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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-04-29 · 250 added, 135 removed, 314 unchanged (55% of the section changed)

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net income in the first three months of 2026 was $26.5 million, which increased $6.4 million , or 31.8%, from $20.1 million for the comparable period of 2025 .

Diluted earnings per common share was $1.04 in the first three months of 2026 , an increase of 33.3% from $0.78 in the comparable period of 2025 .

Net income in the first six months of 2026 was $54.9 million, which increased $7.9 million , or 16.7%, from $47.1 million for the comparable period of 2025 .

Diluted earnings per common share were $2.17 in the first six months of 2026 , an increase of 19.2% from $1.82 in the comparable period of 2025 .

The increase in net income for 2026 was primarily due to an increase to net interest income of $7.3 million, or 6.8%, an increase in noninterest income of $3.1 million, or 13.8%, and a decrease in the provision for credit losses of $6.1 million, or 62.2%.

Offsetting these positive contributions was an increase in noninterest expense of $6.4 million, or 10.1%, and an increase to income tax expense of $2.2 million, or 22.0%.

Pretax pre-provision earnings, a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense, were $34.6 million in the first three months of 2026 , an increase of $3.5 million , or 11.3%, compared to $31.0 million for the comparable period of 2025 .

Return on average total equity was 13.89% in the first three months of 2026 versus 11.70% in the comparable period of 2025 .

Return on average total assets was 1.52% in the first three months of 2026 versus 1.20% for the comparable period of 2025 .

The Company's average equity to average assets ratio was 10.91% in the first three months of 2026 versus 10.29% in the comparable period of 2025 .

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.53% at March 31, 2026, compared to 10.09% at March 31, 2025 and 10.86% at December 31, 2025.

Unrealized losses from available-for-sale investment securities were $154.5 million at March 31, 2026, compared to $188.3 million at March 31, 2025 and $143.3 million at December 31, 2025.

When excluding the impact of accumulated other comprehensive income (loss) ("AOCI") on tangible common equity and tangible assets, the Company's adjusted tangible common equity to adjusted tangible assets ratio, which is a non-GAAP financial measure, was 12.20% at March 31, 2026, compared to 12.19% at March 31, 2025 and 12.45% at December 31, 2025.

Total assets were $7.084 billion as of March 31, 2026 versus $6.990 billion as of December 31, 2025, an increase of $93.7 million, or 1.3% .

Pretax pre-provision earnings, a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense, were $71.0 million in the first six months of 2026 , an increase of $4.0 million , or 6.0%, compared to $67.0 million for the comparable period of 2025 .

Return on average total equity was 14.44% in the first six months of 2026 versus 13.62% in the comparable period of 2025 .

Return on average total assets was 1.55% in the first six months of 2026 versus 1.39% for the comparable period of 2025 .

The Company's average equity to average assets ratio was 10.74% in the first six months of 2026 versus 10.19% in the comparable period of 2025 .

Net income in the second quarter of 2026 was $28.4 million, an increase of $1.5 million, or 5.5%, from $27.0 million for the comparable period of 2025.

Diluted earnings per common share were $1.13 in the second quarter of 2026, an increase of 8.7% from $1.04 in the comparable period of 2025.

The increase was driven primarily by an increase in net interest income of $3.4 million, or 6.2%, a decrease in provision for credit losses of $1.3 million, or 43.1%, and an increase in noninterest income of $1.1 million, or 9.5%.

Offsetting these positive contributions was an increase in noninterest expense of $4.0 million, or 13.2%.

Pretax pre-provision earnings in the second quarter of 2026 were $36.4 million, an increase of $486,000, or 1.4%, compared to $35.9 million for the comparable period of 2025.

Return on average total equity was 15.00% in the second quarter of 2026 versus 15.52% in the comparable period of 2025.

Return on average total assets was 1.59% in the second quarter of 2026 versus 1.57% in the comparable period of 2025.

The average equity to average assets ratio was 10.58% in the second quarter of 2026 versus 10.09% in the comparable period of 2025.

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.63% at June 30, 2026, compared to 10.15% at June 30, 2025 and 10.86% at December 31, 2025.

Unrealized losses from available-for-sale investment securities were $140.9 million at June 30, 2026, compared to $185.3 million at June 30, 2025 and $143.3 million at December 31, 2025.

When excluding the impact of accumulated other comprehensive income (loss) ("AOCI") on tangible common equity and tangible assets, the Company's adjusted tangible common equity to adjusted tangible assets ratio, which is a non-GAAP financial measure, was 12.14% at June 30, 2026, compared to 12.17% at June 30, 2025 and 12.45% at December 31, 2025.

Total assets were $7.243 billion as of June 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $252.9 million, or 3.6% .

Balance sheet expansion was driven by increases to t otal loans, net of the allowance for credit losses, which increased $202.7 million, or 3.8%, and cash and cash equivalents, which increased $52.8 million, or 37.4%.

These increases were offset by a decrease to available-for-sale securities of $25.1 million, or 2.4% The balance sheet expansion from December 31, 2025 to March 31, 2026 was funded by an increase in total deposits of $216.9 million, or 3.6%, and was offset by a decrease in borrowings of $116.0 million, or 63.0%.

Total equity decreased $13.5 million, or 1.8%, from $762.5 million at December 31, 2025 to $749.0 million at March 31, 2026.

The decrease to total equity was primarily attributable to an increase in treasury stock of $19.3 million, or 53.8%, driven by the Company's utilization of the share repurchase program, and a decrease in accumulated other comprehensive income (loss) of $8.5 million, contributed further to the decline in total equity.

Offsetting these reductions to total equity was an increase in retained earnings of $13.3 million, or 1.7%, primarily as a result of net income of $26.5 million less dividends declared and paid of $13.2 million.

The combined effect of the repurchase activity under the share repurchase program and dividends paid during the quarter represented a total return of capital to Company shareholders of $32.4 million.

These increases were offset by a decrease to available-for-sale securities of $16.9 million, or 1.6%.

The balance sheet expansion from December 31, 2025 to June 30, 2026 was funded by an increase in total deposits of $356.2 million, or 6.0%, and was offset by a decrease in borrowings of $113.0 million, or 61.3%.

Total equity increased $10.9 million, or 1.4%, from $762.5 million at December 31, 2025 to $773.4 million at June 30, 2026.

Driving the increase in total equity was an increase in retained earnings of $28.7 million, or 3.6%, primarily as a result of net income of $54.9 million less dividends declared and paid of $26.3 million.

Accumulated other comprehensive income (loss) improved by $2.7 million and contributed further to the increase in total equity.

Offsetting these items was an increase in treasury stock, which increased by $23.5 million, or 65.7%, driven by the Company's utilization of its share repurchase program.

The combined effect of the repurchase activity under the share repurchase program and dividends paid during the first six months of 2026 represented a total return of capital to Company shareholders of $49.8 million.

CRITICAL ACCOUNTING POLICIES

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RESULTS OF OPERATIONS

Selected income statement information for the three months ended March 31, 2026 and 2025 is presented in the following table:

Three Months Ended March 31,

Selected income statement information for the three and six months ended June 30, 2026 and 2025 is presented in the following table:

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2026 2025 2026 2025

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Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax.

Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in accumulated other comprehensive income (loss) ("AOCI").

Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in AOCI.

Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock.

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A reconciliation of these non-GAAP financial measures is provided below.

As of and For The

Three Months Ended March 31,

As of and For The As of and For The

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands, except per share data) 2026 2025 2026 2025

19 unchanged sentences

Pretax Pre-Provision Earnings $ 36,416 $ 35,930 $ 70,971 $ 66,970

Net income was $26.5 million in the first three months of 2026, which increased $6.4 million , or 31.8%, from $20.1 million for the comparable period of 2025 .

Diluted earnings per common share was $1.04 in the first three months of 2026 , an increase of 33.3% from $0.78 in the comparable period of 2025 .

The increase in net income for the first three months of 2026 was primarily due to an increase to net interest income of $3.9 million, or 7.4%, an increase to noninterest income of $2.0 million, or 18.3%, and a decrease in the provision for credit losses of $4.8 million, or 70.6%.

Net income was $54.9 million in the first six months of 2026, which increased $7.9 million , or 16.7%, from $47.1 million for the comparable period of 2025 .

Diluted earnings per common share were $2.17 in the first six months of 2026 , an increase of 19.2% from $1.82 in the comparable period of 2025 .

The increase in net income for the first six months of 2026 was primarily due to an increase to net interest income of $7.3 million, or 6.8%, an increase to noninterest income of $3.1 million, or 13.8%, and a decrease in the provision for credit losses of $6.1 million, or 62.2%.

Offsetting these positive contributions was an increase in noninterest expense of $6.4 million, or 10.1%, and an increase to income tax expense of $2.2 million, or 22.0%.

Net income during the second quarter of 2026 was $28.4 million, an improvement of 5.5% from $27.0 million for the comparable period of 2025.

Diluted earnings per common share was $1.13 in the second quarter of 2026, an increase of 8.7% from $1.04 in the comparable period of 2025.

The increase was driven primarily by an increase in net interest income of $3.4 million, or 6.2%, an increase in noninterest income of $1.1 million, or 9.5%, and a decrease in the provision for credit losses of $1.3 million, or 43.1%.

Offsetting these positive contributions was an increase in noninterest expense of $4.0 million, or 13.2%, and an increase to income tax expense of $304,000, or 5.1%.

N et Interest Income

The following tables set forth consolidated information regarding average balances and rates:

Three Months Ended March 31,

Six Months Ended June 30,

(fully tax equivalent basis, dollars in thousands) Average Balance Interest Income Yield (1)/

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Net interest income and margin $ 117,282 3.49 % $ 109,970 3.41 %

(1) Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate.

(1) Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate.

The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses.

Taxable equivalent basis adjustment was $1.1 million for the three-month periods ended March 31, 2026 and 2025.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended March 31, 2026 and 2025, are included as taxable loan interest income.

Tax equivalent basis adjustment was $2.2 million for the six-month periods ended June 30, 2026 and 2025.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the six months ended June 30, 2026 and 2025, are included as taxable loan interest income.

(3) Nonaccrual loans are included in the average balance of taxable loans.

Net interest income, on a fully tax equivalent basis, increased $3.9 million, or 7.2%, to $57.9 million for the three months ended March 31, 2026, compared to $54.0 million for the first three months of 2025 .

Three Months Ended June 30,

(fully tax equivalent basis, dollars in thousands) Average Balance Interest Income Yield (1)/

Rate Average Balance Interest Income Yield (1)/

Earning Assets

Taxable (2)(3) $ 5,507,100 $ 85,994 6.26 % $ 5,204,006 $ 84,418 6.51 %

Tax exempt (1) 24,244 363 6.01 25,640 359 5.62

Securities (1) 1,161,807 8,680 3.00 1,125,597 8,416 3.00

Short-term investments 3,567 28 3.15 2,832 28 3.97

Interest bearing deposits 135,984 1,186 3.50 212,532 2,274 4.29

Total earning assets $ 6,832,702 96,251 5.65 % $ 6,570,607 95,495 5.83 %

Allowance for credit losses (69,959) (93,644)

Nonearning Assets

Cash and due from banks 64,197 66,713

Premises and equipment 69,499 61,280

Other nonearning assets 294,224 299,725

Total assets $ 7,190,663 $ 6,904,681

Interest Bearing Liabilities

Savings deposits $ 287,520 $ 41 0.06 % $ 285,944 $ 43 0.06 %

Interest bearing checking accounts 3,867,392 28,184 2.92 3,767,903 31,499 3.35

Time deposits:

In denominations under $100,000 201,696 1,576 3.13 208,770 1,745 3.35

In denominations over $100,000 728,345 6,578 3.62 589,829 5,824 3.96

Short-term borrowings 47,286 468 3.97 33,297 398 4.79

Long-term borrowings 1,200 0 0.00 1,200 0 0.00

Total interest bearing liabilities $ 5,133,439 $ 36,847 2.88 % $ 4,886,943 $ 39,509 3.24 %

Noninterest Bearing Liabilities

Demand deposits 1,227,721 1,244,058

Other liabilities 68,970 76,704

Stockholders' Equity 760,533 696,976

Total liabilities and stockholders' equity $ 7,190,663 $ 6,904,681

Interest Margin Recap

Interest income/average earning assets 96,251 5.65 % 95,495 5.83 %

Interest expense/average earning assets 36,847 2.16 39,509 2.41

Net interest income and margin $ 59,404 3.49 % $ 55,986 3.42 %

(1) Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate.

Tax equivalent basis adjustments was $1.1 million for the three-month periods ended June 30, 2026 and June 30, 2025.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended June 30, 2026 and 2025, are included as taxable loan interest income .

(3) Nonaccrual loans are included in the average balance of taxable loans.

Net interest income, on a fully tax equivalent basis, increased $7.3 million, or 6.6%, to $117.3 million for the six months ended June 30, 2026, compared to $110.0 million for the first six months of 2025 .

The increase in net interest income on a fully tax equivalent basis was driven by a decrease in deposit interest expense of $5.8 million , or 7.6% , from $75.6 million to $69.8 million .

Securities interest income contributed further to the increase in fully tax equivalent net interest income, increasing by $448,000 , or 5.4% .

Loan interest income increased by $1.4 million, or 1.7%, as an increase in average loans offset decreased average yields.

Borrowings expense increased by $661,000 , or 58.9% .

Total average earning assets were $6.729 billion for the three months ended March 31, 2026, an increase of $298.6 million, or 4.6%, compared to $6.431 billion for the three months ended March 31, 2025 .

Average loans outstanding drove the increase to total average earning assets, increasing $255.0 million, or 4.9%, to $5.441 billion from $5.186 billion for the three months ended March 31, 2026 and 2025 , respectively .

Contributing further to the increase in fully tax equivalent net interest income was an increase in loan interest income of $2.9 million, or 1.8%, from $166.9 million to $169.8 million, and an increase in securities interest income of $710,000 , or 4.2%, from $16.8 million to $17.5 million .

Offsetting these items was an increase in b orrowings expense of $731,000 , or 48.1%, from $1.5 million to $2.3 million .

Average earning assets were $6.781 billion for the six months ended June 30, 2026, an increase of $280.2 million, or 4.3%, compared to $6.501 billion for the six months ended June 30, 2025 .

Average loans outstanding drove the increase to average earning assets, increasing $278.5 million, or 5.3%, to $5.486 billion from $5.208 billion for the six months ended June 30, 2026 and 2025 , respectively .

Average investment securities increased $45.0 million, or 4.0%, to $1.176 billion from $1.131 billion between the respective periods .

Total average interest bearing liabilities were $5.005 billion for the three months ended March 31, 2026, an increase of $288.2 million, or 6.1%, from $4.716 billion for the three months ended March 31, 2025.

This increase was driven by growth in average interest bearing deposits of $204.6 million, or 4.4%, from $4.616 billion for the three months ended March 31, 2025 to $4.821 billion for the three months ended March 31, 2026.

Average interest bearing liabilities were $5.069 billion for the six months ended June 30, 2026, an increase of $267.2 million, or 5.6%, from $4.802 billion for the six months ended June 30, 2025.

This increase was driven by growth in average interest bearing deposits of $218.6 million, or 4.6%, from $4.735 billion for the six months ended June 30, 2025 to $4.954 billion for the six months ended June 30, 2026.

Average short-term borrowings increased by $48.1 million, or 72.5%, between the respective periods.

Noninterest bearing demand deposits decreased $20.1 million, or 1.6%, to $1.231 billion from $1.251 billion between the two periods.

The tax equivalent net interest margin was 3.49% for the three months ended March 31, 2026, compared to 3.40% during the first three months of 2025 , representing a 9 basis point expansion between the two periods.

The net interest margin increase was primarily driven by a decrease to interest expense as a percentage of average earning assets, which decreased to 2.12% for the three months ended March 31, 2026 , down from 2.37% for the comparable period of 2025 , or a decrease of 25 basis points.

The fully tax equivalent net interest margin was 3.49% for the six months ended June 30, 2026, compared to 3.41% during the first six months of 2025 , representing an 8 basis point expansion between the two periods.

The net interest margin increase was primarily driven by a decrease to interest expense as a percentage of average earning assets, which decreased to 2.14% for the six months ended June 30, 2026 , down from 2.39% for the comparable period of 2025 , or a decrease of 25 basis points.

This decline was attributable to a decrease in the rate for total interest bearing liabilities of 37 basis points from 3.24% to 2.87% between the respective periods.

These decreases were driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank.

The average rate for interest bearing deposits declined 38 basis points from 3.22% to 2.84% between the two periods.

Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 65 basis points from 4.57% to 3.92%.

The improvement in interest expense as a percentage of average earning assets was offset by a 17 basis point reduction in interest income as a percentage of average earning assets, which declined fro m 5.80% to 5.63%.

This decrease was primarily attributable to a decline in average loan yields, which decreased 20 basis points to 6.22% for the three months ended March 31, 2026, down from 6.42% for the comparable period of 2025 .

This decrease was primarily attributable to a decline in average loan yields, which decreased 22 basis points to 6.24% for the six months ended June 30, 2026, down from 6.46% for the comparable period of 2025 .

Net interest income, on a fully tax equivalent basis, increased by $3.4 million, or 6.1% , for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

The increase in net interest income on a fully tax equivalent basis was driven by a decrease in deposit interest expense of $2.7 million , or 7.0% , from $39.1 million to $36.4 million.

Contributing further to the increase in fully tax equivalent net interest income was an increase in loan interest income of $1.6 million, or 1.9%, from $84.8 million to $86.4 million, and an increase to s ecurities interest income of $264,000, or 3.1%, from $8.4 million to $8.7 million between the two periods.

Offsetting these, b orrowings expense increased $70,000 , or 17.6% , from $398,000 to $468,000 .

Average earning assets were $6.833 billion for the second quarter of 2026 , an increase of $262.1 million, or 4.0%, compared to $6.571 billion for the second quarter of 2025.

The increase in average earning assets was driven by an increase in average loans of $301.7 million, or 5.8%, from $5.230 billion for the second quarter of 2025 to $5.531 billion for the second quarter of 2026 .

Average investment securities increased $36.2 million, or 3.2%, from $1.126 billion for the second quarter of 2025 to $1.162 billion for the second quarter of 2026 .

Average interest bearing liabilities were $5.133 billion for the second quarter of 2026 , an increase of $246.5 million, or 5.0%, from $4.887 billion for the second quarter of 2025.

This increase was driven by growth in interest bearing deposits of $232.5 million, or 4.8%, from $4.852 billion for the second quarter of 2025 to $5.085 billion for the second quarter of 2026 .

Average short-term borrowings increased $14.0 million , or 42.0%, from $33.3 million to $47.3 million.

Noninterest bearing demand deposits decreased $16.3 million, or 1.3% , to $1.228 billion for the second quarter of 2026 from $1.244 billion for the second quarter of 2025.

The fully tax equivalent net interest margin expanded by 7 basis points, or 2.0%, to 3.49% for the second quarter of 2026 , compared to 3.42% for the second quarter of 2025.

The net interest margin expansion was primarily driven by a decrease in interest expense as a percentage of average earning assets, which decreased to 2.16% for the second quarter of 2026 , down from 2.41% for the comparable period of 2025, for a decrease of 25 basis points.

This decrease was attributable to a decrease in the rate for total interest bearing liabilities of 36 basis points from 3.24% to 2.88% between the respective periods.

This decrease was driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank in late 2025.

The average rate for interest bearing deposits declined 36 basis points fro m 3.23% to 2.87% .

Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 76 basis points from 4.63% to 3.87%.

Th e improvement in interest expense as a percentage of average earning assets was offset by a 18 basis point reduction in interest income as a percentage of average earning assets, which declined from 5.83% for the second quarter of 2025 to 5.65% for the second quarter of 2026.

This decrease was primarily attributable to a decrease in loan yields, which decreased 24 basis points from 6.50% to 6.26% between the two periods.

Investment securities yields remained at 3.00% for both periods.

Provision for Credit Losses

The Company recorded provision for credit losses expense of $2.0 million for the three months ended March 31, 2026, compared to provision expense of $6.8 million during the comparable period of 2025 , a decrease of $4.8 million, or 70.6%.

Net charge-offs were $2.1 million during the three month period ended March 31, 2026, compared to $327,000 during the comparable period of 2025 , an increase of $1.8 million.

The Company recorded provision for credit losses expense of $3.7 million for the six months ended June 30, 2026, compared to provision expense of $9.8 million during the comparable period of 2025 , a decrease of $6.1 million, or 62.2%.

The decrease in provision expense between the respective periods was attributable to the allocation of reserves to a previously disclosed nonperforming credit during the first quarter of 2025.

Net charge-offs were $2.1 million during the six month period ended June 30, 2026, compared to $29.2 million during the comparable period of 2025 for a decrease of $27.1 million, or 92.8%.

Net charge-offs for the first six months of 2026 were primarily driven by a $2.0 million charge off to one commercial credit during the first quarter of 2026.

The decrease in charge offs between the respective periods was attributable to the partial charge off of the previously disclosed nonperforming credit during the second quarter of 2025.

The Company recorded provision expense of $1.7 million during the second quarter of 2026, compared to $3.0 million during the second quarter of 2025 .

Net charge-offs were $24,000 during the second quarter of 2026 compared to $28.9 million during the second quarter of 2025 .

Additional factors considered by management in determining provision expense included key loan quality metrics, reserve coverage of nonperforming loans, economic conditions in the Company’s markets, and changes in the facts and circumstances of watch list credits, which includes the security position of the borrower.

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Noninterest Income

Noninterest income categories for the three months ended March 31, 2026 and 2025 are shown in the following tables:

Noninterest income categories for the three and six months ended June 30, 2026 and 2025 are shown in the following tables:

Six Months Ended

(dollars in thousands) 2026 2025 Dollar Change Percent Change

Wealth advisory fees $ 6,080 $ 5,534 $ 546 9.9 %

Investment brokerage fees 1,035 1,002 33 3.3

Service charges on deposit accounts 5,752 5,601 151 2.7

Loan and service fees 6,267 5,890 377 6.4

Merchant and interchange fee income 1,613 1,676 (63) (3.8)

Bank owned life insurance income 2,593 1,362 1,231 90.4

Interest rate swap fee income 701 20 681 3,405.0

Mortgage banking income 209 73 136 186.3

Other income 1,255 1,256 (1) (0.1)

Total noninterest income $ 25,505 $ 22,414 $ 3,091 13.8 %

Noninterest income to total revenue 18.14 % 17.22 %

Three Months Ended

7 unchanged sentences

Interest rate swap fee income 0 20 (20) (100.0)

Mortgage banking income (loss) 81 (51) 132 (258.8)

Mortgage banking income 128 124 4 3.2

Other income 525 398 127 31.9

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Noninterest income to total revenue 17.74 % 17.31 %

Noninterest income increased $2.0 million, or 18.3%, to $12.9 million for the first quarter of 2026, compared to $10.9 million for the first quarter of 2025.

Loan and service fees income increased $323,000, or 11.2%, driven by increased commercial loan fees.

The Company's noninterest income increased by $3.1 million, or 13.8%, to $25.5 million for the six months ended June 30, 2026, compared to $22.4 million for the prior year period.

Increases in fee-based revenue streams contributed to the increase to noninterest income, with wealth advisory fees improving by $546,000, or 9.9%, loan and service fees improving by $377,000, or 6.4%, service charges on deposit accounts improving by $151,000, or 2.7%, and investment brokerage fees improving by $33,000, or 3.3%.

Additionally, bank owned life insurance increased $1.2 million, or 90.4%, from improved market performance from variable bank owned life insurance policies and incremental income from general account policies purchased in 2025.

Increased transaction volume drove increases to interest rate swap fee income of $681,000 and mortgage banking income of $136,000.

The company’s noninterest income increased $1.1 million, or 9.5%, to $12.6 million for the second quarter of 2026, compared to $11.5 million for the second quarter of 2025.

Wealth advisory fees increased $350,000, or 13.1%, driven by continued growth in customers and assets under management.

Investment brokerage fees increased $72,000, or 15.9%, due to increased volume and commissions on product mix.

Bank owned life insurance income increased $654,000, or 203.1%, from improved market performance of the Bank's variable owned life insurance policies, which reflect returns in the equity markets, as well as incremental income from policies purchased in 2025.

Interest rate swap fee income was $701,000 for the first quarter of 2026, which is borrower and market driven.

Offsetting these increases was a decrease to other income of $128,000, or 14.9%, primarily driven by reduced limited partnership investment income.

Bank owned life insurance income increased $577,000, or 55.5%, from improved market performance of the bank's variable owned life insurance policies which reflect returns in the equity markets.

Other income increased by $127,000, or 31.9%, primarily from increased limited partnership investment income.

Noninterest Expense

Noninterest expense categories for the three months ended March 31, 2026 and 2025 are shown in the following tables:

Noninterest expense categories for the three and six months ended June 30, 2026 and 2025 are shown in the following tables:

Six Months Ended

(dollars in thousands) 2026 2025 Dollar Change Percent Change

Salaries and employee benefits $ 40,789 $ 34,998 $ 5,791 16.5 %

Net occupancy expense 4,071 3,727 344 9.2

Equipment costs 2,873 2,819 54 1.9

Data processing fees and supplies 8,633 8,417 216 2.6

Corporate and business development 2,735 2,566 169 6.6

FDIC insurance and other regulatory fees 1,754 1,639 115 7.0

Professional fees 3,722 4,086 (364) (8.9)

Other expense 5,031 4,943 88 1.8

Total noninterest expense $ 69,608 $ 63,195 $ 6,413 10.1 %

Efficiency ratio 49.51 % 48.55 %

Three Months Ended

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Efficiency ratio 48.62 % 45.86 %

Noninterest expense increased $2.4 million, or 7.3%, to $35.2 million for the first quarter of 2026, compared to $32.8 million during the first quarter of 2025.

Salaries and employee benefits expense increased by $2.4 million, or 13.4%, primarily the result of increased salaries and wages, performance-based incentive pay, and employee benefits expenses.

Net occupancy expense increased $124,000, or 6.3%, and equipment costs increased $82,000, or 5.9%, from the Company's continued expansion and reinvestment into its physical branch network.

Corporate and business development expense increased $87,000, or 6.2%, and FDIC insurance and other regulatory fees increased $73,000, or 9.1%.

Offsetting these increases was a decrease in professional fees of $443,000, or 18.6%, driven by reduced technology implementation fees incurred during the quarter.

The Company's income tax expense increased $1.9 million, or 46.3%, to $6.1 million in the three months ended March 31, 2026, compared to $4.2 million for the same period in 2025.

The effective tax rate was 18.7% in the three months ended March 31, 2026, compared to 17.1% for the comparable period of 2025, driven by lower tax-free interest income on loans.

The Company's noninterest expense increased by $6.4 million, or 10.1%, for the six months ended June 30, 2026 to $69.6 million compared to $63.2 million for the six months ended June 30, 2025.

Salaries and employee benefits expense increased $5.8 million, or 16.5%, primarily due to increased salaries and wages of $2.0 million, performance-based incentive compensation accruals of $2.3 million, variable deferred compensation expense of $799,000, and health insurance expense of $677,000.

Net occupancy expense increased $344,000, or 9.2%.

Data processing fees and supplies expense increased $216,000, or 2.6%, from continued investment in customer-facing and operational technology solutions.

Corporate and business development expense increased $169,000, or 6.6%, from increased advertising and corporate development expenses.

FDIC insurance and other regulatory fees increased $115,000, or 7.0%, from increased FDIC insurance premium accruals.

Offsetting these increases was a decrease in professional fees of $364,000, or 8.9%, primarily driven by reduced technology implementation fees.

Noninterest expense increased $4.0 million, or 13.2%, to $34.5 million for the second quarter of 2026, compared to $30.4 million during the second quarter of 2025.

Salaries and employee benefits expense increased by $3.4 million, or 19.9%, primarily the result of increased salaries and wages, performance-based incentive compensation accruals, and benefits expenses.

Deferred variable compensation expense, which is offset by noninterest income recorded from the performance of the company's variable bank owned life insurance policies, contributed further to the increase.

Net occupancy expense increased $220,000, or 12.6%, from the company's continued expansion and reinvestment into its physical branch and operational infrastructure.

Data processing fees and supplies increased $222,000, or 5.3%, from continued investment in customer-facing and operational technology solutions, including artificial intelligence capabilities.

Additionally, corporate and business development expense increased $82,000, or 7.1%, professional fees increased $79,000, or 4.6%, and FDIC insurance and other regulatory fees increased $42,000, or 5.0%.

The Company's income tax expense increased $2.2 million, or 22.0%, to $12.3 million in the six months ended June 30, 2026, compared to $10.1 million for the same period in 2025.

The effective tax rate was 18.4% in the six months ended June 30, 2026, compared to 17.7% for the comparable period of 2025, driven by higher earnings and lower tax-exempt income.

Income tax expense increased $304,000, or 5.1%, to $6.3 million for the second quarter of 2026 compared to $6.0 million for the second quarter of 2025.

The effective tax rate for the second quarter of 2026 was 18.1%, compared to 18.1% for the prior year period.

FINANCIAL CONDITION

Total assets were $7.084 billion as of March 31, 2026 versus $6.990 billion as of December 31, 2025, an increase of $93.7 million, or 1.3% .

Total assets were $7.243 billion as of June 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $252.9 million, or 3.6% .

Total equity decreased $13.5 million, or 1.8%, from $762.5 million at December 31, 2025 to $749.0 million at March 31, 2026.

The decrease to total equity was primarily attributable to an increase in treasury stock of $19.3 million, or 53.8%, driven by the Company's utilization of the share repurchase program.

A decrease in accumulated other comprehensive income (loss) of $8.5 million contributed further to the decline in total equity.

The combined effect of the repurchase activity under the share repurchase program and dividends paid during the quarter represented a total return of capital to Company shareholders of $32.4 million.

These increases were offset by a decrease to available-for-sale securities of $16.9 million, or 1.6%.

Total equity increased $10.9 million, or 1.4%, from $762.5 million at December 31, 2025 to $773.4 million at June 30, 2026.

Accumulated other comprehensive income (loss) improved by $2.7 million and contributed further to the increase in total equity.

Offsetting these items was an increase in treasury stock, which increased by $23.5 million, or 65.7%, driven by the Company's utilization of its share repurchase program.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents increased by $10.0 million, or 7.1%, to $151.3 million at March 31, 2026, from $141.3 million at December 31, 2025.

Total cash and cash equivalents increased by $52.8 million, or 37.4%, to $194.1 million at June 30, 2026, from $141.3 million at December 31, 2025.

Cash and cash equivalents include short-term investments.

The fluctuation in cash and cash equivalents at March 31, 2026 was driven by an increase in cash and due from banks of $8.6 million, or 15.0%, and an increase in interest bearing short-term investment accounts of $1.4 million, or 1.7%, which were deposited primarily at the Federal Reserve Bank of Chicago.

The fluctuation in cash and cash equivalents at June 30, 2026 was driven by an increase in cash and due from banks of $12.7 million, or 22.3%, and an increase in interest bearing short-term investment accounts of $40.1 million, or 47.6%, which were deposited primarily at the Federal Reserve Bank of Chicago.

Investment Portfolio

The amortized cost and the fair value of securities as of March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026 December 31, 2025

The amortized cost and the fair value of securities as of June 30, 2026 and December 31, 2025 were as follows:

June 30, 2026 December 31, 2025

(dollars in thousands) Amortized

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Total Investment Portfolio $ 1,310,067 $ 1,154,596 $ 1,328,525 $ 1,169,572

At March 31, 2026 and December 31, 2025, there were no holdings of securities of any one issuer, other than the U.S.

At June 30, 2026 and December 31, 2025, there were no holdings of securities of any one issuer, other than the U.S.

government agencies and government sponsored entities, in an amount greater than 10% of stockholders’ equity.

Management is aware that the directional change in the fair value of the available-for-sale investment securities portfolio is inversely related to the directional movement of the interest rate environment, with the resulting impact being reflected in the unrealized gain (loss) of the available-for-sale investment securities portfolio.

Since the majority of the bonds in the investment portfolio are fixed-rate, with only a few adjustable-rate bonds, we would expect our investment portfolio to follow this market value pattern.

Since the majority of the bonds in the investment portfolio are fixed-rate, with only a few adjustable-rate bonds, we expect our investment portfolio to follow this market value pattern.

This is taken into consideration when evaluating the gain or loss of investment securities in the portfolio and the potential for an allowance for credit losses.

Purchases of available-for-sale securities were $5.1 million in the first three months of 2026.

Investment securities represented 16.4% of total assets on March 31, 2026, compared to 17.0% of total assets on December 31, 2025.

Purchases of available-for-sale securities were $20.5 million in the first six months of 2026.

Investment securities represented 16.1% of total assets on June 30, 2026, compared to 17.0% of total assets on December 31, 2025.

The Company anticipates receiving principal and interest cash flows of approximately $51.9 million during the remainder of 2026 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as to fund reinvestments to the investment securities portfolio.

Tax equivalent adjusted effective duration for the investment securities portfolio was 6.0 years at March 31, 2026 and 5.9 years at December 31, 2025.

Paydowns from prepayments and scheduled payments of $18.1 million were received in the first three months of 2026, and the amortization of premiums, net of the accretion of discounts, was $870,000.

There were no sales of available-for-sale investment securities in the first three months of 2026.

No allowance for credit losses was recognized for available-for-sale or held-to-maturity securities as of March 31, 2026 and December 31, 2025.

The fair value of the available-for-sale investment securities portfolio as of March 31, 2026 included net unrealized losses of $154.5 million, compared to net unrealized losses of $143.3 million as of December 31, 2025.

Tax equivalent adjusted effective duration for the investment securities portfolio was 5.8 years at June 30, 2026 and 5.9 years at December 31, 2025.

Paydowns from prepayments and scheduled payments of $38.1 million were received in the first six months of 2026, and the amortization of premiums, net of the accretion of discounts, was $1.8 million.

There were no sales of available-for-sale investment securities in the first six months of 2026.

No allowance for credit losses was recognized for available-for-sale or held-to-maturity securities as of June 30, 2026 and December 31, 2025.

The fair value of the available-for-sale investment securities portfolio as of June 30, 2026 included net unrealized losses of $140.9 million, compared to net unrealized losses of $143.3 million as of December 31, 2025.

Unrealized losses in the available-for-sale investment securities portfolio are generally attributable to market value declines experienced during the rate tightening cycle of 2022 and 2023.

Increases in the 10-year Treasury rate during the first quarter of 2026 increased unrealized losses in the investment securities portfolio.

The investment portfolio is managed by a third-party firm to provide for an appropriate balance between liquidity, credit risk, interest rate risk management and investment return and to limit the Company’s exposure to credit risk in the investment securities portfolio.

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Real Estate Mortgage Loans Held-for-Sale

Real estate mortgage loans held-for-sale decreased by $1.6 million, or 59.9%, to $1.1 million at March 31, 2026, from $2.7 million at December 31, 2025.

Real estate mortgage loans held-for-sale increased by $923,000, or 34.1%, to $3.6 million at June 30, 2026, from $2.7 million at December 31, 2025.

The balance of this asset category is subject to a high degree of variability depending on, among other factors, recent mortgage loan rates and the timing of loan sales into the secondary market.

The Company generally sells conforming qualifying mortgage loans it originates on the secondary market.

Proceeds from sales of residential mortgages totaled $4.8 million in the first three months of 2026, compared to $3.0 million in the first three months of 2025.

Proceeds from sales of residential mortgages totaled $9.4 million in the first six months of 2026, compared to $8.7 million in the first six months of 2025.

Management expects the volume of loans originated for sale in the secondary market to increase if long-term interest rates decline from current levels.

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Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets.

The unpaid principal balances of loans serviced for others were $290.4 million and $294.5 million, as of March 31, 2026 and December 31, 2025, respectively.

The unpaid principal balances of loans serviced for others were $286.8 million and $294.5 million, as of June 30, 2026 and December 31, 2025, respectively.

Loan Portfolio

The loan portfolio by portfolio segment as of March 31, 2026 and December 31, 2025 is summarized as follows:

(dollars in thousands) March 31,

The loan portfolio by portfolio segment as of June 30, 2026 and December 31, 2025 is summarized as follows:

(dollars in thousands) June 30,

2026 December 31,

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Loans, net $ 5,509,027 $ 5,306,354 $ 202,673

Total net loans, excluding real estate mortgage loans held-for-sale, increased by $98.1 million, or 1.8%, to $5.404 billion at March 31, 2026 from $5.306 billion at December 31, 2025.

The increase was primarily driven by originations of loans concentrated in the commercial and industrial loans, commercial real estate and multi-family residential loans and consumer 1-4 family mortgage loans categories and was offset by paydowns in the agri-business and agricultural loans segment, which traditionally experiences seasonal fluctuations in activity.

The following table summarizes the Company’s non-performing assets, excluding deferred fees and costs, as of March 31, 2026 and December 31, 2025:

(dollars in thousands) March 31,

Total net loans, excluding real estate mortgage loans held-for-sale, increased by $202.7 million, or 3.8%, to $5.509 billion at June 30, 2026 from $5.306 billion at December 31, 2025.

The increase was primarily driven by originations of loans concentrated in the commercial and industrial loans, commercial real estate and multi-family residential loans, other commercial loans, and consumer 1-4 family mortgage loans categories and was offset by paydowns in the agri-business and agricultural loans segment, which traditionally experiences seasonal fluctuations in activity.

The following table summarizes the Company’s non-performing assets, excluding deferred fees and costs, as of June 30, 2026 and December 31, 2025:

(dollars in thousands) June 30,

2026 December 31,

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Nonperforming assets to total assets 0.28 % 0.30 %

Total nonperforming assets increased by $12,000, or 0.1%, to $20.9 million during the three month period ended March 31, 2026.

The ratio of nonperforming assets to total assets remained at 0.30% as of December 31, 2025 and March 31, 2026.

Total nonperforming assets decreased by $926,000, or 4.4%, from $20.9 million at December 31, 2025 to $20.0 million at June 30, 2026.

The ratio of nonperforming assets to total assets declined to 0.28% at June 30, 2026, down from 0.30% as of December 31, 2025.

A loan is individually analyzed when full payment under the original loan terms is not expected.

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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 or at the fair value of collateral if repayment is expected solely from the collateral.

Total individually analyzed loans increased by $136,000, or 0.3%, to $43.2 million at March 31, 2026 from $43.0 million at December 31, 2025.

Total individually analyzed loans increased by $23.9 million, or 55.6%, to $66.9 million at June 30, 2026 from $43.0 million at December 31, 2025.

The increase in individually analyzed loans during the first six months of 2026 was primarily driven by migration within the watchlist as three unrelated relationships with an aggregate balance of approximately $24.7 million were moved from the pooled watch list to individually analyzed status during the second quarter of 2026.

Loans are charged against the allowance for credit losses when management believes that the principal is uncollectible.

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Special Mention applies to loans that do not currently expose an insured institution to a sufficient degree of risk to warrant classification as Substandard, Doubtful or Loss but do possess credit deficiencies or potential weaknesses deserving management’s close attention.

The Company’s policy is to establish a specific allowance for credit losses for any assets where management has identified conditions or circumstances that indicate an asset is nonperforming.

The Company’s policy is to evaluate for a specific allowance for credit losses for any assets where management has identified conditions or circumstances that indicate an asset is nonperforming.

If an asset or portion thereof is classified as a loss, the Company’s policy is to either establish specified allowances for credit losses in the amount of 100% of the portion of the asset classified loss or charge-off such amount.

At March 31, 2026, the allowance for credit losses was 1.26% of total loans, a decrease of 2 basis points from 1.28% at December 31, 2025.

At March 31, 2026, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio.

However, if economic conditions deteriorate, certain borrowers may

experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses.

At June 30, 2026, the allowance for credit losses was 1.27% of total loans, a decrease of 1 basis point from 1.28% at December 31, 2025.

At June 30, 2026, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio.

However, if economic conditions deteriorate, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses.

The process of identifying credit losses is a subjective process.

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The Company has limited exposure to commercial office space borrowers, all of which are located in the Bank's Indiana markets.

Loans totaling $103.6 million for this sector represented 1.9% of total loans at March 31, 2026.

Additionally, commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 214.9% of the Bank's risk-based capital at March 31, 2026.

Loans totaling $104.9 million for this sector represented 1.9% of total loans at June 30, 2026.

Additionally, commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 222.8% of the Bank's risk-based capital at June 30, 2026.

The Company continues to monitor the impact of tariffs on its borrowers.

As of March 31, 2026, based on management’s review of the loan portfolio, the Company had 95 credit relationships with principal balances totaling $182.3 million on the classified loan list versus 96 credit relationships with principal balances totaling $184.0 million as of December 31, 2025.

As of March 31, 2026, the Company $132.7 million of assets classified as Special Mention, $49.5 million classified as Substandard, $73,000 classified as Doubtful and $0 classified as Loss as compared to $134.0 million, $50.0 million, $74,000 and $0, respectively, at December 31, 2025.

As of June 30, 2026, based on management’s review of the loan portfolio, the Company had 107 credit relationships with principal balances totaling $198.0 million on the classified loan list versus 96 credit relationships with principal balances totaling $184.0 million on the classified loan list as of December 31, 2025.

As of June 30, 2026, the Company had $135.3 million of assets classified as Special Mention, $62.7 million classified as Substandard, $43,000 classified as Doubtful and $0 classified as Loss as compared to $134.0 million, $50.0 million, $74,000 and $0, respectively, at December 31, 2025.

The amounts by grade in "Note 4 - Allowance for Credit Losses and Credit Quality" are reported at amortized cost and include deferred fees and costs.

Watch list loans as a percentage of total loans were 3.33% as of March 31, 2026, down 9 basis points from 3.42% at December 31, 2025.

Watch list loans as a percentage of total loans were 3.55% as of June 30, 2026, up 13 basis points from 3.42% at December 31, 2025.

Allowance estimates are developed by management after taking into account actual loss experience adjusted for current economic conditions and a reasonably supportable forecast period.

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For a more thorough discussion of the allowance for credit losses methodology see the "Critical Accounting Policies" section of this Item 2.

The allowance for credit losses decreased $81,000, or 0.1%, from $69.0 million at December 31, 2025 to $68.9 million at March 31, 2026.

The decrease was primarily driven by net charge offs of $2.1 million, offset by provision for credit losses of $2.0 million.

Net charge offs for the three months ended March 31, 2026 were primarily driven by a $2.0 million charge off to one commercial credit.

The allowance for credit losses increased $1.6 million, or 2.3%, from $69.0 million at December 31, 2025 to $70.6 million at June 30, 2026.

The increase was primarily driven provision for credit losses of $3.7 million and offset by net charge offs of $2.1 million.

Net charge offs for the six months ended June 30, 2026 were primarily driven by a $2.0 million charge off to one commercial credit during the first quarter of 2026.

As the bulk of the Company’s lending activity is concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits, management has historically considered growth and portfolio composition when determining credit loss allocations.

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In addition, the Company has access to unsecured borrowing capacity through long established relationships within the brokered deposit markets, Federal Funds lines from correspondent bank partners and Insured Cash Sweep (ICS) one-way buy funds available from the Intrafi network.

As of March 31, 2026, the Company had access to $3.312 billion in unused liquidity available from these aggregate sources as compared to $3.526 billion at December 31, 2025.

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the three months ended March 31, 2026 and 2025 are summarized in the following table:

Three months ended March 31,

As of June 30, 2026, the Company had access to $3.380 billion in unused liquidity available from these aggregate sources as compared to $3.526 billion at December 31, 2025.

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the six months ended June 30, 2026 and 2025 are summarized in the following table:

Six months ended June 30,

(dollars in thousands) Balance Rate Balance Rate

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Total funding sources $ 6,300,498 2.31 % $ 6,053,336 2.57 %

Average total deposits were $6.056 billion for the three months ended March 31, 2026, an increase of $180.8 million, or 3.1%, from the comparable period in 2025.

Average total borrowings were $183.6 million for the three months ended March 31, 2026, an increase of $83.5 million, or 83.5%, from the comparable period in 2025.

Total average deposit costs decreased 28 basis points from 2.52% for the three months ended March 31, 2025, to 2.24% for the three months ended March 31, 2026.

Total average borrowing costs decreased 60 basis points from 4.54% for the three months ended March 31, 2025 to 3.94% for the three months ended March 31, 2026.

As a result, the total cost of funding sources decreased by 26 basis points from 2.55% for the three months ended March 31, 2025, to 2.29% for the three months ended March 31, 2026.

Average total deposits were $6.185 billion for the six months ended June 30, 2026, an increase of $198.6 million, or 3.3%, from the comparable period in 2025.

Average total borrowings were $115.7 million for the six months ended June 30, 2026, an increase of $48.6 million, or 72.4%, from the comparable period in 2025.

Total average deposit costs decreased 27 basis points from 2.55% for the six months ended June 30, 2025, to 2.28% for the six months ended June 30, 2026.

Total average borrowing costs decreased 65 basis points from 4.57% for the six months ended June 30, 2025 to 3.92% for the six months ended June 30, 2026.

As a result, the total cost of funding sources decreased by 26 basis points from 2.57% for the six months ended June 30, 2025, to 2.31% for the six months ended June 30, 2026.

The decrease in the cost of funding sources between the two periods was attributable to easing of monetary policy by the Federal Reserve Bank which allowed deposit costs to reprice to lower levels and reduced average rates for borrowings.

Deposits and Borrowings

As of March 31, 2026, total deposits increased by $216.9 million, or 3.6%, from December 31, 2025.

Core deposits, which excludes brokered deposits, decreased by $108.1 million, or 1.8%, to $5.815 billion as of March 31, 2026 from $5.923 billion as of December 31, 2025.

Total brokered deposits were $375.6 million at March 31, 2026, compared to $50.6 million at December 31, 2025, an increase of $325.0 million, or 642.7%.

The following table summarizes deposit composition at March 31, 2026 and December 31, 2025:

(dollars in thousands) March 31,

As of June 30, 2026, total deposits increased by $356.2 million, or 6.0%, from December 31, 2025.

Core deposits, which excludes brokered deposits, increased by $107.6 million, or 1.8%, to $6.030 billion as of June 30, 2026 from $5.923 billion as of December 31, 2025.

Total brokered deposits were $299.2 million at June 30, 2026, compared to $50.6 million at December 31, 2025, an increase of $248.6 million, or 491.5%.

The following table summarizes deposit composition at June 30, 2026 and December 31, 2025:

(dollars in thousands) June 30,

2026 Percentage of Total December 31,

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Total deposits $ 6,329,568 100.0 % $ 5,973,350 100.0 % $ 356,218

On March 31, 2026, commercial deposits represented 34.5% of total deposits versus 36.5% at December 31, 2025.

Retail deposits represented 29.1% at March 31, 2026 versus 29.5% at December 31, 2025.

Public Funds deposits represented 30.3% at March 31, 2026 versus 33.2% at December 31, 2025.

Brokered deposits represented 6.1% of total deposits at March 31, 2026 versus 0.8% at December 31, 2025.

Commercial deposits contracted $43.6 million, or 2.0%, from $2.180 billion at December 31, 2025 to $2.136 billion at March 31, 2026;

public funds deposits contracted $101.5 million, or 5.1%, from $1.979 billion at December 31, 2025 to $1.878 billion at March 31, 2026, due to seasonal fluctuations in public funds balances;

and retail deposits expanded $37.0 million, or 2.1%, from $1.763 billion at December 31, 2025 to $1.800 billion at March 31, 2026.

Deposits not covered by FDIC deposit insurance were 55.1% as of March 31, 2026, versus 59.1% at December 31, 2025.

Deposits not covered by FDIC deposit insurance or the Indiana Public Deposit Insurance Fund, which insures public fund deposits in Indiana, were 25.0% of total deposits as of March 31, 2026, versus 26.0% as of December 31, 2025.

As of March 31, 2026 and December 31, 2025, 97.9% and 97.8% of deposit accounts had deposit balances less than $250,000, respectively.

As of March 31, 2026, total stockholders’ equity was $749.0 million, a decrease of $13.5 million, or 1.8%, from $762.5 million at December 31, 2025.

The decrease to total stockholders' equity was driven by an increase in treasury stock of $19.3 million, or 53.8%, from utilization of the Company's share repurchase program and a reduction of $8.5 million in accumulated other comprehensive income (loss).

Offsetting these decreases was net income of $26.5 million less dividends declared and paid of $13.2 million for a $13.3 million increase to retained earnings.

The combined effect of the repurchase activity under the share repurchase program and dividends paid during the quarter represented a total return of capital to Company shareholders of $32.6 million.

On June 30, 2026, commercial deposits represented 33.4% of total deposits versus 36.5% at December 31, 2025.

Retail deposits represented 28.0% at June 30, 2026 versus 29.5% at December 31, 2025.

Public Funds deposits represented 33.9% at June 30, 2026 versus 33.2% at December 31, 2025.

Brokered deposits represented 4.7% of total deposits at June 30, 2026 versus 0.8% at December 31, 2025.

Public funds deposits expanded $168.3 million, or 8.5%, from $1.979 billion at December 31, 2025 to $2.148 billion at June 30, 2026, due to seasonal fluctuations in public funds balances;

and retail deposits expanded $5.6 million, or 0.3%, from $1.763 billion at December 31, 2025 to $1.769 billion at June 30, 2026;

and commercial deposits contracted $66.2 million, or 3.0%, from $2.180 billion at December 31, 2025 to $2.114 billion at June 30, 2026.

Deposits not covered by FDIC deposit insurance were 57.7% as of June 30, 2026, versus 59.1% at December 31, 2025.

Deposits not covered by FDIC deposit insurance or the Indiana Public Deposit Insurance Fund, which insures public fund

deposits in Indiana, were 24.2% of total deposits as of June 30, 2026, versus 26.0% as of December 31, 2025.

As of June 30, 2026 and December 31, 2025, 97.9% and 98.2% of deposit accounts had deposit balances less than $250,000, respectively.

As of June 30, 2026, total equity was $773.4 million, an increase of $10.9 million, or 1.4%, from $762.5 million at December 31, 2025.

Accumulated other comprehensive income (loss) improved by $2.7 million and contributed further to the increase in total equity.

Offsetting these items was an increase in treasury stock, which increased by $23.5 million, or 65.7%, driven by the Company's utilization of its share repurchase program.

The impact on equity for other comprehensive income (loss) is not included in regulatory capital.

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banking organizations.

As of March 31, 2026, the Company's capital levels remained characterized as “well-capitalized”.

The actual capital amounts and ratios of the Company and the Bank as of March 31, 2026 and December 31, 2025, are presented in the table below.

Capital ratios for March 31, 2026 are preliminary until the Call Report and FR Y-9C are filed.

As of June 30, 2026, the Company's capital levels remained characterized as “well-capitalized”.

The actual capital amounts and ratios of the Company and the Bank as of June 30, 2026 and December 31, 2025, are presented in the table below.

Capital ratios for June 30, 2026 are preliminary until the Call Report and FR Y-9C are filed.

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 March 31, 2026:

As of June 30, 2026:

Total Capital (to Risk Weighted Assets)

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• the timing and scope of any legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators;

• increased competition in the financial services sector, including from non-bank competitors such as credit unions and fintech companies, and the inability to attract new customers;

• the effects of war, geopolitical conflicts, acts of terrorism, or other catastrophic events, including storms, droughts, tornados and flooding, that may affect general economic conditions, including agricultural production and demand and prices for agricultural inputs, goods and land used for agricultural purposes, generally and in our markets;

• increased competition in the financial services sector, including from non-bank competitors such as credit unions and fintech companies, and the inability to attract new customers;

• the effects of fraud by or affecting employees, customers or third parties;

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis