What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 335 added, 304 removed, 581 unchanged (52% of the section changed)

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Reference should be made to the Company’s

consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024 for an understanding of the following discussion and analysis.Operating

results for the three and six months ended June 30, 2025 are not necessarily indicative of the results of the full year ending December 31, 2025 or any future period.

results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results of the full year ending December 31, 2025 or any future period.

Forward-Looking Statements

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(12) acquisition and integration of acquired businesses;

(13) the possibility that NBT may be unable to achieve expected synergies and operating efficiencies in the Evans merger within the expected

timeframes or at all or to successfully integrate Evans operations and those of NBT;

(13) the ability to increase market share and control expenses;

(14) changes in the competitive environment among financial holding companies;

(16) the effect of

changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, and the Economic Growth,

Regulatory Relief, and Consumer Protection Act of 2018;

(17) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial

Accounting Standards Board and other accounting standard setters;

(15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, and the

Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018;

(16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the

Financial Accounting Standards Board and other accounting standard setters;

(17) changes in the Company’s organization, compensation and benefit plans;

(19) the costs and effects of legal and regulatory developments, including the resolution of legal

proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews;

(18) the costs and effects of legal and regulatory developments, including the resolution of

legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews;

(19) greater than expected costs or difficulties related to the integration of new products and lines of business;

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Non-GAAP Measures

This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP.Where non-GAAP disclosures are used in this Form 10-Q, the comparable

This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP.

Where non-GAAP disclosures are used in this Form 10-Q, the comparable

GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables.

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forecast period.

As of June 30, 2025, the quantitative model incorporated a baseline economic outlook along with an alternative upside and two equally weighted downside scenarios, recessionary conditions and stagflation, sourced from a reputable

third-party to accommodate other potential economic conditions in the model.

At June 30, 2025, the weightings were 70%, 5% and 25% for the baseline, upside and downside economic forecasts, respectively.

The baseline outlook reflected an economic

environment where the Northeast unemployment rate increases from 4.3% to 4.8% during the forecast period.

National GDP’s annualized growth (on a quarterly basis) is expected to start the third quarter of 2025 at approximately 0.6% and increase to

1.6% by the end of the forecast period.

Key assumptions in the baseline economic outlook included the Federal Reserve cutting rates with two 25 basis point cuts at the September and December meetings and the economy remaining at full employment.

As of September 30, 2025, the quantitative model incorporated a baseline economic outlook along with an alternative upside scenario and two equally weighted downside scenarios, recessionary conditions and stagflation, sourced from

a reputable third-party to accommodate other potential economic conditions in the model.

At September 30, 2025, the weightings were 65%, 5% and 30% for the baseline, upside and downside economic forecast scenarios, respectively.

outlook reflected an economic environment where the Northeast unemployment rate increases from 4.4% in the fourth quarter of 2025 to 4.8% by the end of the forecast period, with a peak Northeast unemployment rate of 4.9% in the fourth quarter of

National GDP’s annualized growth (on a quarterly basis) is expected to start the fourth quarter of 2025 at approximately 0.8% and increase to 1.7% by the end of the forecast period.

Key assumptions in the baseline economic outlook included

the Federal Reserve cutting rates with two 25 basis point cuts at the September and December meetings and the economy remaining at full employment.

The alternative upside scenario assumes improved economic conditions from the baseline outlook.

Under this scenario, Northeast unemployment falls from 4.3% in the second quarter of 2025 to 3.7% in the fourth quarter of 2025 and eventually settles

at 4.1% by the end of the forecast period.

The alternative downside scenario with recessionary conditions assumes deteriorated economic conditions from the baseline outlook.

Under this scenario, Northeast unemployment rises from 4.3% in the second

quarter of 2025 to a peak of 7.7% in the third quarter of 2026.

The alternative downside stagflation scenario assumes deteriorated economic conditions from the baseline outlook.

Under this scenario, Northeast unemployment rises from 4.3% in the

second quarter of 2025 to 5.8% by the end of the forecast period in the fourth quarter of 2026, with a peak Northeast unemployment rate of 8.1% in the third quarter of 2027.

These scenarios and their respective weightings are evaluated at each

measurement date and reflect management’s expectations as of June 30, 2025.

Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, reversion

adjustments for the stagflation scenario and recent trends in asset value indices.

Under this scenario, Northeast unemployment falls from 4.3% in the third quarter of 2025 to 3.8% in the first quarter of 2026 and eventually settles at 4.1% by the end of the forecast period.

The alternative downside scenario with recessionary

conditions assumes deteriorated economic conditions from the baseline outlook.

Under this scenario, Northeast unemployment rises from 4.3% in the third quarter of 2025 to a peak of 7.8% in the fourth quarter of 2026.

The alternative downside

stagflation scenario assumes deteriorated economic conditions from the baseline outlook.

Under this scenario, Northeast unemployment rises from 4.3% in the third quarter of 2025 to 6% by the end of the forecast period in the first quarter of 2027,

with a peak Northeast unemployment rate of 8.2% in the fourth quarter of 2027.

These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of September 30, 2025.

qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, reversion adjustments for the stagflation scenario and recent trends in asset value indices.

Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of June 30, 2025, the Company changed the scenario weightings, with

a 10% increase to the downside scenarios, equally weighted, and a 10% decrease to the baseline scenario causing a 4% increase in the overall estimated allowance for credit losses.

If instead the upside scenario was increased 10% and the baseline

scenario was decreased 10%, the overall estimated allowance for credit losses decreased 1%.

To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of June 30, 2025, the

Company increased the downside scenarios, equally weighted, to 100% which resulted in a 29% increase in the overall estimated allowance for credit losses.

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of September 30, 2025, the Company changed the scenario weightings,

with a 10% increase to the downside scenarios, equally weighted, and a 10% decrease to the baseline scenario causing a 3% increase in the overall estimated allowance for credit losses.

If instead the upside scenario was increased 10% and the

baseline scenario was decreased 10%, the overall estimated allowance for credit losses decreased 1%.

To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of September

30, 2025, the Company increased the downside scenarios, equally weighted, to 100% which resulted in a 26% increase in the overall estimated allowance for credit losses.

The Company’s policies on the CECL methodology for allowance for credit losses are disclosed in Note 1 to the consolidated financial statements presented in our 2024 Annual Report on Form 10-K.

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Evans Bancorp, Inc.

On May 2, 2025, the Company completed its acquisition of Evans, through the merger of Evans with and into the Company, with the Company merger.

Total consideration for the acquisition was $221.8

million in stock.

On May 2, 2025, the Company completed its acquisition of Evans, through the merger of Evans with and into the Company, with the Company surviving the merger.

Total consideration for the

acquisition was $221.8 million in stock.

Evans, with assets of $2.19 billion at December 31, 2024, was headquartered in Williamsville, New York.

Its primary subsidiary, Evans Bank, was a federally-chartered national banking association operating 18 banking locations in

Western New York.

Its primary subsidiary, Evans Bank, was a federally-chartered national banking association operating 18

banking locations in Western New York.

The acquisition enhances the Company’s presence in Western New York, including the Buffalo and Rochester communities.

In connection with the acquisition, the Company issued 5.1 million shares of common stock and acquired

approximately $130.4 million of identifiable net assets, including $1.67 billion of loans, $255.5 million in AFS investment securities, which were subsequently sold during the quarter, $33.2 million of core deposit intangibles as well as $1.86

In connection with the acquisition, the Company issued 5.1 million shares of common stock

and acquired approximately $130.4 million of identifiable net assets, including $1.67 billion of loans, $255.5 million in AFS investment securities, which were sold during the second quarter of 2025, $33.2 million of core deposit intangibles and

$1.86 billion in deposits.

As of the acquisition date, the fair value discount was $95.2 million for loans, net of the reclassification of the PCD allowance and $0.6 million net discount related to long-term debt.

The Company incurred acquisition expenses related to the merger of $17.2 million and $18.4 million for the three and six months ended June 30, 2025, respectively.

The Company incurred acquisition expenses related to the merger of $1.1 million and $19.5 million for the three and nine months ended September 30, 2025, respectively.

Executive Summary

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share and peer comparisons.

Net income for the three months ended June 30, 2025 was $22.5 million, down $14.2 million from the first quarter of 2025 and down $10.2 million from the second quarter of 2024.

Net income for the three months ended September 30, 2025 was $54.5 million, up $32.0 million from the second quarter of 2025 and up $16.4 million from the third quarter of 2024.

Diluted earnings

per share were $0.44 for the three months ended June 30, 2025, down $0.33 from the first quarter of 2025 and down $0.25 from the second quarter of 2024.

Net income for the six months ended June 30, 2025 was $59.3 million, or $1.21 per diluted

common share, down $7.3 million from $66.5 million, or $1.40 per diluted common share for the six months ended June 30, 2024.

per share were $1.03 for the three months ended September 30, 2025, up $0.59 from the second quarter of 2025 and up $0.23 from the third quarter of 2024.

Net income for the nine months ended September 30, 2025 was $113.7 million, or $2.26 per

diluted common share, up $9.1 million from $104.6 million, or $2.21 per diluted common share for the nine months ended September 30, 2024.

Operating net income (1) , a non-GAAP measure, was $55.3 million, or $1.05 per diluted common share, for the three

months ended June 30, 2025, compared to $0.80 per diluted common share for the first quarter of 2025 and $0.69 per diluted common share for the second quarter of 2024.

Operating net income (1) , for the six months ended June 30, 2025 was $83.4 million, or $1.70 per diluted common share, up $18.5 million from $64.9 million, or $1.37 per diluted common share for the six months ended June 30, 2024.

The following information should be considered in connection with the Company’s results for the three and six months ended June 30, 2025:

The acquisition of Evans by the merger of Evans with and into the Company was completed on May 2, 2025.

Net interest income for the three months ended June 30, 2025 was $124.2 million, up $17.0 million, or 15.9%, from the first quarter of 2025 and up $27.0 million, or 27.8%, from the second quarter of 2024.

interest income for the six months ended June 30, 2025 was $231.4 million, up $39.1 million, or 20.3%, from the same period in 2024.

The Company recorded a provision for loan losses of $17.8 million for the three months ended June 30, 2025, compared to $7.6 million in the first quarter of 2025 and $8.9 million in the second quarter of

Provision for loan losses was $25.4 million for the six months ended June 30, 2025 up $10.9 million from the same period in 2024.

Included in the provision expense for the three and six months ended June 30, 2025 was $13.0 million of

acquisition-related provision for loan losses.

Excluding securities gains (losses), noninterest income represented 27% of total revenues and was $46.8 million for the three months ended June 30, 2025, down $0.7 million, or 1.5%, from the first quarter of

2025 and up $3.5 million, or 8.1%, from the second quarter of 2024.

Excluding securities gains (losses), noninterest income was $94.4 million for the six months ended June 30, 2025 up $7.8 million for the same period in 2024.

Noninterest expense, excluding acquisition expenses, was up $6.8 million, or 6.8%, from the first quarter of 2025 and was up $15.8 million, or 17.7%, from the second quarter of 2024.

months ended September 30, 2025, compared to $0.88 per diluted common share for the second quarter of 2025 and $0.80 per diluted common share for the third quarter of 2024.

Operating net income (1) for the nine months ended September 30, 2025 was $138.7 million, or $2.76 per diluted common share, up $35.6 million from $103.1 million, or $2.17 per diluted common share for the nine months ended September 30,

The following information should be considered in connection with the Company’s results for the three and nine months ended September 30, 2025:

The acquisition of Evans through the merger of Evans with and into the Company was completed on May 2, 2025.

Net interest income for the three months ended September 30, 2025 was $134.7 million, up $10.4 million, or 8.4%, from the second quarter of 2025 and up $33.0 million, or 32.5%, from the third quarter of 2024.

Net interest income for the nine months ended September 30, 2025 was $366.1 million, up $72.1 million, or 24.5%, from the same period in 2024.

The Company recorded a provision for loan losses of $3.1 million for the three months ended September 30, 2025, compared to $17.8 million in the second quarter of 2025 and $2.9 million in the third quarter of

Provision for loan losses was $28.5 million for the nine months ended September 30, 2025, up $11.1 million from the same period in 2024.

Included in the provision expense for the nine months ended September 30, 2025 was $13.0 million

of acquisition-related provision for loan losses.

Excluding securities (losses) gains, noninterest income represented 28% of total revenues and was $51.4 million for the three months ended September 30, 2025, up $4.6 million, or 9.8%, from the second quarter

of 2025 and up $6.1 million, or 13.5%, from the third quarter of 2024.

Excluding securities (losses) gains, noninterest income was $145.8 million for the nine months ended September 30, 2025 up $14.0 million for the same period in 2024.

Noninterest expense, excluding acquisition expenses, was up $4.6 million, or 4.4%, from the second quarter of 2025 and was up $14.8 million, or 15.6%, from the third quarter of 2024.

Noninterest expense,

excluding acquisition expenses, was $204.1 million for the six months ended June 30, 2025, up $22.7 million for the same period in 2024.

excluding acquisition expenses, was $314.1 million for the nine months ended September 30, 2025, up $37.6 million for the same period in 2024.

Period end total loans were $11.60 billion, up $1.63 billion from December 31, 2024, including $1.67 billion of loans acquired from Evans.

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Period end total deposits were $13.66 billion, up $2.11 billion from December 31, 2024, including $1.86 billion in deposits acquired from Evans.

The loan to deposit ratio was 86.0% as of June 30, 2025 and

86.3% as of December 31, 2024.

The loan to deposit ratio was 84.9% as of September 30, 2025

and 86.3% as of December 31, 2024.

In July of 2025, the Company redeemed $118 million of subordinated debt that had a weighted average rate of 5.45% using existing liquidity sources.

The $118 million of subordinated debt would have converted

to a weighted average floating rate above 9%.

Non-GAAP measure - Refer to non-GAAP reconciliation below.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Performance :

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except per share data)

September 30,

Return on average tangible common equity:

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Acquisition-related reserve for unfunded loan commitments

Securities (gains) losses

Securities losses (gains)

Adjustments to net income

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liabilities, primarily deposits and borrowings.

Net interest income is affected by the interest rate spread, the difference between the yield on interest-earning assets and cost of interest-bearing liabilities, as well as the volumes of such assets

and liabilities.

Net interest income is affected by the interest rate spread, the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities, as well as the volumes of such

assets and liabilities.

Net interest income is one of the key determining factors in a financial institution’s performance as it is the principal source of earnings.

Net interest income was $124.2 million for the second quarter of 2025, up $17.0 million, or 15.9%, from the previous quarter.

The FTE NIM was 3.59% for the three months ended June 30, 2025, an

Net interest income was $134.7 million for the third quarter of 2025, up $10.4 million, or 8.4%, from the previous quarter.

The FTE NIM was 3.66% for the three months ended September 30, 2025, an

increase of 7 bps from the previous quarter.

Interest income increased $23.2 million, or 15.0%, as the yield on average interest-earning assets increased 17 bps from the prior quarter to 5.12%, while average interest-earning assets of $13.96

billion increased $1.26 billion from the prior quarter, primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth.

Interest expense increased $6.2 million, or

13.1%, primarily due to the addition of $1.62 billion in interest-bearing liabilities in May 2025 from the Evans acquisition.

Included in net interest income was $5.0 million of acquisition-related net accretion for the three months ended June 30,

2025 compared to $2.2 million of acquisition-related net accretion in the previous quarter.

Net interest income was $124.2 million for the second quarter of 2025, up $27.0 million, or 27.8%, from the second quarter of 2024.

The FTE NIM was 3.59% for the three months ended June 30, 2025,

an increase of 41 bps from the second quarter of 2024.

Interest income increased $26.8 million, or 17.8%, as the yield on average interest-earning assets increased 20 bps from the same period in 2024 to 5.12%, while average interest-earning assets

increased $1.59 billion, or 12.9%, from the second quarter of 2024 primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth.

Interest expense decreased $0.2

million, or 0.4%, as the cost of interest-bearing liabilities decreased 34 bps to 2.24% for the quarter ended June 30, 2025, primarily due to a 29 bps decrease in interest-bearing deposit costs and lower average balances of short-term borrowings.

The decrease in interest expense was partially offset by the addition of $1.62 billion in interest-bearing liabilities, primarily due to the Evans acquisition and organic growth.

Included in net interest income was $5.0 million of

acquisition-related net accretion for the three months ended June 30, 2025 compared to $2.6 million of acquisition-related net accretion for the three months ended June 30, 2024.

Net interest income for the six months ended June 30, 2025 was $231.4 million, up $39.1 million, or 20.3%, from the same period in 2024.

The FTE NIM was 3.52% for the six months ended June 30,

2025, an increase of 36 bps from the same period in 2024.

Interest income increased $12.9 million, or 7.3%, as the yield on average interest-earning assets increased 6 bps from the prior quarter to 5.18%, while average interest-earning assets of $14.64 billion

increased $685.1 million from the prior quarter, primarily due to the full quarter impact from the Evans acquisition.

Interest expense increased $2.4 million, or 4.6%, primarily due to the full quarter impact from the Evans acquisition partially

offset by the redemption of $118 million of subordinated debt in the beginning of the quarter.

Included in net interest income was $6.3 million of acquisition-related net accretion for the three months ended September 30, 2025, compared to $5.0

million of acquisition-related net accretion in the previous quarter.

Net interest income was $134.7 million for the third quarter of 2025, up $33.0 million, or 32.5%, from the third quarter of 2024.

The FTE NIM was 3.66% for the three months ended September 30,

2025, an increase of 39 bps from the third quarter of 2024.

Interest income increased $34.2 million, or 21.9%, as the yield on average interest-earning assets increased 17 bps from the same period in 2024 to 5.18%, while average interest-earning

assets increased $2.20 billion, or 17.6%, from the third quarter of 2024 primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth.

Interest expense increased

$1.2 million, or 2.3%, primarily due to the addition of $1.62 billion in interest-bearing liabilities from the Evans acquisition and organic growth.

The increase in interest expense was partially offset by the redemption of $118 million of

subordinated debt in the third quarter of 2025.

Included in net interest income was $6.3 million of acquisition-related net accretion for the three months ended September 30, 2025, compared to $2.7 million of acquisition-related net accretion for

the three months ended September 30, 2024.

Net interest income for the nine months ended September 30, 2025 was $366.1 million, up $72.1 million, or 24.5%, from the same period in 2024.

The FTE NIM was 3.57% for the nine months ended

September 30, 2025, an increase of 37 bps from the same period in 2024.

Interest income increased $68.5 million, or 15.1%, as the yield on average interest-earning assets increased 16 bps from the same period in 2024 to 5.09%.

Average interest-earning assets of

$13.33 billion increased $1.01 billion primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth.

Interest expense decreased $4.8 million, or 4.6%, for the six

months ended June 30, 2025 as compared to the same period in 2024 driven by interest-bearing deposit costs decreasing 25 bps and lower average balances of short-term borrowings.

The decrease in interest expense was partially offset by the addition

of $1.62 billion in interest-bearing liabilities in May 2025 from the Evans acquisition and organic growth.

Included in net interest income was $7.2 million of acquisition-related net accretion for the six months ended June 30, 2025 compared to

$5.1 million of acquisition-related net accretion for the six months ended June 30, 2024.

interest-earning assets of $13.77 billion increased $1.41 billion primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth.

Interest expense decreased $3.6

million, or 2.2%, for the nine months ended September 30, 2025 as compared to the same period in 2024 driven by interest-bearing deposit costs decreasing 27 bps, lower average balances of short-term borrowings and lower average balances of

subordinated debt.

The decrease in interest expense was partially offset by the addition of $1.62 billion in interest-bearing liabilities in May 2025 from the Evans acquisition and organic growth.

Included in net interest income was $13.6 million

of acquisition-related net accretion for the nine months ended September 30, 2025, compared to $7.8 million of acquisition-related net accretion for the nine months ended September 30, 2024.

Average Balances and Net Interest Income

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Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

(Dollars in thousands)

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Interest income for tax-exempt securities and loans have been adjusted to an FTE basis using the statutory Federal income tax rate of 21%.

Six Months Ended

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

(Dollars in thousands)

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The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of change.

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

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Change in FTE net interest income

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

September 30,

Service charges on deposit accounts

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Bank owned life insurance income

Net securities gains (losses)

Net securities (losses) gains

Total noninterest income

Noninterest income for the three months ended June 30, 2025 was $46.9 million, down $0.5 million, or 1.1%, from the prior quarter and up $3.7 million, or 8.6%, from the second quarter of 2024.

Excluding net securities gains (losses), noninterest income for the three months ended June 30, 2025 was $46.8 million, down $0.7 million, or 1.5%, from the prior quarter and up $3.5 million, or 8.1%, from the second quarter of 2024.

from the prior quarter was primarily driven by the decrease in bank owned life insurance income and insurance services income, partially offset by increases in card services income.

Bank owned life insurance income decreased from the prior quarter

due to a $1.3 million gain recognized in the first quarter of 2025.

Insurance services decreased from the prior quarter due to the seasonally higher income in the first quarter.

Card services income increased from the prior quarter driven by the

Evans acquisition and increased volumes.

The increase from the second quarter of 2024 was driven by an increase in card services income, retirement plan administration fees and wealth management fees.

Card services income increased from the second

quarter of 2024, driven by the Evans acquisition and increased volumes.

Retirement plan administration fees increased from the second quarter of 2024, driven by higher market values of assets under administration and the acquisition of a small

third-party administrator ("TPA") business in the fourth quarter of 2024.

Wealth management fees increased from the second quarter of 2024, driven by market performance and growth in new customer accounts.

Noninterest income for the six months ended June 30, 2025 was $94.4 million, up $5.8 million, or 6.5%, from the same period in 2024.

Excluding net securities gains (losses), noninterest income

for the six months ended June 30, 2025 was $94.4 million, up $7.8 million, or 9.1%, from the same period in 2024.

The increase from the prior year was primarily due to an increase in retirement plan administration fees, wealth management fees and

bank owned life insurance income.

Noninterest income for the three months ended September 30, 2025 was $51.4 million, up $4.5 million, or 9.5%, from the prior quarter and up $5.6 million, or 12.3%, from the third quarter of 2024.

Excluding net securities (losses) gains, noninterest income for the three months ended September 30, 2025 was $51.4 million, up $4.6 million, or 9.8%, from the prior quarter and up $6.1 million, or 13.5%, from the third quarter of 2024.

The increase from the prior quarter was primarily driven by an increase in insurance services and bank owned life insurance income.

Insurance services increased from the prior quarter due to

seasonal renewals.

Bank owned life insurance income increased from the prior quarter due to a $0.9 million gain recognized in the third quarter of 2025.

Included in other noninterest income for the three months ended September 30, 2025 was a $0.6

million gain related to the finalization of a third-party contractual arrangement.

Service charges on deposit accounts and card services income increased from the prior quarter primarily due to the Evans acquisition.

The increase from the third quarter of 2024 was driven by an increase in retirement plan administration fees and bank owned life insurance income.

Retirement plan administration fees increased

from the third quarter of 2024, driven by higher market values of assets under administration and the acquisition of a small third-party administrator (“TPA”) business in the fourth quarter of 2024.

Bank owned life insurance income increased from

the third quarter of 2024 due to a $0.9 million gain recognized in the third quarter of 2025.

Service charges on deposit accounts, card services income and other noninterest income increased from the third quarter of 2024 primarily due to the Evans

Included in other noninterest income for the three months ended September 30, 2025 was a $0.6 million gain related to the finalization of a third-party contractual arrangement.

Noninterest income for the nine months ended September 30, 2025 was $145.8 million, up $11.4 million, or 8.5%, from the same period in 2024.

Excluding net securities (losses) gains, noninterest

income for the nine months ended September 30, 2025 was $145.8 million, up $14.0 million, or 10.6%, from the same period in 2024.

The increase from the prior year was primarily due to an increase in retirement plan administration fees, wealth

management fees and bank owned life insurance income.

The increase in retirement plan administration fees was driven by higher market values of assets under administration and the acquisition of a small TPA business in the fourth quarter of 2024.

The increase in

wealth management fees was driven by market performance and growth in new customer accounts.

Bank owned life insurance income increased due to a $1.3 million gain recognized in the first quarter of 2025.

The increase in wealth management fees was driven by market performance and growth in new customer accounts.

Bank owned life insurance income increased due to $2.2 million gain recognized in the first nine months of 2025.

Service charges on deposit

accounts, card services income and other noninterest income increased from the same period in 2024 primarily due to the Evans acquisition.

Included in other noninterest income for the nine months ended September 30, 2025 was a $0.6 million gain

related to the finalization of a third-party contractual arrangement.

Noninterest Expense

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

September 30,

Salaries and employee benefits

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Total noninterest expense

Noninterest expense for the three months ended June 30, 2025 was $122.6 million, up $22.7 million, or 22.7%, from the prior quarter and up $33.0 million, or 36.9%, from the second quarter of

Excluding acquisition expenses, noninterest expense for the three months ended June 30, 2025 was $105.4 million, up $6.8 million, or 6.8%, from the prior quarter and up $15.8 million, or 17.7%, from the second quarter of 2024.

from the prior quarter was primarily driven by the Evans acquisition.

Salaries and benefits increased from the prior quarter driven by the Evans acquisition, a full quarter of merit pay increases and higher medical costs which were partially offset

by lower payroll taxes and stock-based compensation expenses which are seasonally higher in the first quarter.

Technology and data services increased over the prior quarter due to the Evans acquisition, the timing of planned initiatives and

continued investment in digital platform solutions.

Noninterest expense for the three months ended September 30, 2025 was $111.1 million, down $11.5 million, or 9.4%, from the prior quarter and up $15.4 million, or 16.1%, from the third quarter of

Excluding acquisition expenses, noninterest expense for the three months ended September 30, 2025 was $110.0 million, up $4.6 million, or 4.4%, from the prior quarter and up $14.8 million, or 15.6%, from the third quarter of 2024.

The increase from the prior quarter was primarily driven by the Evans acquisition.

Salaries and benefits increased from the prior quarter driven by the full quarter impact of the Evans

acquisition, higher incentive compensation expenses and higher medical costs.

Technology and data services increased over the prior quarter due to the Evans acquisition, timing of planned activities and ongoing investment in enterprise technology

Occupancy costs were consistent from the prior quarter due to lower seasonal maintenance and utilities costs being offset by the additional expenses from the Evans acquisition.

Professional fees and outside services increased from the

prior quarter primarily due to the Evans acquisition and the timing of various initiatives.

The increase in amortization of intangible assets was due to the amortization of the core deposit intangible asset related to the Evans acquisition.

The increase from the second quarter of 2024

was driven by higher salaries and employee benefits due to the impact of the Evans acquisition, merit pay increases, higher medical and other benefit costs.

Technology and data services increased from the second quarter of 2024 primarily due to the

Evans acquisition, timing of planned initiatives and continued investment in digital platform solutions.

In addition, the increase in occupancy expense was impacted by additional expenses from the Evans acquisition, higher utilities and higher

facilities costs related to new banking locations.

Amortization of intangible assets increased due to the Company recording a core deposit intangible of $33.2 million related to the Evans acquisition.

Noninterest expense for the six months ended June 30, 2025 was $222.5 million, up $41.1 million, or 22.7%, from the same period in 2024.

Excluding acquisition expenses, noninterest expense for

the six months ended June 30, 2025 was $204.1 million, up $22.7 million, or 12.5%, from the same period in 2024.

The increase from the prior year was driven by higher salaries and employee benefits due to the Evans acquisition, merit pay increases

and higher medical and other benefit costs.

The increase in technology and data services was driven by the Evans acquisition, timing of planned initiatives and continued investment in digital platform solutions.

Occupancy expense was impacted by

additional expenses from the Evans acquisition, higher utilities and higher facilities costs related to new banking locations.

In addition, the increase in amortization of intangible assets was due to the amortization of the core deposit intangible

asset related to the Evans acquisition.

Income tax expense for the three months ended June 30, 2025 was $8.2 million, down $2.3 million from the prior quarter and down $1.0 million from the second quarter of 2024.

The increase from the third quarter of 2024 was driven by the Evans acquisition.

Salaries and benefits increased from the third quarter of 2024 driven by the impact of the Evans acquisition,

merit pay increases, higher medical expenses and higher incentive compensation expenses.

Technology and data services increased from the third quarter of 2024 primarily due to the Evans acquisition, timing of planned activities and ongoing

investment in enterprise technology initiatives.

In addition, the increase in occupancy expense was impacted by additional expenses from the Evans acquisition, higher utilities and higher facilities costs related to new banking locations.

Professional fees and outside services increased from the third quarter of 2024 primarily due to the Evans acquisition and the timing of various initiatives.

Amortization of intangible assets increased due to the Company recording a core deposit

intangible of $33.2 million related to the Evans acquisition.

Noninterest expense for the nine months ended September 30, 2025 was $333.7 million, up $56.5 million, or 20.4%, from the same period in 2024.

Excluding acquisition expenses, noninterest expense

for the nine months ended September 30, 2025 was $314.1 million, up $37.6 million, or 13.6%, from the same period in 2024.

The increase from the prior year was driven by higher salaries and employee benefits due to the Evans acquisition, merit pay

increases, higher incentive compensation expenses and higher medical expenses and other benefit costs.

The increase in technology and data services was driven by the Evans acquisition and ongoing investment in enterprise technology initiatives.

Occupancy expense was impacted by additional expenses from the Evans acquisition, higher utilities and higher facilities costs related to new banking locations.

Professional fees and outside services increased from the prior year primarily due to

the Evans acquisition.

In addition, the increase in amortization of intangible assets was due to the amortization of the core deposit intangible asset related to the Evans acquisition.

Income tax expense for the three months ended September 30, 2025 was $17.4 million, up $9.2 million from the prior quarter and up $6.7 million from the third quarter of 2024.

The effective tax

rate was 26.7% for the second quarter of 2025 compared to 22.2% for the prior quarter and 22.0% for the second quarter of 2024.

The increase in the effective tax rate from the prior quarter and the second quarter of 2024 was primarily due to the

estimated impact of acquisition expenses related to the Evans acquisition and a lower level of tax-exempt income as a percentage of total taxable income.

Income tax expense for the six months ended June 30, 2025 was $18.7 million, consistent with the same period in 2024.

The effective tax rate was 24.0% for the six months ended June 30, 2025,

compared to 21.8% for the six months ended June 30, 2024.

The increase in the effective tax rate from 2024 was primarily due to the estimated impact of acquisition expenses related to the Evans acquisition and a lower level of tax-exempt income as

a percentage of total taxable income.

rate was 24.2% for the third quarter of 2025, compared to 26.7% for the prior quarter and 21.9% for the third quarter of 2024.

The decrease in the effective tax rate from the prior quarter and the increase from the third quarter of 2024 was

primarily due to the impact of nondeductible acquisition expenses related to the Evans acquisition and the level of tax-exempt income as a percentage of total pretax income.

Income tax expense for the nine months ended September 30, 2025 was $36.0 million, up $6.8 million from the same period in 2024.

The effective tax rate was 24.1% for the nine months ended

September 30, 2025, compared to 21.9% for the nine months ended September 30, 2024.

The increase in the effective tax rate from 2024 was primarily due to the estimated impact of nondeductible acquisition expenses related to the Evans acquisition

and the level of tax-exempt income as a percentage of total pretax income.

On July 4, 2025, the One Big Beautiful Bill Act (the “Bill”) was enacted into law.

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ANALYSIS OF FINANCIAL CONDITION

Total securities increased $125.8 million, or 5.1%, from December 31, 2024 to June 30, 2025.

The securities portfolio represented 16.1% of total assets as of June 30, 2025 as compared to 17.8% of

total assets as of December 31, 2024.

Total securities increased $174.3 million, or 7.1%, from December 31, 2024 to September 30, 2025.

The securities portfolio represented 16.3% of total assets as of September 30, 2025 as compared

to 17.8% of total assets as of December 31, 2024.

The following table details the composition of securities AFS, securities HTM and equity securities for the periods indicated:

June 30, 2025

September 30, 2025

December 31, 2024

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(In thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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Commercial real estate

Residential real estate

Residential mortgage

Indirect auto

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Other consumer

Loans are summarized by business line which do not align to how the Company assesses credit risk in the allowance for credit losses.

Total loans were $11.62 billion and $9.97 billion at June 30, 2025 and December 31, 2024, respectively.

Period end loans increased by $1.65 billion from December 31, 2024 to June 30, 2025, which

included $1.67 billion of loans acquired from Evans.

Excluding the other consumer and residential solar portfolios, which are in a planned run-off status and the loans acquired from Evans, period end loans increased $38.3 million from December 31,

2024 and increased $221.0 million from June 30, 2024.

C&I loans increased $265.9 million to $1.69 billion;

Loans are summarized by business line which do not align to how the Company assesses credit risk in the allowance for credit losses under CECL.

Total loans were $11.60 billion and $9.97 billion at September 30, 2025 and December 31, 2024, respectively.

Period end loans increased by $1.63 billion from December 31, 2024 to September 30,

2025, which included $1.67 billion of loans acquired from Evans.

Excluding the other consumer and residential solar portfolios, which are in a planned run-off status and the loans acquired from Evans, period end loans increased $38.2 million from

December 31, 2024 and increased $132.4 million from September 30, 2024.

From December 31, 2024 to September 30, 2025 C&I loans increased $217.7 million to $1.64 billion;

CRE loans increased $954.1 million to $4.83 billion;

and total consumer loans increased $465.1 million to $5.13 billion.

represent approximately 72.6% of assets as of June 30, 2025, as compared to 72.3% as of December 31, 2024.

and total consumer

loans increased $453.4 million to $5.12 billion.

Total loans represent approximately 72.0% of assets as of September 30, 2025, as compared to 72.3% as of December 31, 2024.

Loans in the C&I and CRE portfolios consist primarily of loans extended to small and medium-sized entities.

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Company’s markets such as residential rental properties (45%), and office spaces (13%), along with retail, manufacturing, mixed use, hotels and others.

Notably, office CRE loans account for 4% of the total outstanding loans, predominantly serving

suburban medical and professional tenants across suburban and small urban markets.

These loans carry an average size of $1.7 million, with 12% maturing over the next two years.

As of June 30, 2025 and December 31, 2024, the total CRE construction

and development loans amounted to $423.3 million and $314.8 million, respectively.

As of September 30, 2025 and December 31, 2024, the total CRE construction and development loans

amounted to $427.0 million and $314.8 million, respectively.

Allowance for Credit Losses, Provision for Loan Losses and Nonperforming Assets

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The total allowance decreased by approximately 3% as of March 31, 2025 due to the model refreshment.

During the second quarter of 2025, the Company included an additional downside scenario with

Starting in the second quarter of 2025, the Company included an additional downside scenario with

stagflation conditions, which is characterized as an economic environment where inflation rises alongside unemployment.

Stagflation was identified as an emerging risk as tariff policies begin to impact the economy.

Stagflation was identified as an emerging risk as tariff policies impact the economy.

Additional information about our Allowance for Credit Losses is included in Note 7 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q as well as in

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analysis of the loan portfolio.

The allowance for credit losses totaled $140.2 million at June 30, 2025, as compared to $117.0 million at March 31, 2025 and $120.5 million at June 30, 2024.

The allowance for credit losses as a

percentage of loans was 1.21% at June 30, 2025, compared to 1.17% at March 31, 2025 and 1.22% at June 30, 2024.

The increase in the allowance for credit losses from March 31, 2025 to June 30, 2025 was primarily due to the recording of $20.7 million

of allowance for acquired Evans loans as of the acquisition date, which included both the $13.0 million of non-PCD allowance recognized through the provision for loan losses and the $7.7 million of PCD allowance reclassified from loans.

addition, the allowance for credit losses increased due to a modest deterioration in the economic forecast.

The increase in the allowance for credit losses from June 30, 2024 to June 30, 2025 was primarily due to the $20.7 million of allowance for

acquired Evans loans and a deterioration in the economic forecast, which was partially offset by model refreshment and the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status.

The allowance for credit losses was 302.21% of nonperforming loans at June 30, 2025, compared to 245.33% at March 31, 2025 and 316.37% at June 30, 2024.

The increase in the coverage of the

allowance to nonperforming and nonaccrual loans from March 31, 2025 to June 30, 2025 was due to the increase in the allowance relating to acquired Evans loans.

The decrease in the coverage of the allowance to nonperforming loans from June 30, 2024

to June 30, 2025 was due to an increase in nonaccrual loans which was partially offset by the increase in the allowance relating to acquired Evans loans.

The provision for loan losses was $17.8 million for the three months ended June 30, 2025, compared to $7.6 million in the prior quarter and $8.9 million for the same period in the prior year.

Provision expense

increased from the prior quarter and the second quarter of 2024 primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans and a deterioration in economic forecasts, which was partially

offset by a decrease in net charge-offs in the current quarter.

Net charge-offs totaled $2.4 million during the three months ended June 30, 2025, compared to net charge-offs of $6.6 million during the first quarter of 2025 and $3.7 million in the

second quarter of 2024.

Net charge-offs to average loans were 9 bps for the three months ended June 30, 2025, compared to 27 bps for the first quarter of 2025 and 15 bps for the three months ended June 30, 2024.

The provision for loan losses was $25.4 million for the six months ended June 30, 2025, compared to $14.5 million for the six months ended June 30, 2024.

Provision expense increased from the same period in the prior

year primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans and a deterioration in economic forecasts.

This was partially offset by a specific reserve established in the second quarter

of 2024, which was subsequently released due to a charge-off in the fourth quarter of 2024.

Net charge-offs totaled $8.9 million during the six months ended June 30, 2025, compared to net charge-offs of $8.4 million during the six months ended June

Net charge-offs to average loans was 17 bps for the six months ended June 30, 2025 and 2024.

As of June 30, 2025, the unfunded commitment reserve totaled $6.2 million, compared to $4.5 million as of March 31, 2025 and $4.3 million as of June 30, 2024.

The increase in unfunded reserve was

caused by increases in pipeline exposure and $0.5 million of acquisition-related provision for unfunded commitments established for unfunded commitments acquired in the Evans acquisition.

The allowance for credit losses totaled $139.0 million at September 30, 2025, as compared to $140.2 million at June 30, 2025 and $119.5 million at September 30, 2024.

The allowance for credit

losses as a percentage of loans was 1.20% at September 30, 2025, compared to 1.21% at June 30, 2025 and 1.21% at September 30, 2024.

The decrease in the allowance for credit losses from June 30, 2025 to September 30, 2025 was primarily driven by

portfolio mix changes resulting from the run-off of the other consumer and residential solar portfolios which were partially offset by a modest deterioration in economic forecasts.

The increase in the allowance for credit losses from September 30,

2024 to September 30, 2025 was primarily due to the recording of $20.7 million of allowance for acquired Evans loans as of the acquisition date, which included both $13.0 million of non-PCD allowance recognized through the provision for loan losses

and the $7.7 million of PCD allowance reclassified from loans and a modest deterioration in the economic forecast.

This increase was partially offset by model refreshment and the shift in loan composition driven by other consumer and residential

solar portfolios that are in a planned run-off status.

The allowance for credit losses was 260.22% of nonperforming loans at September 30, 2025, compared to 302.21% at June 30, 2025 and 320.21% at September 30, 2024.

The decrease in the coverage of

the allowance to nonperforming and nonaccrual loans from June 30, 2025 to September 30, 2025 was due to the increase in nonaccrual loans.

The decrease in the coverage of the allowance to nonperforming loans from September 30, 2024 to September 30,

2025 was due to an increase in nonaccrual loans, partially offset by the increase in the allowance relating to acquired Evans loans.

The provision for loan losses was $3.1 million for the three months ended September 30, 2025, compared to $17.8 million in the prior quarter and $2.9 million for the same period in the prior

Provision expense decreased from the prior quarter due to the $13.0 million of acquisition-related provision for loan losses recorded in the second quarter of 2025.

Provision expense increased from the third quarter of 2024 due to a slight

increase in net charge-offs.

Net charge-offs totaled $4.3 million during the three months ended September 30, 2025, compared to net charge-offs of $2.4 million during the second quarter of 2025 and $3.9 million in the third quarter of 2024.

charge-offs to average loans were 15 bps for the three months ended September 30, 2025, compared to 9 bps for the second quarter of 2025 and 16 bps for the three months ended September 30, 2024.

The provision for loan losses was $28.5 million for the nine months ended September 30, 2025, compared to $17.4 million for the nine months ended September 30, 2024.

Provision expense increased

from the same period in the prior year primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans and a deterioration in economic forecasts.

This was partially offset by a specific reserve

established in the second quarter of 2024, which was subsequently released due to a charge-off in the fourth quarter of 2024 and an increase in current period net charge-offs.

Net charge-offs totaled $13.2 million during the nine months ended

September 30, 2025, compared to net charge-offs of $12.3 million during the nine months ended September 30, 2024.

Net charge-offs to average loans was 16 bps for the nine months ended September 30, 2025 and 17 bps for the nine months ended

September 30, 2024.

As of September 30, 2025, the unfunded commitment reserve totaled $5.9 million, compared to $6.2 million as of June 30, 2025 and $4.6 million as of September 30, 2024.

The decrease in the

unfunded reserve from the prior quarter was caused by a slight decline in pipeline exposure.

The increase from the same period in the prior year was caused by an increase in pipeline exposure and $0.5 million of acquisition-related provision for

unfunded commitments established for unfunded commitments acquired in the Evans acquisition.

Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, troubled loans modifications, OREO and nonperforming securities.

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represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

June 30, 2025

September 30, 2025

December 31, 2024

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Total allowance for loan losses to nonaccrual loans

Total nonperforming assets were $46.7 million at June 30, 2025, compared to $51.8 million at December 31, 2024 and $38.2 million at June 30, 2024.

Nonperforming loans at June 30, 2025 were $46.4

million or 0.40% of total loans, compared with $51.6 million or 0.52% of total loans at December 31, 2024 and $38.1 million or 0.39% of total loans at June 30, 2024.

The increase in nonperforming assets from the same period in the prior year was

attributable to the addition of nonperforming loans acquired from the Evans acquisition, partially offset by payoffs of nonperforming commercial real estate loans.

The decrease from December 31, 2024 is attributable to the payoff of two nonaccrual

loans in the second quarter of 2025, partly offset by the addition of nonperforming loans from the Evans acquisition.

Total nonaccrual loans were $43.2 million or 0.37% of total loans at June 30, 2025, compared to $45.8 million or 0.46% of total

loans at December 31, 2024 and $34.8 million or 0.35% of total loans at June 30, 2024.

Past due loans as a percentage of total loans was 0.38% at June 30, 2025, up from 0.34% at December 31, 2024 and up from 0.30% at June 30, 2024.

In addition to nonperforming loans discussed above, the Company has also identified approximately $195.3 million in potential problem loans at June 30, 2025 as compared to $116.1 million at

December 31, 2024 and $125.2 million at June 30, 2024.

Total nonperforming assets were $53.7 million at September 30, 2025, compared to $51.8 million at December 31, 2024 and $37.4 million at September 30, 2024.

Nonperforming loans at September 30,

2025 were $53.4 million or 0.46% of total loans, compared with $51.6 million or 0.52% of total loans at December 31, 2024 and $37.3 million or 0.38% of total loans at September 30, 2024.

The increase in nonperforming assets from the same period in

the prior year was attributable to the addition of nonperforming loans acquired from the Evans acquisition, partially offset by payoffs of nonperforming commercial real estate loans.

The increase from December 31, 2024 is primarily attributable to

the addition of nonperforming loans from the Evans acquisition.

These increases were partially offset by the payoff of two nonaccrual loans in the second quarter of 2025.

Total nonaccrual loans were $46.5 million or 0.40% of total loans at

September 30, 2025, compared to $45.8 million or 0.46% of total loans at December 31, 2024 and $33.3 million or 0.34% of total loans at September 30, 2024.

Past due loans as a percentage of total loans were 0.38% at September 30, 2025, up from

0.34% at December 31, 2024 and up from 0.36% at September 30, 2024.

In addition to nonperforming loans discussed above, the Company has also identified approximately $211.3 million in potential problem loans at September 30, 2025, as compared to $116.1 million at

December 31, 2024 and $119.9 million at September 30, 2024.

Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected.

Such loans may need to be disclosed as nonperforming at some time in

Potential problem loans are classified by the Company’s loan rating system as “substandard.” Potential problem loans have increased to more normalized levels and the increase primarily relates to a few CRE relationships reflecting

changing conditions in certain CRE markets including construction delays, rising costs and delays in leasing up spaces.

The increase in potential problem loans at June 30, 2025 compared to December 31, 2024 and June 30, 2024 is primarily due to the

addition of $60.5 million in acquired commercial loans from Evans during the second quarter of 2025 and additional migration of commercial loan balances to substandard, the majority of which are adequately secured by the underlying real estate

Such loans may need to be disclosed as nonperforming at some

time in the future.

Potential problem loans are classified by the Company’s loan rating system as “substandard.” The increase in potential problem loans at September 30, 2025, compared to December 31, 2024 and September 30, 2024 is primarily due to

the addition of $60.5 million in acquired commercial loans from Evans during the second quarter of 2025 and additional migration of commercial loan balances to substandard, the majority of which are adequately secured by the underlying real estate

Most of the increase involves commercial real estate and reflects changing conditions in commercial markets including delays in construction, rising costs and delays in leasing spaces.

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primarily within its footprint.

Total deposits were $13.52 billion at June 30, 2025, up $1.97 billion, or 17.0%, from December 31, 2024, which included $1.86 billion in deposits acquired from Evans.

Excluding deposits acquired from

Evans, deposits increased $104.4 million from December 31, 2024.

As of June 30, 2025, there were $219.7 million of brokered time deposits, down from $295.8 million as of December 31, 2024.

The Deposit mix characteristics also improved with an

increase in demand deposits, interest-bearing checking and money market accounts offset by a decrease in time deposits.

The Company’s composition of total deposits is diverse and granular with nearly 615,000 accounts with an average per account

balance of $21,979 as of June 30, 2025.

As of June 30, 2025 and December 31, 2024 the estimated amounts of uninsured deposits based on the methodologies and assumptions used for the bank regulatory reporting were $5.80 billion and $4.73 billion,

respectively.

Total deposits were $13.66 billion at September 30, 2025, up $2.11 billion, or 18.3%, from December 31, 2024, which included $1.86 billion in deposits acquired from Evans.

Excluding deposits

acquired from Evans, deposits increased $250.1 million from December 31, 2024.

As of September 30, 2025, there were $173.9 million of brokered time deposits, down from $295.8 million as of December 31, 2024.

Excluding deposits acquired from Evans,

demand, interest-bearing checking and money market accounts increased, partially offset by a decrease in time deposits.

The Company’s composition of total deposits is diverse and granular with over 616,000 accounts with an average per account

balance of $22,161 as of September 30, 2025.

As of September 30, 2025 and December 31, 2024 the estimated amounts of uninsured deposits based on the methodologies and assumptions used for the bank regulatory reporting were $5.96 billion and $4.73

billion, respectively.

Total average deposits increased $1.47 billion, or 13.2%, from the same period last year due to the $1.86 billion in deposits acquired from Evans in the second quarter of 2025.

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The Company’s borrowed funds consist of short-term borrowings and long-term debt.

Short-term borrowings totaled $113.0 million at June 30, 2025 compared to $162.9 million at December 31, 2024.

Long-term debt was $44.8 million at June 30, 2025 compared to $29.6 million at December 31, 2024.

The increase in long-term debt was due to a $40.0 million borrowing acquired in the Evans acquisition, partially offset by the maturity of a $25.0

million borrowing that matured in the first quarter of 2025.

As of the acquisition date, the fair value discount was $0.3 million for the acquired long-term debt which is being accreted into interest expense over the life of the debt instrument.

Short-term borrowings totaled $138.7 million at September 30, 2025 compared to $162.9 million at December 31,

Long-term debt was $44.8 million at September 30, 2025 compared to $29.6 million at December 31, 2024.

The increase in long-term debt was due to a $40.0 million borrowing acquired in the Evans acquisition, partially offset by the maturity of

a $25.0 million borrowing that matured in the first quarter of 2025.

For more information about the Company’s borrowing capacity and liquidity position, see “Liquidity Risk” below.

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On June 23, 2020, the Company issued $100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030.

The subordinated notes, which qualify as Tier 2 capital, bear interest at an

The subordinated notes, which qualified as Tier 2 capital, bore interest at an

annual rate of 5.00%, payable semi-annually in arrears commencing on January 1, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 4.85%, payable quarterly in arrears commencing on October 1, 2025.

subordinated debt issuance cost of $2.2 million is being amortized on a straight-line basis into interest expense over five years.

subordinated notes issuance costs of $2.2 million were amortized on a straight-line basis into interest expense over five years.

The Company repurchased $2.0 million of the subordinated notes in 2022 at a discount of $0.1 million.

Subsequent to

quarter end, on July 1, 2025, the Company redeemed these subordinated notes in full using existing liquidity sources.

Subordinated notes assumed in connection with the Salisbury acquisition included $25.0 million of 3.50% fixed-to-floating rate subordinated notes due 2031.

The subordinated notes, which qualify

as Tier 2 capital, bear interest at an annual rate of 3.50%, payable quarterly in arrears commencing on June 30, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 2.80%, payable quarterly in arrears

On July 1, 2025,

the Company redeemed these subordinated notes in full using existing liquidity sources.

The subordinated notes assumed in connection with the Salisbury acquisition included $25.0 million of 3.50% fixed-to-floating rate subordinated notes due 2031.

The subordinated notes, which

qualified as Tier 2 capital, bore interest at an annual rate of 3.50%, payable quarterly in arrears commencing on June 30, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 2.80%, payable quarterly in arrears

commencing on June 30, 2026.

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commencing on July 15, 2025.

Subsequent to quarter end, on July 15, 2025, the Company redeemed these subordinated notes in full using existing liquidity sources.

As of June 30, 2025 and December 31, 2024 the subordinated debt net of unamortized issuance costs and fair value discount was $141.9 million and $121.2 million, respectively.

On July 15, 2025, the Company redeemed these subordinated notes in full using existing liquidity sources.

As of September 30, 2025 and December 31, 2024 the subordinated debt net of unamortized issuance costs and fair value discount was $24.2 million and $121.2 million, respectively.

Junior Subordinated Debt

In connection with the Evans acquisition, the Company assumed Evans Capital Trust I, a statutory business trust wholly-owned by the Company, which issued $11.0 million in aggregate principal

In connection with the Evans acquisition, the Company acquired Evans Capital Trust I, a statutory business trust wholly-owned by the Company, which issued $11.0 million in aggregate principal

amount of floating rate preferred capital securities due November 23, 2034 to various investors and $0.3 million of common securities.

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As of June 30, 2025 in connection with the completion of the Evans

acquisition and the Company exceeding $15 billion in assets, the Trusts are now included in Tier 2 capital of the Company for regulatory capital purposes.

acquisition and the Company’s assets exceeding $15 billion, the Trusts are now included in Tier 2 capital of the Company for regulatory capital purposes.

Capital Resources

Stockholders’ equity of $1.81 billion represented 11.27% of total assets at June 30, 2025 compared with $1.53 billion, or 11.07% of total assets, as of December 31, 2024.

Stockholders’ equity

increased $279.0 million from December 31, 2024 driven by the Evans acquisition adding $221.8 million of capital, net income generation of $59.3 million for the six months ended June 30, 2025 and a decrease of $32.6 million in accumulated other

comprehensive loss due primarily to the change in the fair value of securities available for sale, partially offset by dividends declared of $33.9 million.

The Company did not purchase shares of its common stock during the three and six months ended June 30, 2025.

Under its share repurchase program, the Company may repurchase shares of its common

stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes.

As of June 30, 2025, there were 1,992,400 shares available for repurchase under this

plan authorized on December 18, 2023, which is set to expire on December 31, 2025.

As the capital ratios in the following table indicate, the Company remained “well capitalized” at June 30, 2025 under applicable bank regulatory requirements.

Capital measurements are well in

excess of regulatory minimum guidelines and meet the requirements to be considered well capitalized for all periods presented.

Stockholders’ equity of $1.85 billion represented 11.50% of total assets at September 30, 2025 compared with $1.53 billion, or 11.07% of total assets, as of December 31, 2024.

Stockholders’

equity increased $327.0 million from December 31, 2024 driven by the Evans acquisition adding $221.8 million of capital, net income generation of $113.7 million for the nine months ended September 30, 2025 and a decrease of $43.2 million in

accumulated other comprehensive loss due primarily to the change in the fair value of securities available for sale, partially offset by dividends declared of $53.3 million.

The Company did not purchase shares of its common stock during the three and nine months ended September 30, 2025.

As of September 30, 2025, there were 1,992,400 shares available for repurchase

under the Company’s stock repurchase plan authorized on December 18, 2023 and set to expire on December 31, 2025.

On October 27, 2025, the Company’s Board of Directors authorized and approved an amendment to the Company’s stock repurchase program.

Pursuant to the amended stock repurchase program, the Company may repurchase up to 2,000,000 shares of the Company’s common stock with all repurchases under the stock repurchase program to be made by December 31, 2027.

The Company may repurchase

shares of its common stock from time to time to mitigate the potential dilutive effect of stock-based incentive plans and other potential uses of common stock for corporate purposes.

As the capital ratios in the following table indicate, the Company remained “well capitalized” at September 30, 2025 under applicable bank regulatory requirements.

Capital measurements are well

in excess of regulatory minimum guidelines and meet the requirements to be considered well capitalized for all periods presented.

To be considered well capitalized, tier 1 leverage, common equity tier 1 capital, tier 1 capital and total risk-based

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Capital Measurements

June 30, 2025

September 30, 2025

December 31, 2024

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The following table summarizes the percentage change in net interest income in the rising and declining rate scenarios over a 12-month period from the forecasted net interest income in the flat

rate scenario using the June 30, 2025 balance sheet position:

rate scenario using the September 30, 2025 balance sheet position:

Interest Rate Sensitivity Analysis

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inflationary pressures and FOMC monetary policy.

Post-pandemic, inflationary pressures have resulted in a higher overall yield curve with federal funds increases of 425 bps in 2022 with an additional 100 bps of increases in 2023.

tightening cycle ended in September of 2024, when the FRB lowered the federal funds rate by 50 bps, followed by consecutive 25 bps reductions in November and December of 2024 for a total of 100 bps of federal funds rate reductions by the end of

While deposit rates increased meaningfully in 2023 and continued to increase in early 2024 in conjunction with elevated short-term interest rates, the recent federal funds rate reductions have provided the catalyst for the Company to begin

reducing deposit rates.

The Company continues to focus on managing deposit expense in an environment of still elevated but declining short-term interest rates while allowing assets to reprice upward in relation to existing portfolio asset yields.

Post-pandemic, inflationary pressures resulted in a higher overall yield curve with federal funds increases of 425 bps in 2022 with an additional 100 bps of increases in 2023.

However, the tightening

cycle ended in September of 2024, when the FRB lowered the federal funds rate by 50 bps, followed by consecutive 25 bps reductions in November and December of 2024 for a total of 100 bps of federal funds rate reductions by the end of 2024.

Additionally, one rate cut of 25 bps occured in 2025, signaling a continuation of the cutting cycle.

While deposit rates increased meaningfully in 2023 and continued to increase in early 2024 in conjunction with elevated short-term interest rates,

the federal funds rate reductions of 2024 and expectations for continued reductions in 2025 and 2026 have provided the catalyst for the Company to begin reducing deposit rates.

The Company continues to focus on managing deposit expense in an

environment of still elevated but declining short-term interest rates while allowing assets to reprice upward in relation to existing portfolio asset yields.

Liquidity Risk

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This approach recognizes the importance of balancing levels of cash flow liquidity from short and long-term securities with the availability of dependable borrowing sources, which can be accessed when necessary.

30, 2025, the Company’s Basic Surplus measurement was 16.4% of total assets, or $2.63 billion, as compared to the December 31, 2024 Basic Surplus of 17.0%, or $2.34 billion, and was above the Company’s minimum of 5% (calculated at $800.7 million

and $689.3 million of period end total assets as June 30, 2025 and December 31, 2024, respectively) set forth in its liquidity policies.

At June 30, 2025 and December 31, 2024, FHLB advances outstanding totaled $44.6 million and $45.6 million, respectively.

At June 30, 2025 and December 31, 2024, the Bank had $388.8 million and

$199.0 million, respectively, of collateral encumbered by municipal letters of credit.

The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $1.83 billion at June 30, 2025 and $1.71 billion at

December 31, 2024.

In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $1.00 billion and $957.3 million at June 30, 2025 and December 31, 2024, respectively, or used to collateralize

other borrowings, such as repurchase agreements.

The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of

$2.42 billion at June 30, 2025 and $2.01 billion at December 31, 2024.

In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile and residential solar loans as collateral.

30, 2025 and December 31, 2024, the Bank had the capacity to borrow $1.17 billion and $1.13 billion, respectively, from this program.

September 30, 2025, the Company’s Basic Surplus measurement was 17.2% of total assets, or $2.78 billion, as compared to the December 31, 2024 Basic Surplus of 17.0%, or $2.34 billion, and was above the Company’s minimum of 5% (calculated at $805.6

million and $689.3 million of period end total assets as September 30, 2025 and December 31, 2024, respectively) set forth in its liquidity policies.

At September 30, 2025 and December 31, 2024, FHLB advances outstanding totaled $44.5 million and $45.6 million, respectively.

At September 30, 2025 and December 31, 2024, the Bank had $356.0

million and $199.0 million, respectively, of collateral encumbered by municipal letters of credit.

The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $1.98 billion at September 30, 2025 and

$1.71 billion at December 31, 2024.

In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $913.6 million and $957.3 million at September 30, 2025 and December 31, 2024, respectively, or

used to collateralize other borrowings, such as repurchase agreements.

The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide

additional liquidity of $2.48 billion at September 30, 2025 and $2.01 billion at December 31, 2024.

In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile and residential solar

loans as collateral.

At September 30, 2025 and December 31, 2024, the Bank had the capacity to borrow $1.18 billion and $1.13 billion, respectively, from this program.

The Company’s internal policy authorizes borrowing up to 25% of assets.

Under this policy, remaining available

borrowing capacity totaled $3.94 billion at June 30, 2025 and $3.38 billion at December 31, 2024.

this policy, remaining available borrowing capacity totaled $3.97 billion at September 30, 2025 and $3.38 billion at December 31, 2024.

This Basic Surplus approach enables the Company to appropriately manage liquidity from both operational and contingency perspectives.

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increased volatility to liquidity risk.

At June 30, 2025, a portion of the Company’s loans and securities were pledged as collateral on borrowings.

Therefore, once on-balance sheet liquidity is reduced, future growth of earning assets

will depend upon the Company’s ability to obtain additional funding, through growth of core deposits and collateral management and may require further use of brokered time deposits or other higher cost borrowing arrangements.

At September 30, 2025, a portion of the Company’s loans and securities were pledged as collateral on borrowings.

Therefore, once on-balance sheet liquidity is reduced, future growth of earning

assets will depend upon the Company’s ability to obtain additional funding, through growth of core deposits and collateral management and may require further use of brokered time deposits or other higher cost borrowing arrangements.

The Company’s primary source of funds is dividends from its subsidiaries.

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to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years as specified in applicable OCC regulations.

At June 30, 2025, approximately $66.5 million of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC.

The Bank’s ability to pay dividends is also subject to the Bank being in

compliance with regulatory capital requirements.

At September 30, 2025, approximately $91.8 million of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC.

The Bank’s ability to pay dividends is also subject to the Bank

being in compliance with regulatory capital requirements.

The Bank is currently in compliance with these requirements.

Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained

earnings or capital surplus.

Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net

retained earnings or capital surplus.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis