-year period.

Net gains on loan sales decreased $470,000, or 16.3%, compared to the prior-year period.

The decrease was due to a decrease in balance of fixed-rate single-family mortgage loans originated and sold during the 2025 period compared to the 2024 period.

2 unchanged sentences

Late charges and fees on loans increased $392,000 compared to the prior-year period.

This increase was primarily due to prepayment fees on one large commercial real estate loan which paid off in the 2025 period.

For the six months ended June 30, 2025, non-interest income decreased $1.8 million, to $14.8 million, when compared to the six months ended June 30, 2024, primarily as a result of the following items:

Other income :

Other income decreased $1.7 million, or 36.1%, compared to the prior-year period, for the same reasons noted above.

Net gains on loan sales :

Net gains on loan sales decreased $310,000, or 17.2%, compared to the prior-year period, for the same reason noted above.

Late charges and fees on loans :

Late charges and fees on loans increased $280,000 compared to the prior-year period, for the same reason noted above.

This increase was primarily due to prepayment fees on a few large commercial real estate loans which paid off in the 2025 period.

Non-interest Expense

For the three months ended June 30, 2025, non-interest expense decreased $1.4 million, to $35.0 million, when compared to the three months ended June 30, 2024, primarily as a result of the following items:

For the three months ended September 30, 2025, non-interest expense increased $2.4 million, to $36.1 million, when compared to the three months ended September 30, 2024, primarily as a result of the following items:

Net occupancy and equipment expenses :

Net occupancy and equipment expenses increased $735,000, or 9.0%, from the prior-year period.

This was mainly due to a collective increase of $637,000 in various components of computer license and support expenses related to upgrades of core systems capabilities and disaster recovery site.

Salaries and employee benefits :

Salaries and employee benefits increased $636,000, or 3.3%, from the prior-year period.

Much of this increase related to annual merit increases in various lending and operations areas.

Legal, audit and other professional fees :

Legal, audit and other professional fees decreased $935,000, or 50.2%, from the prior-year period, to $929,000.

In the three months ended June 30, 2024, the Company expensed a total of $902,000 related to training and implementation costs for the intended core systems conversion and professional fees to consultants engaged to support the Company’s proposed transition of core and ancillary software and information technology systems, compared to $46,000 expensed in the three months ended June 30, 2025.

Legal, audit and other professional fees increased $439,000, or 54.3%, from the prior-year period, to $1.2 million.

Of this total, legal fees increased $355,000 compared to the prior year period.

In the three months ended September 30, 2025, the Company incurred increased legal expenses related to certain corporate matters along with loan collection activities.

Expense (income) on other real estate owned :

Expenses on other real estate owned decreased $453,000, or 158.9%, to income of $168,000 compared to the prior-year period.

In the three months ended June 30, 2025, the Company collected a total of $445,000 in rental income from other real estate owned, compared to $24,000 collected for the three months ended June 30, 2024.

The 2025 period included rental income from the $6.0 million office building asset that was added to other real estate owned in late 2024.

Expenses on other real estate owned increased $394,000, or 73.5%, from the prior-year period.

In the three months ended September 30, 2024, the Company recorded gains on sales of other real estate owned totaling $452,000, with no such gains in the 2025 period.

In the three months ended September 30, 2025, the Company recorded a total of $133,000 in rental income in excess of expense from other real estate owned, compared to $76,000 in the three months ended September 30, 2024.

The increase in rental income in the 2025 period related to the $6.0 million office building that was added to other real estate owned in the fourth quarter of 2024.

For the nine months ended September 30, 2025, non-interest expense increased $1.4 million, to $105.9 million, when compared to the nine months ended September 30, 2024, primarily as a result of the following items:

Net occupancy and equipment expenses :

Net occupancy and equipment expenses increased $2.0 million, or 8.5%, from the prior-year period.

This increase was primarily related to various components of computer license and support expenses in connection with upgrades of core systems capabilities and collectively increased by $1.3 million in the nine months ended September 30, 2025 compared to the same period in 2024.

In addition, parking lot maintenance expenses, primarily related to above-normal snow removal activity, collectively increased by $242,000 in the nine months ended September 30, 2025 compared to the same period in 2024.

Salaries and employee benefits :

Salaries and employee benefits increased $1.2 million, or 2.1%, in the nine months ended September 30, 2025 compared to the prior-year period.

Much of this increase related to annual merit increases in various lending and operations areas.

Other operating expenses :

1 unchanged sentence

In the 2024 period, the Company recorded expenses totaling $600,000 related to the resolution of compliance matters, with no similar expenses recorded in the current-year period.

Net occupancy and equipment expenses :

Net occupancy and equipment expenses increased $594,000, or 7.6%, from the prior-year period.

Various components of computer license and support expenses related to upgrades of core systems capabilities collectively increased by $502,000 in the 2025 period compared to the 2024 period.

For the six months ended June 30, 2025, non-interest expense decreased $1.0 million, to $69.8 million, when compared to the six months ended June 30, 2024, primarily as a result of the following items:

Legal, audit and other professional fees :

1 unchanged sentence

In the 2024 period, the Company expensed a total of $2.0 million related to training and implementation costs for the intended core systems conversion and professional fees to consultants engaged to support the Company’s proposed transition of core and ancillary software and information technology systems, compared to $105,000 expensed in the 2025 period.

Expense (income) on other real estate owned :

Expenses on other real estate owned decreased $584,000, or 168.8%, to income of $238,000 compared to the prior-year period, for the same reason noted above.

Other operating expenses :

Other operating expenses decreased $462,000, or 10.7%, from the prior-year period, for the same reason noted above.

Salaries and employee benefits :

Salaries and employee benefits increased $592,000, or 1.5%, in the six months ended June 30, 2025 compared to the prior-year period.

Much of this increase related to normal annual merit increases in various lending and operations areas.

Net occupancy and equipment expenses :

Net occupancy and equipment expenses increased $1.3 million, or 8.2%, from the prior-year period.

This increase was primarily related to various components of computer license and support expenses in connection with upgrades of core systems capabilities and collectively increased by $824,000 in the six months ended June 30, 2025 compared to the same period in 2024.

In addition, parking lot maintenance expenses, primarily related to above-normal snow removal activity, collectively increased by $242,000 in the six months ended June 30, 2025 compared to the same period in 2024.

The Company’s efficiency ratio for the three months ended June 30, 2025, was 59.16% compared to 64.27% for the same period in 2024.

The Company’s efficiency ratio for the six months ended June 30, 2025, was 60.67% compared to 65.42% for the same period in 2024.

The Company’s ratio of non-interest expense to average assets was 2.37% and 2.35% for the three- and six-months ended June 30, 2025, respectively, compared to 2.50% and 2.44% for the three- and six-months ended June 30, 2024, respectively.

Average assets for the three months ended June 30, 2025, increased $86.0 million, or 1.5%, compared to the three months ended June 30, 2024, and average assets for the six months ended June 30, 2025, increased $143.0 million, or 2.5%, compared to the six months ended June 30, 2024.

The increases in average assets were primarily due to growth in average balances of net loans receivable and investment securities.

This decrease in expense was partially offset by an increase in legal fees related to certain corporate matters along with loan collection activities.

The Company’s efficiency ratio for the three months ended September 30, 2025, was 62.45% compared to 61.34% for the same period in 2024.

The Company’s efficiency ratio for the nine months ended September 30, 2025, was 61.26% compared to 64.05% for the same period in 2024.

The Company’s ratio of non-interest expense to average assets was 2.50% and 2.40% for the three- and nine-months ended September 30, 2025, respectively, compared to 2.27% and 2.38% for the three- and nine-months ended September 30, 2024, respectively.

Average assets for the three months ended September 30, 2025, decreased $185.3 million, or 3.1%, compared to the three months ended September 30, 2024, and average assets for the nine months ended September 30, 2025, increased $32.5 million, or 0.6%, compared to the nine months ended September 30, 2024.

The decrease in average assets in the three months ended September 30, 2025, was primarily due to a net decrease in average balances of outstanding loans.

The small increase in average assets in the nine months ended September 30, 2025, was primarily due to a small increase in average balances of investment securities, along with no material change in average balances of outstanding loans.

Provision for Income Taxes

For each of the three months ended June 30, 2025 and 2024, the Company’s effective tax rate was 18.5%.

For the six months ended June 30, 2025 and 2024, the Company’s effective tax rate was 19.2% and 18.8%, respectively.

For the three months ended September 30, 2025 and 2024, the Company’s effective tax rate was 19.7% and 18.0%, respectively.

For the nine months ended September 30, 2025 and 2024, the Company’s effective tax rate was 19.4% and 18.5%, respectively.

These effective rates were below the statutory federal tax rate of 21.0%, due primarily to the utilization of certain investment tax credits and the Company’s tax-exempt investments and tax-exempt loans.

7 unchanged sentences

Interest income on loans also includes the amortization of net loan fees, which were deferred in accordance with accounting standards.

Net loan fees included in interest income were $1.1 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024.

Net loan fees included in interest income were $2.1 million and $2.3 million for the six months ended June 30, 2025 and 2024, respectively.

Net loan fees included in interest income were $1.0 and $1.1 million for the three months ended September 30, 2025 and 2024, respectively.

Net loan fees included in interest income were $3.1 million and $3.4 million for the nine months ended September 30, 2025 and 2024, respectively.

Tax-exempt income was not calculated on a tax equivalent basis.

The tables do not reflect any effect of income taxes.

September 30,

Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

(Dollars in Thousands)

33 unchanged sentences

* Defined as the Company’s net interest income divided by total average interest-earning assets.

Of the total average balances of investment securities, average tax-exempt investment securities were $51.9 million and $56.3 million for the three months ended June 30, 2025 and 2024, respectively.

In addition, average tax-exempt loans and industrial revenue bonds were $9.7 million and $10.7 million for the three months ended June 30, 2025 and 2024, respectively.

Interest income on tax-exempt assets included in this table was $610,000 and $589,000 for the three months ended June 30, 2025 and 2024, respectively.

Interest income net of disallowed interest expense related to tax-exempt assets was $523,000 and $481,000 for the three months ended June 30, 2025 and 2024, respectively.

Six Months Ended

June 30, 2025

June 30, 2024

Of the total average balances of investment securities, average tax-exempt investment securities were $51.7 million and $57.0 million for the three months ended September 30, 2025 and 2024, respectively.

In addition, average tax-exempt loans and industrial revenue bonds were $9.6 million and $10.4 million for the three months ended September 30, 2025 and 2024, respectively.

Interest income on tax-exempt assets included in this table was $544,000 and $463,000 for the three months ended September 30, 2025 and 2024, respectively.

September 30,

Nine Months Ended

September 30, 2025

September 30, 2024

(Dollars in Thousands)

33 unchanged sentences

* Defined as the Company’s net interest income divided by total average interest-earning assets.

Of the total average balances of investment securities, average tax-exempt investment securities were $53.5 million and $56.9 million for the six months ended June 30, 2025 and 2024, respectively.

In addition, average tax-exempt loans and industrial revenue bonds were $9.8 million and $11.1 million for the six months ended June 30, 2025 and 2024, respectively.

Interest income on tax-exempt assets included in this table was $1.2 million for each of the six months ended June 30, 2025 and 2024, respectively.

Interest income net of disallowed interest expense related to tax-exempt assets was $981,000 and $941,000 for the six months ended June 30, 2025 and 2024, respectively.

Of the total average balances of investment securities, average tax-exempt investment securities were $52.9 million and $56.9 million for the nine months ended September 30, 2025 and 2024, respectively.

In addition, average tax-exempt loans and industrial revenue bonds were $9.8 million and $10.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Interest income on tax-exempt assets included in this table was $1.6 million for both the nine months ended September 30, 2025 and 2024, respectively.

Rate/Volume Analysis

3 unchanged sentences

Tax-exempt income was not calculated on a tax equivalent basis.

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

16 unchanged sentences

Net interest income

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

20 unchanged sentences

As a result of the Company’s ability to generate liquidity primarily through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors’ requirements and meet its borrowers’ credit needs.

At June 30, 2025, the Company had commitments of approximately $20.0 million to fund loan originations, $1.14 billion of unused lines of credit and unadvanced loans, and $17.0 million of outstanding letters of credit.

At September 30, 2025, the Company had commitments of approximately $16.9 million to fund loan originations, $1.09 billion of unused lines of credit and unadvanced loans, and $16.2 million of outstanding letters of credit.

Loan commitments and the unfunded portion of loans at the dates indicated were as follows (In Thousands):

September 30,

Closed non-construction loans with unused available lines

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The Company has also utilized both fixed-rate and floating-rate brokered deposits of varying terms, as well as overnight FHLBank borrowings.

At June 30 , 2025 and December 31, 2024, the Company had the following available secured lines and on-balance sheet liquidity:

At September 30, 2025 and December 31, 2024, the Company had the following available secured lines and on-balance sheet liquidity:

September 30,

Federal Home Loan Bank line

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Statements of Cash Flows.

The Company had positive cash flows from operating activities during the six months ended June 30, 2025 and 2024.

The Company had positive cash flows from investing activities during the six months ended June 30, 2025, and negative cash flows from investing activities during the six months ended June 30, 2024.

The Company had negative cash flows from financing activities during the six months ended June 30, 2025, and positive cash flows from financing activities during the six months ended June 30, 2024.

The Company had positive cash flows from operating activities during the nine months ended September 30, 2025 and 2024.

The Company had positive cash flows from investing activities during the nine months ended September 30, 2025, and negative cash flows from investing activities during the nine months ended September 30, 2024.The Company had negative cash flows from financing activities during the nine months ended September 30, 2025, and positive cash flows from financing activities during the nine months ended September 30, 2024.

Cash flows from operating activities for the periods covered by the Statements of Cash Flows have been primarily related to changes in accrued and deferred assets, credits and other liabilities, the provision for credit losses, depreciation and amortization, realized gains on sales of loans and the amortization of deferred loan origination fees and discounts (premiums) on loans and investments, all of which are non-cash or non-operating adjustments to operating cash flows.

Net income adjusted for non-cash and non-operating items and the origination and sale of loans held for sale were the primary source of cash flows from operating activities.

Operating activities provided cash of $54.3 million and $16.6 million during the six months ended June 30, 2025 and 2024, respectively.

During the six months ended June 30, 2025 and 2024, investing activities provided cash of $170.9 million and used cash of $144.2 million, respectively.

Operating activities provided cash of $59.9 million and $34.3 million during the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025 and 2024, investing activities provided cash of $239.6 million and used cash of $191.5 million, respectively.

Investing activities in the 2025 period provided cash primarily due to net decreases in outstanding loan balances and principal payments received on investment securities.

Investing activities in the 2024 period used cash primarily due to net increases in outstanding loan balances and principal purchases of investment securities.

Investing activities in the 2024 period used cash primarily due to net increases in outstanding loan balances and purchases of investment securities.

Changes in cash flows from financing activities during the periods covered by the Statements of Cash Flows were due primarily to changes in deposits after interest credited and changes in short-term borrowings, as well as advances from borrowers for taxes and insurance, dividend payments to stockholders and repurchases of the Company’s common stock.

During the six months ended June 30, 2025 and 2024, financing activities used cash of $175.1 million and provided cash of $102.8 million, respectively.

In the 2025 period, financing activities used cash primarily as a result of repayments of FRB borrowings and subordinated notes, repurchases of the Company’s common stock and dividends paid to stockholders, partially offset by net increases in time deposits, checking deposits and short-term borrowings.

During the nine months ended September 30, 2025 and 2024, financing activities used cash of $299.0 million and provided cash of $154.3 million, respectively.

In the 2025 period, financing activities used cash primarily as a result of repayments of FRB borrowings and the redemption of all of the Company’s subordinated notes, net decreases in time deposits, repurchases of the Company’s common stock and dividends paid to stockholders, partially offset by increases in checking deposits and short-term borrowings.

In the 2024 period, financing activities provided cash primarily as a result of increases in FRB borrowings and net increases in short-term borrowings, partially offset by repurchases of the Company’s common stock, dividends paid to stockholders and net decreases in checking and time deposits.

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Management continuously reviews the capital position of the Company and the Bank to ensure compliance with minimum regulatory requirements, as well as to explore ways to increase capital either by retained earnings or other means.

At June 30, 2025, the Company’s total stockholders’ equity was $622.4 million, or 10.6% of total assets, equivalent to a book value of $54.61 per common share.

At September 30, 2025, the Company’s total stockholders’ equity was $632.9 million, or 11.0% of total assets, equivalent to a book value of $56.18 per common share.

As of December 31, 2024, total stockholders’ equity was $599.6 million, or 10.0% of total assets, equivalent to a book value of $51.14 per common share.

At June 30, 2025, the Company’s tangible common equity to tangible assets ratio was 10.5%, compared to 9.9% at December 31, 2024 (See Non-GAAP Financial Measures below).

Included in stockholders’ equity at June 30, 2025 and December 31, 2024, were unrealized losses (net of taxes) on the Company’s available-for-sale investment securities totaling $36.7 million and $46.1 million, respectively.

This change in net unrealized losses primarily resulted from decreased intermediate-term market interest rates in the six months ended June 30, 2025, which generally increased the Company’s fair value of the investment securities.

In addition, included in stockholders’ equity at June 30, 2025, were realized gains (net of taxes) on the Company’s terminated cash flow hedge (interest rate swap), totaling $1.7 million.

This amount, plus associated deferred taxes, is expected to be accreted to interest income over the remaining term of the original interest rate swap contract, which was to end in October 2025.

At June 30, 2025, the remaining pre-tax amount to be recorded in interest income was $2.2 million.

The net effect on total stockholders’ equity over time will be no impact, as the reduction of this realized gain will be offset by an increase in retained earnings (as the interest income flows through pre-tax income).

Also included in stockholders’ equity at June 30, 2025, was an unrealized loss (net of taxes) on the Company’s two outstanding cash flow hedges (interest rate swaps) totaling $6.0 million.

At September 30, 2025, the Company’s tangible common equity to tangible assets ratio was 10.9%, compared to 9.9% at December 31, 2024 (See Non-GAAP Financial Measures below).

Included in stockholders’ equity at September 30, 2025 and December 31, 2024, were unrealized losses (net of taxes) on the Company’s available-for-sale investment securities totaling $30.6 million and $46.1 million, respectively.

This change in net unrealized losses primarily resulted from decreased intermediate-term market interest rates in the nine months ended September 30, 2025, which generally increased the fair value of the Company’s investment securities.

In addition, included in stockholders’ equity at September 30, 2025, were realized gains (net of taxes) on the Company’s terminated cash flow hedge (interest rate swap), totaling $113,000.

This amount, plus associated deferred taxes, was accreted to interest income over the remaining term of the original interest rate swap contract, which ended on October 6, 2025.

Also included in stockholders’ equity at September 30, 2025, was an unrealized loss (net of taxes) on the Company’s two outstanding cash flow hedges (interest rate swaps) totaling $5.0 million.

Increases in market interest rates since the inception of these hedges have caused their fair values to decrease.

The unrealized loss position on these swaps improved substantially in the six months ended June 30, 2025, due to a decline in market interest rates in that period.

As noted above, total stockholders’ equity increased $22.8 million, from $599.6 million at December 31, 2024 to $622.4 million at June 30, 2025.

Total stockholders’ equity increased due to net income of $36.9 million in the six months ended June 30, 2025, a $2.0 million increase in stockholders’ equity during that period due to stock option exercises and a decrease in accumulated other comprehensive loss of $13.0 million during that period primarily due to increases in the fair value of cash flow hedges and available-for-sale investment securities mainly because of a decrease in market interest rates.

Partially offsetting these changes were repurchases of the Company’s common stock during the six months ended June 30, 2025 totaling $20.0 million and dividends declared on common stock during that period of $9.2 million.

The Company had unrealized losses on its portfolio of HTM investment securities, which totaled $19.3 million and $24.7 million at June 30, 2025 and December 31, 2024 respectively, that were not included in its total capital balance.

If HTM unrealized losses were included in capital (net of taxes), at June 30, 2025, they would have decreased total stockholder’s equity at that date by $14.6 million.

This amount was equal to 2.3% of total stockholders’ equity of $622.4 million at June 30, 2025, compared to 3.1% of total stockholders’ equity of $599.6 million at December 31, 2024.

The unrealized loss position on these swaps improved substantially in the nine months ended September 30, 2025, due to a decline in market interest rates in that period.

As noted above, total stockholders’ equity increased $33.3 million, from $599.6 million at December 31, 2024 to $632.9 million at September 30, 2025.

Total stockholders’ equity increased due to net income of $54.7 million in the nine months ended September 30, 2025, a $4.2 million increase in stockholders’ equity during that period due to stock option exercises and a decrease in accumulated other comprehensive loss of $18.5 million during that period primarily due to increases in the fair value of cash flow hedges and available-for-sale investment securities mainly because of a decrease in market interest rates during 2025.

Partially offsetting these changes were repurchases of the Company’s common stock during the nine months ended September 30, 2025 totaling $30.0 million and dividends declared on common stock during that period of $14.0 million.

The Company had unrealized losses on its portfolio of held-to-maturity investment securities, which totaled $17.7 million and $24.7 million at September 30, 2025 and December 31, 2024 respectively, that were not included in its total capital balance.

If held-to-maturity unrealized losses were included in capital (net of taxes), at September 30, 2025 and December 31, 2024, they would have decreased total stockholder’s equity at those dates by $13.4 million and $18.6 million, respectively.

These amounts were equal to 2.1% of total stockholders’ equity of $632.9 million at September 30, 2025, compared to 3.1% of total stockholders’ equity of $599.6 million at December 31, 2024.

Banks are required to maintain minimum risk-based capital ratios.

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To be considered “well capitalized,” banks must have a minimum common equity Tier 1 capital ratio of 6.50%, a minimum Tier 1 risk-based capital ratio of 8.00%, a minimum total risk-based capital ratio of 10.00%, and a minimum Tier 1 leverage ratio of 5.00%.

On June 30, 2025, the Bank’s common equity Tier 1 capital ratio was 13.1%, its Tier 1 capital ratio was 13.1%, its total capital ratio was 14.4% and its Tier 1 leverage ratio was 11.2%.

As a result, as of June 30, 2025, the Bank was well capitalized, with capital ratios in excess of those required to qualify as such.

On September 30, 2025, the Bank’s common equity Tier 1 capital ratio was 13.4%, its Tier 1 risk-based capital ratio was 13.4%, its total risk-based capital ratio was 14.6% and its Tier 1 leverage ratio was 11.5%.

As a result, as of September 30, 2025, the Bank was well capitalized, with capital ratios in excess of those required to qualify as such.

On December 31, 2024, the Bank’s common equity Tier 1 capital ratio was 12.6%, its Tier 1 capital ratio was 12.6%, its total capital ratio was 13.9% and its Tier 1 leverage ratio was 11.0%.

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The FRB has established capital regulations for bank holding companies that generally parallel the capital regulations for banks.

On June 30, 2025, the Company’s common equity Tier 1 capital ratio was 13.0%, its Tier 1 capital ratio was 13.5%, its total capital ratio was 14.7% and its Tier 1 leverage ratio was 11.5%.

On September 30, 2025, the Company’s common equity Tier 1 capital ratio was 13.3%, its Tier 1 capital ratio was 13.8%, its total capital ratio was 15.1% and its Tier 1 leverage ratio was 11.9%.

On December 31, 2024, the Company’s common equity Tier 1 capital ratio was 12.3%, its Tier 1 capital ratio was 12.8%, its total capital ratio was 15.4% and its Tier 1 leverage ratio was 11.2%.

In addition to the minimum common equity Tier 1 capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio, the Company and the Bank have to maintain a capital conservation buffer consisting of additional common equity Tier 1 capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses.

At June 30, 2025 and December 31, 2024, both the Company and the Bank had a capital conservation buffer that exceeded the required minimum levels.

At September 30, 2025 and December 31, 2024, both the Company and the Bank had a capital conservation buffer that exceeded the required minimum levels.

On June 15, 2025, the Company redeemed all of its outstanding 5.50% fixed-to-floating rate subordinated notes due June 15, 2030, with an aggregate principal balance of $75 million.

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The annual combined interest expense and amortization of deferred issuance costs on the subordinated notes had been approximately $4.4 million.

During the three months ended June 30, 2025, the Company declared a common stock cash dividend of $0.40 per share, or 23% of net income per diluted common share for that three-month period, and paid a common stock cash dividend of $0.40 per share (which was declared in March 2025).

During the three months ended June 30, 2024, the Company declared a common stock cash dividend of $0.40 per share, or 28% of net income per diluted common share for that three-month period, and paid a common stock cash dividend of $0.40 per share (which was declared in March 2024).

During the six months ended June 30, 2025, the Company declared common stock cash dividends totaling $0.80 per share, or 25% of net income per diluted common share for that six-month period, and paid common stock cash dividends totaling $0.80 per share.

During the six months ended June 30, 2024, the Company declared common stock cash dividends totaling $0.80 per share, or 31% of net income per diluted common share for that six-month period, and paid common stock cash dividends totaling $0.80 per share.

During the three months ended September 30, 2025, the Company declared a common stock cash dividend of $0.43 per share, or 28% of net income per diluted common share for that three-month period, and paid a common stock cash dividend of $0.40 per share (which was declared in June 2025).

During the three months ended September 30, 2024, the Company declared a common stock cash dividend of $0.40 per share, or 28% of net income per diluted common share for that three-month period, and paid a common stock cash dividend of $0.40 per share (which was declared in June 2024).

During the nine months ended September 30, 2025, the Company declared common stock cash dividends totaling $1.23 per share, or 26% of net income per diluted common share for that nine-month period, and paid common stock cash dividends totaling $1.20 per share.

During the nine months ended September 30, 2024, the Company declared common stock cash dividends totaling $1.20 per share, or 30% of net income per diluted common share for that nine-month period, and paid common stock cash dividends totaling $1.20 per share.

The Board of Directors meets regularly to consider the level and timing of dividend payments.

The $0.40 per share dividend declared but unpaid as of June 30, 2025, was paid to stockholders in July 2025.

The $0.43 per share dividend declared but unpaid as of September 30, 2025, was paid to stockholders in October 2025.

Common Stock Repurchases and Issuances .

The Company has been in various buy-back programs since May 1990.

During the three months ended June 30, 2025, the Company repurchased 175,998 shares of its common stock at an average price of $55.11 per share and issued 7,320 shares of common stock at an average price of $45.67 per share to cover stock option exercises.

During the three months ended June 30, 2024, the Company repurchased 124,600 shares of its common stock at an average price of $51.88 per share and issued 7,850 shares of common stock at an average price of $38.77 per share to cover stock option exercises.

During the six months ended June 30, 2025, the Company repurchased 349,342 shares of its common stock at an average price of $56.73 per share and issued 22,327 shares of common stock at an average price of $47.38 per share to cover stock option exercises.

During the six months ended June 30, 2024, the Company repurchased 236,962 shares of its common stock at an average price of $51.67 per share and issued 15,138 shares of common stock at an average price of $37.15 per share to cover stock option exercises.

In November 2022, the Company’s Board of Directors authorized the purchase of up to one million shares of the Company’s outstanding common stock, under a program of open market purchases or privately negotiated transactions.

At June 30, 2025, approximately 94,000 shares remained available under this stock repurchase authorization.

In April 2025, the Company’s Board of Directors approved a new stock repurchase program, which will succeed the existing repurchase program (authorized in November 2022) following the repurchase of the existing program’s remaining available shares.

During the three months ended September 30, 2025, the Company repurchased 165,116 shares of its common stock at an average price of $60.33 per share and issued 34,520 shares of common stock at an average price of $52.29 per share to cover stock option exercises.

During the three months ended September 30, 2024, the Company repurchased 2,971 shares of its common stock at an average price of $53.04 per share and issued 101,333 shares of common stock at an average price of $50.07 per share to cover stock option exercises.

During the nine months ended September 30, 2025, the Company repurchased 514,458 shares of its common stock at an average price of $57.89 per share and issued 56,847 shares of common stock at an average price of $50.36 per share to cover stock option exercises.

During the nine months ended September 30, 2024, the Company repurchased 239,933 shares of its common stock at an average price of $51.69 per share and issued 116,471 shares of common stock at an average price of $48.39 per share to cover stock option exercises.

In April 2025, the Company’s Board of Directors approved a new stock repurchase program to purchase shares of the Company’s outstanding common stock.

The new stock repurchase program authorizes the purchase, from time to time in open market or privately negotiated transactions, of up to one million additional shares of the Company’s common stock.

This program does not have an expiration date.

The authorization of this program became effective in August 2025 upon completion of the previous repurchase program (authorized in November 2022).

At September 30, 2025, approximately 929,000 shares remained available under the latest stock repurchase authorization.

Management has historically utilized stock buy-back programs from time to time as long as management believed that repurchasing the Company’s common stock would contribute to the overall growth of stockholder value.

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Ratio of Tangible Common Equity to Tangible Assets

September 30,

(Dollars in Thousands)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis