What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-19 · 309 added, 252 removed, 1933 unchanged (22% of the section changed)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Lakeland Financial Corporation (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Lakeland Financial Corporation (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework:

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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses (ACL) – Qualitative Adjustments

The Company adopted ASC 326 as of January 1, 2021, which among other things, required the Company to recognize expected credit losses over the contractual lives of financial asset carried at amortized costs, including loans receivables, utilizing the Current Expected Credit Losses (“CECL”) methodology.

The Company recognizes the expected credit losses over the contractual lives of financial asset carried at amortized costs, including loans receivables, utilizing the Current Expected Credit Losses (“CECL”) methodology.

As of December 31, 2025, the ACL balance was $68,995,000.

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The loss rates, subject to a floor, are then adjusted, for reasonable and supportable forecasts of relevant economic indicators as well as other environmental factors based on the risks present for each portfolio segment.

The environmental factors (“qualitative adjustments”) include consideration of economic conditions and portfolio trends.

The environmental factors (“qualitative adjustments”) include consideration of portfolio trends and conditions;

industry conditions;

and effects of changes in credit concentrations.

We have identified auditing the qualitative adjustments as a critical audit matter as management’s determination of the qualitative adjustments used in the ACL is subjective and involves significant management judgments;

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We have served as the Company's auditor since 1983.

South Bend, Indiana

Indianapolis, Indiana

February 25, 2026

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Borrowings - Federal Home Loan Bank advances:

Short-term advance 170,000 0

Long-term advance 1,200 0

Other borrowings 13,000 0

Total borrowings 184,200 0

Accrued interest payable 8,868 15,117

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Interest on deposits 150,732 172,759 137,791

Interest on borrowings

Short-term 3,720 8,441 272

Long-term 0 0 127

Interest on short-term borrowings 1,986 3,720 8,441

Total interest expense 152,718 176,479 146,232

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The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)

Years Ended December 31 2025 2024 2023

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Reclassification adjustment for amortization of unrealized losses on securities transferred to held-to-maturity 1,957 1,962 1,987

Reclassification adjustment for (gains) losses included in net income 46 25 ( 21 )

Reclassification adjustment for losses included in net income 0 46 25

Net securities gain (loss) activity during the period 49,777 ( 14,522 ) 42,651

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Total other comprehensive income (loss), net of tax 39,363 ( 11,305 ) 33,728

Comprehensive income (loss) $ 82,173 $ 127,495 $ ( 101,199 )

Comprehensive income $ 142,724 $ 82,173 $ 127,495

The accompanying notes are an integral part of these consolidated financial statements.

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Net income 93,767 93,767 93,767

Other comprehensive loss, net of tax ( 205,016 ) ( 205,016 ) ( 205,016 )

Other comprehensive income, net of tax 33,728 33,728 33,728

Cash dividends declared, $ 1.84 per share

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Balance at December 31, 2023 25,430,566 $ 127,692 $ 692,760 $ ( 155,195 ) $ ( 15,553 ) $ 649,704 $ 89 $ 649,793

Impact of ASU 2023-02, net of tax ( 532 ) ( 532 ) ( 532 )

Adjusted Balance at January 1, 2024 25,430,566 127,692 692,228 ( 155,195 ) ( 15,553 ) 649,172 89 649,261

Net income 93,478 93,478 93,478

Other comprehensive income, net of tax 33,728 33,728 33,728

Other comprehensive loss, net of tax ( 11,305 ) ( 11,305 ) ( 11,305 )

Cash dividends declared, $ 1.92 per share

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Balance at December 31, 2024 25,509,592 $ 129,664 $ 736,412 $ ( 166,500 ) $ ( 15,754 ) $ 683,822 $ 89 $ 683,911

Impact of adoption of ASU 2023-02, net of tax ( 532 ) ( 532 ) ( 532 )

Adjusted Balance at January 1, 2024 25,430,566 127,692 692,228 ( 155,195 ) ( 15,553 ) 649,172 89 649,261

Net income 103,361 103,361 103,361

Other comprehensive loss, net of tax ( 11,305 ) ( 11,305 ) ( 11,305 )

Other comprehensive income, net of tax 39,363 39,363 39,363

Cash dividends declared, $ 2.00 per share

( 51,428 ) ( 51,428 ) ( 51,428 )

Treasury shares purchased under share repurchase plan ( 337,890 ) ( 19,779 ) ( 19,779 ) ( 19,779 )

Treasury shares purchased under deferred directors’ plan ( 9,625 ) 612 ( 612 ) 0 0

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Provision for credit losses 11,800 16,750 5,850

Net loss on sale and write down of other real estate owned 23 0 96

Amortization of loan servicing rights 0 0 757

Net (gain) loss on sale and write down of other real estate owned ( 365 ) 23 0

Net change in loan servicing rights valuation allowance 446 497 540

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Proceeds from sale of loans, including participations 17,554 20,836 8,022

Net (gain) loss on Visa shares ( 8,996 ) 0 0

Net (gain) loss on sale of premises and equipment 81 3 7

Net (gain) loss on sales and calls of securities available-for-sale 46 25 ( 21 )

Net gain on Visa shares 0 ( 8,996 ) 0

Net loss on sale of premises and equipment 85 81 3

Net loss on sales and calls of securities available-for-sale 0 46 25

Net securities amortization 4,014 4,796 4,915

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Gain on life insurance ( 220 ) ( 243 ) ( 131 )

Tax benefit of stock award issuances ( 215 ) ( 718 ) ( 514 )

Tax (benefit) expense of stock award issuances 136 ( 215 ) ( 718 )

Interest receivable and other assets ( 162 ) 1,284 ( 6,169 )

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Purchases of land, premises and equipment ( 11,122 ) ( 8,634 ) ( 5,991 )

Proceeds from redemption of Federal Home Loan Bank stock 0 0 932

Purchases of Federal Home Loan Bank stock 0 0 ( 5,625 )

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Cash flows from financing activities:

Net increase (decrease) in total deposits 180,441 259,905 ( 274,787 )

Net increase (decrease) in short-term borrowings 0 ( 22,000 ) 22,000

Payments on short-term FHLB borrowings ( 50,000 ) ( 275,000 ) 0

Proceeds from short-term FHLB borrowings 0 50,000 275,000

Payments on long-term FHLB borrowings 0 0 ( 75,000 )

Net increase in total deposits 72,384 180,441 259,905

Net increase (decrease) in other borrowings 13,000 0 ( 22,000 )

Payments on short-term FHLB borrowings,net 0 0 0

Proceeds from (payments on) short-term FHLB borrowings, net 170,000 ( 50,000 ) ( 225,000 )

Proceeds from long-term FHLB borrowings 1,200 0 0

Common dividends paid ( 51,415 ) ( 49,281 ) ( 47,094 )

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Retail and commercial clients utilize the Lake City Bank Digital application to access and transact banking transactions.

The Company provides credit card services to retail and commercial customers through its retail card program and merchant processing activity.

The Company provides credit card services to retail and commercial customers through its retail card program and merchant processing services.

The Company provides wealth advisory and trust clients with traditional personal and corporate trust services.

The Company also provides retail brokerage services, including an array of financial and investment products such as annuities and life insurance.

Private banking services, which include a comprehensive set of personalized credit and banking solutions, trust and fiduciary services, and estate and financial planning consulting services, are available to certain wealth advisory clients.

Other financial instruments, which represent potential concentrations of credit risk, include deposit accounts in other financial institutions.

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Cash and cash equivalents include cash, demand deposits in other financial institutions and short-term investments and certificates of deposit with maturities of 90 days or less.

Short-term investments includes interest bearing deposits.

Cash flows are reported net for customer loan and deposit transactions, and certain short-term borrowings.

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In making this assessment, management considers the extent to which fair value is less than amortized cost, nature of the security, the underlying collateral, and the financial condition of the issuer, among other factors.

If this assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present

If this assessment indicates a credit loss exists, the present value

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and a valuation allowance for securities losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and a valuation allowance for securities losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

Any impairment that has not been recorded through a valuation allowance for securities losses is recognized in other comprehensive income (loss).

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All of these factors are susceptible to change, which may be significant.

As a result of this detailed process, the allowance results in two forms of allocations, specific and general.

As a result of this detailed process, the allowance results in two forms of allocations, specific and pooled.

These two components represent the total allowance for credit losses deemed adequate to cover expected losses within the loan portfolio.

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These grade assignments are performed independent of each other, and a consensus is reached by credit administration and the loan officer.

Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis.

Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following:

Individual allowances are established in cases where management has identified significant conditions or circumstances related to a specific credit that indicate it should be analyzed on an individual basis.

Considerations with respect to allocations for these individually analyzed credits include, but are not limited to, the following:

(a) the sufficiency of the customer's cash flow or net worth to repay the loan;

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and consumer 1-4 family mortgage and other consumer loans.

General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool's probability of default-loss given default, subject to a floor.

Pooled allocations of the allowance are determined by a historical loss rate based on the calculation of each pool's probability of default-loss given default, subject to a floor.

The length of the historical period for each pool is based on the average life of the pool.

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and decreases in the value of underlying collateral.

A loan is individually analyzed for specific allocation when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

Allocations are analyzed individually or in total for smaller-balance loans of similar nature such as all classes of consumer 1-4 family and other consumer loans, and individually for all classes of commercial and industrial, commercial real estate and multi-family, agri-business and agricultural and other commercial loans.

A loan is analyzed for specific allocation when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

Allocations are analyzed specifically or in total for smaller-balance loans of similar nature such as all classes of consumer 1-4 family and other consumer loans, and specifically for all classes of commercial and industrial, commercial real estate and multi-family, agri-business and agricultural and other commercial loans.

The Company analyzes commercial loans individually by classifying the loans as to credit risk.

This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $ 250,000 .

Factors considered by management in determining individual evaluation include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as individually evaluated.

Factors considered by management in determining individual analysis include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as individually analyzed.

Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

If a loan is individually evaluated, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s original rate or at the fair value of collateral less anticipated costs to sell.

If a loan is individually analyzed, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s original rate or at the fair value of collateral less anticipated costs to sell.

All classes of commercial and industrial, commercial real estate and multifamily residential, agri-business and agricultural, other commercial, consumer 1-4 family mortgage loans and other consumer loans that become delinquent beyond 90 days are analyzed and a charge off is taken when it is determined that the underlying collateral, if any, is not sufficient to offset the indebtedness.

Loans, for which the terms have been modified for borrowers experiencing financial difficulties and a concession has been granted that could materially change the Company's expected future cash flows, are classified as individually evaluated and may be either accruing or non-accruing.

Modifications to borrowers experiencing financial difficulties on nonaccrual status follow the same policy as described above for other loans.

Individual evaluation for modifications to borrowers experiencing financial difficulty is measured at the present value of estimated future cash flows using the loan’s effective rate at inception or at discounted collateral value for collateral dependent loans.

Loans, for which the terms have been modified for borrowers experiencing financial difficulty and a concession has been granted that could materially change the Company's expected future cash flows, are classified as individually analyzed and may be either accruing or non-accruing.

Modifications to borrowers experiencing financial difficulty on nonaccrual status follow the same policy as described above for other loans.

Individual analysis for modifications to borrowers experiencing financial difficulty is measured at the present value of estimated future cash flows using the loan’s effective rate at inception or at discounted collateral value for collateral dependent loans.

Due to the imprecise nature of estimating the allowance for credit losses, the Company's allowance for credit losses includes an immaterial unallocated component.

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For off balance sheet credit exposures outlined in the ASC at 326-20-30-11, it is the Company's position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

Investments in Limited Partnerships:

Investments in Limited Partnerships and Limited Liability Companies:

The Company enters into and invests in limited partnerships in order to support Community Reinvestment Act activities.

The Company invests in Small Business Investment Company Program funds, a mission-driven financial institutions fund, and a technology consortium fund.

The Company is a limited partner in these investments and, as such, the Company is not involved in the management or operation of such investments.

The Company invests in Small Business Investment Company Program funds, a mission-driven financial institutions fund, a qualifying Minority Depository Institution, and a technology consortium fund.

The Company is a limited partner or limited member in these investments and, as such, the Company is not involved in the management or operation of such investments.

These investments are accounted for using the equity method of accounting.

Under the equity method of accounting, the Company records its share of the partnership’s earnings or losses in its income statement and adjusts the carrying amount of the investments on the consolidated balance sheet.

These investments are evaluated for impairment when events indicate the carrying amount may not be recoverable.

The investments recorded at

These investments are evaluated for impairment when events indicate the

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

December 31, 2024 and 2023 were $ 7.6 million and $ 6.2 million, respectively and are included with other assets in the consolidated balance sheet.

carrying amount may not be recoverable.

The investments recorded at December 31, 2025 and 2024 were $ 11.4 million and $ 7.6 million, respectively and are included with other assets in the consolidated balance sheet.

Investments in Tax Credit Structures:

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Prior to this, these investments were accounted for using the equity method.

During the year ended December 31, 2024, the Company recognized amortization expense of $ 794,000 , which was included within income tax expense on the consolidated statements of income.

During the years ended December 31, 2025 and 2024, the Company recognized amortization expense of $ 900,000 and $ 794,000 , which was included within income tax expense on the consolidated statements of income.

During the year ended December 31, 2023, the Company recognized amortization expense (investment loss) of $ 592,000 , which was included within other noninterest income on the consolidated statements of income.

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Costs incurred after acquisition are expensed.

At December 31, 2024 and 2023, the balance of other real estate owned was $ 284,000 and $ 384,000 , respectively, and is included with other assets on the consolidated balance sheet.

At December 31, 2025 and 2024, the balance of other real estate owned was zero and $ 284,000 , respectively, and is included with other assets on the consolidated balance sheet.

Land, Premises and Equipment, Net:

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The amortization of servicing rights is netted against mortgage banking income.

Servicing fees were $ 1.1 million for the year ended 2024 and $ 1.2 million for the years ended 2023 and 2022.

Servicing fees were $ 1.1 million for the years ended December 31, 2025 and 2024, and $ 1.2 million for the year ended December 31, 2023.

Late fees and ancillary fees related to loan servicing are not material.

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The unpaid principal balances of these loans were $ 294.5 million and $ 313.0 million at December 31, 2025 and 2024, respectively.

Custodial escrow balances maintained in connection with serviced loans were $ 1.7 million and $ 1.5 million at year end 2024 and 2023, respectively.

Custodial escrow balances maintained in connection with serviced loans were $ 1.7 million at December 31, 2025 and 2024.

Servicing fee income (loss), which is included in loan and service fees on the income statement, is recorded for fees earned for servicing loans.

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The fair value of the interest rate swap asset was $ 14.6 million and $ 25.4 million and the fair value of the interest rate swap liability was $ 14.6 million and $ 25.4 million at December 31, 2025 and 2024, respectively.

The Company is a party in a risk participation transaction of an interest rate swap, which had a total notional amount of $ 4.9 million at December 31, 2024.

The Company was not a party to such transactions at December 31, 2023.

The Company was a party in a risk participation transaction of an interest rate swap, which had a total notional amount of zero and $ 4.9 million at December 31, 2025 and 2024.

Bank Owned Life Insurance:

At December 31, 2025 and 2024, the Company owned $ 123.0 million and $ 107.3 million, respectively, of life insurance policies on certain officers to provide a life insurance benefit for these officers.

At December 31, 2024 and 2023, the Company also owned $ 6.0 million and $ 4.3 million, respectively, of variable life insurance on certain officers related to a deferred compensation plan.

At December 31, 2025 and December 31, 2024, the Company also owned $ 7.0 million and $ 6.0 million, respectively, of variable life insurance on certain officers related to a deferred compensation plan.

Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, i.e., the cash surrender value adjusted for other changes or other amounts due that are probable at settlement.

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For tax positions not meeting the "more likely than not" test, no tax benefit is recorded

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Off-Balance Sheet Financial Instruments:

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Because these shares are held in trust for the participants, they are treated as outstanding when computing the weighted-average common shares outstanding for the calculation of both basic and diluted earnings per share.

During the year ended December 31, 2025, the Company repurchased 337,890 shares of its common shares at a weighted average price of $ 58.03 per share.

Treasury stock is carried at cost using the treasury stock method.

Comprehensive Income (Loss):

Comprehensive income (loss) consists of net income and other comprehensive income (loss).

Comprehensive Income:

Comprehensive income consists of net income and other comprehensive income (loss).

Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, reclassification adjustments for securities transferred to held-to-maturity, reclassification adjustments for gains on the sale of available-for-sale securities and changes in the funded status of the pension plan, which are also recognized as separate components of equity.

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, which were filed in the United States Bankruptcy Court for the Western District of Michigan.

The Bank and other remaining individual defendants have settled the matter with the liquidating trustee and the case was dismissed with prejudice on June 21, 2024.

A $ 4.5 million accrual was recognized during the second quarter of 2024 related to the resolution of this matter and the expense was recorded within other expense on the consolidated statements of income.

In June 2024, the Bank and other remaining individual defendants settled the matter with the liquidating trustee and the case was dismissed with prejudice.

A $ 4.5 million accrual was recognized related to the resolution of this matter and paid during 2024.

The expense was recorded within other expense on the consolidated statements of income during the year ended December 31, 2024.

Restrictions on Cash:

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Executive Vice President, Chief Retail Banking Officer;

Senior Vice President, Chief Credit Officer;

Executive Vice President, Chief Credit Officer;

Senior Vice President, Chief Wealth Advisory Officer;

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Adoption of New Accounting Standards:

On March 28, 2023, the FASB issued ASU 2023-02, "Investments - Equity Method and Joint Ventures (ASC 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." ASU 2014-01, "Investments - Equity method and Joint Ventures (ASC 323):

Accounting for Investments in Qualified Affordable Housing Projects" , previously introduced the option to apply the proportional amortization method to account for investments made primarily for the purpose of receiving income tax credits and other income tax benefits when certain requirements are met;

however, this guidance limited the proportional amortization method to investments in low-income-housing tax credit ("LIHTC") structures.

The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of net income tax expense (benefit).

Equity investments in other tax credit structures are typically accounted for using the equity method, which results in investment income, gains and losses, and tax credits being presented gross on the income statement in their respective line items.

The amendments in this update permit reporting entities to elect to account for certain tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax benefits in the income statement as a component of income tax expense (benefit).

To qualify for the proportional amortization method, all of the following conditions must be met:

(1) It is probable that the income tax credits allocated to the tax equity investor will be available;

(2) The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project;

(3) Substantially all of the projected benefits are from income tax credits and other income tax benefits.

Projected benefits included income tax credits, other income tax benefits, and other non-income tax-related benefits.

The projected benefits are determined on a discounted basis, using a discount rate that is consistent with the cash flow assumptions used by the tax equity investor in making its decision to invest in the project;

(4) The tax equity investor's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive;

and (5) The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor's liability is limited to its capital investment.

An accounting policy election is allowed to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments.

The amendments in this update require specific disclosures that must be applied to all investments that generate income tax credits

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method.

The amendments require that a reporting entity disclose certain information in annual and interim reporting periods that enable investors to understanding the following information about its investments that generate income tax credits and other income tax benefits from a tax credit program including:

(1) The nature of its tax equity investments;

and (2) The effect of its tax equity investments and related income tax credits and other income tax benefits on its financial position and results of operations.

For public business entities, the amendments in this update are effective for fiscal years beginning after December 31, 2023, including interim periods within those fiscal years.

Early adoption is permitted in any interim period.

If early adoption is elected, the provisions shall be adopted as of the beginning of the fiscal year that includes the interim period of adoption.

The amendments in this update must be applied on either a modified retrospective or a retrospective basis.

The Company chose the modified retrospective approach and recorded a day one adjustment of ($ 532,000 ) to beginning retained earnings upon adoption of ASU 2023-02 on January 1, 2024, which did not have a material impact on the consolidated financial statements.

On November 27, 2023, the FASB issued ASU 2023-07, "Segment Reporting (ASC 280):

Improvements to Reportable Segment Disclosures" , intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Provisions in the amendment include:

(1) Requirement that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss (collectively referred to as the "significant expense principle");

(2) Requirement that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition.

The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss;

(3) Requirement that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by ASC 280 in interim periods;

(4) Clarification that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.

However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements;

(5) Requirement that a public entity disclose the title and position of the CODM and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources;

and (6) Requirement that a public entity that has a single reportable segment provide all the disclosures by the amendments in the update and all existing segment disclosures in ASC 280.

The amendments in the update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

For public business entities, amendments in the update should be applied retrospectively to all periods presented in the financial statements, and upon transition the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company adopted this standard effective January 1, 2024, and did not have a material impact on the consolidated financial statements.

Newly Issued But Not Yet Effective Accounting Standards:

On October 9, 2023, the FASB issued ASU 2023-06, "Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative" , which modified the disclosure or presentation requirements of a variety of Topics in the Codification and was intended to both clarify or improve such requirements and align the requirements with the SEC's regulations.

The amendments to Topics of Codification provided in this update apply to all reporting entities within the scope of the affected Topics unless otherwise indicated by the update.

Given the variety of Topics

amended, a broad range of entities may be affected by one or more of the amendments provided in the update.

The Company evaluated the amendments provided in the update and believes certain of the disclosure improvements are applicable to the

Company's interim or annual disclosures.

Subtopic 230-10, as amended, requires disclosure within the accounting policy in annual periods of where cash flows associated with derivative instruments and their related gains and losses are presented within the statement of cash flows.

Subtopic 260-10, as amended, requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim

Subtopic 470-10, as amended, requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest rate on short-term borrowings outstanding as of the date of each balance sheet presented.

The effective date for each amendment for entities subject to the SEC's existing disclosure requirements is the

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited.

The amendments in the update are to be applied prospectively.

The Company will apply prospectively the provisions provided

in the amendments as such provisions become effective, and does not believe the application of these modified disclosure requirements will have a material impact on the consolidated financial statements.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment in the Update will be removed from the Codification and will not become effective.

On December 13, 2023, the FASB issued ASU 2023-08, "Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

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If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.

The amendments in this update require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.

The Company is currently evaluating the impact of this update on its disclosures, however does not expect the adoption of this update to have a material impact on the consolidated financial statements based upon the nature of the Company's current operations.

The amendments in this

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

update require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.

This standard did not have an impact on the Company's consolidated financial statements based upon the nature of the Company's current operations.

On March 18, 2025, the FASB issued ASU 2025-02, "Liabilities (Topic 405):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

122" , which provided amendments to SEC paragraphs pursuant to Staff Accounting Bulletin 122.

This amendment removed text related to "Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Its Platform Users" from ASU 405-10-S99-1, as Staff Accounting Bulletin 122 rescinded the topic.

On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" , to address investor requests for greater transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments are designed to enhance transparency surrounding income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by taxing jurisdiction, which will allow investors to better assess, in their capital allocation decisions, how an entity's operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows.

Other amendments in this Update improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with the SEC's Regulation S-X 210.4-08(h), Rules of General Application-General Notes to Financial Statements:

Income Tax Expense , and (2) removing disclosures that are no longer considered cost beneficial or relevant.

Improvements to Income Tax Disclosures" , to address investor requests for greater transparency in regards to income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments are designed to enhance transparency surrounding income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation;

and (2) income taxes paid disaggregation by taxing jurisdiction, which will allow investors to better assess, in their capital allocation decisions, how an entity's operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows.

Other amendments in this update are designed to improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (loss) and income tax expense (benefit) to be consistent with the SEC's Regulation S-X 210.4-08(h), Rules of General Application-General Notes to Financial Statements:

Income Tax Expense;

and (2) removing disclosures that are no longer considered cost beneficial or relevant.

The amendments in this update are effective for public business entities for annual periods beginning after December 31, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments in this update should be applied on a prospective basis, however retrospective application is

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The amendments in this update should be applied on a prospective basis, however retrospective application is permitted.

The Company adopted ASU 2023-09 on January 1, 2025, however the adoption of this update did not have a material impact on the year-end consolidated financial statements and related footnotes.

Newly Issued But Not Yet Effective Accounting Standards:

On October 9, 2023, the FASB issued ASU 2023-06, "Disclosure Improvements:

The amendments to Topics of Codification provided in this update apply to all reporting entities within the scope of the affected Topics unless otherwise indicated by the update.

Given the variety of Topics amended, a broad range of entities may be affected by one or more of the amendments provided in the update.

The Company evaluated the amendments provided in the update and believes certain of the disclosure improvements are applicable to the Company's interim or annual disclosures.

The effective date for each amendment for entities subject to the SEC's existing disclosure requirements is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited.

The amendments in the update are to be applied prospectively.

The Company will apply prospectively the provisions provided in the amendments as such provisions become effective, and does not believe the application of these modified disclosure requirements will have a material impact on the consolidated financial statements.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment in the update will be removed from the Codification and will not become effective.

On November 8, 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses" , to improve the disclosures surrounding a public business entity's expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development).

Disaggregation of Income Statement Expenses" , to improve the disclosures surrounding a public business entity's expenses and address requests from investors for more detailed information

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development).

The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments require that at each interim and annual reporting period an entity (1) Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption.

A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the following expense categories listed in (a)-(e);

A relevant expense caption is an is an expense caption presented on the face of the income statement within continuing operations that contains any of the following expense categories listed in (a)-(e);

(2) Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as other disaggregation requirements;

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and (4) Disclose the total amount of selling expenses, and in annual reporting periods, an entity's definition of selling expenses.

An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods after December 15, 2027.

Early adoption is permitted.

An entity is not precluded from providing additional voluntarily disclosures that may provide investors with additional decision-useful information.

On January 6, 2025, the FASB issued ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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The update amends the effective date of Update 2024-03 to annual reporting periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027.

The Company is currently evaluating the impact of this update on its disclosures.

On September 18, 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal Use-Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software" , to modernize the accounting for software costs to better align the guidance with current software development practices.

Specifically, many entities have shifted from using a prescriptive and sequential ("linear") development method to using an incremental and iterative ("agile") development method, the latter of which is not contemplated in the current guidance and presents a challenge to stakeholders in determining when to begin capitalizing internal-use software costs.

The amendments in this update remove all references to linear project stages, and instead require an entity to start capitalizing software costs when both of the following occur:

(1) Management has authorized and committed to funding the software project and (2) It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold").

In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty").

The two factors to consider in determining whether the re is significant development uncertainty are whether:

(1) The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing and (2) The entity has determined what it needs the software to do, including whether the entity has identified or continues to substantially revise the software's significant performance requirements.

The amendments in the update specify that internal-use software costs must be disclosed according to applicable property, plant and equipment guidance, regardless of how such costs are presented in the financial statements.

Furthermore, the amendments in the update supersede website development costs guidance and incorporate the recognition requirements for website-specific development costs into Subtopic 350-40.

The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period.

The amendments in the update may be applied using a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption or a retrospective transition approach.

On November 12, 2025, the FASB issued ASU 2025-08, "Financial Instruments - Credit Losses (Topic 326):

Purchased Loans" , to expand the population of acquired financial assets subject to the gross-up approach in Topic 326.

In accordance with the amendments in this update, loans (excluding credit cards) acquired without credit deterioration and deemed "seasoned" are purchased seasoned loans and are accounted for using the gross-up approach at acquisition.

Specifically, after an entity determines that a loan is a non-purchased financial asset with credit deterioration ("PCD") asset based on its

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

assessment of credit deterioration experienced since origination, the entity should apply the guidance described in the amendments to determine whether the loan is seasoned and, therefore, should be accounted for using the gross-up approach.

All non-PCD loans (excluding credit cards) that are acquired in a business combination are deemed seasoned.

Other non-PCD loans (excluding credit cards) are seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans.

The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods.

The amendments in this update should be applied prospectively to loans that are acquired on or after the initial application date.

Early adoption is permitted in an interim or annual reporting period in which the financial statements have not yet been issued or made available for issuance.

If an entity adopts the amendments in an interim reporting period, it should apply the amendments as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

The Company does not anticipate this standard will have an impact on the Company's financial statements based upon the nature of the Company's current operations.

On December 8, 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270):

Narrow Scope Improvements" , to improve the guidance in Topic 270, by clarifying interim disclosure requirements and the applicability of Topic 270.

The amendments in this update result in a comprehensive list of interim disclosures that are required by GAAP.

In developing the list of disclosures required by other Topics, the Board focused on identifying the interim disclosures that are currently required under GAAP.

The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements.

The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods.

The amendments in this update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP.

The Board expects these clarifications will enhance consistency in interim financial reporting in interim for all entities and considers the amendments to be necessary to reflect the development of interim reporting over time.

The amendments in this update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2027, for entities other than public business entities.

Early adoption is permitted for all entities, and can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this update on its financial disclosures, however does not expect the adoption of this update to have a material impact on the consolidated financial statements.

On December 17, 2025, the FASB issued ASU 2025-12, "Codification Improvements" .

The amendments in this update represent changes that (1) clarify, (2) correct errors or (3) make minor improvements to the Codification.

The amendments are intended to make the Codification easier to understand and apply.

The amendments in this update are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear.

The amendments in this update are effective for all entities for annual reporting beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

If an entity adopts the amendments in this update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes the interim period.

An entity may elect to early adopt the amendments on an issue-by-issue basis.

For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date.

An entity may also elect the transition method on an issue-by-issue basis.

For example, it may apply certain amendments prospectively while applying others retrospectively.

The Company is currently evaluating the impact of the update on its financial disclosures, however does not expect the adoption of this update to have a material impact on the consolidated financial statements.

NOTE 2 – SECURITIES

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Available-for-Sale Securities

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at December 31, 2024 and 2023 is provided in the tables below.

(dollars in thousands) Amortized

Losses Allowance for Credit Losses Fair

Treasury securities $ 10,117 $ 2 $ 0 $ 0 $ 10,119

government sponsored agencies 136,772 82 ( 21,164 ) 0 115,690

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Held-to-Maturity Securities

Information related to the amortized cost, fair value and allowance for credit losses of securities held-to-maturity and the related gross gains and unrealized gains and losses at December 31, 2024 and 2023 is presented in the table below.

(dollars in thousands) Amortized

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State and municipal securities $ 131,568 $ 0 $ ( 18,461 ) $ 0 $ 113,107

On April 1, 2022, the Company elected to transfer securities from available-for-sale to held-to-maturity as an overall balance sheet management strategy.

The fair value of securities transferred was $ 127.0 million from available-for-sale to held-to-maturity.

The Company has the current intent and ability to hold the transferred securities until maturity.

Any net unrealized gain or loss on the transferred securities included in accumulated other comprehensive income (loss) at the time of the transfer will be amortized over the remaining life of the underlying security as an adjustment to the yield on those securities.

The unrealized loss on the securities transferred from available-for-sale to held-to-maturity was $ 24.4 million ($ 19.3 million, net of tax) based on the fair value of the securities on the transfer date and has amortized down to $ 19.0 million ($ 15.0 million, net of tax) at December 31, 2024.

NOTE 2 – SECURITIES (continued)

Information regarding the fair value and amortized cost of available-for-sale and held-to-maturity debt securities by maturity as of December 31, 2024 is presented below.

All of the Company's securities designated as held-to-maturity were transferred from the available-for-sale classification.

The net unrealized gain or loss on the transferred securities was recorded as a component of accumulated other comprehensive income (loss) at the time of the transfer and is amortized over the remaining life of the underlying securities as an adjustment to the yield on those securities.

The net amount of the unrealized loss on the securities included in accumulated other comprehensive income (loss) was $ 17.0 million ($ 13.4 million, net of tax) at December 31, 2025.

Information regarding the fair value and amortized cost of available-for-sale and held-to-maturity debt securities by maturity as of December 31, 2025 is presented one the next page.

Maturity information is based on contractual maturity for all securities other than mortgage-backed securities.

Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without prepayment penalty.

NOTE 2 – SECURITIES (continued)

Available-for-Sale Held-to-Maturity

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Securities with fair values of $ 546.8 million and $ 560.2 million were pledged as of December 31, 2025 and 2024, respectively, as collateral for borrowings from the FHLB and Federal Reserve Bank and for other purposes as permitted or required by law.

NOTE 2 – SECURITIES (continued)

Unrealized Loss Analysis on Available-for-Sale and Held-to-Maturity Securities

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Value Unrealized Losses

Treasury securities $ 5,107 $ 0 $ 0 $ 0 $ 5,107 $ 0

government sponsored agencies 0 0 105,609 21,164 105,609 21,164

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Total temporarily impaired $ 36,132 $ 688 $ 943,487 $ 190,487 $ 979,619 $ 191,175

NOTE 2 – SECURITIES (continued)

Information regarding held-to-maturity securities with unrealized losses as of December 31, 2025 and 2024 is presented below.

The table divides the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

Less than 12 months 12 months or more Total

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State and municipal securities $ 0 $ 0 $ 113,107 $ 18,461 $ 113,107 $ 18,461

NOTE 2 – SECURITIES (continued)

The number of securities with unrealized losses as of December 31, 2025 and 2024 is presented below.

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or more Total

Treasury securities 1 0 1 0 0 0

government sponsored agencies 0 17 17 0 0 0

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Accrued interest receivable on available-for-sale and held-to-maturity debt securities totaled $ 7.8 million and $ 7.5 million at December 31, 2025 and 2024, respectively, and is excluded from the estimate of credit losses.

NOTE 2 – SECURITIES (continued)

Ninety-nine percent of the securities are backed by the U.S.

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State and municipal securities credit losses are benchmarked against highly rated municipal securities of similar duration, as published by Moody's, resulting in an immaterial allowance for credit losses.

On April 8, 2024, Visa Inc.

announced the commencement of an exchange offer for Visa Class B-1 common stock, which was being carried at a historical cost basis of zero on the Company's balance sheet.

On May 7, 2024, the Bank received notice that Visa had accepted the Bank's tender of its 23,804 shares of Visa Class B-1 common stock in exchange for a combination of Visa Class B-2 common stock and Visa Class C common stock, which are carried at fair value.

Subsequent to the exchange and during the second quarter of 2024, the Bank sold its Visa Class B-2 common stock, which resulted in a realized gain of $ 3.9 million.

During the second and third quarters of 2024, the Bank liquidated its Visa Class C common stock, which resulted in a net realized gain of $ 5.1 million.

The Bank remains a party of a makewhole agreement with Visa as a requirement of entering the exchange.

The Bank did not record a liability as of December 31, 2024 under the terms of this agreement as a loss was neither probable nor estimable at this time.

In 2024, Visa Inc.

announced an exchange offer for Visa Class B-1 common stock.

At the time of the announcement the Bank held 23,804 shares of stock which were being carried at a historical cost basis of zero on the Company's consolidated balance sheet.

The Bank elected to enter the exchange program and tendered all of its shares of Class B-1 common stock.

The tender was accepted by Visa in exchange for a combination of its Class B-2 common stock and Class C common stock, which were carried by the Bank at fair value.

After the completion of the exchange, the Bank converted its remaining Class B-2 common stock to Class C common stock and liquidated all shares resulting in a net gain of $ 9.0 million that was recognized in 2024.

The Bank remains a party to a makewhole agreement with Visa as a requirement of entering the exchange.

The Bank did not record a liability as related to the terms of the agreement at December 31, 2025 or 2024 as a loss was neither probable nor estimable at the time .

NOTE 3 – LOANS

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The recorded investment in loans does not include accrued interest, which totaled $ 20.7 million and $ 20.3 million at December 31, 2025 and 2024, respectively.

The Company had $ 424,000 and $ 238,000 in residential real estate loans in process of foreclosure as of December 31, 2024 and 2023, respectively.

The Company had $ 1.5 million and $ 424,000 in residential real estate loans in process of foreclosure as of December 31, 2025 and 2024, respectively.

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2024, 2023 and 2022:

The following tables present the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2025, 2024 and 2023:

(dollars in thousands) Commercial

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Ending balance $ 30,338 $ 31,335 $ 4,150 $ 1,129 $ 3,474 $ 1,174 $ 372 $ 71,972

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with "Not Rated" loans.

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with "Not Rated" loans.

Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Substandard 300 0 2,057 924 211 230 3,722 27,759 31,481

Doubtful 0 3,090 39,994 0 0 0 43,084 0 43,084

Total 6,163 1,405 2,076 987 1,277 564 12,472 699,043 711,515

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Special Mention 0 0 11,321 59 0 0 11,380 0 11,380

Substandard 0 0 0 0 0 0 0 1,957 1,957

Total 184,183 114,323 119,732 128,926 93,880 154,390 795,434 127,612 923,046

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Special Mention 286 0 0 0 0 0 286 0 286

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Pass 384 0 939 120 22 0 1,465 37,683 39,148

Special Mention 0 0 475 0 157 0 632 0 632

Substandard 0 35 273 91 6 11 416 0 416

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Total current period gross write offs $ 5 $ 189 $ 306 $ 28,797 $ 60 $ 58 $ 29,415 $ 999 $ 30,414

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Substandard 0 0 933 0 195 219 1,347 25,878 27,225

Doubtful 0 3,090 39,994 0 0 0 43,084 0 43,084

Total 1,599 3,204 42,567 1,647 846 219 50,082 599,358 649,440

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Substandard 0 2,986 1,598 107 4,142 584 9,417 406 9,823

Doubtful 0 0 0 21 386 0 407 0 407

Not Rated 1,297 1,657 1,149 395 395 23 4,916 0 4,916

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Pass 23,264 69,737 43,228 2,566 0 0 138,795 426,577 565,372

Special Mention 603 0 0 0 0 0 603 0 603

Total 23,867 69,737 43,228 2,566 0 0 139,398 426,577 565,975

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Current period gross write offs 0 0 0 0 0 0 0 0 0

Multi-family loans:

Pass 90,954 23,315 9,042 35,648 13,971 14,609 187,539 45,987 233,526

Special Mention 19,671 0 0 0 0 0 19,671 0 19,671

Total 110,625 23,315 9,042 35,648 13,971 14,609 207,210 45,987 253,197

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Multi-family loans (continued):

Pass 70,497 61,679 11,708 52,995 29,177 9,794 235,850 108,486 344,336

Special Mention 0 0 307 0 0 0 307 0 307

Total 70,497 61,679 12,015 52,995 29,177 9,794 236,157 108,486 344,643

Multi-family loans:

Current period gross write offs 0 0 0 0 0 0 0 0 0

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Pass 14,574 21,241 29,601 23,043 25,192 18,312 131,963 24,249 156,212

Special Mention 122 209 0 0 0 0 331 0 331

Substandard 0 0 0 0 0 71 71 0 71

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Current period gross write offs 0 0 0 0 0 0 0 0 0

Open end and junior lien loans:

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

(dollars in thousands) 2024 2023 2022 2021 2020 Prior Term Total Revolving Total

Open end and junior lien loans (continued):

Pass 574 738 0 438 0 5 1,755 10,090 11,845

Special Mention 0 0 0 0 309 0 309 0 309

Substandard 0 104 0 15 0 81 200 118 318

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Total 10,030 1,154 2,045 1,386 759 1,348 16,722 0 16,722

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

(dollars in thousands) 2023 2022 2021 2020 2019 Prior Term Total Revolving Total

Residential construction loans (continued):

Residential construction loans:

Current gross period write offs 0 0 0 0 0 0 0 0 0

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Pass 79 971 234 109 0 0 1,393 20,742 22,135

Special Mention 0 0 475 0 157 0 632 0 632

Substandard 0 128 54 76 17 0 275 0 275

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Total current period gross write offs $ 49 $ 686 $ 409 $ 575 $ 179 $ 910 $ 2,808 $ 660 $ 3,468

As of December 31, 2024 and 2023, $ 1.2 million and $ 1.3 million, respectively, in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans.

As of December 31, 2025 and 2024, $ 1.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans.

These loans were included in this risk rating category because they are fully guaranteed by the Small Business Administration ("SBA").

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and the payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2024 and 2023 by class of loans and loans past due 90 days or more and still accruing by class of loan:

The following tables present the aging of the amortized cost basis in past due loans as of December 31, 2025 and 2024 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands) Loans Not Past Due 30-89 Days Past Due Greater than 89 Days Past Due and Accruing Total Accruing Total Nonaccrual Nonaccrual With No Allowance For Credit Loss Total

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An insignificant amount of interest income was recognized on nonaccrual loans during the twelve months ended December 31, 2025.

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Significant year over year changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Owner occupied loans 318 3,512 0 3,830

Nonowner occupied loans 0 0 0 0

Agri-business and agricultural loans:

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Total $ 3,698 $ 74,191 $ 738 $ 78,627

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

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Because the effect of most modifications to borrowers experiencing financial difficulty is already included in the allowance for credit losses, no change to the allowance for credit losses is generally recorded for these modifications.

During the twelve months ended December 31, 2024, there were an insignificant amount of modifications to borrowers experiencing financial difficulty.

The following table presents the amortized cost basis at the end of the reporting period of loans that were experiencing financial difficulty and received a modification of terms during the twelve months ended December 31, 2023, by class and type of modification.

The following tables present the amortized cost basis of loans that were experiencing financial difficulty and received a modification of terms for the years ended December 31, 2025, 2024, and 2023, by class and type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables at the end of the reporting period is also presented below:

(dollars in thousands) Combination Principal Forgiveness and Interest Rate Reduction Total Modifications Total Class of Financing Receivable

Consumer 1-4 family mortgage loans:

Open end and junior lien loans $ 1,728 $ 1,728 0.68 %

Total consumer 1-4 family mortgage loans 1,728 1,728 0.32

Total consumer loans 1,728 1,728 0.26

Total loan modifications made to borrowers experiencing financial difficulty $ 1,728 $ 1,728 0.03 %

The Company had no material commitments to lend additional funds to borrowers included in the previous table at December 31, 2025.

During the year ended December 31, 2024, there were an insignificant amount of modifications to borrowers experiencing financial difficulty.

(dollars in thousands) Interest Rate Reduction Combination Interest Rate Reduction, Term Extension and Payment Delay Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay Total Modifications Total Class of Financing Receivable

Twelve Months Ended December 31, 2023

Commercial and industrial loans:

2 unchanged sentences

Total commercial and industrial loans 944 1,912 1,572 4,428 0.31

Total commercial loans 944 1,912 1,572 4,428 0.10

Total loan modifications made to borrowers experiencing financial difficulty $ 944 $ 1,912 $ 1,572 $ 4,428 0.09 %

The Company had no material commitments to lend additional funds to borrowers included in the previous table at December 31, 2023.

Table of Content s

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

The following table presents the financial effect of the loan modifications presented above for material modifications to borrowers experiencing financial difficulty for the twelve months ended December 31, 2023:

The following tables present the financial effect of the loan modifications presented above for material modifications to borrowers experiencing financial difficulty for the years ended December 31, 2025, 2024, and 2023:

(dollars in thousands) Principal Forgiveness Weighted Average Interest Rate Reduction

Commercial and industrial loans:

Working capital lines of credit loans (1) $ 28,607 7.00 %

Total commercial and industrial loans 28,607 7.00 %

Total commercial loans 28,607 7.00 %

Total financial effect of loan modifications made to borrowers experiencing financial difficulty $ 28,607 7.00 %

(1) Principal forgiveness of $ 28.6 million represents one $ 30.6 million working capital line of credit loan, of which $ 28.6 million was charged off.

The remaining $ 2.0 million was financed into an open end and junior lien loan with a personal guarantor of the forgiven loan.

The modified note is collateralized by several of the guarantor's commercial and residential real estate properties.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

At December 31, 2025, no loans receiving such a modification within the last twelve months were 30 days or greater past due and no loans have experienced a payment default.

(dollars in thousands) Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension Payment Delay

Twelve Months Ended December 31, 2023

Commercial and industrial loans:

3 unchanged sentences

Total commercial and industrial loans 9,380 7.84 44 months

Total commercial loans 9,380 7.84 44 months

Total modifications $ 9,380 7.84 % 44 months

(1) Principal forgiveness of $ 9.4 million represents one $ 11.0 million non-working capital loan, of which $ 3.7 million and $ 5.6 million was charged off during the twelve months ended December 31, 2023 and 2022, respectively.

(1) Principal forgiveness of $ 9.4 million represents one $ 11.0 million non-working capital loan, of which $ 9.3 million was charged off.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

At December 31, 2024, no loans receiving such a modification within the last twelve months were 30 days or greater past due.

At December 31, 2024, no loans receiving a modification due to borrower financial difficulty within the last twelve months has experienced a payment default.

At December 31, 2023, no loans receiving such a modification within the last twelve months were 30 days or greater past due and no loans have experienced a payment default.

Upon the Company's determination that a modified loan (or portion thereof) has subsequently been deemed uncollectible, the loan (or a portion thereof) is written off.

28 unchanged sentences

The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

NOTE 5 – FAIR VALUE (continued)

Interest rate swap derivatives:

2 unchanged sentences

The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position.

The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing

NOTE 5 – FAIR VALUE (continued)

The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

37 unchanged sentences

(dollars in thousands) Level 1 Level 2 Level 3 at Fair Value

Treasury securities $ 10,119 $ 0 $ 0 $ 10,119

government sponsored agency securities 0 115,690 0 115,690

6 unchanged sentences

Total assets $ 10,119 $ 1,052,191 $ 4,501 $ 1,066,811

Mortgage banking derivative $ 0 $ 8 $ 0 $ 8

Interest rate swap derivative 0 14,634 0 14,634

10 unchanged sentences

Total assets $ 0 $ 1,012,263 $ 4,660 $ 1,016,923

Mortgage banking derivative $ 0 $ 11 $ 0 $ 11

Interest rate swap derivative $ 0 $ 25,403 $ 0 $ 25,403

11 unchanged sentences

Owner occupied loans 0 0 811 811

Nonowner occupied loans 0 0 1,543 1,543

Agri-business and agricultural loans:

Loans secured by farmland 0 0 18 18

Consumer 1‑4 family mortgage loans:

Open end and junior lien loans 0 0 1,523 1,523

Total collateral dependent loans 0 0 7,286 7,286

11 unchanged sentences

Total collateral dependent loans 0 0 27,151 27,151

Other real estate owned 0 0 384 384

Total assets $ 0 $ 0 $ 27,151 $ 27,151

5 unchanged sentences

Collateral dependent loans:

Commercial real estate and multi-family residential 664 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 54 %

Commercial real estate and

multi-family residential 2,354 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 28 %

Collateral dependent loans:

Loans secured by farmland 18 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 62 %

Collateral dependent loans:

Consumer 1-4 family mortgage 1,523 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 12 %

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2024:

6 unchanged sentences

Loans secured by farmland 32 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 54 %

Other real estate owned 384 Appraisals Discount to reflect current market conditions and ultimate collectability 36 %

NOTE 5 – FAIR VALUE (continued)

16 unchanged sentences

All other deposits 5,222,624 5,222,624 0 0 5,222,624

Federal Home Loan Bank advances:

Short-term advance 170,000 169,998 0 0 169,998

Long-term advance 1,200 0 792 0 792

Other borrowings 13,000 0 12,997 0 12,997

Mortgage banking derivative 8 0 8 0 8

Interest rate swap derivative 14,634 0 14,634 0 14,634

16 unchanged sentences

All other deposits 5,045,090 5,045,090 0 0 5,045,090

Federal Home Loan Bank advances 50,000 50,000 0 0 50,000

Mortgage banking derivative 11 0 11 0 11

Interest rate swap derivative 25,403 0 25,403 0 25,403

30 unchanged sentences

Total deposits $ 5,973,350 $ 5,900,966

NOTE 8 – DEPOSITS (continued)

At December 31, 2025, the scheduled maturities of time deposits were as follows:

7 unchanged sentences

Total time deposits $ 750,726

During 2023 the Bank entered into agreements with IntraFi Network relative to their Insured Cash Sweep One-Way Buy program.

As of December 31, 2023 the total amount available to the Bank via this program was $ 100.0 million, of which, $ 10.0 million was drawn.

During 2024 the agreement was terminated, and no amounts were outstanding or available as of December 31, 2024.

NOTE 9 – BORROWINGS

The following table details outstanding fixed rate bullet advances with the Federal Home Loan Bank ("FHLB") of Indianapolis for the years ended December 31, 2024 and 2023:

The following table details outstanding fixed rate bullet advances with the Federal Home Loan Bank of Indianapolis ("FHLBI") for the years ended December 31, 2025 and 2024:

(dollars in thousands) 2025 2024

Federal Home Loan Bank of Indianapolis $ 0 $ 50,000

The advance outstanding at December 31, 2023 was a fixed-rate bullet advance and could not be prepaid by the Company without a penalty.

The advance had an interest rate of 5.55 % and matured on January 5, 2024.

Short-term fixed rate bullet advance, 3.79 %, due January 8, 2026

$ 170,000 $ 0

Long-term fixed rate bullet advance, 0.00 %, due March 12, 2035

Total $ 171,200 $ 0

For the year ended December 31, 2025, the Company had advances outstanding from the FHLBI of $ 171.2 million.

The short-term fixed rate bullet advance advance could not be prepaid by the Company without a penalty.

The note required payment at maturity and was secured by residential real estate loans and securities with a carrying value of $ 925.6 million at December 31, 2025.

At December 31, 2024 and 2023, the Company owned $ 18.0 million of FHLB stock, which also secures debts owed to the FHLB.

The Company is authorized by the Board to borrow up to $ 800.0 million at the FHLB, but availability is limited to $ 555.9 million based on collateral and outstanding borrowings.

The long-term fixed rate bullet advance is a rate-subsidized Community Development Financial Institution ("CDFI") Rate Buydown Advance offered by the FHLBI to fund a low cost loan to a qualifying CDFI.

There were no borrowings outstanding with the FHLBI at December 31, 2024.

At December 31, 2025 and 2024, the Company owned $ 18.0 million of FHLB stock, which also secures debts owed to the FHLBI.

The Company is authorized by the Board to borrow up to $ 800.0 million at the FHLBI, but availability is limited to $ 473.6 million based on collateral and outstanding borrowings.

Federal Reserve Discount Window borrowings were secured by commercial loans and investment securities with a carrying value of $ 1.47 billion and $ 1.71 billion as of December 31, 2025 and 2024, respectively.

1 unchanged sentence

There were no borrowings outstanding at the Federal Reserve Bank at December 31, 2025 and 2024.

The Company enrolled in the Federal Reserve Bank Term Funding Program that was initiated in March 2023 and had available borrowings secured by investment securities with a collateral value of $ 150.5 million as of December 31, 2023.

There were no borrowings outstanding under the Bank Term Funding Program as of December 31, 2023.

The Bank Term Funding Program was officially closed in March of 2024 whereupon the investment securities pledged as collateral by the Company were released by the Federal Reserve Bank.

The Company had $ 395.0 million and $ 325.0 million of availability in federal funds lines with thirteen and eleven correspondent banks as of December 31, 2024 and 2023, respectively;

The Company had $ 395.0 million of availability in federal funds lines with thirteen correspondent banks as of both December 31, 2025 and 2024;

no amounts were drawn upon as of either year-end.

3 unchanged sentences

There were no amounts drawn as of December 31, 2025 and 2024.

NOTE 9 – BORROWINGS (continued)

On October 11, 2023, the Company entered into an unsecured revolving credit agreement with another financial institution allowing the Company to borrow up to $ 30.0 million.

this credit agreement was subsequently amended and renewed on October 2, 2024 and renews annually thereafter.

There were no borrowings outstanding on the credit agreement at December 31, 2024 or December 31, 2023.

The credit agreement has a one year term which may be amended, extended, modified or renewed.

The credit agreement was subsequently amended and renewed in 2024 and most recently on October 10, 2025.

Funds provided under the agreement may be used to repurchase shares of the Company's common stock under the share repurchase program, which was reauthorized by the Company's board of directors on April 8, 2025 and expires on April 30, 2027, and for general operations.

The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of the Bank.

The credit agreement has a one year term which may be amended, extended, modified or renewed.

The credit agreement had an outstanding balance of $ 13.0 million and zero at December 31, 2025 and 2024 , respectively.

The outstanding balance of the credit agreement at December 31, 2025 was repaid by the Company on January 14, 2026.

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS

28 unchanged sentences

Net actuarial loss $ 464 $ 469 $ 240 $ 288

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

The accumulated benefit obligation for the pension plan was $ 1.3 million and $ 1.2 million for December 31, 2025 and 2024, respectively.

The accumulated benefit obligation for the SERP was $ 540,000 and $ 620,000 for December 31, 2025 and 2024, respectively.

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

Net period benefit cost and other amounts recognized in other comprehensive income (loss) include the following:

15 unchanged sentences

For 2025, 2024 and 2023, the assumed form of payment elected by active participants upon retirement was a lump sum to reflect participant trends.

The lump sum assumed interest rates, on the next page, for December 31, 2024, 2023 and 2022 reflect the mortality table in effect for 2024, 2023 and 2022, respectively.

The lump sum assumed interest rates, on the next page, for 2025, 2024 and 2023 reflect the mortality table in effect for 2025, 2024 and 2023, respectively.

For 2025, 2024 and 2023, the mortality assumption was the PRI-2012 White Collar Mortality Table, with full generational Projection Scale MP-2021 at year-end.

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

The following assumptions were used in calculating the net benefit obligation:

Pension Benefits SERP Benefits

2025 2024 2023 2025 2024 2023

The following assumptions were used in calculating the net benefit obligation:

Weighted average discount rate 5.09 % 5.46 % 4.83 % 5.09 % 5.46 % 4.83 %

7 unchanged sentences

Expected long-term rate of return 6.50 % 6.50 % 6.50 % 6.50 % 6.50 % 6.50 %

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

Pension Plan and SERP Assets

12 unchanged sentences

Certain asset types and investment strategies are prohibited including, the investment in commodities, options, futures, short sales, margin transactions and non-marketable securities.

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

The Company’s pension plan asset allocation at year end 2025 and 2024, target allocation for 2026, and expected long-term rate of return by asset category are as follows:

22 unchanged sentences

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

Equity and debt securities:

1 unchanged sentence

This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

The fair values of the Company’s pension plan assets at December 31, 2025, by asset category are as follows:

11 unchanged sentences

Debt securities - short term bond mutual funds 264 264 0 0

Debt securities - high yield bond mutual funds 54 54 0 0

Debt securities - preferred stock mutual funds 53 53 0 0

14 unchanged sentences

Debt securities - short term bond mutual funds 172 172 0 0

Debt securities - high yield bond mutual funds 18 18 0 0

Debt securities - nontraditional bond mutual funds 12 12 0 0

Debt securities - bank loan mutual funds 35 35 0 0

Debt securities - preferred stock mutual funds 34 34 0 0

3 unchanged sentences

NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued)

The fair values of the Company’s SERP assets at December 31, 2024, by asset category are as follows:

T he fair values of the Company’s SERP assets at December 31, 2025, by asset category are as follows:

Asset Category Total Quoted Prices

20 unchanged sentences

(dollars in thousands)

Equity securities - US large cap common stocks $ 236 $ 236 $ 0 $ 0

Equity securities - US large cap stock mutual funds $ 82 $ 82 $ 0 $ 0

Equity securities - US mid cap stock mutual funds 28 28 0 0

Equity securities - US small cap stock mutual funds 15 15 0 0

Equity securities - US large cap exchange traded funds 105 105 0 0

Equity securities - emerging markets stock mutual funds 14 14 0 0

2 unchanged sentences

Debt securities - short term bond mutual funds 36 36 0 0

Debt securities - high yield bond mutual funds 5 5 0 0

Debt securities - nontraditional bond mutual funds 4 4 0 0

Debt securities - bank loan mutual funds 10 10 0 0

Debt securities - preferred stock mutual funds 10 10 0 0

20 unchanged sentences

A liability is accrued by the Company for its obligation under this plan.

The expense (benefit) recognized was $ 1.4 million, $ 425,000 and ($ 1.0 ) million during the years ended December 31, 2024, 2023 and 2022, respectively.

The expense recognized was $ 673,000 , $ 1.4 million and $ 425,000 during the years ended 2025, 2024 and 2023, respectively.

This resulted in a deferred compensation liability of $ 6.4 million and $ 5.6 million as of year end 2025 and 2024, respectively.

8 unchanged sentences

NOTE 12 – INCOME TAXES

Pretax income is entirely related to domestic activities.

The Company did not have any foreign operations or foreign tax expense for the periods presented below.

Income tax expense for the years ended December 31, 2025, 2024 and 2023 consisted of the following:

5 unchanged sentences

Total income tax expense $ 22,222 $ 18,211 $ 16,566

For the year ended December 31, 2025, the Company adopted ASU 2023-09, " Income Taxes (Topic 740):

Improvements to Income Tax Disclosures " on a prospective basis.

The differences between financial statement tax expense and amounts computed by applying the statutory federal income tax rate of 21 % to income before income taxes were as follows:

(dollars in thousands) 2025

Federal statutory rate $ 26,372 21.0 %

State and local income taxes, net of federal benefits ( 9 ) 0.0

Tax credits, net of amortization and losses ( 164 ) ( 0.1 )

Nontaxable or nondeductible items:

Tax exempt income ( 3,501 ) ( 2.8 )

Bank owned life insurance ( 921 ) ( 0.7 )

Long-term incentive plan and deferred compensation 10 0.0

Nondeductible compensation expense 190 0.1

Other nondeductible expenses 288 0.2

Other ( 43 ) 0.0

Total income tax expense $ 22,222 17.7 %

For 2024 and 2023 the differences between financial statement tax expense and amounts computed by applying the statutory federal income tax rate of 21 % to income before income taxes were as follows:

(dollars in thousands) 2024 2023

Income taxes at statutory federal rate of 21% $ 23,455 $ 23,170

1 unchanged sentence

Tax exempt income ( 3,712 ) ( 4,226 )

Nondeductible expense 280 269 159

Nondeductible expenses 280 269

State income tax, net of federal tax effect ( 718 ) ( 716 )

Captive insurance premium income 0 ( 261 )

Tax credit investments ( 150 ) ( 713 ) ( 586 )

Tax credits, net of amortization and losses ( 150 ) ( 713 )

Bank owned life insurance ( 903 ) ( 658 )

3 unchanged sentences

Total income tax expense $ 18,211 $ 16,566

During the year ended December 31, 2025, the Company paid federal income taxes of $ 16.4 million and received a refund from the State of Indiana for $ 30,000 .

NOTE 12 – INCOME TAXES (continued)

The net deferred tax asset recorded in the consolidated balance sheets at December 31, 2024 and 2023 consisted of the following:

The net deferred tax asset recorded in the consolidated balance sheets at December 31, 2025 and December 31, 2024 consisted of the following:

(dollars in thousands) 2025 2024

31 unchanged sentences

The Company did no t have any unrecognized tax benefits at December 31, 2025 or 2024.

The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.

No interest or penalties were recorded in the income statement and no amount was accrued for interest and penalties for the periods ending December 31, 2025, 2024 and 2023.

1 unchanged sentence

The Company and its subsidiaries file a consolidated U.S.

federal tax return and a combined unitary return in the States of Indiana and Michigan.

federal tax return and a combined unitary return in the State of Indiana.

These returns are subject to examinations by authorities for all years after 2021.

7 unchanged sentences

Ending balance $ 105,279 $ 131,734

Deposits from principal officers, directors, and their affiliates at year end 2024 and 2023 were $ 24.7 million and $ 22.5 million, respectively.

Deposits from principal officers, directors, and their affiliates at year end December 31, 2025 and 2024 were $ 33.1 million and $ 24.7 million, respectively.

The Company and Bank are an investor in certain funds managed by Centerfield Capital ("Centerfield"), a private equity investment firm.

12 unchanged sentences

As of December 31, 2025, 22,548 shares were available for future grants in the 2017 Plan, which is the only active plan.

Effective April 9, 2025, the Company adopted the Lakeland Financial Corporation 2025 Equity Incentive Plan (the "2025 Plan"), which was approved by the Company's stockholders and does not permit recycling.

At its inception, there were 1,100,000 shares of common stock reserved for grants of stock options, stock appreciation rights, stock awards and cash incentive awards to employees of the Company, its subsidiaries and Board.

There were no shares granted from the 2025 Plan during the year ended December 31, 2025.

Certain stock awards provide for accelerated vesting if there is a change in control.

The Company has a policy of issuing new shares to satisfy exercises of stock awards.

Included in net income for the years ended December 31, 2024, 2023 and 2022 was employee stock compensation expense of $ 4.6 million, $ 3.7 million and $ 7.8 million, and a related tax benefit of $ 1.1 million, $ 908,000 and $ 2.0 million, respectively.

Included in net income for the years ended December 31, 2025, 2024 and 2023 was employee stock compensation expense of $ 8.6 million, $ 4.6 million and $ 3.7 million, and a related tax benefit of $ 1.9 million, $ 1.1 million and $ 908,000 , respectively.

Stock Options

3 unchanged sentences

Expected volatility is based on historical volatility of the Company’s stock over the immediately preceding expected life period, as well as other factors known on the grant date that would have a significant effect on the stock price during the expected life period.

The expected stock option life used is the historical option life of the similar employee base or Board.

The turnover rate is based on historical data of the similar employee base as a group

The expected stock option life used is the historical option

NOTE 14 – STOCK BASED COMPENSATION (continued)

and the Board as a group.

life of the similar employee base or Board.

The turnover rate is based on historical data of the similar employee base as a group and the Board as a group.

The risk-free interest rate is the Treasury rate on the date of grant corresponding to the expected life period of the stock option.

14 unchanged sentences

The cost is expected to be recognized over a weighted period of 1.8 years.

The total fair value of shares vested during the years ended December 31, 2024, 2023 and 2022 was $ 1.1 million, $ 862,000 and $ 1.2 million, respectively.

The total fair value of shares vested during the years ended December 31, 2025, 2024 and 2023 was $ 2.1 million, $ 1.1 million and $ 862,000 , respectively.

Performance Stock Units

116 unchanged sentences

Total $ 46,196 $ 2,627,860 $ 63,898 $ 2,625,776

NOTE 17 – COMMITMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES (continued)

The index on variable rate commercial loan commitments is principally the national prime rate.

9 unchanged sentences

3.00 - 7.38 %

6.00 - 12.50 %

Consumer loan open-ended revolving line 15.00 %

19 unchanged sentences

Dividends payable and other liabilities $ 398 $ 653

Borrowings 13,000 0

STOCKHOLDERS’ EQUITY 762,403 683,822

Total liabilities and stockholders’ equity $ 775,801 $ 684,475

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

NOTE 18 – PARENT COMPANY STATEMENTS (continued)

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Years ended December 31,

3 unchanged sentences

Other income 17 2 5

Interest expense ( 102 ) 0 0

Miscellaneous expense ( 9,632 ) ( 5,642 ) ( 4,768 )

4 unchanged sentences

NET INCOME $ 103,361 $ 93,478 $ 93,767

COMPREHENSIVE INCOME (LOSS) $ 82,173 $ 127,495 $ ( 101,199 )

NOTE 18 – PARENT COMPANY STATEMENTS (continued)

COMPREHENSIVE INCOME $ 142,724 $ 82,173 $ 127,495

CONDENSED STATEMENTS OF CASH FLOWS

11 unchanged sentences

Cash flows from financing activities:

Proceeds from (payments on) other borrowings 13,000 0 0

Payments related to equity incentive plans ( 1,493 ) ( 2,815 ) ( 3,135 )

16 unchanged sentences

Weighted-average common shares outstanding for basic earnings per common share 25,687,159 25,676,543 25,604,751

Dilutive effect of assumed exercises of stock options and awards 92,475 118,414 184,210

Dilutive effect of assumed exercises of awards 111,888 92,475 118,414

Average shares and dilutive potential common shares 25,799,047 25,769,018 25,723,165

Diluted earnings per common share $ 4.01 $ 3.63 $ 3.65

There were no antidilutive stock options for 2024, 2023 and 2022.

There were no antidilutive stock awards for 2025, 2024 and 2023.

NOTE 20 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

4 unchanged sentences

Balance at January 1, 2025

$ ( 165,932 ) $ ( 568 ) $ ( 166,500 )

Other comprehensive income (loss) before reclassification 37,778 0 37,778

2 unchanged sentences

Balance at December 31, 2025

$ ( 126,609 ) $ ( 528 ) $ ( 127,137 )

(dollars in thousands) Unrealized

2 unchanged sentences

Balance at January 1, 2024

$ ( 154,460 ) $ ( 735 ) $ ( 155,195 )

Other comprehensive income (loss) before reclassification ( 13,058 ) 121 ( 12,937 )

2 unchanged sentences

Balance at December 31, 2024

$ ( 165,932 ) $ ( 568 ) $ ( 166,500 )

NOTE 20 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (continued)

12 unchanged sentences

Amortization of unrealized losses on held-to-maturity securities $ ( 1,957 ) Interest income

Realized gains and (losses) on available-for-sale securities ( 46 ) Net securities gains (losses)

Tax effect 412 Income tax expense

75 unchanged sentences

Year Ended Year Ended Year Ended

(dollars in thousands)

December 31, 2024 December 31, 2023 December 31, 2022

(dollars in thousands) December 31, 2025 December 31, 2024 December 31, 2023

Operating lease cost $ 863 $ 742 $ 724

8 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data