LAKELAND FINANCIAL CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stockholders and the Board of Directors of Lakeland Financial Corporation Warsaw, Indiana 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, 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: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 58 Table of Contents disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter 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. 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 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. Estimates of expected credit losses are based on relevant information about current conditions, past events, and reasonable and supportable forward-looking forecasts regarding collectability of the reported amounts. The Company utilized a Probability of Default/ Loss Given Default model derived from historical charge-off data to construct a loss rate for each identified loan segment. 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 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; and our audit procedures related to the qualitative adjustments involved a high degree of auditor judgment and required significant audit effort, including the need to involve more experienced audit personnel. The primary procedures we performed to address this critical audit matter included: • Testing th e effectiveness of controls over the qualitative adjustments used in the ACL calculation including controls addressing the: ◦ Significant assumptions and judgments applied in the development of the qualitative adjustments. ◦ Mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation. • Substantively testing management's determination of the qualitative adjustments used in the ACL estimate, including: ◦ Testing management's process for developing the qualitative adjustments, which included assessing the relevance and reliability of data used to develop the qualitative adjustments, including evaluating their judgments and assumptions for reasonableness. Among other procedures, our evaluation considered evidence from internal and external sources. ◦ Analytically evaluating the qualitative adjustments for directional consistency, testing for reasonableness, and obtaining evidence for significant changes. ◦ Testing the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation. /s/ Crowe LLP Crowe LLP We have served as the Company's auditor since 1983. Indianapolis, Indiana February 25, 2026 59 Table of Contents CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31 2025 2024 ASSETS Cash and due from banks $ 57,139 $ 71,733 Short-term investments 84,179 96,472 Total cash and cash equivalents 141,318 168,205 Securities available-for-sale, at fair value 1,052,062 991,426 Securities held-to-maturity, at amortized cost (fair value of $ 117,510 and $ 113,107 respectively) 133,208 131,568 Real estate mortgage loans held-for-sale 2,707 1,700 Loans, net of allowance for credit losses of $ 68,995 and $ 85,960 5,306,354 5,031,988 Land, premises and equipment, net 65,542 60,489 Bank owned life insurance 129,978 113,320 Federal Reserve and Federal Home Loan Bank stock 21,420 21,420 Accrued interest receivable 28,997 28,446 Goodwill 4,970 4,970 Other assets 103,466 124,842 Total assets $ 6,990,022 $ 6,678,374 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Noninterest bearing deposits $ 1,221,327 $ 1,297,456 Interest bearing deposits 4,752,023 4,603,510 Total deposits 5,973,350 5,900,966 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 Other liabilities 61,112 78,380 Total liabilities 6,227,530 5,994,463 Commitments, off-balance sheet risks and contingencies (Notes 1 and 17) STOCKHOLDERS’ EQUITY Common stock: 90,000,000 shares authorized, no par value 26,023,644 shares issued and 25,219,634 outstanding as of December 31, 2025 25,978,831 shares issued and 25,509,592 outstanding as of December 31, 2024 136,965 129,664 Retained earnings 788,345 736,412 Accumulated other comprehensive income (loss) ( 127,137 ) ( 166,500 ) Treasury stock, at cost ( 804,010 shares and 469,239 shares as of December 31, 2025 and 2024, respectively) ( 35,770 ) ( 15,754 ) Total stockholders’ equity 762,403 683,822 Noncontrolling interest 89 89 Total equity 762,492 683,911 Total liabilities and equity $ 6,990,022 $ 6,678,374 The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share and per share data) Years Ended December 31 2025 2024 2023 NET INTEREST INCOME Interest and fees on loans Taxable $ 335,856 $ 335,639 $ 304,130 Tax exempt 1,186 2,126 3,885 Interest and dividends on securities Taxable 14,055 12,048 13,153 Tax exempt 15,650 15,714 16,396 Other interest income 6,988 7,631 5,703 Total interest income 373,735 373,158 343,267 Interest on deposits 150,732 172,759 137,791 Interest on short-term borrowings 1,986 3,720 8,441 Total interest expense 152,718 176,479 146,232 NET INTEREST INCOME 221,017 196,679 197,035 Provision for credit losses 11,800 16,750 5,850 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 209,217 179,929 191,185 NONINTEREST INCOME Wealth advisory fees 11,365 10,469 9,080 Investment brokerage fees 2,198 1,894 1,815 Service charges on deposit accounts 11,474 11,157 10,773 Loan and service fees 12,294 11,832 11,750 Merchant and interchange fee income 3,416 3,542 3,651 Bank owned life insurance income 4,256 4,210 3,133 Interest rate swap fee income 83 0 794 Mortgage banking income (loss) 134 116 ( 254 ) Net securities gains (losses) 0 ( 46 ) ( 25 ) Net gain on Visa shares 0 8,996 0 Other income 2,751 4,674 9,141 Total noninterest income 47,971 56,844 49,858 NONINTEREST EXPENSE Salaries and employee benefits 75,293 66,728 59,147 Net occupancy expense 7,524 6,865 6,360 Equipment costs 5,716 5,612 5,632 Data processing fees and supplies 16,534 15,161 14,003 Corporate and business development 5,277 4,965 4,807 FDIC insurance and other regulatory fees 3,361 3,465 3,363 Professional fees 7,698 8,950 8,583 Wire fraud loss 0 0 18,058 Other expense 10,202 13,338 10,757 Total noninterest expense 131,605 125,084 130,710 INCOME BEFORE INCOME TAX EXPENSE 125,583 111,689 110,333 Income tax expense 22,222 18,211 16,566 NET INCOME $ 103,361 $ 93,478 $ 93,767 BASIC WEIGHTED AVERAGE COMMON SHARES 25,687,159 25,676,543 25,604,751 BASIC EARNINGS PER COMMON SHARE $ 4.02 $ 3.64 $ 3.67 DILUTED WEIGHTED AVERAGE COMMON SHARES 25,799,047 25,769,018 25,723,165 DILUTED EARNINGS PER COMMON SHARE $ 4.01 $ 3.63 $ 3.65 The accompanying notes are an integral part of these consolidated financial statements. 61 Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Years Ended December 31 2025 2024 2023 Net income $ 103,361 $ 93,478 $ 93,767 Other comprehensive income (loss) Change in available-for-sale and transferred securities: Unrealized holding gain (loss) on securities available-for-sale arising during the period 47,820 ( 16,530 ) 40,639 Reclassification adjustment for amortization of unrealized losses on securities transferred to held-to-maturity 1,957 1,962 1,987 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 Tax effect ( 10,454 ) 3,050 ( 8,957 ) Net of tax amount 39,323 ( 11,472 ) 33,694 Defined benefit pension plans: Net gain (loss) on defined benefit pension plans 0 160 ( 13 ) Amortization of net actuarial loss 53 62 59 Net gain on activity during the period 53 222 46 Tax effect ( 13 ) ( 55 ) ( 12 ) Net of tax amount 40 167 34 Total other comprehensive income (loss), net of tax 39,363 ( 11,305 ) 33,728 Comprehensive income $ 142,724 $ 82,173 $ 127,495 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) Accumulated Other Total Common Stock Retained Comprehensive Treasury Stockholders’ Noncontrolling Total Shares Amount Earnings Income (Loss) Stock Equity Interest Equity Balance at January 1, 2023 25,349,225 $ 127,004 $ 646,100 $ ( 188,923 ) $ ( 15,383 ) $ 568,798 $ 89 $ 568,887 Net income 93,767 93,767 93,767 Other comprehensive income, net of tax 33,728 33,728 33,728 Cash dividends declared, $ 1.84 per share ( 47,107 ) ( 47,107 ) ( 47,107 ) Treasury shares purchased under deferred directors' plan ( 10,073 ) 575 ( 575 ) 0 0 Treasury shares sold and distributed under deferred directors’ plan 12,855 ( 405 ) 405 0 0 Stock activity under equity incentive plans 78,559 ( 3,135 ) ( 3,135 ) ( 3,135 ) Stock based compensation expense 3,653 3,653 3,653 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 loss, net of tax ( 11,305 ) ( 11,305 ) ( 11,305 ) Cash dividends declared, $ 1.92 per share ( 49,294 ) ( 49,294 ) ( 49,294 ) Treasury shares purchased under deferred directors’ plan ( 9,394 ) 592 ( 592 ) 0 0 Treasury shares sold and distributed under deferred directors’ plan 13,275 ( 391 ) 391 0 0 Stock activity under equity incentive plans 75,145 ( 2,815 ) ( 2,815 ) ( 2,815 ) Stock based compensation expense 4,586 4,586 4,586 Balance at December 31, 2024 25,509,592 $ 129,664 $ 736,412 $ ( 166,500 ) $ ( 15,754 ) $ 683,822 $ 89 $ 683,911 Net income 103,361 103,361 103,361 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 Treasury shares sold and distributed under deferred directors’ plan 12,744 ( 375 ) 375 0 0 Stock activity under equity incentive plans 44,813 ( 1,493 ) ( 1,493 ) ( 1,493 ) Stock based compensation expense 8,557 8,557 8,557 Balance at December 31, 2025 25,219,634 $ 136,965 $ 788,345 $ ( 127,137 ) $ ( 35,770 ) $ 762,403 $ 89 $ 762,492 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31 2025 2024 2023 Cash flows from operating activities: Net income $ 103,361 $ 93,478 $ 93,767 Adjustments to reconcile net income to net cash from operating activities: Depreciation 5,978 5,953 6,173 Provision for credit losses 11,800 16,750 5,850 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 Loans originated for sale, including participations ( 18,180 ) ( 20,969 ) ( 8,601 ) Net gain on sales of loans ( 567 ) ( 556 ) ( 292 ) Proceeds from sale of loans, including participations 17,554 20,836 8,022 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 Stock based compensation expense 8,557 4,586 3,653 Earnings on life insurance ( 4,256 ) ( 4,210 ) ( 3,133 ) Gain on life insurance ( 220 ) ( 243 ) ( 131 ) Tax (benefit) expense of stock award issuances 136 ( 215 ) ( 718 ) Net change: Interest receivable and other assets ( 162 ) 1,284 ( 6,169 ) Interest payable and other liabilities ( 13,294 ) ( 10,656 ) 10,077 Total adjustments 11,526 9,007 20,214 Net cash from operating activities 114,887 102,485 113,981 Cash flows from investing activities: Proceeds from sale of securities available-for-sale 0 7,136 105,175 Proceeds from sales of Visa shares 0 8,996 0 Proceeds from maturities, calls and principal paydowns of securities available-for-sale 66,834 59,669 71,833 Proceeds from maturities, calls and principal paydowns of securities held-to-maturity 0 0 5 Purchases of securities available-for-sale ( 83,347 ) ( 27,517 ) ( 7,178 ) Purchase of life insurance ( 12,867 ) ( 331 ) ( 258 ) Net (increase) decrease in total loans ( 286,166 ) ( 204,176 ) ( 212,906 ) Proceeds from sales of land, premises and equipment 6 10 13 Purchases of land, premises and equipment ( 11,122 ) ( 8,634 ) ( 5,991 ) Purchases of Federal Home Loan Bank stock 0 0 ( 5,625 ) Proceeds from sales of other real estate owned 646 76 0 Proceeds from life insurance 595 536 0 Net cash from investing activities ( 325,421 ) ( 164,235 ) ( 54,932 ) Cash flows from financing activities: 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 ) Preferred dividends paid ( 13 ) ( 13 ) ( 13 ) Payments related to equity incentive plan ( 1,493 ) ( 2,815 ) ( 3,135 ) Purchase of treasury stock ( 20,391 ) ( 592 ) ( 575 ) Sales of treasury stock 375 391 405 Net cash from financing activities 183,647 78,131 ( 37,507 ) Net change in cash and cash equivalents ( 26,887 ) 16,381 21,542 Cash and cash equivalents at beginning of the year 168,205 151,824 130,282 Cash and cash equivalents at end of the year $ 141,318 $ 168,205 $ 151,824 Cash paid during the year for: Interest $ 158,967 $ 185,256 $ 128,525 Income taxes 16,736 23,750 14,075 Supplemental non-cash disclosures: Loans transferred to other real estate owned 0 0 284 Right-of-use assets obtained in exchange for lease liabilities 926 2,699 0 The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Principles of Consolidation: The consolidated financial statements include Lakeland Financial Corporation (the "Holding Company") and its wholly owned subsidiary, Lake City Bank (the "Bank"), referred to as (the "Company"). On December 18, 2006, LCB Investments II, Inc. was formed as a wholly owned subsidiary of the Bank incorporated in Nevada to manage the Bank’s investment portfolio beginning in 2007. On December 21, 2006, LCB Funding, Inc., a real estate investment trust incorporated in Maryland, was formed as a wholly owned subsidiary of LCB Investments II, Inc. On December 28, 2012, LCB Risk Management, Inc., a captive insurance company incorporated in Nevada, was formed as a wholly owned subsidiary of the Holding Company. LCB Risk Management, Inc. was dissolved as a corporate entity on December 18, 2023. All assets of the subsidiary were distributed to the Holding Company upon decommissioning. All intercompany transactions and balances are eliminated in consolidation. The Company provides financial services through the Bank, a full-service commercial bank with 55 branch offices in fifteen counties in Northern and Central Indiana. The Company provides commercial, retail, trust and investment services to its customers. Commercial products include commercial loans and technology-driven solutions to meet commercial customers’ treasury management needs such as mobile business banking and online treasury management services. Retail banking clients are provided a wide array of traditional retail banking services, including lending, deposit and investment services. Retail lending programs are focused on mortgage loans, home equity lines of credit and traditional retail installment loans. 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 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. Use of Estimates: To prepare financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. Cash Flows: 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. Securities: Securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax. Securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Purchase premiums or discounts are recognized in interest income using the interest method over the terms of the securities or over estimated lives for mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likel y than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. 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 65 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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). Changes in the valuation allowance for securities losses are recorded as a component of credit loss expense. Losses are charged against the valuation allowance for securities losses when management believes the uncollectibility of the security is confirmed or when either criteria regarding intent or requirement to sell is met. A portion of the municipal bond portfolio is classified as held-to-maturity. The Company measures expected credit losses on investment securities held-to-maturity on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Company's portfolio have been insignificant. After completing this assessment, the Company determined any credit losses as of December 31, 2025 and 2024 were not material to the consolidated financial statements. Real Estate Mortgage Loans Held-for-Sale: Loans held-for-sale are reported at the lower of cost or fair value on an aggregate basis. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Loan sales occur on the delivery date agreed to in the relevant commitment agreement. The Company retains servicing on the majority of loans sold. The carrying value of loans sold is reduced by the amount allocated to the servicing right. The gain or loss on the sale of loans is the difference between the carrying value of the loans sold and the funds received from the sale. Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for credit losses. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. All classes of commercial and industrial, commercial real estate and multi-family residential, agri-business and agricultural, other commercial and consumer 1-4 family mortgage loans for which collateral is insufficient to cover all principal and accrued interest are reclassified as nonaccrual loans, on or before the date when the loan becomes 90 days delinquent. When a loan is classified as a nonaccrual loan, interest on the loan is no longer accrued, all unpaid accrued interest is reversed and interest income is subsequently recorded on the cash-basis or cost-recovery method. Accrual status is resumed when all contractually due payments are brought current and future payments are reasonably assured. Other consumer loans are not placed on a nonaccrual status since these loans are charged-off when they have been delinquent from 90 to 180 days, and when the related collateral, if any, is not sufficient to offset the indebtedness. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated and individually analyzed loans. The recorded investment in loans is the loan balance net of unamortized deferred loan fees and costs. The total amount of loans accrued interest as of December 31, 2025 and 2024 was $ 20.7 million and $ 20.3 million. Allowance for Credit Losses: The allowance for credit losses is a valuation allowance to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management's judgment, should be charged against the allowance. A provision for credit losses is taken based on management's ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company's control. 66 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers' ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a pr obability of default-loss given default ("PD/LGD") model, subject to a floor. A default can be triggered by one of several asset quality factors, including past due status, nonaccrual status, material modification to a borrower experiencing financial difficulty or if the loan has had a charge off. This PD is then combined with a LGD derived from historical charge off data to construct a loss rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee's Summary of Economic Projections, as well as portfolio trends based on the risks present for each portfolio segment. These environmental factors include consideration of portfolio trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. 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 pooled. These two components represent the total allowance for credit losses deemed adequate to cover expected losses within the loan portfolio. Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other, and a consensus is reached by credit administration and the loan officer. 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; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring. Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. 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. The historical loss rates are all supplemented with consideration of economic conditions and portfolio trends. The risk characteristics of each of the identified portfolio segments are as follows: Commercial and Industrial - Borrowers may be subject to industry conditions including decreases in product demand; increase in material or other production costs that cannot be immediately recaptured in the sales or distribution cycle; interest rate increases that could have an adverse impact on profitability; non-payment of credit that has been extended under normal vendor terms for goods sold or services; and interruption related to the importing or exporting of production materials or sold products. Commercial Real Estate and Multi-Family Residential - Borrowers may be subject to potential adverse market conditions that cause a decrease in market value or lease rates; the potential for environmental impairment from events occurring on subject or neighboring properties; and obsolescence in location or function. Multi-family residential is also subject to adverse market conditions associated with a change in governmental or personal funding sources for tenants; over supply of units in a specific region; a shift in population; and reputational risks. Construction and land development risks include slower absorption than anticipated on speculative projects; deterioration in market conditions that may impact a project's value; unforeseen costs not considered in the original construction budget; or any other factors that may impact the completion or success of the project. Agri-business and Agricultural - Borrowers may be subject to adverse market or weather conditions including changes in local or foreign demand; lower yields than anticipated; political or other impact on storage, distribution or use; foreign trade policies including tariffs; exposure to increasing commodity prices which result in higher production, distribution or exporting costs, or falling commodity prices which result in revenues that may be insufficient to cover costs. 67 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Other Commercial - Governmental borrowers may be subject to an interruption in the flow of funds to states and other political subdivisions for the purpose of debt repayments on loans held by the Bank. Not-for-profit borrowers may be subject to changes in tax law that adversely impact revenues. Consumer 1-4 Family Mortgage - Borrowers may be subject to adverse employment conditions in the local economy leading to increased default rates; decreased market values from oversupply in a geographic area; and impact to the borrowers' ability to maintain payments in the event of incremental rate increases on adjustable rate mortgages. Other Consumer - Borrowers may be subject to adverse employment conditions in the local economy which may lead to higher default rates; and decreases in the value of underlying collateral. 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 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 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 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. The unallocated component of the allowance for credit losses incorporates the Company's judgmental determination of potential expected losses that may not be fully reflected in other allocations. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income. 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 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, 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 68 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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: The Company invests in tax credit structures. At December 31, 2025 and 2024, the balance of investments in tax credit structures was $ 6.3 million and $ 7.2 million respectively. These balances are reflected in the other assets line on the consolidated balance sheets. Total unfunded commitments related to these investments in tax credit structures totaled $ 2.4 million and $ 3.8 million at December 31, 2025 and 2024, respectively. The Company expects to fulfill these commitments during the next 15 years. The Company adopted the proportional amortization method for accounting for investments in tax credit structures effective January 1, 2024. Prior to this, these investments were accounted for using the equity method. 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. Additionally, during the years ended December 31, 2025, 2024 and 2023, the Company recognized tax credits and other benefits from its investment in tax credit structures of $ 920,000 , $ 807,000 and $ 713,000 , respectively, which was included within income tax expense on the consolidated statements of income and in cash flows from operations on our consolidated statements of cash flows. Foreclosed Assets: Assets acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed. 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: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the useful lives of the assets. Premises and improvements assets have useful lives between 5 and 40 years. Equipment and furniture assets have useful lives between 3 and 7 years. Loan Servicing Rights: Servicing rights are recognized separately when they are acquired through sales of loans. When mortgage loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking income . Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. The amortization of servicing rights is netted against mortgage banking income. 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. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as loan type, term and interest rate. Any impairment of a grouping is reported as a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in the valuation allowance are reported with mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. The carrying value of mortgage servicing rights, which is included with other assets in the consolidated balance sheet, was $ 1.6 million and $ 1.9 million as of December 31, 2025 and 2024, respectively. Mortgage loans serviced for others are not 69 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) included in the accompanying consolidated balance sheets. 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 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. Fees earned for servicing loans are based on a contractual percentage of the outstanding principal amount of the loan and are recorded as income when earned. Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Mortgage Banking Derivatives: Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free-standing derivatives. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. The Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitments to fund the loans. Changes in fair values of these derivatives are included in mortgage banking income. Interest Rate Swap Derivatives: The Company offers a derivative product to certain creditworthy commercial banking customers. This product allows the commercial banking customers to enter into an agreement with the Company to swap a variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the borrower’s interest rate exposure. The extension of credit incurred in connection with these derivative products is subject to the same approval and underwriting standards as traditional credit products. The Company limits its risk exposure by simultaneously entering into a similar, offsetting swap agreement with a separate, well capitalized and highly rated counterparty previously approved by the Company’s Asset Liability Committee. By using these interest rate swap arrangements, the Company is also better insulated from the interest rate risk associated with underwriting fixed-rate loans and is better able to meet customer demand for fixed rate loans. These derivative contracts are not designated against specific assets or liabilities and, therefore, do not qualify for hedge accounting. The derivatives are recorded as assets and liabilities on the balance sheet at fair value with changes in fair value recorded in non-interest income for both the commercial banking customer swaps and the related offsetting swaps. The fair value of the derivative instruments incorporates a consideration of credit risk (in accordance with ASC 820), resulting in some potential volatility in earnings each period. Cash flow activity is recorded through other assets and other liabilities. The notional amount of the combined interest rate swaps with customers and counterparties at December 31, 2025 and 2024 was $ 573.7 million and $ 744.8 million, respectively. 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 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, 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. 70 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Goodwill and Other Intangible Assets: All goodwill on the Company’s consolidated balance sheet resulted from business combinations prior to January 1, 2009 and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is not amortized, but assessed at least annually for impairment and any such impairment would be recognized in the period identified. FHLB and Federal Reserve Bank Stock: FHLB and Federal Reserve Bank stock are carried at cost in other assets, classified as a restricted security and are periodically evaluated for impairment based on ultimate recoverability of par value. Both cash and stock dividends are reported as income. Long-term Assets: Premises and equipment, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. There was no such impairment identified for the years ended December 31, 2025, 2024 and 2023. Benefit Plans: The Company has a noncontributory defined benefit pension plan, which covered substantially all employees until the plan was frozen effective April 1, 2000. Funding of the plan equals or exceeds the minimum funding requirement determined by the actuary. Pension expense is the net of interest cost, return on plan assets and amortization of gains and losses not immediately recognized. Benefits are based on years of service and compensation levels. The Company maintains a 401(k) profit sharing plan for all employees meeting certain age and service requirements. The Company contributions are based upon the percentage of budgeted net income earned during the year. An employee deferred compensation plan is available to certain employees with returns based on investments in mutual funds. The Company maintains a directors’ deferred compensation plan. Effective January 1, 2003, the directors’ deferred compensation plan was amended to restrict the deferral to be in stock only and deferred directors’ fees are included in equity. The Company acquires shares on the open market and records such shares as treasury stock. Revenue Recognition: All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income. The following is a description of principal activities from which we generate revenue. Revenues are recognized as the Company satisfies its obligations with our customers, in an amount that reflects the consideration that we expect to receive in exchange for those services. Wealth advisory fees The Company provides wealth advisory services to its customers and earns fees from its contracts with trust customers to manage assets for investment and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted monthly, quarterly, or annual services and are generally assessed based on a tiered scale of the market value of assets under management at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed. Other related services, such as escrow accounts that are based on a fixed schedule, are recognized when the services are rendered. Investment brokerage services The Company provides investment brokerage services through a full service brokerage and investment and advisory firm, Cetera Investment Services LLC ("Cetera"). The Company receives commissions from Cetera on a monthly basis based upon customer activity for the month. The fees are recognized monthly and a receivable is recorded until commissions are generally paid by the 5th business day of the following month. Because the Company (i) acts as an agent in arranging the 71 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) relationship between the customer and Cetera and (ii) does not control the services to the customers, investment brokerage service fees are presented net of Cetera’s related costs. Service charges on deposit accounts The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s balance. Interchange income The Company provides the ability to transact on certain deposit accounts through the use of debit cards by outsourcing the services through third party service providers. Performance obligations are met on a transactional basis and income is recognized monthly based on transaction type and volume. Under ASC 606, fees from interchange income related to its customers use of debit cards will be reported gross in loan and service fees under noninterest income. The cost of using third party providers for these interchange services are reported in data processing fees and supplies under noninterest expense. Gain on sale of other real estate owned ("OREO") financed by seller On occasion, the Company underwrites a loan to purchase property owned by the Company. Under ASC 606, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. Debit card incentive rebates The Company receives incentive rebates based on debit card transaction volume. Performance obligations are met on a transactional basis and income is recognized monthly based on transaction volume. Under ASC 606, these rebates related to debit card transaction volume are reported as a contra expense in data processing fees and supplies under noninterest expense. Stock Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant adjusted for the present value of expected dividends is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. Certain of the restricted stock awards are performance based, as more fully discussed in Note 14 – Stock Based Compensation. Income Taxes: Annual consolidated federal and state income tax returns are filed by the Company. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Income tax expense is recorded based on the amount of taxes due on its tax return plus net deferred taxes computed based upon the expected future tax consequences of temporary differences between carrying amounts and tax basis of assets and liabilities, using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is more likely of being realized on examination than not. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded The Company recognizes interest and/or penalties related to income tax matters in income tax expense. 72 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Off-Balance Sheet Financial Instruments: Financial instruments include credit instruments, such as commitments to make loans and standby letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. The fair value of standby letters of credit is recorded as a liability during the commitment period. Earnings Per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, restricted stock awards and warrants. Earnings and dividends per share are restated for all stock splits and dividends through the date of issue of the financial statements. The common shares included in treasury stock for 2025 and 2024 were 804,010 and 469,239 shares, respectively. Common stock that has been purchased under the directors’ deferred compensation plan, described above, is included in the treasury stock total and represented 177,019 and 180,138 shares of treasury stock as of December 31, 2025 and 2024, respectively. 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: 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. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. As previously disclosed, in July 2019, the Bank discovered potentially fraudulent activity by a former treasury management client involving multiple banks. The former client subsequently filed several bankruptcy cases, captioned In re Interlogic Outsourcing, Inc., et al. , which were filed in the United States Bankruptcy Court for the Western District of Michigan. 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: The Federal Reserve Bank eliminated the reserve requirement for all depository institutions in March of 2020. Therefore, the Company was not required to have cash on hand or on deposit with the Federal Reserve Bank to meet regulatory reserve and clearing requirements at December 31, 2025 and 2024. Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company or by the Company to its stockholders. These restrictions currently pose no practical limit on the ability of the Bank or the Company to pay dividends at historical levels. Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disc losed in Note 5 - Fair Value. Fair value estimates involve uncertainties and matters of significant judgment regarding 73 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. Operating Segments: The Company's revenue is primarily derived from the business of banking. The Company's financial performance is monitored on consolidated basis by Management Committee, which is considered to be the Company's Chief Operating Decision Maker ("CODM"). Management Committee includes the following officers of the Company: Chairman of the Board and Chief Executive Officer; President; Executive Vice President, Chief Financial Officer; Executive Vice President, Chief Commercial Banking Officer; Executive Vice President, Chief Retail Banking Officer; Executive Vice President, Chief Credit Officer; Senior Vice President, Chief Wealth Advisory Officer; Senior Vice President, Chief Human Resources Officer; and Senior Vice President, General Counsel. Financial performance is reported to the CODM monthly, and the primary measure of performance is consolidated net income. The allocation of resources throughout the Company is determined annually based upon consolidated net income performance. The presentation of financial performance to the CODM is consistent with amounts and financial statement lines items shown in the Company's consolidated balance sheets and consolidated statements of income. Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, net occupancy expense, equipment costs, data processing fees and supplies, and professional fees. All of the Company’s financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by region and business-line, the Company’s CODM evaluates financial performance on a Company-wide basis. The majority of the Company’s revenue is from the business of banking and the Company’s assigned regions have similar economic characteristics, products, services and customers. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment. Adoption of New Accounting Standards: On December 13, 2023, the FASB issued ASU 2023-08, "Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets" , to provide improved accounting and disclosure guidance for crypto assets. Stakeholders stated that current accounting guidance, except as provided in GAAP for certain specialized industries, surrounding crypto asset holdings as indefinite-lived intangible assets fails to provide financial statement users with decision-useful information. To remedy these shortcomings, the amendments in this update require an entity present (1) crypto assets measured at fair value separately from other intangible assets reported in the balance sheet and (2) changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. While the amendments in the update do not otherwise change the presentation requirements for the statement of cash flows, they do require specific presentation of cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business and are converted nearly immediately into cash. The amendments in the update also provide for several enhancements related to disclosure of an entity's crypto asset holdings. For annual and interim reporting periods, the amendments in the update require an entity disclose the following information: (1) the name, cost basis, fair value, and number of units for each significant crypto asset holding and aggregate fair values and costs bases of the crypto asset holdings that are not individually significant; and (2) for crypto assets that are subject to contractual sale restrictions, the fair value of those crypto assets, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse. For annual reporting periods, the amendments in the update require an entity disclose the following information: (1) a rollforward, in the aggregate, of activity in the reporting period for crypto asset holdings, including additions (with a description of the activities that resulted in the additions), dispositions, gains, and losses; (2) for any dispositions for crypto assets in the reporting period, the difference between the disposal price and the cost basis and a description of the activities that resulted in the dispositions; (3) if gains and losses are not presented separately, the income statement line item in which those gains and losses are recognized; and (4) the method for determining the cost basis of crypto assets. The amendments in this update are effective for public business entities for annual periods beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). 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 74 Table of Contents 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 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 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: 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 periods. 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 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 75 Table of Contents 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 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; (3) Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; 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 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): Clarifying the Effective Date" , to clarify the effective date of the ASU 2024-03. 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, however does not expect the adoption of this update to have a material impact on the consolidated financial statements. 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. 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. 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 76 Table of Contents 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. 77 Table of Contents NOTE 2 – SECURITIES Debt securities purchased with the intent and ability to hold to their maturity are classified as held-to-maturity securities. All other investment securities are classified as available-for-sale securities. 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, 2025 and 2024 is presented in the tables below. (dollars in thousands) Amortized Cost Gross Unrealized Gain Gross Unrealized Losses Allowance for Credit Losses Fair Value 2025 U.S. Treasury securities $ 10,117 $ 2 $ 0 $ 0 $ 10,119 U.S. government sponsored agencies 136,772 82 ( 21,164 ) 0 115,690 Mortgage-backed securities: residential 506,734 892 ( 53,463 ) 0 454,163 State and municipal securities 541,694 131 ( 69,735 ) 0 472,090 Total $ 1,195,317 $ 1,107 $ ( 144,362 ) $ 0 $ 1,052,062 2024 U.S. government sponsored agencies $ 137,150 $ 0 $ ( 27,715 ) $ 0 $ 109,435 Mortgage-backed securities: residential 500,278 83 ( 77,952 ) 0 422,409 State and municipal securities 545,073 17 ( 85,508 ) 0 459,582 Total $ 1,182,501 $ 100 $ ( 191,175 ) $ 0 $ 991,426 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, 2025 and 2024 is presented in the tables below. (dollars in thousands) Amortized Cost Gross Unrealized Gain Gross Unrealized Losses Allowance for Credit Losses Fair Value 2025 State and municipal securities $ 133,208 $ 0 $ ( 15,698 ) $ 0 $ 117,510 2024 State and municipal securities $ 131,568 $ 0 $ ( 18,461 ) $ 0 $ 113,107 The Company has the current intent and ability to hold the transferred securities until maturity. 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. 78 Table of Contents NOTE 2 – SECURITIES (continued) Available-for-Sale Held-to-Maturity (dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 0 $ 0 $ 0 $ 0 Due after one year through five years 22,674 22,341 0 0 Due after five years through ten years 97,616 91,904 7,353 6,802 Due after ten years 568,293 483,654 125,855 110,708 688,583 597,899 133,208 117,510 Mortgage-backed securities 506,734 454,163 0 0 Total debt securities $ 1,195,317 $ 1,052,062 $ 133,208 $ 117,510 Security proceeds, gross gains and gross losses for 2025, 2024 and 2023 were as follows: (dollars in thousands) 2025 2024 2023 Sales of securities available-for-sale Proceeds $ 0 $ 7,136 $ 105,175 Gross gains 0 0 439 Gross losses 0 ( 46 ) ( 464 ) Number of securities 0 15 115 In accordance with ASU 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date. 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. Unrealized Loss Analysis on Available-for-Sale and Held-to-Maturity Securities Information regarding available-for-sale securities securities with unrealized losses as of December 31, 2025 and 2024 is prese nted below. Th e tables distribute 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 (dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 2025 U.S. Treasury securities $ 5,107 $ 0 $ 0 $ 0 $ 5,107 $ 0 U.S. government sponsored agencies 0 0 105,609 21,164 105,609 21,164 Mortgage-backed securities: residential 14,397 106 374,383 53,357 388,780 53,463 State and municipal securities 13,807 24 440,935 69,711 454,742 69,735 Total temporarily impaired $ 33,311 $ 130 $ 920,927 $ 144,232 $ 954,238 $ 144,362 2024 U.S. government sponsored agencies $ 0 $ 0 $ 109,435 $ 27,715 $ 109,435 $ 27,715 Mortgage-backed securities: residential 23,204 249 390,483 77,703 413,687 77,952 State and municipal securities 12,928 439 443,569 85,069 456,497 85,508 Total temporarily impaired $ 36,132 $ 688 $ 943,487 $ 190,487 $ 979,619 $ 191,175 79 Table of Contents NOTE 2 – SECURITIES (continued) Information regarding held-to-maturity securities with unrealized losses as of December 31, 2025 and 2024 is presented below. 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 (dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 2025 State and municipal securities $ 0 $ 0 $ 117,510 $ 15,698 $ 117,510 $ 15,698 2024 State and municipal securities $ 0 $ 0 $ 113,107 $ 18,461 $ 113,107 $ 18,461 The number of securities with unrealized losses as of December 31, 2025 and 2024 is presented below. Available-for-Sale Held-to-Maturity Less than 12 months 12 months or more Total Less than 12 months 12 months or more Total 2025 U.S. Treasury securities 1 0 1 0 0 0 U.S. government sponsored agencies 0 17 17 0 0 0 Mortgage-backed securities: residential 3 120 123 0 0 0 State and municipal securities 17 378 395 0 41 41 Total temporarily impaired 21 515 536 0 41 41 2024 U.S. government sponsored agencies 0 17 17 0 0 0 Mortgage-backed securities: residential 9 124 133 0 0 0 State and municipal securities 23 392 415 0 41 41 Total temporarily impaired 32 533 565 0 41 41 Available-for-sale and held-to-maturity debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the consolidated income statement. For available-for-sale debt securities that do not meet the criteria and for held-to-maturity securities, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with 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 for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. For available-for-sale debt securities, any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes. No allowance for credit losses for available-for-sale or held-to-maturity securities was recorded at December 31, 2025 or 2024. 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. 80 Table of Contents NOTE 2 – SECURITIES (continued) Ninety-nine percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are rated above investment grade with a long history of no credit losses, except for certain non-local or local municipal securities, which are not rated. The U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. 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. 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 . 81 Table of Contents NOTE 3 – LOANS Total loans outstanding as of the years ended December 31, 2025 and 2024 consisted of the following: (dollars in thousands) 2025 2024 Commercial and industrial loans: Working capital lines of credit loans $ 711,742 $ 649,609 Non-working capital loans 841,947 801,256 Total commercial and industrial loans 1,553,689 1,450,865 Commercial real estate and multi-family residential loans: Construction and land development loans 497,239 567,781 Owner occupied loans 807,335 807,090 Nonowner occupied loans 923,708 872,671 Multi-family loans 438,233 344,978 Total commercial real estate and multi-family residential loans 2,666,515 2,592,520 Agri-business and agricultural loans: Loans secured by farmland 155,073 156,609 Loans for agricultural production 251,783 230,787 Total agri-business and agricultural loans 406,856 387,396 Other commercial loans 97,381 95,584 Total commercial loans 4,724,441 4,526,365 Consumer 1-4 family mortgage loans: Closed end first mortgage loans 267,134 259,286 Open end and junior lien loans 251,185 214,125 Residential construction and land development loans 18,873 16,818 Total consumer 1-4 family mortgage loans 537,192 490,229 Other consumer loans 116,224 104,041 Total consumer loans 653,416 594,270 Gross loans 5,377,857 5,120,635 Less: Allowance for credit losses ( 68,995 ) ( 85,960 ) Net deferred loan fees ( 2,508 ) ( 2,687 ) Loans, net $ 5,306,354 $ 5,031,988 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 $ 1.5 million and $ 424,000 in residential real estate loans in process of foreclosure as of December 31, 2025 and 2024, respectively. 82 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY 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 and Industrial Commercial Real Estate and Multi-family Residential Agri-business and Agricultural Other Commercial Consumer 1-4 Family Mortgage Other Consumer Unallocated Total 2025 Beginning balance $ 45,539 $ 30,865 $ 3,541 $ 743 $ 3,358 $ 1,531 $ 383 $ 85,960 Provision for credit losses 10,805 ( 807 ) ( 226 ) 298 795 993 ( 58 ) 11,800 Loans charged-off ( 28,868 ) 0 0 0 ( 226 ) ( 1,320 ) 0 ( 30,414 ) Recoveries 960 105 0 0 69 515 0 1,649 Net loans (charged-off) recovered ( 27,908 ) 105 0 0 ( 157 ) ( 805 ) 0 ( 28,765 ) Ending balance $ 28,436 $ 30,163 $ 3,315 $ 1,041 $ 3,996 $ 1,719 $ 325 $ 68,995 (dollars in thousands) Commercial and Industrial Commercial Real Estate and Multi-family Residential Agri-business and Agricultural Other Commercial Consumer 1-4 Family Mortgage Other Consumer Unallocated Total 2024 Beginning balance $ 30,338 $ 31,335 $ 4,150 $ 1,129 $ 3,474 $ 1,174 $ 372 $ 71,972 Provision for credit losses 16,639 264 ( 609 ) ( 386 ) ( 75 ) 906 11 16,750 Loans charged-off ( 1,615 ) ( 840 ) 0 0 ( 94 ) ( 919 ) 0 ( 3,468 ) Recoveries 177 106 0 0 53 370 0 706 Net loans (charged-off) recovered ( 1,438 ) ( 734 ) 0 0 ( 41 ) ( 549 ) 0 ( 2,762 ) Ending balance $ 45,539 $ 30,865 $ 3,541 $ 743 $ 3,358 $ 1,531 $ 383 $ 85,960 (dollars in thousands) Commercial and Industrial Commercial Real Estate and Multi-family Residential Agri-business and Agricultural Other Commercial Consumer 1-4 Family Mortgage Other Consumer Unallocated Total 2023 Beginning balance $ 35,290 $ 27,394 $ 4,429 $ 917 $ 3,001 $ 1,021 $ 554 $ 72,606 Provision for credit losses 1,209 3,619 ( 279 ) 212 598 673 ( 182 ) 5,850 Loans charged-off ( 6,341 ) 0 0 0 ( 163 ) ( 828 ) 0 ( 7,332 ) Recoveries 180 322 0 0 38 308 0 848 Net loans (charged-off) recovered ( 6,161 ) 322 0 0 ( 125 ) ( 520 ) 0 ( 6,484 ) Ending balance $ 30,338 $ 31,335 $ 4,150 $ 1,129 $ 3,474 $ 1,174 $ 372 $ 71,972 83 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. 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 . The Company uses the following definitions for risk ratings: Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized as the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. 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, 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. 84 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following tables summarize the risk category of loans by loan segment and origination date as of December 31, 2025 and 2024. Balances presented are at the amortized cost basis by origination year. (dollars in thousands) 2025 2024 2023 2022 2021 Prior Term Total Revolving Total Commercial and industrial loans: Working capital lines of credit loans: Pass $ 5,863 $ 1,405 $ 19 $ 63 $ 1,066 $ 334 $ 8,750 $ 633,270 $ 642,020 Special Mention 0 0 0 0 0 0 0 38,014 38,014 Substandard 300 0 2,057 924 211 230 3,722 27,759 31,481 Total 6,163 1,405 2,076 987 1,277 564 12,472 699,043 711,515 Working capital lines of credit loans: Current period gross write offs 0 0 0 28,607 0 12 28,619 45 28,664 Non-working capital loans: Pass 210,230 109,036 101,984 114,735 32,420 20,755 589,160 204,275 793,435 Special Mention 5,819 2,671 154 8,359 7,024 5,060 29,087 7,493 36,580 Substandard 314 327 1,998 1,543 105 3,913 8,200 391 8,591 Doubtful 0 0 0 0 0 74 74 0 74 Not Rated 939 322 767 558 107 173 2,866 0 2,866 Total 217,302 112,356 104,903 125,195 39,656 29,975 629,387 212,159 841,546 Non-working capital loans: Current period gross write offs 1 2 0 0 0 0 3 201 204 Commercial real estate and multi-family residential loans: Construction and land development loans: Pass 20,946 25,430 11,990 20,692 720 0 79,778 414,386 494,164 Special Mention 1,242 0 0 0 0 0 1,242 0 1,242 Total 22,188 25,430 11,990 20,692 720 0 81,020 414,386 495,406 Construction and land development loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Owner occupied loans: Pass 151,944 106,040 89,724 118,976 128,712 143,199 738,595 31,378 769,973 Special Mention 3,083 163 1,810 14,683 0 13,069 32,808 550 33,358 Substandard 0 306 284 0 1,520 1,442 3,552 0 3,552 Total 155,027 106,509 91,818 133,659 130,232 157,710 774,955 31,928 806,883 Owner occupied loans Current period gross write offs 0 0 0 0 0 0 0 0 0 Nonowner occupied loans: Pass 184,183 114,323 108,411 128,867 93,880 154,390 784,054 125,655 909,709 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 85 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) (dollars in thousands) 2025 2024 2023 2022 2021 Prior Term Total Revolving Total Nonowner occupied loans (continued): Current period gross write offs 0 0 0 0 0 0 0 0 0 Multi-family loans: Pass 191,399 21,552 63,810 21,472 8,485 32,995 339,713 97,877 437,590 Special Mention 0 0 0 291 0 0 291 0 291 Total 191,399 21,552 63,810 21,763 8,485 32,995 340,004 97,877 437,881 Multi-family loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Agri-business and agricultural loans: Loans secured by farmland: Pass 28,600 13,595 15,258 31,324 19,915 30,669 139,361 13,202 152,563 Special Mention 1,987 118 193 0 25 148 2,471 0 2,471 Substandard 0 0 0 0 0 49 49 0 49 Total 30,587 13,713 15,451 31,324 19,940 30,866 141,881 13,202 155,083 Loans secured by farmland: Current period gross write offs 0 0 0 0 0 0 0 0 0 Loans for agricultural production: Pass 5,560 13,158 21,355 18,848 21,215 12,502 92,638 151,443 244,081 Special Mention 0 0 654 258 0 1 913 6,891 7,804 Total 5,560 13,158 22,009 19,106 21,215 12,503 93,551 158,334 251,885 Loans for agricultural production: Current period gross write offs 0 0 0 0 0 0 0 0 0 Other commercial loans: Pass 11,178 1,199 13,637 24,506 2,504 11,665 64,689 30,722 95,411 Special Mention 0 0 0 0 0 1,754 1,754 0 1,754 Total 11,178 1,199 13,637 24,506 2,504 13,419 66,443 30,722 97,165 Other commercial loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Consumer 1-4 family mortgage loans: Closed end first mortgage loans: Pass 14,058 9,978 6,465 6,793 10,248 5,525 53,067 2,427 55,494 Special Mention 189 119 215 156 61 0 740 0 740 Substandard 55 305 232 436 0 755 1,783 0 1,783 Not Rated 36,511 23,578 50,011 42,657 24,998 31,020 208,775 0 208,775 Total 50,813 33,980 56,923 50,042 35,307 37,300 264,365 2,427 266,792 Closed end first mortgage loans: Current period gross write offs 0 0 0 0 0 24 24 0 24 Open end and junior lien loans: Pass 665 487 684 0 190 4 2,030 8,477 10,507 Special Mention 286 0 0 0 0 0 286 0 286 86 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) (dollars in thousands) 2025 2024 2023 2022 2021 Prior Term Total Revolving Total Open end and junior lien loans (continued): Substandard 1,728 38 99 0 3 0 1,868 317 2,185 Not Rated 28,327 13,016 9,566 10,347 1,849 1,138 64,243 176,160 240,403 Total 31,006 13,541 10,349 10,347 2,042 1,142 68,427 184,954 253,381 Open end and junior lien loans: Current period gross write offs 0 0 0 29 2 22 53 149 202 Residential construction loans: Not Rated 6,684 6,852 575 1,680 1,189 1,798 18,778 0 18,778 Total 6,684 6,852 575 1,680 1,189 1,798 18,778 0 18,778 Residential construction loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Other consumer loans: Pass 384 0 939 120 22 0 1,465 37,683 39,148 Substandard 0 35 273 91 6 11 416 0 416 Not Rated 19,055 15,982 13,837 7,631 4,301 3,349 64,155 12,269 76,424 Total 19,439 16,017 15,049 7,842 4,329 3,360 66,036 49,952 115,988 Other consumer loans: Current period gross write offs 4 187 306 161 58 0 716 604 1,320 Total Loans $ 931,529 $ 480,035 $ 528,322 $ 576,069 $ 360,776 $ 476,022 $ 3,352,753 $ 2,022,596 $ 5,375,349 Total current period gross write offs $ 5 $ 189 $ 306 $ 28,797 $ 60 $ 58 $ 29,415 $ 999 $ 30,414 87 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) (dollars in thousands) 2024 2023 2022 2021 2020 Prior Term Total Revolving Total Commercial and industrial loans: Working capital lines of credit loans: Pass $ 1,599 $ 114 $ 1,640 $ 1,647 $ 651 $ 0 $ 5,651 $ 525,179 $ 530,830 Special Mention 0 0 0 0 0 0 0 48,301 48,301 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 Working capital lines of credit loans: Current period gross write offs 0 0 94 0 0 0 94 136 230 Non-working capital loans: Pass 151,920 157,276 173,274 58,591 32,909 28,582 602,552 164,106 766,658 Special Mention 3,901 2,614 2,024 1,637 393 1,894 12,463 6,491 18,954 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 Total 157,118 164,533 178,045 60,751 38,225 31,083 629,755 171,003 800,758 Non-working capital loans: Current period gross write offs 0 383 0 542 179 44 1,148 237 1,385 Commercial real estate and multi-family residential loans: Construction and land development loans: 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 Construction and land development loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Owner occupied loans: Pass 98,847 138,299 120,191 143,642 109,451 129,051 739,481 35,003 774,484 Special Mention 6,295 2,728 14,777 0 619 2,488 26,907 0 26,907 Substandard 318 318 0 3,101 1,457 0 5,194 0 5,194 Total 105,460 141,345 134,968 146,743 111,527 131,539 771,582 35,003 806,585 Owner occupied loans: Current period gross write offs 0 0 0 0 0 840 840 0 840 Nonowner occupied loans: Pass 152,963 118,517 168,387 101,064 119,612 77,497 738,040 110,441 848,481 Special Mention 0 15,650 108 5,868 0 0 21,626 1,895 23,521 Total 152,963 134,167 168,495 106,932 119,612 77,497 759,666 112,336 872,002 Nonowner occupied loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 88 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) (dollars in thousands) 2024 2023 2022 2021 2020 Prior Term Total Revolving Total 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 Agri-business and agricultural loans: Loans secured by farmland: 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 Total 14,696 21,450 29,601 23,043 25,192 18,383 132,365 24,249 156,614 Loans secured by farmland: Current period gross write offs 0 0 0 0 0 0 0 0 0 Loans for agricultural production: Pass 15,945 26,704 21,611 24,374 21,446 1,450 111,530 118,090 229,620 Special Mention 0 0 0 0 0 0 0 1,275 1,275 Total 15,945 26,704 21,611 24,374 21,446 1,450 111,530 119,365 230,895 Loans for agricultural production: Current period gross write offs 0 0 0 0 0 0 0 0 0 Other commercial loans: Pass 6,639 17,137 29,985 3,397 11,310 5,544 74,012 19,609 93,621 Special Mention 0 0 0 0 0 1,872 1,872 0 1,872 Total 6,639 17,137 29,985 3,397 11,310 7,416 75,884 19,609 95,493 Other commercial loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 Consumer 1-4 family mortgage loans: Closed end first mortgage loans: Pass 11,104 8,511 9,274 11,278 6,252 4,685 51,104 4,299 55,403 Special Mention 122 226 165 66 0 0 579 0 579 Substandard 0 83 319 90 0 629 1,121 0 1,121 Not Rated 28,706 55,641 47,355 34,173 13,543 22,396 201,814 0 201,814 Total 39,932 64,461 57,113 45,607 19,795 27,710 254,618 4,299 258,917 Closed end first mortgage loans: Current period gross write offs 0 0 0 0 0 0 0 0 0 89 Table of Contents 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 Not Rated 21,929 16,134 18,053 4,660 644 2,894 64,314 139,351 203,665 Total 22,503 16,976 18,053 5,113 953 2,980 66,578 149,559 216,137 Open end and junior lien loans: Current period gross write offs 0 0 79 0 0 0 79 15 94 Residential construction loans: Not Rated 10,030 1,154 2,045 1,386 759 1,348 16,722 0 16,722 Total 10,030 1,154 2,045 1,386 759 1,348 16,722 0 16,722 Residential construction loans: Current gross period write offs 0 0 0 0 0 0 0 0 0 Other consumer loans: 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 Not Rated 23,508 22,250 11,824 6,688 3,743 1,782 69,795 10,930 80,725 Total 23,587 23,349 12,587 6,873 3,917 1,782 72,095 31,672 103,767 Other consumer loans: Current gross period write offs 49 303 236 33 0 26 647 272 919 TOTAL $ 644,836 $ 745,896 $ 750,313 $ 481,427 $ 382,759 $ 311,201 $ 3,316,432 $ 1,801,516 $ 5,117,948 Total current period gross write offs $ 49 $ 686 $ 409 $ 575 $ 179 $ 910 $ 2,808 $ 660 $ 3,468 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"). 90 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Nonaccrual and Past Due Loans: For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. 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 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 2025 Commercial and industrial loans: Working capital lines of credit loans $ 706,317 $ 0 $ 0 $ 706,317 $ 5,198 $ 1,434 $ 711,515 Non-working capital loans 834,134 0 0 834,134 7,412 86 841,546 Commercial real estate and multi-family residential loans: Construction and land development loans 495,406 0 0 495,406 0 0 495,406 Owner occupied loans 804,986 0 0 804,986 1,897 170 806,883 Nonowner occupied loans 921,089 0 0 921,089 1,957 0 923,046 Multi-family loans 437,881 0 0 437,881 0 0 437,881 Agri-business and agricultural loans: Loans secured by farmland 155,035 0 0 155,035 48 0 155,083 Loans for agricultural production 251,885 0 0 251,885 0 0 251,885 Other commercial loans 97,165 0 0 97,165 0 0 97,165 Consumer 1‑4 family mortgage loans: Closed end first mortgage loans 263,385 1,617 7 265,009 1,783 690 266,792 Open end and junior lien loans 251,009 186 0 251,195 2,186 405 253,381 Residential construction loans 18,778 0 0 18,778 0 0 18,778 Other consumer loans 115,046 526 0 115,572 416 6 115,988 Total $ 5,352,116 $ 2,329 $ 7 $ 5,354,452 $ 20,897 $ 2,791 $ 5,375,349 An insignificant amount of interest income was recognized on nonaccrual loans during the twelve months ended December 31, 2025. 91 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) (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 2024 Commercial and industrial loans: Working capital lines of credit loans $ 603,016 $ 1,082 $ 0 $ 604,098 $ 45,342 $ 594 $ 649,440 Non-working capital loans 792,577 663 3 793,243 7,515 37 800,758 Commercial real estate and multi-family residential loans: Construction and land development loans 565,975 0 0 565,975 0 0 565,975 Owner occupied loans 804,810 0 0 804,810 1,775 318 806,585 Nonowner occupied loans 872,002 0 0 872,002 0 0 872,002 Multi-family loans 344,643 0 0 344,643 0 0 344,643 Agri-business and agricultural loans: Loans secured by farmland 156,543 0 0 156,543 71 0 156,614 Loans for agricultural production 230,895 0 0 230,895 0 0 230,895 Other commercial loans 95,493 0 0 95,493 0 0 95,493 Consumer 1‑4 family mortgage loans: Closed end first mortgage loans 256,486 1,284 26 257,796 1,121 665 258,917 Open end and junior lien loans 215,505 314 0 215,819 318 318 216,137 Residential construction loans 16,722 0 0 16,722 0 0 16,722 Other consumer loans 102,565 927 0 103,492 275 17 103,767 Total $ 5,057,232 $ 4,270 $ 29 $ 5,061,531 $ 56,417 $ 1,949 $ 5,117,948 An insignificant amount of interest income was recognized on nonaccrual loans during the twelve months ended December 31, 2024. When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant year over year changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. 92 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following tables present the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2025 and 2024: (dollars in thousands) Real Estate General Business Assets Other Total 2025 Commercial and industrial loans: Working capital lines of credit loans $ 2,388 $ 23,827 $ 673 $ 26,888 Non-working capital loans 464 3,715 49 4,228 Commercial real estate and multi-family residential loans: Owner occupied loans 476 1,726 0 2,202 Nonowner occupied loans 1,958 0 0 1,958 Agri-business and agricultural loans: Loans secured by farmland 0 49 0 49 Consumer 1-4 family mortgage loans: Closed end first mortgage loans 1,725 0 0 1,725 Open end and junior lien loans 2,186 0 0 2,186 Other consumer loans 0 0 416 416 Total $ 9,197 $ 29,317 $ 1,138 $ 39,652 (dollars in thousands) Real Estate General Business Assets Other Total 2024 Commercial and industrial loans: Working capital lines of credit loans $ 50 $ 64,023 $ 447 $ 64,520 Non-working capital loans 1,891 6,585 19 8,495 Commercial real estate and multi-family residential loans: Owner occupied loans 318 3,512 0 3,830 Agri-business and agricultural loans: Loans secured by farmland 0 71 0 71 Consumer 1-4 family mortgage loans: Closed end first mortgage loans 1,121 0 0 1,121 Open end and junior lien loans 318 0 0 318 Other consumer loans 0 0 272 272 Total $ 3,698 $ 74,191 $ 738 $ 78,627 93 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Modifications Made to Borrowers Experiencing Financial Difficulty The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. The starting point to estimate such credit losses is historical loss information. The Company uses a probability of default/loss given default model to determine the allowance for credit losses recorded at origination. Occasionally, the Company subsequently modifies loans for borrowers experiencing financial distress by providing the following forms of relief: forgiveness of loan principal, extension of repayment terms, reduction of interest rate or an other than insignificant payment delay. In some instances, the Company provides multiple types of concessions for such modifications. 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. 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 2025 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 2023 Commercial and industrial loans: Working capital lines of credit loans $ 944 $ 0 $ 0 $ 944 0.16 % Non-working capital loans 0 1,912 1,572 3,484 0.43 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. 94 Table of Contents NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) 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 2025 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 2023 Commercial and industrial loans: Working capital lines of credit loans $ 0 7.50 % None None Non-working capital loans (1) 9,380 7.87 58 months Extension of payment terms from fully amortizing variable rate 40 month term to 60 month fixed rate term with 480 month amortization schedule, monthly interest and semiannual principal payments, and excess cash flow recapture provisions Extension of payment terms from monthly variable rate interest only payments with balloon payment at end of term to fully amortizing ten year fixed rate principal and interest payment schedule 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 $ 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, 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. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. 95 Table of Contents NOTE 5 – FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument: Securities: Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. 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). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs). The Company’s Finance Department, which is responsible for all accounting and SEC compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the board of directors (the "Board") are made aware of such assets at their next scheduled meeting. Securities pricing is obtained on securities from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector: municipal securities +/- 5 %, government agency/MBS/CMO +/- 3 % and U.S. treasuries +/- 1 %. If any securities fall outside the tolerance threshold and have a variance of $ 100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material differences are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service. Mortgage banking derivative: The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2). 96 Table of Contents NOTE 5 – FAIR VALUE (continued) Interest rate swap derivatives: Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. 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 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). Collateral dependent loans: Collateral dependent loans with specific allocations of the allowance for credit losses generally based on the fair value of the underlying collateral when repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of collateral dependent loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 30 - 50 % with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw materials inventory is typically discounted from its cost or book value by 40 %- 60 %, depending on the marketability of the goods (b) finished goods are generally discounted by 40 %- 60 %, depending on the ease of marketability, cost of transportation or scope of use of the finished good (c) work in process inventory is typically discounted by 60 %- 100 %, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is generally discounted at 20 %- 50 % after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are generally discounted by 10 %- 30 %, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value. Mortgage servicing rights: As of December 31, 2025, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans ("MSRs") was $ 1.6 million, carried at amortized cost and no valuation reserve. These residential mortgage loans have a weighted average interest rate of 4.0 %, a weighted average maturity of 20 years and are secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A valuation model is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees, and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At December 31, 2025, the constant prepayment speed ("PSA") used was 168 and discount rate used was 9.5 %. At December 31, 2024, the PSA used was 157 and the discount rate used was 10.0 %. Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Real estate mortgage loans held-for-sale : Real estate mortgage loans held-for-sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification. 97 Table of Contents NOTE 5 – FAIR VALUE (continued) The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024: 2025 Fair Value Measurements Using Assets (dollars in thousands) Level 1 Level 2 Level 3 at Fair Value Assets: U.S. Treasury securities $ 10,119 $ 0 $ 0 $ 10,119 U.S. government sponsored agency securities 0 115,690 0 115,690 Mortgage-backed securities: residential 0 454,163 0 454,163 State and municipal securities 0 467,589 4,501 472,090 Total available-for-sale securities 10,119 1,037,442 4,501 1,052,062 Mortgage banking derivative 0 115 0 115 Interest rate swap derivative 0 14,634 0 14,634 Total assets $ 10,119 $ 1,052,191 $ 4,501 $ 1,066,811 Liabilities: Mortgage banking derivative $ 0 $ 8 $ 0 $ 8 Interest rate swap derivative 0 14,634 0 14,634 Total liabilities $ 0 $ 14,642 $ 0 $ 14,642 2024 Fair Value Measurements Using Assets (dollars in thousands) Level 1 Level 2 Level 3 at Fair Value Assets: U.S. government sponsored agency securities $ 0 $ 109,435 $ 0 $ 109,435 Mortgage-backed securities: residential 0 422,409 0 422,409 State and municipal securities 0 454,922 4,660 459,582 Total available-for-sale securities 0 986,766 4,660 991,426 Mortgage banking derivative 0 94 0 94 Interest rate swap derivative 0 25,403 0 25,403 Total assets $ 0 $ 1,012,263 $ 4,660 $ 1,016,923 Liabilities: Interest rate swap derivative $ 0 $ 25,403 $ 0 $ 25,403 Total liabilities $ 0 $ 25,403 $ 0 $ 25,403 The fair value of Level 3 available-for-sale securities was immaterial to warrant additional recurring fair value disclosures as of December 31, 2025 and 2024. 98 Table of Contents NOTE 5 – FAIR VALUE (continued) The tables below present the amount of assets measured at fair value on a nonrecurring basis as of December 31, 2025 and 2024: 2025 Fair Value Measurements Using Assets (dollars in thousands) Level 1 Level 2 Level 3 at Fair Value Assets Collateral dependent loans: Commercial and industrial loans: Working capital lines of credit loans $ 0 $ 0 $ 1,719 $ 1,719 Non-working capital loans 0 0 1,672 1,672 Commercial real estate and multi-family residential loans: 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 Total assets $ 0 $ 0 $ 7,286 $ 7,286 2024 Fair Value Measurements Using Assets (dollars in thousands) Level 1 Level 2 Level 3 at Fair Value Assets Collateral dependent loans: Commercial and industrial loans: Working capital lines of credit loans $ 0 $ 0 $ 23,174 $ 23,174 Non-working capital loans 0 0 3,281 3,281 Commercial real estate and multi-family residential loans: Owner occupied loans 0 0 664 664 Agri-business and agricultural loans: Loans secured by farmland 0 0 32 32 Total collateral dependent loans 0 0 27,151 27,151 Total assets $ 0 $ 0 $ 27,151 $ 27,151 99 Table of Contents NOTE 5 – FAIR VALUE (continued) 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, 2025: (dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Average Range of Inputs Collateral dependent loans: Commercial and industrial $ 3,391 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 52 % 6 %- 99 % Collateral dependent loans: Commercial real estate and multi-family residential 2,354 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 28 % 7 %- 62 % 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: (dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Average Range of Inputs Collateral dependent loans: Commercial and industrial $ 26,455 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 51 % 4 %- 99 % Collateral dependent loans: Commercial real estate and multi-family residential 664 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 54 % Collateral dependent loans: Loans secured by farmland 32 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 54 % 100 Table of Contents NOTE 5 – FAIR VALUE (continued) The following tables contain the estimated fair values and the related carrying values of the Company’s financial instruments at December 31, 2025 and 2024. Items which are not financial instruments are not included. 2025 Carrying Estimated Fair Value (dollars in thousands) Value Level 1 Level 2 Level 3 Total Financial Assets: Cash and cash equivalents $ 141,318 $ 141,318 $ 0 $ 0 $ 141,318 Securities available-for-sale 1,052,062 10,119 1,037,442 4,501 1,052,062 Securities held-to-maturity 133,208 0 117,510 0 117,510 Real estate mortgages held-for-sale 2,707 0 2,753 0 2,753 Loans, net 5,306,354 0 0 5,257,552 5,257,552 Mortgage banking derivative 115 0 115 0 115 Interest rate swap derivative 14,634 0 14,634 0 14,634 Federal Reserve and Federal Home Loan Bank Stock 21,420 N/A N/A N/A N/A Accrued interest receivable 28,997 0 8,306 20,691 28,997 Financial Liabilities: Certificates of deposit $ 750,726 $ 0 $ 748,798 $ 0 $ 748,798 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 Standby letters of credit 296 0 0 296 296 Accrued interest payable 8,868 410 8,458 0 8,868 2024 Carrying Estimated Fair Value (dollars in thousands) Value Level 1 Level 2 Level 3 Total Financial Assets: Cash and cash equivalents $ 168,205 $ 168,205 $ 0 $ 0 $ 168,205 Securities available-for-sale 991,426 0 986,766 4,660 991,426 Securities held-to-maturity 131,568 0 113,107 0 113,107 Real estate mortgages held-for-sale 1,700 0 1,733 0 1,733 Loans, net 5,031,988 0 0 4,916,231 4,916,231 Mortgage banking derivative 94 0 94 0 94 Interest rate swap derivative 25,403 0 25,403 0 25,403 Federal Reserve and Federal Home Loan Bank Stock 21,420 N/A N/A N/A N/A Accrued interest receivable 28,446 0 8,178 20,268 28,446 Financial Liabilities: Certificates of deposit $ 855,876 $ 0 $ 851,933 $ 0 $ 851,933 All other deposits 5,045,090 5,045,090 0 0 5,045,090 Interest rate swap derivative 25,403 0 25,403 0 25,403 Standby letters of credit 294 0 0 294 294 Accrued interest payable 15,117 425 14,692 0 15,117 101 Table of Contents NOTE 6 – LAND, PREMISES AND EQUIPMENT, NET Land, premises and equipment and related accumulated depreciation were as follows at December 31, 2025 and 2024: (dollars in thousands) 2025 2024 Land $ 12,572 $ 12,572 Premises and improvements 75,265 68,481 Equipment and furniture 35,600 32,753 Total cost 123,437 113,806 Less accumulated depreciation 57,895 53,317 Land, premises and equipment, net $ 65,542 $ 60,489 The Company had no land, premises and equipment held for sale and included in other assets as of December 31, 2025 and 2024. NOTE 7 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill There have been no changes in the $ 5.0 million carrying amount of goodwill since 2002. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. At December 31, 2025, the Company’s reporting unit had positive equity and the Company elected to perform a qualitative assessment to determine if it was more likely than not that the fair value of the reporting unit exceeded its carrying value, including goodwill. The qualitative assessment indicated that it was more likely than not that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment. The Company’s annual impairment analysis was performed as of May 31, 2025. Circumstances did not substantially change during the second half of the year such that the Company believed it was necessary to perform an additional impairment analysis. NOTE 8 – DEPOSITS The following table details total deposits as of December 31, 2025 and 2024: (dollars in thousands) 2025 2024 Non-interest bearing demand deposits $ 1,221,327 $ 1,297,456 Savings and transaction accounts: Savings deposits 285,834 276,179 Interest bearing demand deposits 3,715,463 3,471,455 Time deposits: Other time deposits 201,345 213,099 Deposits of $100,000 to $250,000 199,030 201,412 Deposits of $250,000 or more 350,351 441,365 Total deposits $ 5,973,350 $ 5,900,966 At December 31, 2025, the scheduled maturities of time deposits were as follows: (dollars in thousands) Amount Maturing in 2026 $ 673,129 Maturing in 2027 65,985 Maturing in 2028 6,427 Maturing in 2029 3,771 Maturing in 2030 1,360 Thereafter 54 Total time deposits $ 750,726 102 Table of Contents NOTE 9 – BORROWINGS 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 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 1,200 0 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. 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. The Company had a borrowing capacity of $ 1.19 billion and $ 1.36 billion at the Federal Reserve Bank as of December 31, 2025 and 2024, respectively. There were no borrowings outstanding at the Federal Reserve Bank at December 31, 2025 and 2024. 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. The Bank is also a member of the American Financial Exchange (AFX) where overnight fed funds purchased can be obtained from other banks on the Exchange that have approved the Bank for an unsecured, overnight line. These funds are only available if the approving banks have an ‘offer’ out to sell that day. The total amount approved for the Bank via AFX banks was $ 312.0 million and $ 304.0 million at December 31, 2025 and 2024, respectively. There were no amounts drawn as of December 31, 2025 and 2024. 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. 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 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. 103 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS In April 2000, the Lakeland Financial Corporation Pension Plan was frozen. The Company also maintains a Supplemental Executive Retirement Plan ("SERP") for select officers that was established as a funded, non-qualified deferred compensation plan. Currently, four retired officers are the only participants in the SERP. The measurement date for both the pension plan and SERP is December 31, 2025 and 2024. Information as to the Company’s employee benefit plans at December 31, 2025 and 2024 is as follows: Pension Benefits SERP Benefits (dollars in thousands) 2025 2024 2025 2024 Change in benefit obligation: Beginning benefit obligation $ 1,236 $ 1,497 $ 620 $ 693 Interest cost 65 66 31 30 Actuarial (gain) loss 74 ( 213 ) 22 30 Benefits paid ( 109 ) ( 114 ) ( 133 ) ( 133 ) Ending benefit obligation 1,266 1,236 540 620 Change in plan assets (primarily equity and fixed income investments and money market funds), at fair value: Beginning plan assets 1,767 1,835 470 546 Actual return 223 221 48 57 Employer contribution 0 0 0 0 Benefits paid ( 148 ) ( 289 ) ( 133 ) ( 133 ) Ending plan assets 1,842 1,767 385 470 Funded status at end of year $ 576 $ 531 $ ( 155 ) $ ( 150 ) Amounts recognized in the consolidated balance sheets consist of: Pension Benefits SERP Benefits (dollars in thousands) 2025 2024 2025 2024 Funded status included in other assets $ 576 $ 531 $ 0 $ 0 Funded status included in other liabilities 0 0 155 150 Amounts recognized in accumulated other comprehensive income (loss) consist of: Pension Benefits SERP Benefits (dollars in thousands) 2025 2024 2025 2024 Net actuarial loss $ 464 $ 469 $ 240 $ 288 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. 104 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued) Net period benefit cost and other amounts recognized in other comprehensive income (loss) include the following: Pension Benefits SERP Benefits (dollars in thousands) 2025 2024 2023 2025 2024 2023 Net pension expense: Service cost $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Interest cost 65 66 75 31 30 33 Expected return on plan assets ( 109 ) ( 116 ) ( 123 ) ( 26 ) ( 33 ) ( 38 ) Recognized net actuarial (gain) loss 4 16 18 48 45 42 Settlement cost 0 25 27 0 0 0 Net pension expense $ ( 40 ) $ ( 9 ) $ ( 3 ) $ 53 $ 42 $ 37 Net (gain) loss $ 0 $ ( 168 ) $ ( 43 ) $ 0 $ 8 $ 56 Amortization of net loss ( 5 ) ( 17 ) ( 17 ) ( 48 ) ( 45 ) ( 42 ) Total recognized in other comprehensive income (loss) ( 5 ) ( 185 ) ( 60 ) ( 48 ) ( 37 ) 14 Total recognized in net pension expense and other comprehensive income (loss) $ ( 45 ) $ ( 194 ) $ ( 63 ) $ 5 $ 5 $ 51 The estimated net loss (gain) for the defined benefit pension plan and SERP that will be amortized (accreted) from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is ($ 45,000 ) for the pension plan and $ 50,000 for the SERP. The settlement costs in 2025, 2024 and 2023 were related to participants taking lump sum distributions from the pension plan during those years. 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 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. The following assumptions were used in calculating the net benefit obligation: Pension Benefits SERP Benefits 2025 2024 2023 2025 2024 2023 Weighted average discount rate 5.09 % 5.46 % 4.83 % 5.09 % 5.46 % 4.83 % Rate of increase in future compensation N/A N/A N/A N/A N/A N/A Lump sum assumed interest rates First 5 years 4.01 % 4.42 % 5.77 % N/A N/A N/A Next 15 years 5.04 % 5.04 % 6.14 % N/A N/A N/A All future years 5.83 % 5.46 % 6.19 % N/A N/A N/A The following assumptions were used in calculating the net pension expense: Weighted average discount rate 5.46 % 4.83 % 5.03 % 5.46 % 4.83 % 5.03 % Rate of increase in future compensation N/A N/A N/A N/A N/A N/A Expected long-term rate of return 6.50 % 6.50 % 6.50 % 6.50 % 6.50 % 6.50 % 105 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued) Pension Plan and SERP Assets The Company’s investment strategies are to invest in a prudent manner for the purpose of providing benefits to participants in the pension plan and the SERP. The investment strategies are targeted to maximize the total return of the portfolio net of inflation, spending and expenses. Risk is controlled through diversification of asset types and investments in domestic and international equities and fixed income securities. The target allocations for plan assets are shown in the tables on the next page. Equity securities primarily include investments in common stocks. Debt securities include government agency and commercial bonds. Other investments consist of money market mutual funds. The weighted average expected long-term rate of return on pension plan and SERP assets is developed in consultation with the plans actuary. It is primarily based upon industry trends and consensus rates of return which are then adjusted to reflect the specific asset allocations and historical rates of return of the Company’s plan assets. The following assumptions were used in determining the total long-term rate of return: equity securities were assumed to have a long-term rate of return of approximately 8.85 % and debt securities were assumed to have a long-term rate of return of approximately 3.00 %. These rates of return were adjusted to reflect an approximate target allocation of 60 % equity securities and 40 % debt securities with a small downward adjustment due to investments in the "Other" category, which consist of low yielding money market mutual funds. Certain asset types and investment strategies are prohibited including, the investment in commodities, options, futures, short sales, margin transactions and non-marketable securities. 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: Target Allocation Percentage of Plan Assets at Year End Weighted Average Expected Long-Term Rate of Return Asset Category 2026 2025 2024 Equity securities 35 - 65 % 40 % 59 % 8.85 % Debt securities 35 - 65 % 57 % 38 % 3.00 % Other 0 - 10 % 3 % 3 % 0.10 % Total 100 % 100 % 6.50 % The Company’s SERP 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: Target Allocation Percentage of Plan Assets at Year End Weighted Average Expected Long-Term Rate of Return Asset Category 2026 2025 2024 Equity securities 35 - 65 % 40 % 60 % 8.85 % Debt securities 35 - 65 % 57 % 36 % 3.00 % Other 0 - 10 % 3 % 4 % 0.10 % Total 100 % 100 % 6.50 % Fair Value of Pension Plan and SERP Assets Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. Also, a fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument: 106 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued) Equity and debt securities: The fair values of securities are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models, which utilize significant observable inputs such as matrix pricing. 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). The fair values of the Company’s pension plan assets at December 31, 2025, by asset category are as follows: Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) Equity securities - US large cap common stocks $ 487 $ 487 $ 0 $ 0 Equity securities - US mid cap stock mutual funds 88 88 0 0 Equity securities - US small cap stock mutual funds 18 18 0 0 Equity securities - international stock mutual funds 107 107 0 0 Equity securities - emerging markets stock mutual funds 38 38 0 0 Debt securities - intermediate term bond mutual funds 681 681 0 0 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 Cash - money market account 52 52 0 0 Total $ 1,842 $ 1,842 $ 0 $ 0 The fair values of the Company’s pension plan assets at December 31, 2024, by asset category are as follows: Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2 ) Significant Unobservable Inputs (Level 3) (dollars in thousands) Equity securities - US large cap common stocks $ 698 $ 698 $ 0 $ 0 Equity securities - US mid cap stock mutual funds 96 96 0 0 Equity securities - US small cap stock mutual funds 50 50 0 0 Equity securities - international stock mutual funds 153 153 0 0 Equity securities - emerging markets stock mutual funds 53 53 0 0 Debt securities - intermediate term bond mutual funds 466 466 0 0 Debt securities - short term bond mutual funds 172 172 0 0 Debt securities - preferred stock mutual funds 34 34 0 0 Cash - money market account 45 45 0 0 Total $ 1,767 $ 1,767 $ 0 $ 0 There were no Level 2 or 3 securities during either year. 107 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued) 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 in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) Equity securities - US large cap stock mutual funds $ 45 $ 45 $ 0 $ 0 Equity securities - US mid cap stock mutual funds 15 15 0 0 Equity securities - US small cap stock mutual funds 7 7 0 0 Equity securities - US large cap exchange traded funds 56 56 0 0 Equity securities - emerging markets stock mutual funds 8 8 0 0 Equity securities - international stock mutual funds 34 34 0 0 Debt securities - intermediate term bond mutual funds 144 144 0 0 Debt securities - short term bond mutual funds 55 55 0 0 Debt securities - preferred stock mutual funds 11 11 0 0 Cash - money market account 10 10 0 0 Total $ 385 $ 385 $ 0 $ 0 The fair values of the Company’s SERP assets at December 31, 2024, by asset category are as follows: Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) 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 Equity securities - international stock mutual funds 39 39 0 0 Debt securities - intermediate term bond mutual funds 124 124 0 0 Debt securities - short term bond mutual funds 36 36 0 0 Debt securities - preferred stock mutual funds 10 10 0 0 Cash - money market account 17 17 0 0 Total $ 470 $ 470 $ 0 $ 0 There were no Level 2 or 3 securities during either year. Contributions The Company did not contribute to its pension or SERP plans in 2025. 108 Table of Contents NOTE 10 – PENSION AND OTHER POSTRETIREMENT PLANS (continued) Estimated Future Benefit Payments The following benefit payments are expected to be paid over the next ten years: Plan Year Pension Benefits SERP Benefits (dollars in thousands) 2026 $ 187 $ 121 2027 131 110 2028 127 97 2029 109 81 2030 104 67 2031-2035 416 170 NOTE 11 – OTHER BENEFIT PLANS 401(k) Plan The Company maintains a 401(k) profit sharing plan for all employees meeting certain age and service requirements. The 401(k) plan allows employee contributions up to the maximum amount allowable under the Internal Revenue Code, which are matched based upon the percentage of budgeted net income earned during the year on the first 6 % of the compensation contributed. The expense recognized from matching was $ 2.9 million, $ 2.5 million and $ 2.0 million in 2025, 2024 and 2023, respectively. Deferred Compensation Plan Effective January 1, 2004, the Company adopted the Lake City Bank Deferred Compensation Plan. The purpose of the deferred compensation plan is to extend full 401(k) type retirement benefits to certain individuals without regard to statutory limitations under tax qualified plans. A liability is accrued by the Company for its obligation under this plan. 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. The deferred compensation plan is funded solely by participant contributions and does not receive a Company match. Employee Agreements Under employment agreements with certain executives, certain events leading to separation from the Company could result in cash payments totaling $ 6.3 million as of December 31, 2025. On December 31, 2025, no amounts were accrued on these contingent obligations. Directors’ Deferred Compensation and Cash Plans The Company maintains a directors’ deferred compensation plan and a cash plan. The amount owed to directors for fees under the deferred directors’ compensation and cash plans as of December 31, 2025 and 2024 was $ 6.2 million and $ 5.7 million, respectively. The related expense for the deferred directors’ compensation and cash plans for the years ended December 31, 2025, 2024 and 2023 was $ 422,000 , $ 387,000 and $ 432,000 , respectively. 109 Table of Contents 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: (dollars in thousands) 2025 2024 2023 Current federal $ 18,583 $ 21,949 $ 16,171 Deferred federal 3,650 ( 2,829 ) 1,302 Current state ( 285 ) 63 ( 131 ) Deferred state 274 ( 972 ) ( 776 ) 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 % Effect of: 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 Increase (decrease) in taxes resulting from: Tax exempt income ( 3,712 ) ( 4,226 ) Nondeductible expenses 280 269 State income tax, net of federal tax effect ( 718 ) ( 716 ) Captive insurance premium income 0 ( 261 ) Tax credits, net of amortization and losses ( 150 ) ( 713 ) Bank owned life insurance ( 903 ) ( 658 ) Long-term incentive plan and deferred compensation ( 270 ) ( 715 ) Nondeductible compensation expense 405 784 Other ( 176 ) ( 368 ) 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 . 110 Table of Contents NOTE 12 – INCOME TAXES (continued) 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 Deferred tax assets: Bad debts $ 17,574 $ 21,909 Pension and deferred compensation liability 2,430 2,166 Nonaccrual loan interest 1,403 955 Long-term incentive plan 2,685 1,755 Lease liability 2,370 1,727 Deferred loan fees 540 574 Accrued legal reserve 0 0 Net operating loss carryforward 1,900 1,343 Other 733 724 29,635 31,153 Deferred tax liabilities: Depreciation 5,333 3,324 Loan servicing rights 433 502 State taxes 1,096 1,153 Intangible assets 1,266 1,267 REIT spillover dividend 1,750 2,040 Prepaid expenses 1,155 900 Lease right of use 2,370 1,727 Other 247 331 13,650 11,244 Valuation allowance 0 0 Net deferred tax asset $ 15,985 $ 19,909 At December 31, 2025, the Company has Indiana net operating loss carryforwards of approximately $ 38.8 million that will expire in 2039 if not used. Management has concluded that the state net operating losses will be fully utilized and therefore no valuation allowance is necessary on the state net operating loss. In addition to the net deferred tax assets included above, the deferred income tax asset (liability) allocated to the unrealized net gain (loss) on securities available-for-sale included in equity was $ 33.7 million and $ 44.1 million for 2025 and 2024, respectively. The deferred income tax asset allocated to the pension plan and SERP included in equity was $ 175,000 and $ 188,000 for 2025 and 2024, respectively. The Company evaluated its deferred tax asset at year end 2025 and has concluded that it is more likely than not that it will be realized. The Company expects to have taxable income in the future such that the deferred tax asset will be realized. Therefore, no valuation allowance is required. Unrecognized Tax Benefits The Company did no t have any unrecognized tax benefits at December 31, 2025 or 2024. 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. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company’s policy to record such accruals in its income taxes accounts. The Company and its subsidiaries file a consolidated U.S. 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. 111 Table of Contents NOTE 13 – RELATED PARTY TRANSACTIONS Loans to principal officers, directors, and their affiliates as of December 31, 2025 and 2024 were as follows: (dollars in thousands) 2025 2024 Beginning balance $ 131,734 $ 132,481 New loans and advances 56,635 56,946 Effect of changes in related parties 0 0 Repayments and renewals ( 83,090 ) ( 57,693 ) Ending balance $ 105,279 $ 131,734 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. Faraz Abbasi, a director of the Company, is a Managing Partner and an owner of Centerfield. As of December 31, 2025 and 2024, the Company had an aggregate investment balance of approximately $ 4.4 million and $ 2.7 million, respectively, in such funds, which are included in other assets on the consolidated balance sheet, and had remaining commitments to invest up to approximately $ 6.0 million and $ 2.1 million, respectively. Under the terms of the applicable funds, Centerfield is entitled to customary management fees with respect to the amounts under management and investment gains, and it is estimated that Mr. Abbasi’s interest in such fees was approximately $ 75,000 annually for the years ended December 31, 2025 and 2024. NOTE 14 – STOCK BASED COMPENSATION Effective April 8, 2008, the Company adopted the Lakeland Financial Corporation 2008 Equity Incentive Plan (the "2008 Plan"), which was approved by the Company’s stockholders. At its inception there were 1,125,000 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. Effective April 9, 2013, the Company adopted the Lakeland Financial Corporation 2013 Equity Incentive Plan (the "2013 Plan"), which was also approved by the Company’s stockholders. At its inception the remaining shares of common stock available to grant under the 2008 Plan of 435,867 were transferred to the 2013 Plan and reserved for grants of stock options, stock appreciation rights, stock awards and cash incentive awards to employees of the Company, its subsidiaries and Board. Non-vested shares from the 2008 Plan that were unused at vesting were added to the shares available to grant of the 2013 Plan. Effective April 12, 2017, the Company adopted the Lakeland Financial Corporation 2017 Equity Incentive Plan (the "2017 Plan"), which was also approved by the Company’s stockholders and does not permit share recycling. At its inception there were 1,000,000 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. 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, 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 The equity incentive plan requires that the exercise price for options be the market price on the date the options are granted. The maximum option term is ten years and the awards usually vest over three years . The fair value of each stock option is estimated with the Black-Scholes pricing model, using the following weighted-average assumptions as of the grant date for stock options granted during the years presented. 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 112 Table of Contents NOTE 14 – STOCK BASED COMPENSATION (continued) 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. There were no stock option grants or modifications in 2025, 2024 or 2023. As of December 31, 2025, there was no unrecognized compensation cost related to non-vested stock options granted under the plan. There were no options outstanding, issued or exercised during the years ended December 31, 2025, 2024 or 2023. Restricted Stock Awards and Units The fair value of restricted stock awards and units is the closing price of the Company’s common stock on the date of grant, adjusted for the present value of expected dividends. The restricted stock awards fully vest after one year or more of service, determined at the grant date, with the exception of 13,000 shares granted to non-employee directors of the Board included as vested, below, which vested on the grant date. A summary of the changes in the Company’s non-vested shares for the year follows: Nonvested Shares Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2025 70,255 $ 66.01 Granted 66,859 62.74 Vested ( 56,158 ) 69.70 Forfeited ( 591 ) 61.35 Nonvested at December 31, 2025 80,365 $ 60.77 As of December 31, 2025, there was $ 2.8 million unrecognized compensation cost related to non-vested shares granted under the plan. 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, 2025, 2024 and 2023 was $ 2.1 million, $ 1.1 million and $ 862,000 , respectively. Performance Stock Units The fair value of stock awards is the closing price of the Company’s common stock on the date of grant, adjusted for the present value of expected dividends. The expected dividend rate is assumed to be the most recent dividend rate declared by the Board on the grant date. The grant date fair value of stock awards is assumed at the target payout rate. The stock awards fully vest on the third anniversary of the grant date. The 2025-2027, 2024-2026 and 2023-2025 Long-Term Incentive Plans must be paid in stock and have performance conditions which include revenue growth, diluted earnings per share growth and average return on beginning equity. Shares granted below include the number of shares assumed granted based on actual performance criteria of the 2025-2027, 2024-2026 and 2023-2025 Long-Term Incentive Plans at December 31, 2025. Nonvested Shares Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2025 95,104 $ 66.76 Granted, net 154,692 61.48 Vested ( 35,539 ) 76.26 Forfeited ( 1,073 ) 61.09 Nonvested at December 31, 2025 213,184 $ 61.37 As of December 31, 2025, there wa s $ 6.2 million of total unrecognized compensation cost related to non-vested shares granted under the plan. The cost is expected to be recognized over a weighted period of 1.8 years. The total fair value of shares vested during the year ended December 31, 2025, 2024 and 2023 was $ 2.4 million, $ 6.7 million and $ 7.8 million, respectively. During the years ended December 31, 2025, 2024 and 2023, 35,539 , 100,236 and 107,789 shares vested, respectively. 113 Table of Contents NOTE 15 – CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet certain heightened minimum capital requirements can initiate certain mandatory, and possibly discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors. The capital adequacy requirements were heightened by the Basel III Rule, previously defined, which went into effect on January 1, 2015 with a phase-in period for certain aspects of the rule through 2019. Under the Basel III rule, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer was phased in from 0.00% for 2015 to 2.50% by 2019. The capital conservation buffer for 2025 and 2024 was 2.50%. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. The quantitative measures established by regulation to ensure capital adequacy that were in effect on December 31, 2025 and 2024, require the Company and the Bank to maintain minimum capital amounts and ratios (set forth in the following table) of Total, Tier I and Common Equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulation), and of Tier I capital (as defined in the regulation) to average assets (as defined). Management believes, as of the years ended December 31, 2025 and 2024, that the Company and the Bank met all capital adequacy requirements to which they are subject. 114 Table of Contents NOTE 15 – CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (continued) As of December 31, 2025, the most recent notification from the federal regulators categorized the Company and the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum Total risk-based capital ratios, Tier I risk-based capital ratios and Tier I leverage capital ratios as set forth in the table. There have been no conditions or events since that notification that management believes have changed the Company and the Bank’s category. Actual Minimum Required For Capital Adequacy Purposes For Capital Adequacy Purposes Plus Capital Conservation Buffer Minimum "Required" to Be "Well" Capitalized Under "Prompt" Corrective Action Regulations (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025 Total Capital (to Risk Weighted Assets) Consolidated $ 953,653 15.92 % $ 479,188 8.00 % $ 628,934 N/A N/A N/A Bank 960,393 16.05 478,735 8.00 628,339 10.50 % $ 598,419 10.00 % Tier I Capital (to Risk Weighted Assets) Consolidated 884,569 14.77 359,391 6.00 509,137 N/A N/A N/A Bank 891,310 14.89 359,051 6.00 508,656 8.50 478,735 8.00 Common Equity Tier 1 (CET1) Consolidated 884,569 14.77 269,543 4.50 419,289 N/A N/A N/A Bank 891,310 14.89 269,288 4.50 418,893 7.00 388,972 6.50 Tier I Capital (to Average Assets) Consolidated 884,569 12.39 285,531 4.00 285,531 N/A N/A N/A Bank 891,310 12.50 285,290 4.00 285,290 4.00 356,612 5.00 As of December 31, 2024 Total Capital (to Risk Weighted Assets) Consolidated $ 917,769 15.90 % $ 461,847 8.00 % $ 606,175 N/A N/A N/A Bank 909,232 15.76 461,612 8.00 605,866 10.50 % $ 577,015 10.00 % Tier I Capital (to Risk Weighted Assets) Consolidated 845,352 14.64 346,385 6.00 490,713 N/A N/A N/A Bank 836,845 14.50 346,209 6.00 490,463 8.50 461,612 8.00 Common Equity Tier 1 (CET1) Consolidated 845,352 14.64 259,789 4.50 404,116 N/A N/A N/A Bank 836,845 14.50 259,657 4.50 403,911 7.00 375,060 6.50 Tier I Capital (to Average Assets) Consolidated 845,352 12.15 278,369 4.00 278,369 N/A N/A N/A Bank 836,845 12.03 278,240 4.00 278,240 4.00 347,800 5.00 The Bank is required to obtain the approval of the Indiana Department of Financial Institutions for the payment of any dividend if the total amount of all dividends declared by the Bank during the calendar year, including the proposed dividend, would exceed the sum of the retained net income for the year-to-date combined with the retained net income for the previous two years. Indiana law defines "retained net income" to mean the net income of a specified period, calculated under the consolidated report of income instructions, less the total amount of all dividends declared for the specified period. As of December 31, 2025, approximately $ 109.9 million was available to be paid as dividends to the Company by the Bank. The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and a financial institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2025. Notwithstanding the availability of funds for dividends, however, the FDIC may prohibit the payment of any dividends by the Bank if the FDIC determines such payment would constitute an unsafe or unsound practice. 115 Table of Contents NOTE 16 – OFFSETTING ASSETS AND LIABILITIES The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at December 31, 2025 and 2024. 2025 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position (dollars in thousands) Financial Instruments Cash Collateral Position Net Amount Assets Interest Rate Swap Derivatives $ 14,634 $ 0 $ 14,634 $ 0 $ ( 13,075 ) $ 1,559 Total Assets $ 14,634 $ 0 $ 14,634 $ 0 $ ( 13,075 ) $ 1,559 Liabilities Interest Rate Swap Derivatives $ 14,634 $ 0 $ 14,634 $ 0 $ 0 $ 14,634 Total Liabilities $ 14,634 $ 0 $ 14,634 $ 0 $ 0 $ 14,634 2024 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position (dollars in thousands) Financial Instruments Cash Collateral Position Net Amount Assets Interest Rate Swap Derivatives $ 25,403 $ 0 $ 25,403 $ 0 $ ( 21,815 ) $ 3,588 Total Assets $ 25,403 $ 0 $ 25,403 $ 0 $ ( 21,815 ) $ 3,588 Liabilities Interest Rate Swap Derivatives $ 25,403 $ 0 $ 25,403 $ 0 $ 0 $ 25,403 Total Liabilities $ 25,403 $ 0 $ 25,403 $ 0 $ 0 $ 25,403 If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions. NOTE 17 – COMMITMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES During the normal course of business, the Company becomes a party to financial instruments with off-balance sheet risk in order to meet the financing needs of its customers. These financial instruments include commitments to make loans and open-ended revolving lines of credit. Amounts as of the years ended December 31, 2025 and 2024, were as follows: 2025 2024 (dollars in thousands) Fixed Rate Variable Rate Fixed Rate Variable Rate Commercial loan lines of credit $ 44,962 $ 2,121,585 $ 60,856 $ 2,150,375 Standby letters of credit 0 47,358 0 49,558 Real estate mortgage loans 1,234 7,536 2,032 5,854 Real estate construction mortgage loans 0 3,770 1,010 5,165 Home equity mortgage open-ended revolving lines 0 421,480 0 388,235 Consumer loan open-ended revolving lines 0 26,131 0 26,589 Total $ 46,196 $ 2,627,860 $ 63,898 $ 2,625,776 116 Table of Contents NOTE 17 – COMMITMENTS, OFF-BALANCE SHEET RISKS AND CONTINGENCIES (continued) The index on variable rate commercial loan commitments is principally the national prime rate. Interest rate ranges on commitments and open-ended revolving lines of credit for years ended December 31, 2025 and 2024, were as follows: 2025 2024 Fixed Rate Variable Rate Fixed Rate Variable Rate Commercial loan 1.00 - 14.50 % 3.35 - 10.75 % 1.00 - 14.50 % 3.35 - 11.75 % Real estate mortgage loan 6.38 - 6.50 % 5.50 - 11.75 % 3.00 - 7.38 % 6.00 - 12.50 % Consumer loan open-ended revolving line 15.00 % 6.75 - 15.00 % 15.00 % 7.50 - 15.00 % Commitments, excluding open-ended revolving lines, generally have fixed expiration dates of one year or less. Open-ended revolving lines are monitored for proper performance and compliance on a monthly basis. Since many commitments expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company follows the same credit policy (including requiring collateral, if deemed appropriate) to make such commitments as it follows for those loans that are recorded in its financial statements. The Company’s exposure to credit losses in the event of nonperformance is represented by the contractual amount of the commitments. Management does not expect any significant losses as a result of these commitments. NOTE 18 – PARENT COMPANY STATEMENTS The Company operates primarily in the banking industry, which accounts for substantially all of its revenues, operating income and assets. Presented below are parent only financial statements: CONDENSED BALANCE SHEETS December 31, (dollars in thousands) 2025 2024 ASSETS Deposits with Lake City Bank $ 177 $ 5,901 Deposits with other depository institutions 1,020 435 Cash 1,197 6,336 Investments in banking subsidiary 769,144 675,315 Other assets 5,460 2,824 Total assets $ 775,801 $ 684,475 LIABILITIES Dividends payable and other liabilities $ 398 $ 653 Borrowings 13,000 0 STOCKHOLDERS’ EQUITY 762,403 683,822 Total liabilities and stockholders’ equity $ 775,801 $ 684,475 117 Table of Contents NOTE 18 – PARENT COMPANY STATEMENTS (continued) CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Years ended December 31, (dollars in thousands) 2025 2024 2023 Dividends from Lake City Bank $ 56,301 $ 42,118 $ 46,263 Dividends from non-bank subsidiaries 0 0 1,525 Other income 17 2 5 Interest expense ( 102 ) 0 0 Miscellaneous expense ( 9,632 ) ( 5,642 ) ( 4,768 ) INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 46,584 36,478 43,025 Income tax benefit 2,298 1,608 1,957 INCOME BEFORE EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 48,882 38,086 44,982 Equity in undistributed income of subsidiaries 54,479 55,392 48,785 NET INCOME $ 103,361 $ 93,478 $ 93,767 COMPREHENSIVE INCOME $ 142,724 $ 82,173 $ 127,495 CONDENSED STATEMENTS OF CASH FLOWS Years ended December 31, (dollars in thousands) 2025 2024 2023 Cash flows from operating activities: Net income $ 103,361 $ 93,478 $ 93,767 Adjustments to net cash from operating activities: Equity in undistributed income of subsidiaries ( 54,479 ) ( 55,392 ) ( 48,785 ) Other changes 5,903 3,421 16,601 Net cash from operating activities 54,785 41,507 61,583 Cash flows from investing activities: Return of capital from subsidiary 0 0 3,602 Cash flows from investing activities 0 0 3,602 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 ) Purchase of treasury stock ( 20,391 ) ( 592 ) ( 575 ) Sales of treasury stock 375 391 405 Dividends paid ( 51,415 ) ( 49,281 ) ( 47,094 ) Cash flows from financing activities ( 59,924 ) ( 52,297 ) ( 50,399 ) Net increase (decrease) in cash and cash equivalents ( 5,139 ) ( 10,790 ) 14,786 Cash and cash equivalents at beginning of the year 6,336 17,126 2,340 Cash and cash equivalents at end of the year $ 1,197 $ 6,336 $ 17,126 118 Table of Contents NOTE 19 – EARNINGS PER SHARE Following are the factors used in the earnings per share computations: (dollars in thousand except share and per share data) 2025 2024 2023 Basic earnings per common share: Net income $ 103,361 $ 93,478 $ 93,767 Weighted-average common shares outstanding 25,687,159 25,676,543 25,604,751 Basic earnings per common share $ 4.02 $ 3.64 $ 3.67 Diluted earnings per common share: Net income $ 103,361 $ 93,478 $ 93,767 Weighted-average common shares outstanding for basic earnings per common share 25,687,159 25,676,543 25,604,751 Add: 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 awards for 2025, 2024 and 2023. NOTE 20 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the years ended December 31, 2025 and 2024 all shown net of tax: (dollars in thousands) Unrealized Gains and (Losses) on Available-for-Sale Securities Defined Benefit Pension Items Total Balance at January 1, 2025 $ ( 165,932 ) $ ( 568 ) $ ( 166,500 ) Other comprehensive income (loss) before reclassification 37,778 0 37,778 Amounts reclassified from accumulated other comprehensive income (loss) 1,545 40 1,585 Net current period other comprehensive income (loss) 39,323 40 39,363 Balance at December 31, 2025 $ ( 126,609 ) $ ( 528 ) $ ( 127,137 ) (dollars in thousands) Unrealized Gains and (Losses) on Available-for-Sale Securities Defined Benefit Pension Items Total Balance at January 1, 2024 $ ( 154,460 ) $ ( 735 ) $ ( 155,195 ) Other comprehensive income (loss) before reclassification ( 13,058 ) 121 ( 12,937 ) Amounts reclassified from accumulated other comprehensive income (loss) 1,586 46 1,632 Net current period other comprehensive income (loss) ( 11,472 ) 167 ( 11,305 ) Balance at December 31, 2024 $ ( 165,932 ) $ ( 568 ) $ ( 166,500 ) 119 Table of Contents NOTE 20 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (continued) Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023 are as follows: Details about Accumulated Other Comprehensive Income Components Amount Reclassified From Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Statement Where Net Income is Presented 2025 (dollars in thousands) Amortization of unrealized losses on held-to-maturity securities $ ( 1,957 ) Interest income Tax effect 412 Income tax expense Subtotal ( 1,545 ) Net of tax Amortization of defined benefit pension items (1) ( 53 ) Salaries and employee benefits Tax effect 13 Income tax expense Subtotal ( 40 ) Net of tax Total reclassifications for the period $ ( 1,585 ) Net income 2024 (dollars in thousands) Amortization of unrealized losses on held-to-maturity securities $ ( 1,962 ) Interest income Realized gains and (losses) on available-for-sale securities ( 46 ) Net securities gains (losses) Tax effect 422 Income tax expense Subtotal ( 1,586 ) Net of tax Amortization of defined benefit pension items (1) ( 62 ) Salaries and employee benefits Tax effect 16 Income tax expense Subtotal ( 46 ) Net of tax Total reclassifications for the period $ ( 1,632 ) Net income 2023 (dollars in thousands) Amortization of unrealized losses on held-to-maturity securities $ ( 1,987 ) Interest income Realized gains and (losses) on available-for-sale securities ( 25 ) Net securities gains (losses) Tax effect 423 Income tax expense Subtotal ( 1,589 ) Net of tax Amortization of defined benefit pension items (1) ( 59 ) Salaries and employee benefits Tax effect 15 Income tax expense Subtotal ( 44 ) Net of tax Total reclassifications for the period $ ( 1,633 ) Net income (1) Included in the computation of net pension plan expense as more fully discussed in Note 10 – Pension and Other Postretirement Plans. 120 Table of Contents NOTE 21 – SELECTED QUARTERLY DATA (UNAUDITED) (in thousands except per share data) 2025 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Interest income $ 94,008 $ 94,887 $ 94,385 $ 90,455 Interest expense 36,815 38,814 39,509 37,580 Net interest income 57,193 56,073 54,876 52,875 Provision for credit losses 0 2,000 3,000 6,800 Net interest income after provision 57,193 54,073 51,876 46,075 Noninterest income 12,603 12,954 11,486 10,928 Noninterest expense 33,445 34,965 30,432 32,763 Income tax expense 6,445 5,658 5,964 4,155 Net income $ 29,906 $ 26,404 $ 26,966 $ 20,085 Basic earnings per common share $ 1.16 $ 1.03 $ 1.05 $ 0.78 Diluted earnings per common share $ 1.16 $ 1.03 $ 1.04 $ 0.78 2024 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Interest income $ 93,370 $ 95,018 $ 93,736 $ 91,034 Interest expense 41,676 45,745 45,440 43,618 Net interest income 51,694 49,273 48,296 47,416 Provision for credit losses 3,691 3,059 8,480 1,520 Net interest income after provision 48,003 46,214 39,816 45,896 Noninterest income 11,876 11,917 20,439 12,612 Noninterest expense 30,653 30,393 33,333 30,705 Income tax expense 5,036 4,400 4,373 4,402 Net income $ 24,190 $ 23,338 $ 22,549 $ 23,401 Basic earnings per common share $ 0.94 $ 0.91 $ 0.88 $ 0.91 Diluted earnings per common share $ 0.94 $ 0.91 $ 0.87 $ 0.91 NOTE 22 – LEASES The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2044 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company’s corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 121 Table of Contents NOTE 22 - LEASES (continued) Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the lease standard. The following is a maturity analysis of the operating lease liabilities as of December 31, 2025: Years ending December 31, (in thousands) Operating Lease Obligation 2026 $ 971 2027 919 2028 869 2029 743 2030 661 2031 and thereafter 5,191 Total undiscounted lease payments 9,354 Less imputed interest ( 2,286 ) Lease liability $ 7,068 Right-of-use asset $ 7,068 Year Ended Year Ended Year Ended (dollars in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Lease cost Operating lease cost $ 863 $ 742 $ 724 Short-term lease cost 4 7 18 Total lease cost $ 867 $ 749 $ 742 Other information Operating cash outflows from operating leases $ 863 $ 742 $ 724 Weighted-average remaining lease term - operating leases 6.6 years 7.6 years 6.3 years Weighted average discount rate - operating leases 3.8 % 3.7 % 2.5 % 122 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Within the prior two years of the date of the most recent financial statement, there have been no changes in or disagreements with the Company’s accountants.