What changed in this filing

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Item 1. Financial Statements

2026-05-08 compared with 2025-11-07 · 1100 added, 744 removed, 737 unchanged (71% of the section changed)

3 unchanged sentences

Balance Sheets (unaudited)

September 30,

(In thousands, except share and per share data)

21 unchanged sentences

Preferred stock, $ 0.01

2,500,000 shares authorized

Common stock, $ 0.01 par value.

100,000,000 shares authorized;

and 53,974,492 shares issued, respectively

par value, 2,500,000 shares authorized

Common stock, $ 0.01 par value, 100,000,000 shares authorized;

shares issued

Additional paid-in-capital

7 unchanged sentences

and Subsidiaries

Statements of

Income (unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30 ,

(In thousands, except per share data)

20 unchanged sentences

Bank owned life insurance income

Net securities (losses) gains

Net securities gains (losses)

Total noninterest income

15 unchanged sentences

and Subsidiaries

Statements of

Comprehensive Income (Loss)

Consolidated Statements of

Comprehensive Income (Loss) (unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30 ,

(In thousands)

1 unchanged sentence

Securities available for sale:

Unrealized net holding gains arising during the period, gross

Unrealized net holding gains arising during the period, net

Unrealized net holding (losses) gains arising during the period, gross

Unrealized net holding (losses) gains arising during the period, net

Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross

4 unchanged sentences

Amortization of prior service cost and actuarial losses, net

Decrease (increase) in unrecognized actuarial loss, gross

Decrease (increase) in unrecognized actuarial loss, net

Total pension and other benefits, net

Total other comprehensive income

Total other comprehensive (loss) income

Comprehensive income

2 unchanged sentences

and Subsidiaries

Statements of

Consolidated Statements of

Stockholders’ Equity (unaudited)

2 unchanged sentences

(Loss) Income

Balance at June 30, 2025

Balance at December 31, 2025

Cash dividends - $ 0.37

Purchase of 250,000 treasury shares

Net issuance of 56,691

2 unchanged sentences

Stock-based compensation

Other comprehensive income

Balance at September 30 , 2025

Balance at June 30, 2024

Other comprehensive (loss)

Balance at March 31 , 2026

Balance at December 31, 2024

Cash dividends - $ 0.34

4 unchanged sentences

Other comprehensive income

Balance at September 30 , 2024

(In thousands, except share and per share data)

Comprehensive

(Loss) Income

Balance at December 31 , 2024

Cash dividends - $ 1.05

Issuance of 5,108,663 shares of common stock for acquisition

Net issuance of 145,474

employee and other stock plans

Stock-based compensation

Other comprehensive income

Balance at September 30 , 2025

Balance at December 31, 2023

Cash dividends - $ 0.98

Purchase of 7,600

treasury shares

Net issuance of 74,529

employee and other stock plans

Stock-based compensation

Other comprehensive income

Balance at September 30 , 2024

Balance at March 31 , 2025

See accompanying notes to unaudited interim consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

13 unchanged sentences

Net gain on sale of loans held for sale

Net securities gains

Net securities (gains) losses

Net gains on sale of other real estate owned

2 unchanged sentences

Investing activities

Net cash provided by (used in) acquisitions

Net cash used in acquisitions

Securities available for sale:

Proceeds from maturities, calls and principal paydowns

Proceeds from sales

Securities held to maturity:

Proceeds from maturities, calls and principal paydowns

Equity securities:

Proceeds from sales

Net decrease (increase) in loans

Proceeds from Federal Reserve and Federal Home Loan Bank stock redemption

Purchases of Federal Reserve and Federal Home Loan Bank stock

Proceeds from Federal Home Loan Bank stock redemption

Purchases of Federal Home Loan Bank stock

Proceeds from settlement of bank owned life insurance

1 unchanged sentence

Proceeds from sales of other real estate owned

Net cash provided by (used in) investing activities

Net cash used in investing activities

Financing activities

1 unchanged sentence

Net decrease in short-term borrowings

Redemption of subordinated debt

Repayments of long-term debt

Proceeds from the issuance of shares to employee and other stock plans

Cash paid by employer for tax-withholding on stock issuance

1 unchanged sentence

Cash dividends

Net cash (used in) provided by financing activities

Net increase in cash and cash equivalents

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Consolidated Statements of Cash Flows (unaudited) (continued)

Nine Months Ended

September 30,

Three Months Ended

Supplemental disclosure of cash flow information

1 unchanged sentence

Interest expense

Income taxes paid, net of refund

Income taxes paid, net of refunds

Noncash investing activities:

Loans transferred to other real estate owned

Acquisitions:

Fair value of assets acquired, excluding acquired cash and goodwill

Fair value of liabilities assumed

See accompanying notes to unaudited interim consolidated financial statements.

3 unchanged sentences

Consolidated Financial Statements

September 30, 2025

March 31, 2026

Description of Business

13 unchanged sentences

includes upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine and central and northwestern Connecticut.

The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services.

The Company’s

business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

On May 2, 2025, the Company completed the acquisition of

Evans Bancorp, Inc.

Evans was headquartered in Williamsville, New York.

Evans Bank, National Association (“Evans Bank”), was a federally-chartered national banking association operating 18 banking locations in Western New York.

The Company has been, and intends to remain, a community-oriented financial institution offering a variety of financial services.

The Company’s business

philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

Summary of Significant Accounting Policies

20 unchanged sentences

Estimates associated with the allowance for credit losses are particularly susceptible to material

change in the near term.

changes in the near term.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In November 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) 2025-08, Financial Instruments-Credit Losses (Topic 326):

Purchased Loans .

The ASU expands the population of acquired financial assets subject to the

gross-up approach in Topic 326, Financial Instrument-Credit Losses.

In accordance with the amendments in this update, loans acquired without credit deterioration and deemed seasoned are purchased seasoned loans and accounted for using the gross-up

approach at acquisition.

The amendments apply prospectively and will be effective for fiscal periods beginning after December 15, 2026.

The Company elected to early-adopt the ASU as of January 1, 2026.

Standards Issued Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures , in response to requests from investors, lenders, creditors and other allocators of capital for enhanced income tax disclosures to support capital allocation decisions.

The ASU requires

enhanced disclosures primarily related to existing rate reconciliation and income taxes paid information to help investors better assess how the Company’s operations and related tax risks and tax planning and operational opportunities affect the

Company’s tax rate and prospects for future cash flows.

The ASU 2023-09 improves the transparency of income tax disclosures.

The amendments in this ASU are effective for the Company for annual periods beginning after December 15, 2024, and should

be applied on a prospective basis.

Retrospective application and early adoption are permitted.

Aside from complying with the new disclosure requirements, the adoption is not expected to have a material impact on the consolidated financial

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense

Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , that addresses longstanding investor requests for more information regarding expenses included in the expense captions presented on the face of

the income statement.

Disaggregation of Income Statement Expenses , that addresses longstanding investor requests for more information regarding expenses included in the expense captions presented on the face of the

income statement.

The ASU will require a tabular disclosure that disaggregates certain income statement expenses including employee compensation, depreciation and intangible asset amortization.

1 unchanged sentence

Clarifying the Effective Date, which revises the effective date of ASU 2024-03.

will become effective in the annual reporting periods beginning after December 15, 2026, and early adoption is permitted.

become effective in the annual reporting periods beginning after December 15, 2026, and early adoption is permitted.

Aside from complying with the new disclosure requirements, the adoption is not expected to have a material impact on the

consolidated financial statements.

Evans Bancorp, Inc.

On May 2, 2025 , the Company completed the 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 common 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.

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.

Preliminary goodwill of $ 91.4 million was recognized as a result of the merger and is not amortizable or deductible for tax purposes.

The effects of

the acquired assets and liabilities have been included in the consolidated financial statements since May 2, 2025.

As a result of the full integration of the operations of Evans, it is not practicable to determine all revenue or net income

included in the Company’s operating results relating to Evans since the date of acquisition as Evans results cannot be separately identified.

The acquisition of Evans is being accounted for as a business combination in

accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805 ”), using the acquisition method of accounting.

Accordingly, as of the date of the acquisition, the Company recorded the assets acquired, liabilities assumed and consideration paid at fair value based

on management’s best estimates using information available at the date of the acquisition.

These estimates are subject to adjustment based on updated information not available at the time of the acquisition.

The amount of goodwill arising

from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with Evans.

Accrued income taxes and deferred taxes associated with the Evans acquisition were recorded on a

provisional basis and could vary from the actual recorded balance once tax provisions and returns are finalized.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed:

(In thousand s)

Evans Bancorp, Inc.

Consideration:

Cash paid to shareholders (fractional shares)

Common stock issuance

Total net consideration

Recognized amounts of identifiable assets acquired and (liabilities) assumed:

Cash and cash equivalents

Securities available for sale

Securities held to maturity

Loans, net of allowance for credit losses on purchased credit deteriorated loans

Premises and equipment, net

Core deposit intangibles

Bank owned life insurance

Total identifiable assets acquired

Other liabilities

Total liabilities assumed

Total identifiable assets, net

The following is a description of the

valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed.

The Company used an independent valuation specialist to assist with the determination of fair values for certain acquired

assets and assumed liabilities.

Cash and due from banks - The estimated fair value was determined to

approximate the carrying amount of these assets.

Securities available for sale (“AFS”) - The

estimated fair value of the AFS investment portfolio was primarily determined using quoted market prices and dealer quotes.

The investment securities were sold immediately after the merger and no gains or losses were recorded.

Securities held to maturity (“HTM”) - The estimated fair value of the

HTM investment portfolio, which consisted of local municipal securities, was retained at par, which is estimated to be equal to fair value.

Loans - The estimated fair value of loans were based on a discounted

cash flow methodology applied on a pooled basis.

Loans were first segmented by purchased credit deteriorated (“PCD”) or non-purchased credit deteriorated (“non-PCD”) status, and then further grouped according to Federal Deposit Insurance

Corporation (“FDIC”) call report segmentation.

The valuation considered key loan characteristics including loan type, term, rate, payment schedule and loan performance attributes.

Assumptions related to prepayment speeds, probability of default

(“PD”) and loss given default (“LGD”) were also considered.

The discount rates applied were based on a build-up approach factoring in the funding mix, servicing costs, liquidity premium and factors related to performance risk.

Core deposit intangible - The core deposit intangible was valued

utilizing the cost savings method approach, which recognizes the cost savings represented by the expense of maintaining the core deposit base versus the cost of an alternative funding source.

The valuation incorporated assumptions related to

account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates.

Deposits - The fair value of noninterest bearing demand deposits,

interest-bearing checking, money market and savings deposit accounts were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.

Certificate of deposit (“CD”) (time deposit accounts) were

valued at the present value of the certificates’ expected contractual payments discounted at market rates for similar certificates which approximates carrying value.

Borrowings - The estimated fair value of short-term borrowings was

determined to approximate stated value.

Long-term debt, subordinated debt and junior subordinated debt were valued using a discounted cash flow approach incorporating a discount rate that incorporated similar terms, maturity and credit rating.

Accounting for Acquired Loans - Acquired loans are classified into two

PCD loans and non-PCD loans.

PCD loans are defined as a loan or group of loans that have experienced more than insignificant credit deterioration since origination.

Non-PCD loans had an allowance established on acquisition date,

which is recognized as an expense through the provision for credit losses.

For PCD loans, an allowance is recognized by adding it to the fair value of the loan, which is the amortized cost.

There is no provision for credit loss expense

recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loan.

The allowance for credit losses on non-PCD loans of $ 13.0 million was recorded through the provision for loan losses within the unaudited interim consolidated statements of income.

The following table provides details related to the fair value

of acquired PCD loans.

(In thousand s)

Par value of PCD loans at acquisition

Allowance for credit losses at acquisition

Discount at acquisition

Fair value of PCD loans at acquisition

Direct costs related to the acquisition were expensed as incurred.

integration-related expenses were $ 1.1 million and $ 19.5 million during the three and nine months ended September 30, 2025 , respectively.

These amounts have been separately stated in the unaudited interim consolidated statements of

income and are included in operating activities in the unaudited interim consolidated statements of cash flow.

Supplemental Pro Forma Financial Information (Unaudited)

The following table presents certain unaudited pro forma financial information

for illustrative purposes only, for the three and nine

months ended September 30, 2025 and 2024, as if Evans had been acquired on January 1, 2024.

This unaudited pro forma information combines the historical results of Evans with the Company’s consolidated historical results and includes certain adjustments

reflecting the estimated impact of certain fair value adjustments for the respective periods.

The pro forma information is not indicative of what would have occurred had the acquisition taken place at the beginning of the year prior to the

The unaudited pro forma information does not consider any changes to the provision expense resulting from recording loan assets at fair value, cost savings or business synergies.

As a result, actual amounts would have differed

from the unaudited pro forma information presented and the differences could be significant.

Pro Forma (Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousand s,)

Total revenue, net of interest expense

Other Acquisitions

In November 2024, the Company, through its subsidiary, NBT Bank, National Association, completed its acquisition of certain assets of PACO, Inc., a third -party administration business based in West Des Moines, Iowa for a total consideration of $ 3.3 million .

As part of the acquisition, the Company recorded goodwill of $ 0.7 million and a $ 2.9 million contingent considerations recorded in other

liabilities on the consolidated balance sheets as of December 31, 2024.

In July 2024, the Company, through its subsidiary, NBT Insurance Agency, LLC, a full-service insurance agency, completed the acquisition of substantially all of the assets of Karl W.

Reynard, Inc.

located in Stamford, NY for

a total consideration of $ 1.2 million .

Reynard, Inc.

was a long-established property and casualty agency offering personal and commercial lines.

This strategic acquisition expands the presence of NBT Insurance Agency, LLC in the Catskills, where the agency and the Bank are

well established.

As part of the acquisition, the Company recorded goodwill of $ 0.2 million and a $ 1.0 million contingent consideration recorded in other

liabilities on the unaudited interim consolidated balance sheets.

The operating results of the acquired companies are included in the consolidated results after the date of acquisition.

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securit ies are as follows:

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

Narrow-Scope Improvements , which clarifies the

guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the

last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

complying with the new disclosure requirements, the adoption is not expected to have a material impact on the consolidated financial statements.

The amortized cost, estimated fair value and unrealized gains (losses) of available for sale (“AFS”) securities are as follows:

(In thousands)

As of September 30 , 2025

As of March 31, 2026

Federal agency

18 unchanged sentences

There was no allowance for credit losses on AFS

securities as of September 30, 2025 and December 31, 2024.

During the three and nine months ended September

30, 2025, there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into

During the three months ended September 30, 2024, there were no gains or losses reclassified out of AOCI and into earnings.

During the nine months ended September

30, 2024, the Company sold a previously written-off security and recognized a gain of $ 2.3 million into earnings in net securities gains

(losses) in the unaudited interim consolidated statements of income.

The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as

securities as of March 31, 2026 and December 31, 2025.

During the three months ended March 31,

2026 and March 31, 2025, there were no gains or losses reclassified out of accumulated other comprehensive income (loss)

(“AOCI”) and into earnings .

The amortized cost, estimated fair value and unrealized gains (losses) of held to maturity (“HTM”) securities are as follows:

(In thousands)

As of September 30 , 2025

As of March 31, 2026

Federal agency

17 unchanged sentences

Total HTM securities

At September 30, 2025 and

December 31, 2024, all of the mortgage-backed HTM securities were comprised of U.S.

government agency and government-sponsored enterprises securities.

The Company recorded no gains from calls on HTM securities for the three and nine months ended September 30, 2025 and 2024.

At March 31, 2026 and December 31, 2025, all of the mortgage-backed HTM securities were comprised of U.S.

government agency and government-sponsored enterprises

The Company recorded no gains from calls on HTM

securities for the three months ended March 31, 2026 and 2025.

AFS and HTM securities with amortized costs totaling $ 1.84

billion at September 30,

2025 and $ 1.60 billion at December 31, 2024, were pledged to secure public deposits and for other purposes required or permitted by law.

Additionally, at September 30, 2025 and December 31, 2024, AFS and HTM securities with an amortized cost of $ 213.2 million and $ 234.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

Three Months Ended September 30,

(In thousands)

Net (losses) gains recognized on equity securities

Net (losses) gains recognized on equity securities sold during the period

Unrealized (losses) gains recognized on equity securities still held

Nine Months Ended September 30,

billion at March 31, 2026 and $ 1.87 billion at December 31, 2025, were pledged to secure public deposits and for other purposes required or

permitted by law.

Additionally, at March 31, 2026 and December 31, 2025, AFS and HTM securities with an amortized cost of $ 215.0 million

and $ 207.6 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following table sets forth information with regard to gains and (losses) on equity securities:

Three Months Ended

(In thousands)

2 unchanged sentences

Unrealized gains (losses) recognized on equity securities still held

As of September 30, 2025 and December 31, 2024, the carrying value of equity securities without

readily determinable fair values was $ 1.0 million.

The Company performed a qualitative assessment to determine whether the investments

were impaired and identified no areas of credit concern as of September 30, 2025 and 2024.

There were no impairments, or downward or

upward adjustments recognized for equity securities without readily determinable fair values during the three and nine months ended September 30, 2025 and 2024.

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2025:

As of March 31, 2026 and December 31, 2025 the carrying value of equity securities without readily determinable fair values was $ 1.0 million.

The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of credit concern as of March 31, 2026

There were no impairments, or downward or upward adjustments recognized for equity securities without readily determinable

fair values during the three months ended March 31, 2026 and 2025.

The following table sets forth information with regard to contractual maturities of debt securities at March 31, 2026:

(In thousands)

11 unchanged sentences

Total HTM debt securities

of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives.

Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases,

borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives.

Actual maturities may

differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations, with or without call or prepayment penalties.

Except for U.S.

government securities and government-sponsored enterprises securities , there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at September 30, 2025 and

December 31, 2024.

government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at March 31, 2026 and December 31, 2025.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded,

3 unchanged sentences

(In thousands)

As of September 30 , 2025

As of March 31, 2026

AFS securities:

23 unchanged sentences

Total securities with unrealized losses

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024, which consisted of 359 and 401 individual securities,

The Company does not believe the AFS securities that were in an unrealized loss position as of March 31, 2026 and December 31, 2025, which consisted of 370 and 350 individual securities,

respectively, represented a credit loss impairment.

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly.

As of September 30, 2025 and December 31, 2024, the majority of the AFS

As of March 31, 2026 and December 31, 2025, the majority of the AFS

securities in an unrealized loss position consisted of debt securities issued by U.S.

9 unchanged sentences

AIR on AFS debt securities totaled $ 5.0

million and $ 4.4 million at September 30, 2025 and December 31, 2024, respectively, and is excluded from the estimate of credit losses and

million and $ 5.6 million at March 31, 2026 and December 31, 2025, respectively, and is excluded from the estimate of credit losses and

reported in the other assets financial statement line.

None of the Bank’s HTM debt securities were past due

or on nonaccrual status as of September 30, 2025 and December 31, 2024.

There was no accrued interest reversed against interest income

for the three and nine months ended September 30, 2025 or the year ended December 31, 2024 as all securities remained in accrual status.

In addition, there were no collateral-dependent HTM debt securities as of September 30, 2025 and December 31, 2024.

allowance for credit losses on HTM securities as of September 30, 2025 and December 31, 2024.

As of September 30, 2025 and December 31, 2024, 66 %

or on nonaccrual status as of March 31, 2026 and December 31, 2025.

There was no accrued interest reversed against interest income for

the three months ended March 31, 2026 or the year ended December 31, 2025 as all securities remained in accrual status.

In addition, there were no

collateral-dependent HTM debt securities as of March 31, 2026 and December 31, 2025.

There was no allowance for credit losses on HTM securities as of March 31, 2026 and December 31, 2025.

As of March 31, 2026 and December 31,

2025, 65 % of the Company’s HTM debt securities were issued by U.S.

government agencies or U.S.

government-sponsored enterprises with bond ratings of A to AAA.

government-sponsored enterprises with

bond ratings of A to AAA.

These securities carry the explicit and/or implicit guarantee of the U.S.

government, which are

widely recognized as “risk-free” and have a long history of zero credit losses.

Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2025 and December 31, 2024.

The remaining HTM debt

securities at September 30, 2025 and December 31, 2024 were comprised of state and municipal obligations with bond ratings of A to AAA excluding the $ 79.2

million and $ 84.7 million, respectively, of local municipal bonds which are not rated.

Based on the Company’s current expected credit

losses (“CECL”) methodology, the expected credit loss on the HTM municipal bond portfolio was deemed immaterial, therefore no allowance for credit loss was recorded as of September 30, 2025 and December 31, 2024.

AIR on HTM debt securities totaled $ 3.6 million at September 30, 2025 and $ 4.4

million at December 31, 2024 and is excluded from the estimate of credit losses and reported in the other assets financial statement

government, which are widely recognized as “risk-free” and have a long history of zero credit losses.

Therefore, the Company did not record an

allowance for credit losses for these securities as of March 31, 2026 and December 31, 2025.

The remaining HTM debt securities at March 31, 2026 and December 31, 2025 were comprised of state and municipal obligations with bond ratings of A to AAA

excluding the $ 88.5 million and $ 85.7 million, respectively, of local municipal bonds which are not rated.

Based on the Company’s current expected credit losses (“CECL”)

methodology, the expected credit loss on the HTM municipal bond portfolio was deemed immaterial, therefore no allowance for credit loss was recorded as of March 31, 2026 and December 31, 2025.

AIR on HTM debt securities totaled $ 3.9 million at March 31, 2026 and December 31, 2025 and is excluded from the estimate of credit losses and reported in the other assets financial statement line .

A summary of loans, net of deferred fees and origination costs, by category (1) is as follows:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

8 unchanged sentences

$( 34.6 ) million and $( 37.9 )

million at September 30, 2025 and December 31, 2024, respectively.

million at March 31, 2026 and December 31, 2025, respectively.

Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $ 139.0 million

at September 30, 2025, compared to $ 116.0 million at December 31, 2024.

The allowance for credit losses as a percentage of loans was 1.20 % at September 30, 2025, compared to 1.16 %

The allowance for credit losses

totaled $ 138.6 million at March 31, 2026, compared to $ 138.0 million at

December 31, 2025.

The allowance for credit losses as a percentage of loans was 1.20 % at March 31, 2026, compared to 1.19 % at December 31, 2025.

The allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions

under each scenario utilized in the measurement.

For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis.

The Company considers a baseline, upside and

downside economic forecast in measuring the allowance.

From the second quarter of 2025 through the fourth 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 impacted the economy.

The quantitative model as of March 31, 2026 incorporated a baseline economic outlook along with alternative upside and

downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model.

At March 31, 2026, the weightings were 60%, 5% and 35% for the baseline, upside and downside economic forecast scenarios,

respectively.

The baseline outlook reflected an economic environment where the northeast unemployment rate decreases from 4.6% in the second quarter of 2026 to 4.56% by the end of the forecast period, with a peak northeast unemployment rate of 4.6%

in the third quarter of 2026.

National Gross Domestic Product (“GDP”) annualized growth (on a quarterly basis) is expected to start the second quarter of 2026 at approximately 2.75% and decrease to 1.72% by the end of the forecast period.

assumptions in the baseline economic outlook included the Federal Reserve cutting rates with two 25 basis point cuts at the June and September 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 4.6% in the first quarter of 2026 to 3.7% in the second quarter of 2027 and eventually settles at 3.8% by the end of the forecast period.

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

Under this scenario, northeast unemployment rises from 4.6% in the first quarter of 2026 to a peak of 7.8% in the second

quarter of 2027.

The alternative downside stagflation scenario was removed in the first quarter of 2026 following a recalibration of the scenario’s narrative and model by the reputable third-party, which no longer provided a relevant stagflation

These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of March 31, 2026.

Additional qualitative adjustments were made for factors not incorporated in the forecasts

or the model, such as loss rate expectations for certain loan pools and recent trends in asset value indices.

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

The quantitative model as of December 31, 2025 incorporated a baseline economic

outlook along with 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 December 31,

allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement.

For periods beyond the 6-quarter forecast, the model reverts to

long-term economic conditions over a 4-quarter reversion period on a straight-line basis.

The Company considers a baseline, upside and downside economic forecast in measuring the allowance.

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 impact the

The quantitative model as of September 30, 2025 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.

The baseline 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 2026.

National Gross Domestic Product (“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.

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

The baseline outlook reflected an economic environment where the northeast unemployment rate increases from 4.5% in the first

quarter of 2026 to 4.8% by the end of the forecast period, with a peak northeast unemployment rate of 4.9% in the fourth quarter of 2026.

National GDP annualized growth (on a quarterly basis) is expected to start the first quarter of 2026 at

approximately 2.55% and decrease to 1.8% by the end of the forecast period.

Key assumptions in the baseline economic outlook included the Federal Reserve cutting rates with one 25 basis point cut at the December meeting 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 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.

Under this scenario, northeast unemployment falls from 4.4% in the fourth quarter of 2025 to 4.0% in the second 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

in the third quarter of 2025 to a peak of 7.8% in the fourth quarter of 2026.

4.4% in the fourth quarter of 2025 to a peak of 7.8% in the first quarter of 2027.

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.

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.

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

The quantitative model as of June 30, 2025 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 June 30, 2025, the weightings were 70%, 5% and 25% for the baseline, upside and downside economic forecast scenarios,

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.

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.

Additional monitoring for industry

concentrations, loan growth and policy exceptions was also conducted.

The quantitative model as of December 31, 2024 incorporated a baseline

economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model.

At December 31, 2024, the weightings were 80% and 20% for the baseline and

downside economic forecasts, respectively.

The baseline outlook reflected a Northeast unemployment rate environment starting at 4.1% and increasing slightly during the forecast period to 4.2%.

Northeast GDP’s annualized growth (on a quarterly

basis) is expected to start the first quarter of 2025 at approximately 3.8% before decreasing to a low of 2.6% in the third quarter of 2025 and then increasing to 3.9% by the end of the forecast period.

Key assumptions in the baseline

economic outlook included two 25 basis point federal funds rate cuts in 2025, quantitative tightening ending in early 2025, a post-election fiscal outlook with lower spending, lower taxes, and higher tariffs, and the economy currently being

near full employment.

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

Under this scenario, Northeast unemployment increases to a peak of 7.5% in the first quarter of 2026.

These scenarios

and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2024.

Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model,

such as loss rate expectations for certain loan pools, considerations for inflation and recent trends in asset value indices.

from 4.4% in the fourth quarter of 2025 to 6% by the end of the forecast period in the second quarter of 2027, with a peak northeast unemployment rate of 8.2% in the first quarter of 2028.

These scenarios and their respective weightings are evaluated

at each measurement date and reflect management’s expectations as of December 31, 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.

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

There were $ 336.4 million of PCD loans acquired from

Evans during the nine months ended September 30, 2025 which resulted in an allowance for credit losses at acquisition of $ 7.7

There were no loans purchased with credit deterioration during the year ended December 31, 2024.

During the nine months

ended September 30, 2025, the Company purchased $ 13.2 million of residential loans at a 4.7 % premium with a $ 145 thousand allowance for credit losses

recorded for these loans.

There were no loans purchased with credit deterioration during the three months ended

March 31, 2026.

There were $ 336.4 million of purchased credit deteriorated (“PCD”) loans acquired from Evans Bancorp, Inc.

during the year ended December 31, 2025, which resulted in an allowance for credit losses at acquisition of $ 7.7 million.

three months ended March 31, 2026, the Company purchased $ 4.6 million of residential loans at a 4.5 % premium with a $ 47 thousand

allowance for credit losses recorded for these loans.

During 2025, the Company purchased $ 21.3 million of residential loans at a 4.5 % premium with a $ 234 thousand

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The Company made a policy election to report AIR in the other assets line item on the consolidated balance sheets.

AIR on loans totaled $ 41.8 million at September 30, 2025 and $ 34.8 million at December 31, 2024

and with no estimated allowance for credit losses related to AIR as of September 30, 2025 and December 31, 2024 as it is excluded from amortized cost.

The following tables present the activity in the allowance for credit losses by our portfolio segments:

(In thousands)

Balance as of June 30, 2025

Ending balance as of September 30, 2025

Balance as of June 30, 2024

Ending balance as of September 30 , 2024

AIR on loans totaled $ 41.3 million at

March 31, 2026 and $ 42.5 million at December 31, 2025 and with no estimated allowance for credit losses related to AIR at March 31, 2026 and December 31, 2025 as it is excluded from amortized cost.

The following table presents the activity in the allowance for credit losses by our

portfolio segments:

(In thousands)

Balance as of December

Allowance for credit loss on PCD acquired loans

Ending balance as of September 30 , 2025

Ending Balance as of March 31 , 2026

Balance as of December 31, 2024

Ending balance as of September 30 , 2024

The allowance for credit losses as of September 30, 2025 increased compared to the allowance estimates as of December 31, 2024 and September 30, 2024 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.

In addition, the allowance for credit losses increased due to deterioration in the economic forecast including the change in the

forecast scenarios and weightings, 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 decreased

slightly compared to the allowance estimates as of June 30, 2025 primarily due to a decrease in loan balances partially offset by the change in the forecast scenarios weightings.

Ending Balance as of March 31 , 2025

The allowance for credit losses as of March 31, 2026 increased compared to December 31, 2025 primarily due to

the change in forecast scenario weightings and the establishment of specific reserves for newly identified individually evaluated loans.

These increases to the allowance for credit losses were partially offset by improvements in the economic

forecast, model adjustments, and changes in loan composition and balances, including reductions driven by other consumer and residential solar portfolios that are in a planned run-off status.

First quarter 2026 model adjustments lowered the

allowance, as updates from the annual model review and recalibration process incorporated recent delinquency and loss experience which reflected improved default estimates across most portfolio segments.

The allowance for credit losses as of March

31, 2026 increased compared to March 31, 2025 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-purchased credit deteriorated (“non-PCD”) allowance

recognized through the provision for loan losses and the $ 7.7 million of PCD allowance reclassified from loans.

Individually Evaluated Loans

The threshold for evaluating classified, Commercial & Industrial (“C&I”) and Commercial Real Estate (“CRE”) loans risk graded substandard or doubtful, and

nonperforming loans specifically evaluated for individual credit loss is $ 1.0 million.

As of September 30, 2025, seven relationships with an amortized cost basis of $ 16.0

million, including six acquired relationships from Evans, were identified for individual credit loss evaluation.

These relationships

were in nonaccrual status with no allowance for credit loss.

As of December 31, 2024, three relationships were identified for individual credit loss evaluation, had an amortized cost basis of $ 28.8 millio n and were

in nonaccrual status with no allowance for credit loss.

decrease in the amortized cost basis of individually evaluated loans from December 31, 2024 to September 30, 2025 was primarily attributed to the three

relationships resolving through payoff or transfer to other assets in the second quarter of 2025, partially offset by the addition of the previously mentioned six acquired relationships from Evans which had an amortized cost basis of $ 13.9

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

The threshold for evaluating commercial loans risk graded substandard or doubtful, and nonperforming loans specifically evaluated for individual credit

loss is $ 1.0 million.

As of March 31, 2026, eight relationships were identified for individual credit loss evaluation with an amortized cost basis of $ 26.1 million, with $ 3.6 million of allowance for credit loss.

As of March 31, 2026, there were $ 16.1

million of loans in nonaccrual status that were specifically evaluated for individual credit loss with no allowance for credit loss as the fair value of the underlying collateral supported the amortized cost.

As of December 31, 2025, five relationships with an amortized cost basis of $ 12.2 million were identified for individual credit loss evaluation.

These relationships were in nonaccrual status and with no allowance for credit loss as the fair value of the underlying

collateral supported the amortized cost.

The following tables set forth information with regard to past due and nonperforming

loans by loan segment:

(In thousands)

As of September 30 , 2025

As of March 31 , 2026

Commercial loans:

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Credit Quality Indicators

The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk, focusing on, among

other things, borrower’s financial strength, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and industry outlook.

The internal grading system enables the Company to

monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, which facilitates recognition of and response to problem loans and potential problem loans.

The Company has developed an internal loan grading system to evaluate and quantify

the Company’s loan portfolio with respect to quality and risk, focusing on, among other things, borrower’s financial strength, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the

business and industry outlook.

The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, which facilitates recognition of and

response to problem loans and potential problem loans.

Commercial Grading System

For C&I and CRE loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available.

This includes comparison of

financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages.

Some grading factors are necessarily

more subjective such as economic and industry factors, regulatory environment and management.

C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

Doubtful - A Doubtful loan has a high probability of total or substantial loss, but because of

specific pending events that may strengthen the asset, its classification as a loss is deferred.

Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity.

events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing.

Generally, pending events should be resolved within a relatively short period

and the ratings will be adjusted based on the new information.

Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard - Substandard loans have a high probability of payment default or they have other

well-defined weaknesses.

For Commercial & Industrial (“C&I”) and Commercial Real Estate (“CRE”)

loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available.

This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and

conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages.

Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management.

and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

- A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred.

Doubtful borrowers are usually in default, lack adequate

liquidity or capital and lack the resources necessary to remain an operating entity.

Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral

and refinancing.

Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information.

Nonaccrual treatment is required for Doubtful assets because of the high probability of

Substandard - Substandard loans have a high probability of payment default or they have other well-defined weaknesses.

They require more intensive supervision by bank management.

Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal

capitalization.

Substandard loans are generally characterized by

current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization.

Repayment may depend on collateral or other credit risk mitigants.

For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual.

Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention - Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date.

loans pose elevated risk, but their weakness does not yet justify a Substandard classification.

Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance

sheet (i.e., increasing inventory without an increase in sales, high leverage and/or tight liquidity).

Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention

Although a Special Mention loan has a higher PD than a Pass asset, its default is not imminent.

Pass - Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special

For some Substandard loans, the likelihood of full

collection of interest and principal may be in doubt and those loans should be placed on nonaccrual.

Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be

distinct for the asset to be rated Substandard.

Mention - Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date.

These loans pose elevated risk, but their weakness does

not yet justify a Substandard classification.

Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase

in sales, high leverage and/or tight liquidity).

Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating.

Although a Special Mention loan has a higher

probability of default than a Pass asset, its default is not imminent.

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention.

Pass loans are in compliance with loan covenants and payments are generally made as agreed.

Pass loans range from superior quality to fair quality.

Pass loans also include any portion of a government guaranteed loan, including Paycheck

Protection Program loans.

Pass loans also include any portion of a government guaranteed loan.

Consumer and Residential Grading System

Consumer and Residential loans are graded as either Nonperforming or Performing.

Nonperforming - Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing - All loans not meeting any of the above criteria are considered Performing.

The following tables illustrate the Company’s credit quality by loan class by vintage and includes gross charge-offs by loan class by vintage.

Included in other consumer gross charge-offs for the nine months ended September 30, 2025, the

Company recorded $ 0.3 million in overdrawn deposit accounts reported as 2024 originations and $ 0.5 million in overdrawn deposit accounts reported as 2025 originations.

Included in other consumer gross charge-offs for the year ended December 31, 2024, the Company

recorded $ 0.2 million in overdrawn deposit accounts reported as 2023 originations and $ 0.7 million in overdrawn deposit accounts reported as 2024 originations .

Nonperforming - Nonperforming loans are

loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing - All loans not meeting any of

the above criteria are considered Performing.

The following

tables illustrate the Company’s credit quality by loan class by vintage and includes gross charge-offs by loan class by vintage.

Included in other consumer gross charge-offs for the three months ended March 31, 2026, the Company recorded $ 0.4 million in overdrawn deposit accounts reported as 2025 originations.

Included in other consumer gross charge-offs for the year ended December 31,

2025, the Company recorded $ 0.3 million in overdrawn deposit accounts reported as 2024 originations and $ 0.8 million in overdrawn deposit accounts reported as 2025 originations.

(In thousands)

As of September 30 , 2025

As of March 31 , 2026

By internally assigned grade:

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Nonperforming

Current-period gross charge-offs

Current-period

gross charge-offs

Residential solar

14 unchanged sentences

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The allowance for

credit losses on unfunded commitments totaled $ 5.9 million as of September 30, 2025, compared to $ 4.4 million as of December 31, 2024.

The reserve for unfunded loan commitments was $( 0.3 ) million for the three months ended September 30, 2025, compared to $ 0.3

million for the three months ended September 30, 2024 and was recorded within other noninterest expense in the unaudited interim consolidated statements of income.

The reserve for unfunded loan commitments was $ 1.5 million for the nine months ended September 30, 2025, compared to $( 0.6 ) million for the nine months ended September 30, 2024, and was recorded within other noninterest expense in the unaudited interim consolidated statements of income.

Included in the

reserve for unfunded loan commitments for the nine months ended September 30, 2025, was $ 0.5 million of acquisition-related provision for

unfunded loan commitments due to the Evans acquisition.

The increase for the nine months ended September 30, 2025 is primarily related to increases in pipeline exposure and the Evans acquisition.

Loan Modifications to Borrowers Experiencing Financial Difficulties

When the Company modifies a loan with financial difficulty, such modifications generally include one or a combination of

the following:

an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk;

The allowance for credit losses on unfunded commitments totaled $ 5.5 million as of March 31, 2026, compared to $ 5.8

million as of December 31, 2025.

The reserve for unfunded loan commitments was $ ( 0.3 ) million for the three months ended March 31, 2026, compared to $ 0.1 million for the three months

ended March 31, 2025 and was recorded within other noninterest expense in the unaudited interim consolidated statements of income.

Modifications to Borrowers Experiencing Financial Difficulties

When the Company modifies a loan with financial difficulty, such modifications generally include one or a combination of the following:

an extension of the maturity

a stated rate of interest lower than the current market rate for new debt with similar risk;

a change in scheduled payment amount;

or principal forgiveness.

The following tables show the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty,

disaggregated by class of financing receivable and type of concession granted:

Three Months Ended September 30, 2025

Term Extension

(Dollars in thousands)

% of Total Class

Three Months Ended September 30, 2024

Term Extension

Combination - Term

Extension and Interest Rate

(Dollars in thousands)

% of Total Class

Nine Months Ended September 30, 2025

The following tables show the amortized cost basis at the end of the reporting period of the loans modified to borrowers

experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

Three Months Ended March 31, 2026

Term Extension

Combination - Term

Extension and Interest Rate

(Dollars in thousands)

% of Total Class

Nine Months Ended September 30, 2024

Amortized Cost

% of Total Class of

Financing Receivables

Three Months Ended March 31, 2025

Term Extension

Combination - Term

Extension and Interest Rate

(Dollars in thousands)

% of Total Class

The following tables describe the financial effect of the modifications made

to borrowers experiencing financial difficulties:

Three Months Ended September 30, 2025

Term Extension

Added a weighted-average 1.6 years to the life of loans, which reduced

monthly payment amounts for the borrowers

Three Months Ended September 30, 2024

Term Extension

Interest Rate Reduction

Added a weighted-average 8.2 years to the life of loans, which reduced monthly payment

amounts for the borrowers

Interest Rates were reduced by an average of 0.25 %

Nine Months Ended September 30, 2025

Amortized Cost

% of Total Class of

Financing Receivables

The following tables describe the financial effect of the modifications made to

borrowers experiencing financial difficulties:

Three Months Ended March 31, 2026

Term Extension

Interest Rate Reduction

Added a weighted-average 5.6 years to the life of loans, which reduced

monthly payment amounts for the borrowers

Interest Rates were reduced by an average of 0.62 %

Nine Months Ended September 30, 2024

Added a weighted-average 6.2

years to the life of loans, which reduced monthly payment amounts for the borrowers.

Three Months Ended March 31, 2025

Term Extension

Interest Rate Reduction

Added a weighted-average 6.5 years to the life of loans, which reduced monthly payment

amounts for the borrowers

Interest Rates were reduced by an average of 0.63 %

There were no financing receivables that had a payment default during the three months ended September 30, 2025 and 2024, that were modified to

borrowers experiencing financial difficulty in the twelve months prior to the default.

During the nine months ended September 30, 2025 and 2024 there were $ 59 thousand and $ 171 thousand, respectively, of Residential

financing receivables with term extension modifications that had payment defaults during the period, that were modified to borrowers experiencing financial difficulty in the twelve months prior to the default.

The following table depicts the performance of loans that have been modified to borrowers experiencing financial difficulty that were modified in

the prior twelve months:

Added a weighted-average 5.2 years to the life of

loans, which reduced monthly payment amounts for the borrowers.

were no financing receivables that had payment defaults during the three months ended March 31, 2026 that were modified to borrowers

experiencing financial difficulty in the twelve months prior to the default.

During the three months ended March 31, 2025, there were $ 59

thousand of residential financing receivables with term extension modifications that had payment defaults during the period, that were modified to borrowers experiencing financial difficulty in the twelve months prior to the default.

The following tables

depict the performance of loans that have been modified to borrowers experiencing financial difficulty that were modified in the prior twelve months:

Payment Status (Amortized Cost Basis)

2 unchanged sentences

Days Past Due

As of September 30, 2025

As of March 31, 2026

Payment Status (Amortized Cost Basis)

2 unchanged sentences

Days Past Due

As of September 30, 2024

As of March 31, 2025

Short-Term Borrowing s

addition to the liquidity provided by balance sheet cash flows, liquidity must also be supplemented with additional sources such as credit lines from correspondent banks as well as borrowings from the Federal Home Loan Bank (“FHLB”) and the

1 unchanged sentence

Other funding alternatives may also be appropriate from time to time, including wholesale and retail repurchase agreements and brokered certificate of deposit accounts.

Information related to short-term

borrowings is summarized as follows:

related to short-term borrowings is summarized as follows:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

Securities sold under repurchase agreements

Other short-term borrowings

Total short-term borrowings

Note 4 for additional information regarding securities pledged as collateral for securities sold under the repurchase agreements.

Subordinated Debt

On June 23, 2020, the Company issued $ 100.0 million

aggregate principal amount of 5.00 % fixed-to-floating rate subordinated notes due 2030.

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 Secured Overnight Financing Rate (“ SOFR ”) plus a spread of 4.85 %, payable quarterly in arrears

commencing on October 1, 2025.

The subordinated notes issuance costs of $ 2.2 million were amortized on a straight-line basis into

interest expense over five years .

The subordinated notes were redeemable (1) in whole or in part beginning with the interest payment date of July 1, 2025, and on any interest payment date

thereafter or (2) in whole but not in part upon the occurrence of a “Tax Event”, a “Tier 2 Capital Event” or in the event the Company was required to register as an investment company pursuant to the Investment Company Act of 1940, as amended.

The redemption price for any redemption was 100 % of the principal amount of the subordinated notes being redeemed, plus accrued and

unpaid interest thereon to, but excluding, the date of redemption.

Any redemption of the subordinated notes was subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent required under

applicable laws or regulations, including capital regulations.

The Company repurchased $ 2.0 million of the subordinated notes during

the year ended December 31, 2022 at a discount of $ 0.1 million.

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, have a maturity date of March 31, 2031 and 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.

The subordinated notes are redeemable, without penalty, on or after March 31, 2026 and, in certain limited circumstances, prior to that date.

As of the acquisition date, the fair value

discount was $ 3.0 million.

Subordinated notes assumed in connection with the Evans acquisition included $ 20.0 million of 6.00 % fixed-to-floating rate subordinated notes due 2030.

The subordinated notes,

which qualified as Tier 2 capital, bore interest at an annual rate of 6.00 %, payable semi-annually in arrears commencing on January

15, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 5.90 %, payable quarterly in arrears

commencing on July 15, 2025.

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

The following table summarizes the Company’s subordinated debt:

(Dollars in thousands)

September 30, 2025

December 31, 2024

Subordinated notes issued June 2020 - fixed interest rate of 5.00 %

through June 2025 and a variable interest rate equivalent to three-month SOFR plus 4.85 % thereafter, maturing July 1, 2030

Subordinated notes issued March 2021 and acquired August 2023 - fixed interest rate of 3.50 % through June 2026 and a variable interest rate equivalent to three-month

SOFR plus 2.80 % thereafter, maturing March 31, 2031

Subtotal subordinated notes

Unamortized debt issuance costs and unamortized fair value discount

Total subordinated debt, net

Defined Benefit Post-Retirement Plans

Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”) covering substantially all of its employees at September 30, 2025.

Benefits paid from the Plan are based on age, years of service, compensation and social

security benefits and are determined in accordance with defined formulas.

The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards.

Assets of the Plan are invested in publicly traded

stocks, bonds and mutual funds.

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”) covering substantially all of its employees at March 31, 2026.

Benefits paid from

the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas.

The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974

Assets of the Plan are invested in publicly traded stocks, bonds and mutual funds.

In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives.

These supplemental employee retirement plans and the Plan are collectively referred to

herein as “Pension Benefits.”

In addition, the Company provides certain health care benefits for retired

These supplemental employee

retirement plans and the Plan are collectively referred to herein as “Pension Benefits.”

In addition, the Company provides certain health care benefits for retired employees.

Benefits were accrued over the employees’ active service period.

Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits.

These post-retirement benefits

are referred to herein as “Other Benefits.”

In connection with the Evans acquisition, the Company assumed the non-contributory, qualified, defined benefit pension plan and the nonqualified supplemental executive retirement

Effective May 2, 2025, the Evans defined benefit pension plan was merged into the Plan.

The merging of the plans required a valuation as of the merger date and resulted in a $ 0.9 million adjustment to AOCI.

The merging of the plans did not have a significant impact on the Company’s financial statements and related footnotes.

Only employees

that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits.

These post-retirement benefits are referred to herein as “Other Benefits.”

Accounting standards require an employer to:

(1) recognize the overfunded or

underfunded status of defined benefit post-retirement plans, which is measured as the difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet;

(2) recognize changes in that funded

status in the year in which the changes occur through comprehensive income;

and (3) measure the defined benefit plan assets and obligations as of the date of its year-end balance sheet.

The Company made no voluntary contributions to the

Pension Benefits and Other Benefits plans during the three and nine months ended September 30, 2025 and 2024.

(1) recognize the overfunded or underfunded status of defined benefit post-retirement plans, which is measured as the

difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet;

(2) recognize changes in that funded status in the year in which the changes occur through comprehensive income;

and (3) measure

the defined benefit plan assets and obligations as of the date of its year-end balance sheet.

The Company made no voluntary contributions to the Pension Benefits and Other Benefits plans during the three months ended March 31, 2026 and 2025.

The components of expense for Pension Benefits and Other Benefits are set forth below:

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Other Benefits

Three Months Ended September 30,

(In thousands)

Components of net periodic cost (benefit):

Interest cost

Expected return on plan assets

Net amortization

Total net periodic cost (benefit)

Pension Benefits

Other Benefits

Nine Months Ended September 30,

Three Months Ended

(In thousands)

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Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to

common stockholders by the weighted average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into

common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive restricted stock units and stock options).

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares

outstanding for the period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared

in the earnings of the entity (such as the Company’s dilutive restricted stock units).

The following is a reconciliation of basic and diluted EPS for the periods presented in the unaudited interim consolidated statements of income:

Three Months Ended

September 30,

(In thousands, except per share data)

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Net income available to common stockholders

Nine Months Ended

September 30,

(In thousands, except per share data)

Weighted average common shares outstanding

Net income available to common stockholders

Weighted average common shares outstanding

Dilutive effect of common stock options and restricted stock

Weighted average common shares and common share equivalents

Net income available to common stockholders

There was a nominal number of anti-dilutive

stock options and restricted stock outstanding for the nine months ended September 30, 2024, that were not considered in the calculation of diluted EPS.

Reclassification Adjustments Out of Other Comprehensive Income (Loss)

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(In thousands)

September 30, 2025

September 30, 2024

AFS securities:

Amortization of unrealized gains related to securities transfer

Interest income

Income tax (benefit)

Pension and other benefits:

Amortization of net losses

Other noninterest expense

Amortization of prior service costs

Other noninterest expense

Income tax (benefit)

Total reclassifications, net of tax

Detail About AOCI Components

Amount Reclassified from AOCI

Affected Line item in the

Consolidated Statements of

Comprehensive Income (Loss)

Nine Months Ended

(In thousands)

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

AFS securities:

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The Company is exposed to certain risks arising from both its business operations and economic conditions.

The Company principally manages its exposures to a wide

variety of business and operational risks through management of its core business activities.

The Company manages economic risks, including interest rate risk, primarily by managing the amount, sources and duration of its assets and liabilities and

through the use of derivative instruments.

Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash

amounts, the value of which is determined by interest rates.

Generally, the Company may use derivative financial instruments to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or

expected cash payments.

Currently, the Company has interest rate derivatives resulting from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.

The Company manages economic risks, including interest rate risk, primarily by managing the amount, sources

and duration of its assets and liabilities and through the use of derivative instruments.

Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt

or payment of future known and uncertain cash amounts, the value of which is determined by interest rates.

Generally, the Company may use derivative financial instruments to manage differences in the amount, timing and duration of the Company’s

known or expected cash receipts and its known or expected cash payments.

Currently, the Company has interest rate derivatives resulting from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate

risk in the Company’s assets or liabilities.

The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

Derivatives Not Designated as Hedging Instruments

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As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.

As of September 30, 2025 and December 31, 2024, the Company had twenty-two and twenty participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans.

Risk participation agreements provide credit

protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation.

The Company enters into both risk participation agreements in which it purchases credit protection from other

financial institutions and those in which it provides credit protection to other financial institutions.

T he following table summarizes the derivatives outstanding:

As of March 31, 2026 and December 31, 2025, the Company had twenty-four and twenty-two risk

participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans.

Risk participation agreements provide credit protection to the financial institution that originated the swap

transaction should the borrower fail to perform on its obligation.

The Company enters into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection

to other financial institutions .

The following table summarizes the derivatives outstanding:

(In thousands)

As of September 30 , 2025

Balance Sheet

As of March 31 , 2026

Derivatives not designated as hedging instruments

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Net derivative amounts

Netting adjustments represent the

amounts recorded to convert derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives.

The CME legally characterizes the

variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral .

Cash collateral represents the amount that cannot be used to offset our

derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

The other collateral consists of securities and is exchanged under bilateral collateral and master netting

agreements that allow us to offset the net derivative position with the related collateral.

The application of the other collateral cannot reduce the net derivative position below zero.

Therefore, excess other collateral, if any, is not

reflected above.

The following table indicates the gain or loss recognized in income on

derivatives not designated as a hedging relationship:

Three Months Ended September 30,

Months Ended September 30,

Netting adjustments

represent the amounts recorded to convert derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives.

The CME legally

characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral.

Cash collateral

represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

The other collateral consists of securities and is

exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral.

The application of the other collateral cannot reduce the net derivative position

Therefore, excess other collateral, if any, is not reflected above.

The following table

indicates the gain or loss recognized in income on derivatives not designated as a hedging relationships:

Three Months Ended

(In thousands)

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Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either

directly or indirectly, for substantially the full term of the asset or liability;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly

or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no

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Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).

Other investment securities

are reported at fair value utilizing Level 1 and Level 2 inputs.

The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases

and sales of investment securities.

Other investment securities are

reported at fair value utilizing Level 1 and Level 2 inputs.

The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and

sales of investment securities.

Prices obtained from these sources include prices derived from market quotations and matrix pricing.

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash

flows, the U.S.

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Management reviews the methodologies used by its

third-party providers in pricing the securities.

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.

Management reviews the methodologies used by its third-party

providers in pricing the securities.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions.

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(In thousands)

September 30, 2025

March 31, 2026

AFS securities:

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for expected credit losses and HTM securities.

Loans with fair value of $ 16.0 million as of September 30, 2025 were individually

evaluated for expected credit losses where the amortized cost was adjusted to fair value.

Loans with fair value of $ 28.8 million as of

December 31, 2024 were individually evaluated for expected

credit losses where the amortized cost was adjusted to fair value.

The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans.

The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10 % to 50 % .

Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified

Loans with fair value of $ 19.0 million as of March 31, 2026 were individually evaluated for

expected credit losses where the amortized cost was adjusted to fair value.

Loans with fair value of $ 12.2 million as of December 31,

2025 were individually evaluated for expected credit losses

where the amortized cost was adjusted to fair value.

A s of March 31, 2026 the Company had collateral dependent individually evaluated loans with a carrying value of $ 26.1

million, which had an estimated allowance for credit loss of $ 3.6 million.

As of December 31, 2025 the Company had no collateral dependent loans.

The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for

credit losses for individually evaluated collateral dependent loans.

The appraisals may be adjusted by management for qualitative factors such as economic conditions and

estimated liquidation expenses ranging from 10 % to 50 % .

Based on the valuation techniques used, the

fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.

The following table sets forth information with regard to estimated fair values of financial instruments.

This table excludes financial instruments for which the

carrying amount approximates fair value.

Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, AIR, non-maturity deposits, short-term borrowings, accrued

interest payable and derivatives.

September 30, 2025

This table excludes financial instruments for which the carrying

amount approximates fair value.

and derivatives.

March 31, 2026

December 31, 2025

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instrument and its value has not been incorporated into the fair value estimates.

Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in

the market and premises and equipment.

Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the

market and premises and equipment.

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

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Treasury yield curve, live trading levels, trade execution data, market

consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.

Net Loans - Net loans include portfolio loans and loans held for sale.

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approach that applies prevailing market interest rates for similar maturity instruments.

Subordinated Debt - The fair value of subordinated debt has been measured using the

observable market price as of the period reported.

Junior Subordinated Debt - The fair value of junior subordinated debt has been estimated

using a discounted cash flow analysis.

Subordinated Debt - The fair value of subordinated debt has been measured using the observable

market price as of the period reported.

Junior Subordinated Debt - The fair value of junior subordinated debt has been estimated using

a discounted cash flow analysis.

Commitments and Contingencies

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Collateral may be obtained based on management’s assessment of the customer’s creditworthiness.

Commitments to extend credit and unused lines of credit totaled $ 3.28 billion at September 30, 2025 and $ 2.84 billion at December 31, 2024.

Commitments to extend credit and unused lines of credit totaled $ 3.41 billion and $ 3.40 billion at March 31, 2026 and December 31, 2025, respectively.

Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract

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Standby letters of credit totaled $ 63.6

million at September 30, 2025 and $ 50.8 million at December 31,

A s of September 30, 2025 and December 31, 2024 , the fair value of the Company’s standby letters of credit was not significant.

million at March 31, 2026 and $ 58.5 million at December 31, 2025.

A s of March 31, 2026 and December 31, 2025 , the fair value of the Company’s standby letters of credit was not significant.

In the normal course of business there are various outstanding legal proceedings.

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Segment Reporting

Historically, the Company has operated as a single reportable segment, providing a

full range of banking services to retail and commercial customers.

However, in accordance with ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , and as the Bank has

grown, management reassessed its operating segment structure to enhance transparency in how financial performance is evaluated and resources are allocated by the chief operating decision maker (“CODM”).

The updated guidance enhances disclosures by

requiring more detailed information on segment profitability and certain key performance metrics used by management.

Management assesses its operating segment structure to enhance transparency in how

financial performance is evaluated and resources are allocated by the chief operating decision maker (“CODM”).

Segments are components of an enterprise that are regularly evaluated by the CODM to allocate resources and assess performance.

Company’s CODM is its Chief Executive Officer.

As a result of this reassessment, beginning with the fiscal year ended December

31, 2024, the Company has determined that it now operates through two reportable segments:

Banking - Provides commercial banking, retail banking, and wealth management services primarily to customers in its market area, offering a broad array of banking and financial services to retail,

commercial, and municipal customers.

Included in Banking are the revenue and expenses from the wealth management business and the parent holding company.

The parent company’s principal activities include the direct and indirect ownership of

banking and non-banking subsidiaries, as well as the issuance of debt and equity.

The parent company’s principal sources of revenue are the management fees and dividends it receives from its subsidiaries.

Banking also includes corporate shared

service costs such as the majority of equity compensation expense, as well as other general and administrative shared services costs including pension, retirement plan and supplemental retirement plan costs.

Currently there is no allocation of

these costs to other operating segments.

Retirement Plan Administration - Includes retirement plan and health savings account recordkeeping and administration, investment management, third-party administration, and actuarial services.

The Company has determined that it operates through two reportable segments:

Banking – Provides commercial banking,

retail banking, and wealth management services primarily to customers in its market area, offering a broad array of banking and financial services to retail, commercial, and municipal customers.

Included in Banking are the revenue and expenses

from the wealth management business and the parent holding company.

The parent company’s principal activities include the direct and indirect ownership of banking and non-banking subsidiaries, as well as the issuance of debt and equity.

parent company’s principal sources of revenue are the management fees and dividends it receives from its subsidiaries.

Banking also includes corporate shared service costs such as the majority of equity compensation expense, as well as other

general and administrative shared services costs including pension, retirement plan and supplemental retirement plan costs.

Currently there is no allocation of these costs to other operating segments.

Retirement Plan Administration – Includes

retirement plan and health savings account recordkeeping and administration, investment management, third-party administration, and actuarial services.

Our CODM reviews actual net income versus budgeted net income to assess segment

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management structure, allocation methodologies, or procedures may result in future revisions to previously reported segment financial data.

For the three and nine months ended September 30, 2024, the Company only disclosed

one reportable segment, as operations were assessed on a consolidated basis.

Accordingly, prior year segment data has been

retrospectively adjusted to conform to the current period presentation.

The Company will continue to evaluate its segment disclosures in accordance with ASU 2023-07 and make necessary adjustments as business operations evolve.

There have been no changes to the Company’s operating segments since those disclosed in the Company’s Annual Report on Form 10‑K for the year

ended December 31, 2025.

The Company will continue to evaluate its segment disclosures and make necessary adjustments as business operations evolve.

Information about reportable segments and reconciliation of the information to the

consolidated financial statements follows:

Three Months Ended September 30, 2025

Three Months Ended March 31, 2026

(In thousands)

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Bank owned life insurance income

Net securities (losses) gains

Net securities gains (losses)

Total noninterest income

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Included in All Other is the revenue and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands)

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Intangible assets, net

(1) Included in All Other is the revenue

and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.

Nine Months Ended September 30, 2025

(In thousands)

Administration

All Other (1)

Included in All Other is the revenue and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do

not meet the definition of an operating segment.

NBT BANCORP INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc.

(“NBT”) and its wholly-owned

subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc.

(“NBT Financial”) and NBT Holdings, Inc.

(“NBT Holdings”) (collectively referred to herein as the “Company”).

When references to “NBT,” “we,” “our,”

“us,” and “the Company” are made in this report, we mean NBT Bancorp Inc.

and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp Inc.

When we refer to the “Bank” in this report, we

mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries.

This discussion will focus on results of operations and financial condition, including capital resources and asset/liability management.

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, 2025 for an understanding of the following discussion and

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results of the full year ending December 31, 2026 or any future period.

Forward-Looking Statements

Certain statements in this filing and future filings by the Company with the SEC, in the Company’s press releases or other public or stockholder communications or in oral statements made with the

approval of an authorized executive officer, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.

These statements may be identified by the use of phrases such as “anticipate,” “believe,”

“expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms.

There are a number of factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from

those contemplated by any forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities:

(1) local, regional,

national and international economic conditions, including actual or potential stress in the banking industry, and the impact they may have on the Company and its customers, and the Company’s assessment of that impact;

(2) changes in the level of

nonperforming assets and charge-offs;

(3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements;

(4) the effects of and changes in trade and monetary and

fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”) and international trade disputes (including threatened or implemented tariffs imposed by the U.S.

and threatened or implemented tariffs imposed by

foreign countries in retaliation);

(5) inflation, interest rate, securities market and monetary fluctuations;

(6) political instability;

(7) acts of war, including international military conflicts, or terrorism;

(8) the timely development and

acceptance of new products and services and the perceived overall value of these products and services by users;

(9) changes in consumer spending, borrowing and saving habits;

(10) changes in the financial performance and/or condition of the

Company’s borrowers;

(11) technological changes;

(12) acquisition and integration of acquired businesses;

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

(14) changes in the competitive environment among financial holding

(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;

(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

and (20) the Company’s success at managing the risks involved in the foregoing items.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made, and advises readers that various factors,

including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual

results or circumstances for future periods to differ materially from those anticipated or projected.

Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to

reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

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 GAAP

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

Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of the

Company’s core business as well as provide information standard in the financial institution industry.

Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider

the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.

Amounts previously reported in the consolidated financial statements

are reclassified whenever necessary to conform to current period presentation.

Critical Accounting Estimates

SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with GAAP that involve a significant level

of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.

The Company follows financial accounting and reporting policies that are in

accordance with GAAP.

The more significant of these policies are summarized in Note 1 to the consolidated financial statements presented in our 2025 Annual Report on Form 10-K.

Management has reviewed the application of these estimates with the

Audit Committee of NBT’s Board of Directors.

The allowance for credit losses and unfunded commitments policies are deemed to meet the SEC’s definition of a critical accounting estimate.

Allowance for Credit Losses and Unfunded Commitments

The allowance for credit losses consists of the allowance for credit losses and the allowance for losses on unfunded commitments.

The measurement of CECL on financial instruments requires an

estimate of the credit losses expected over the life of an exposure (or pool of exposures).

The estimate of expected credit losses under the CECL methodology is based on relevant information about past events, current conditions, and reasonable

and supportable forecasts that affect the collectability of the reported amounts.

Historical loss experience is generally the starting point for estimating expected credit losses.

The Company then considers whether the historical loss experience

should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used.

Finally, the Company considers forecasts about future economic

conditions that are reasonable and supportable.

The allowance for credit losses for loans, as reported in our consolidated statements of financial condition, is adjusted by an expense for credit losses, which is recognized in earnings, and

reduced by the charge-off of loan amounts, net of recoveries.

The allowance for losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby

letters of credit.

However, a liability is not recognized for commitments unconditionally cancellable by the Company.

The allowance for losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates

on those draws.

Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the

allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio.

Determining the appropriateness of the allowance is complex and requires judgment by management about the

effect of matters that are inherently uncertain.

Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods.

While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions.

The impact of utilizing the CECL

methodology to calculate the reserve for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized.

Material changes

to these and other relevant factors may result in greater volatility to the reserve for credit losses, and therefore, greater volatility to our reported earnings.

One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the

forecast period.

As of March 31, 2026, the weightings were 60%, 5%, and 35% for the baseline, upside and downside economic forecast scenarios, respectively.

The baseline outlook reflected an economic environment where the northeast unemployment

rate decreases from 4.6% in the second quarter of 2026 to 4.56% by the end of the forecast period, with a peak northeast unemployment rate of 4.6% in the third quarter of 2026.

National GDP annualized growth (on a quarterly basis) is expected to

start the second quarter of 2026 at approximately 2.75% and decrease to 1.72% 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 June

and September 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 4.6% in the first quarter

of 2026 to 3.7% in the second quarter of 2027 and eventually settles at 3.8% 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 4.6% in the first quarter of 2026 to a peak of 7.8% in the second quarter of 2027.

The alternative downside stagflation scenario was removed in the first quarter of 2026 following a

recalibration of the scenario’s narrative and model by the reputable third-party, which no longer provided a relevant stagflation scenario.

These scenarios and their respective weightings are evaluated at each measurement date and reflect

management’s expectations as of March 31, 2026.

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

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 March 31, 2026, the Company changed the scenario weightings, with a

10% increase to the downside scenario and a 10% decrease to the baseline scenario causing a 3.6% 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 0.8%.

To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of March 31, 2026, the Company

increased the downside scenario to 100% which resulted in a 24.1% 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 2025 Annual Report on Form 10-K.

accounting policies are important and as such, the Company encourages the reader to review each of the policies included in Note 1 to the consolidated financial statements presented in our 2025 Annual Report on Form 10-K to obtain a better

understanding of how the Company’s financial performance is reported.

The Company’s critical accounting policies are described in detail in Part II Item 7.

in the 2025 Annual Report on Form 10-K and there have been no material changes in such

policies since the date of that report.

Refer to Note 3 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q for recently adopted accounting standards.

Executive Summary

Significant factors management reviews to evaluate the Company’s operating results and financial condition include, but are not limited to, net income and EPS, return on average assets and equity,

NIM, noninterest income, operating expenses, asset quality indicators, loan and deposit growth, capital management, liquidity and interest rate sensitivity, enhancements to customer products and services, technology advancements, market share and

peer comparisons.

Net income for the three months ended March 31, 2026 was $51.1 million, down $4.4 million from the fourth quarter of 2025 and up $14.4 million from the first quarter of 2025.

Diluted earnings per

share was $0.98 for the three months ended March 31, 2026, down $0.08 from the fourth quarter of 2025 and up $0.21 from the first quarter of 2025.

Operating net income (1) , a non-GAAP measure, was $50.8 million, or $0.97 per diluted common share, for the three

months ended March 31, 2026, compared to $1.05 per diluted common share for the fourth quarter of 2025 and $0.80 per diluted common share for the first quarter of 2025.

The following information should be considered in connection with the Company’s results for the three months ended March 31, 2026:

Net interest income for the three months ended March 31, 2026 was $134.3 million, down $1.1 million, or 0.8%, from the fourth quarter of 2025 and up $27.1 million, or 25.3%, from the first quarter of 2025.

FTE NIM was 3.72% for the three months ended March 31, 2026, an increase of 7 bps from the previous quarter and an increase of 28 bps from the first quarter of 2025.

The Company recorded a provision for loan losses of $5.6 million for the three months ended March 31, 2026, compared to $3.8 million in the fourth quarter of 2025 and $7.6 million in the first quarter of 2025.

Excluding securities gains (losses), noninterest income represented 27% of total revenues and was $49.7 million for the three months ended March 31, 2026, consistent with the fourth quarter of 2025 and up $2.1

million, or 4.5%, from the first quarter of 2025.

Noninterest expense, excluding acquisition expenses, was up $0.5 million, or 0.5%, from the fourth quarter of 2025 and was up $13.6 million, or 13.7%, from the first quarter of 2025.

Period end total loans were $11.55 billion, down $50.9 million, or 0.4%, from December 31, 2025.

Credit quality metrics including net charge-offs to average loans were 0.17%, annualized, and allowance for loan losses to total loans was 1.20%.

Period end total deposits were $13.74 billion, up $243.8 million, or 1.8%, from December 31, 2025.

The loan to deposit ratio was 84.0% as of March 31, 2026 and 85.9% as of December 31, 2025.

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

The Company incurred acquisition expenses of $1.2 million related to the merger with Evans in the

first quarter of 2025.

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

Results of Operations

The following table sets forth certain financial highlights:

Three Months Ended

Diluted earnings per share

Return on average assets (2)

Return on average equity (2)

Return on average tangible common equity (1)(2)

Net interest margin (FTE) (1)(2)

Equity to assets

Tangible equity ratio (1)

Book value per share

Tangible book value per share (1)

Leverage ratio

Common equity tier 1 capital ratio

Tier 1 capital ratio

Total risk-based capital ratio

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

The following table provides non-GAAP reconciliations:

Three Months Ended

(In thousands, except per share data)

Return on average tangible common equity:

Amortization of intangible assets (net of tax)

Net income, excluding intangible amortization

Average stockholders’ equity

average goodwill and other intangibles

Average tangible common equity

Return on average tangible common equity (2)

Tangible equity ratio:

Stockholders’ equity

Tangible equity ratio

Tangible book value per share:

Stockholders’ equity

Tangible equity

Diluted common shares outstanding

Tangible book value per share

Operating net income:

Acquisition expenses

Securities (gains) losses

Adjustments to net income

Adjustments to net income (net of tax)

Operating net income

Operating diluted earnings per share

FTE adjustment

Net interest income

Provision for loan losses

Net interest income after provision for loan losses

FTE adjustment

Net interest income (FTE)

Average earnings assets

Net interest margin (FTE) (2)

Net Interest Income

Net interest income is the difference between the interest and dividend income earned on interest-earning assets, primarily loans and securities and the interest expense paid on interest-bearing

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 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 $134.3 million for the first quarter of 2026, down $1.1 million, or 0.8%, from the previous quarter.

FTE NIM was 3.72% for the three months ended March 31, 2026, an increase

of 7 bps from the previous quarter.

Interest income decreased $5.9 million, or 3.1%, as the yield on average interest-earning assets decreased 2 bps from the prior quarter to 5.06%, while average interest-earning assets of $14.69 billion

decreased $73.6 million from the prior quarter.

The decrease in interest income was primarily due to two fewer days in the first quarter of 2026 compared to the fourth quarter of 2025 and lower yields on loans and short-term interest-bearing

accounts due to the fourth quarter Federal Reserve interest rate cuts, partially offset by loans originating at higher rates than portfolio yields.

Interest expense decreased $4.8 million, or 9.1%, as the cost of interest-bearing liabilities

decreased 14 bps to 1.95% for the three months ended March 31, 2026 as compared to the prior quarter, primarily due to a 14 bps decrease in interest-bearing deposit costs.

Included in net interest income was $6.7 million of acquisition-related

net accretion for the three months ended March 31, 2026, compared to $7.4 million of acquisition-related net accretion for the three months ended December 31, 2025.

Net interest income was $134.3 million for the first quarter of 2026, up $27.1 million, or 25.3%, from the first quarter of 2025.

FTE NIM was 3.72% for the three months ended March 31, 2026, an

increase of 28 bps from the first quarter of 2025.

Interest income increased $28.2 million, or 18.2%, as the yield on average interest-earning assets increased 11 bps from the same period in 2025 to 5.06%, while average interest-earning assets

increased $1.99 billion, or 15.7%, from the first quarter of 2025, 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 $1.1

million, or 2.4%, for the three months ended March 31, 2026 primarily due to the addition of $1.62 billion in interest-bearing liabilities from the Evans acquisition, partially offset by a decrease in the cost of interest-bearing liabilities.

Included in net interest income was $6.7 million of acquisition-related net accretion for the three months ended March 31, 2026 and $2.2 million of acquisition-related net accretion for the three months ended March 31, 2025.

Average Balances and Net Interest Income

The following table includes the condensed consolidated average balance sheet, an analysis of interest income/expense and average yield/rate for each major category of earning assets and

interest-bearing liabilities on a taxable equivalent basis.

Three Months Ended

March 31, 2026

December 31, 2025

March 31, 2025

(Dollars in thousands)

Short-term interest-bearing accounts

Securities taxable (1)

Securities tax-exempt (1) (3)

FRB and FHLB stock

Loans (2) (3)

Total interest-earning assets

Liabilities and stockholders’ equity:

Money market deposits

Interest-bearing checking deposits

Savings deposits

Time deposits

Total interest-bearing deposits

Federal funds purchased

Repurchase agreements

Short-term borrowings

Long-term debt

Subordinated debt, net

Junior subordinated debt

Total interest-bearing liabilities

Demand deposits

Other liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Net interest income (FTE)

Interest rate spread

Net interest margin (FTE)

Taxable equivalent adjustment

Net interest income

Securities are shown at average amortized cost.

For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.

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

The following table presents changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in

rate multiplied by prior year volume) and the net change in net interest income.

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 March 31,

Increase (Decrease)

2026 over 2025

(In thousands)

Short-term interest-bearing accounts

Securities taxable

Securities tax-exempt

FRB and FHLB stock

Total FTE interest income

Money market deposits

Interest-bearing checking deposits

Savings deposits

Time deposits

Federal funds purchased

Repurchase agreements

Short-term borrowings

Long-term debt

Subordinated debt, net

Junior subordinated debt

Total FTE interest expense

Change in FTE net interest income

Noninterest Income

Noninterest income is a significant source of revenue for the Company and an important factor in the Company’s results of operations.

The following table sets forth information by category of

noninterest income for the periods indicated:

Three Months Ended

(In thousands)

Service charges on deposit accounts

6 unchanged sentences

Total noninterest income

Noninterest income for the three months ended March 31, 2026 was $50.1 million, up $0.4 million, or 0.9%, from the prior quarter and up $2.7 million, or 5.7%, from the first quarter of 2025.

Excluding net securities gains (losses), noninterest income for the three months ended March 31, 2026 was $49.7 million, up $0.1 million, or 0.3%, from the prior quarter and up $2.1 million, or 4.5%, from the first quarter of 2025.

The increase from the prior quarter was primarily driven by an increase in retirement plan administration fees and insurance services partially offset by a decrease in wealth management fees, bank

owned life insurance income and other noninterest income.

Retirement plan administration fees increased from the prior quarter driven by higher activity-based fees, an increase in market values of assets under administration and the additional

revenue from new customer relationships.

Insurance revenues increased from the prior quarter due to organic growth and first quarter seasonality.

Wealth management fees decreased from the prior quarter driven primarily by higher seasonal and

activity-based fees recognized in the prior quarter.

Bank owned life insurance income decreased from the prior quarter due to lower gains recognized.

Other noninterest income decreased from the prior quarter due to a gain on an equity investment

recognized in the fourth quarter of 2025.

The increase from the first quarter of 2025 was driven by an increase in service charges on deposit accounts and card services income due to the Evans acquisition.

In addition, noninterest income

increased from the first quarter of 2025 due to an increase in retirement plan administration fees which were partially offset by a decrease in bank owned life insurance income.

The increase in retirement plan administration fees from the first

quarter of 2025 was due to higher activity-based fees, increase in market values of assets under administration and the additional revenue from new customer relationships.

Bank owned life insurance income decreased from the first quarter of 2025

due to lower gains recognized.

Noninterest Expense

Noninterest expenses are also an important factor in the Company’s results of operations.

The following table sets forth the major components of noninterest expense for the periods indicated:

Three Months Ended

(In thousands)

Salaries and employee benefits

7 unchanged sentences

Total noninterest expense

Income before income tax expense

Income tax expense

Intangible assets, net

(1) Included in All Other is the revenue and

expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.

Nine Months Ended September 30, 2024

Noninterest expense for the three months ended March 31, 2026 was $112.2 million, up $0.5 million, or 0.5%, from the prior quarter and up $12.3 million, or 12.3%, from the first quarter of 2025.

Excluding acquisition expenses, noninterest expense for the three months ended March 31, 2026 was $112.2 million, up $13.6 million, or 13.7%, from the first quarter of 2025.

The increase from the prior quarter was primarily due to an increase in salaries and employee benefits and occupancy expenses, partially offset by a decrease in other noninterest expense.

and employee benefits increased from the prior quarter driven by seasonally higher payroll taxes and stock-based compensation expenses, partially offset by lower medical expenses.

Occupancy costs increased from the prior quarter due to seasonal

maintenance and utilities costs due to harsh winter conditions across the footprint.

Other expenses decreased from the prior quarter due to seasonally lower levels of travel, training and charitable contributions and loan-servicing related

The increase from the first quarter of 2025 was driven by the Evans acquisition.

Salaries and benefits increased from the first quarter of 2025 driven by the impact of the Evans acquisition, annual

merit pay increases, higher medical expenses and stock-based compensation expenses.

Technology and data services increased from the first quarter of 2025 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 seasonal maintenance and utilities, and higher facilities costs related to new branch

banking locations.

Professional fees and outside services increased from the first quarter of 2025 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.

Income tax expense for the three months ended March 31, 2026 was $15.5 million, up $1.4 million from the prior quarter and up $5.1 million from the first quarter of 2025.

The effective tax rate was

23.3% for the first quarter of 2026, compared to 20.3% for the prior quarter and 22.2% for the first quarter of 2025.

The increase in the effective tax rate from the prior quarter was primarily due to the assessment of the deductibility of

merger-related expenses incurred in 2025 and the associated impact on the full year effective tax rate in the fourth quarter of 2025.

The increase in the effective tax rate from the first quarter of 2025 was primarily due to the increase in fully

taxable pre-tax income.

ANALYSIS OF FINANCIAL CONDITION

Total securities increased $40.0 million, or 1.5%, from December 31, 2025 to March 31, 2026.

The securities portfolio represented 16.8% of total assets as of March 31, 2026 as compared to 16.7% of

total assets as of December 31, 2025.

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

March 31, 2026

December 31, 2025

Mortgage-backed securities:

With maturities 15 years or less

With maturities greater than 15 years

Collateralized mortgage obligations

Municipal securities

Equity securities

The Company’s mortgage-backed securities, U.S.

agency notes and collateralized mortgage obligations are all guaranteed by Fannie Mae, Freddie Mac, FHLB, Federal Farm Credit Banks or Ginnie Mae

GNMA securities are considered similar in credit quality to U.S.

Treasury securities, as they are backed by the full faith and credit of the U.S.

Currently, there are no subprime mortgages in our investment portfolio.

A summary of the loan portfolio by major categories (1) , net of deferred fees and origination costs, for the periods

indicated is as follows:

(In thousands)

Administration

All Other (1)

March 31, 2026

December 31, 2025

Commercial & industrial

Commercial real estate

Residential mortgage

Indirect auto

Residential solar

Other consumer

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

Total loans were $11.55 billion and $11.60 billion at March 31, 2026 and December 31, 2025, respectively.

Period end loans decreased by $50.9 million from December 31, 2025 to March 31, 2026, which

included a $25.9 million decrease in the other consumer and residential solar portfolios, which are in a planned run-off status.

Total loans represent approximately 71.3% of assets as of March 31, 2026, as compared to 72.5% as of December 31,

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

The Company offers a variety of loan products tailored to meet the needs of commercial

customers including term loans, time notes and lines of credit.

Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion, equipment purchases, livestock purchases and seasonal

crop expenses.

These loans are typically collateralized by business assets such as equipment, accounts receivable and perishable agricultural products, which are inherently subject to industry price volatility.

The Company extends CRE loans to

support real estate transactions, including acquisitions, refinancings, expansions and property improvements to both commercial and agricultural properties.

These loans are secured by liens on real estate assets, covering a spectrum of properties

including apartments, commercial structures, healthcare facilities and others, whether occupied by owners or non-owners.

Risks associated with the CRE portfolio pertain to the borrowers’ ability to meet interest and principal payments over the

life of the loan, as well as their ability to secure financing upon the loan’s maturity.

The Company has a risk management framework that includes rigorous underwriting standards, targeted portfolio stress testing, interest rate sensitivities on

commercial borrowers and comprehensive credit risk monitoring mechanisms.

The Company remains vigilant in monitoring market trends, economic indicators and regulatory developments to promptly adapt our risk management strategies as needed.

Within the CRE portfolio, approximately 78% are comprised of Non-Owner Occupied CRE, with the remaining 22% being Owner-Occupied CRE.

Non-Owner Occupied CRE includes diverse sectors across the

Company’s markets such as residential rental properties (44%) and office spaces (13%), along with retail, manufacturing, mixed use, hotels and others.

As of March 31, 2026 and December 31, 2025, the total CRE construction and development loans

amounted to $430.9 million and $405.3 million, respectively.

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

Management considers the accounting policy relating to the allowance for credit losses to be a critical estimate given the degree of judgment exercised in evaluating the level of the allowance

required to estimate expected credit losses over the expected contractual life of our loan portfolio and the material effect that such judgments can have on the consolidated results of operations.

The CECL methodology requires an estimate of the credit losses expected over the life of a loan (or pool of loans).

The allowance for credit losses is a valuation account that is deducted from, or

added to, the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans.

Loan losses are charged off against the allowance when management believes a loan balance is confirmed to be uncollectible.

Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Required additions or reductions to the allowance for credit losses are made periodically by charges or credits to the provision for loan losses.

These are necessary to maintain the allowance at a

level which management believes is reasonably reflective of the overall loss expected over the contractual life of the loan portfolio, adjusted for expected prepayments and curtailments.

While management uses available information to recognize

losses on loans, additions or reductions to the allowance may fluctuate from one reporting period to another.

These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of

any or all of the determining factors discussed above.

Management considers the allowance for credit losses to be appropriate based on evaluation and analysis of the loan portfolio.

Management estimates the allowance for credit losses using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and

supportable forecasts.

Historical credit loss experience provides the basis for the estimation of expected credit losses.

Company historical loss experience was supplemented with peer information when there was insufficient loss data for the

Significant management judgment is required at each point in the measurement process.

The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics

The respective quantitative allowance for each segment is measured using an econometric, discounted PD and LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to multiple,

probabilistically weighted external economic forecasts.

Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled

cash flows and amortized cost basis.

After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit loss is reflective of the estimate of lifetime losses that exist in the loan

portfolio as of the balance sheet date.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses.

Consistent with CECL guidance, management

has pooled loans with similar risk characteristics and identified segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or subsegmented as

needed to ensure loans of similar risk profiles are appropriately pooled.

Additional information about our Allowance for Credit Losses is included in Note 6 to the unaudited interim consolidated financial statements in this Quarterly Report on Form 10-Q as well as in the

“Critical Accounting Estimates” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company’s management considers the allowance for credit losses to be appropriate based on evaluation and

analysis of the loan portfolio.

The allowance for credit losses totaled $138.6 million at March 31, 2026, compared to $138.0 million at December 31, 2025 and $117.0 million at March 31, 2025.

The allowance for credit losses as a

percentage of loans was 1.20% at March 31, 2026, compared to 1.19% at December 31, 2025 and 1.17% at March 31, 2025.

The allowance for credit losses as of March 31, 2026 increased compared to the allowance estimates as of December 31, 2025

primarily due to the change in forecast scenario weightings and the establishment of specific reserves for newly identified individually evaluated loans.

These increases to the allowance for credit losses were partially offset by improvements in

the economic forecast, model adjustments, and changes in loan composition and balances, including reductions driven by other consumer and residential solar portfolios that are in a planned run-off status.

First quarter 2026 model adjustments

lowered the allowance, as updates from the annual model review and recalibration process incorporated recent delinquency and loss experience which reflected improved default estimates across most portfolio segments.

The increase in the allowance

for credit losses from March 31, 2025 to March 31, 2026 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.

This increase was partially offset by 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 226.27% of nonperforming loans at March 31, 2026, compared to 266.81% at December 31, 2025 and to 245.33% at March 31, 2025.

The decrease in the coverage of the

allowance to nonperforming and nonaccrual loans from December 31, 2025 to March 31, 2026 was due to the increase in nonaccrual loans.

The decrease in the coverage of the allowance to nonperforming loans from March 31, 2025 to March 31, 2026 was

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

The provision for loan losses was $5.6 million for the three months ended March 31, 2026, compared to $3.8 million in the prior quarter and $7.6 million for the same period in the prior year.

Provision expense increased from the prior quarter primarily due to an increase in net charge-offs during the quarter and a higher level of allowance for loan losses.

The decrease in provision expense from March 31, 2025, was driven largely due

to lower net charge-offs.

Net charge-offs totaled $5.0 million during the three months ended March 31, 2026, compared to net charge-offs of $4.8 million during the fourth quarter of 2025 and $6.6 million in the first quarter of 2025.

charge-offs to average loans were 17 bps for the three months ended March 31, 2026, compared to 16 bps for the fourth quarter of 2025 and 27 bps for the three months ended March 31, 2025.

As of March 31, 2026, the unfunded commitment reserve totaled $5.5 million, compared to $5.8 million as of December 31, 2025 and $4.5 million as of March 31, 2025.

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 loan modifications, OREO and nonperforming securities.

Loans are generally placed on

nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection.

Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet

the contractual principal or interest payments.

The threshold for evaluating commercial loans risk graded substandard or doubtful, and nonperforming loans specifically evaluated for individual credit loss is $1.0 million.

OREO represents

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

March 31, 2026

December 31, 2025

(Dollars in thousands)

N onaccrual loans:

Troubled loan modifications

Total nonaccrual loans

Loans over 90 days past due and still accruing:

Total loans over 90 days past due and still accruing

Total nonperforming loans

Total nonperforming assets

Total nonaccrual loans to total loans

Total nonperforming loans to total loans

Total nonperforming assets to total assets

Total allowance for loan losses to total nonperforming loans

Total allowance for loan losses to nonaccrual loans

Total nonperforming assets were $61.3 million at March 31, 2026, compared to $52.1 million at December 31, 2025 and $48.0 million at March 31, 2025.

Nonperforming loans at March 31, 2026 were $61.3

million or 0.53% of total loans, compared with $51.7 million or 0.45% of total loans at December 31, 2025 and $47.7 million or 0.48% of total loans at March 31, 2025.

The increase in nonperforming assets and nonperforming loans from the prior

period was attributable to an increase in nonaccrual loans including three newly identified commercial relationships identified for individual credit loss evaluation, partially offset by a decrease in accruing loans past due over 90 days.

increase from March 31, 2025 is primarily attributable to the addition of nonperforming loans from the Evans acquisition.

Total nonaccrual loans were $57.9 million or 0.50% of total loans at March 31, 2026, compared to $44.6 million or 0.38% of

total loans at December 31, 2025 and $44.8 million or 0.45% of total loans at March 31, 2025.

Past due loans as a percentage of total loans was 0.40% at March 31, 2026, up from 0.38% at December 31, 2025 and up from 0.32% at March 31, 2025.

In addition to nonperforming loans discussed above, the Company has also identified approximately $278.5 million in potential problem loans at March 31, 2026 as compared to $271.8 million at

December 31, 2025.

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 the future.

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 from December 31, 2025 is primarily due to the net migration of $5.3 million in commercial loan balances to

substandard, primarily attributable to acquired commercial loans from Evans.

Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans.

there can be no assurance that other loans will not become over 90 days past due, be placed on nonaccrual, become troubled loan modifications or require increased allowance coverage and provision for loan losses.

To mitigate this risk the Company

maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.

Total deposits were $13.74 billion at March 31, 2026, up $243.8 million, or 1.8%, from December 31, 2025.

As of March 31, 2026 there were $25.0 million of brokered time deposits, down from $98.9

million as of December 31, 2025.

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

The Company continues to experience growth within all business lines, consumer, municipal and

commercial, including the inflow of seasonal municipal deposits during the first quarter of 2026.

The Company’s composition of total deposits is diverse and granular with over 611,000 accounts with an average per account balance of $22,467 as of

March 31, 2026.

As of March 31, 2026 and December 31, 2025 the estimated amounts of uninsured deposits based on the same methodologies and assumptions used for the bank regulatory reporting were $6.04 billion and $5.86 billion, respectively.

Total average deposits increased $1.94 billion, or 16.7%, from the same period last year due to the $1.86 billion in deposits acquired from Evans in the second quarter of 2025.

Borrowed Funds

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

Short-term borrowings totaled $117.8 million at March 31, 2026 compared to $148.1 million at December 31, 2025.

Long-term debt was $43.1 million at March 31, 2026 compared to $43.2 million at December 31, 2025.

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

Subordinated Debt

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 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.

The 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.

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.

As of the acquisition date, the fair value discount was $3.0 million, which will be amortized into interest expense over the expected call or maturity date.

As of March 31, 2026 and December 31, 2025 the subordinated debt net of fair value discount was $24.8 million and $24.5 million, respectively.

Junior Subordinated Debt

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.

As of the acquisition date, the fair value discount was $0.9 million which is being amortized into interest expense

over the life of the debt instrument.

Collectively, the Company sponsors six business trusts, CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I, Alliance Financial Capital Trust II

and Evans Capital Trust I (collectively, the “Trusts”).

Despite the fact that the Trusts are not included in the Company’s consolidated financial statements, $108 million of the $112 million in trust preferred securities issued by these subsidiary trusts

was included in the Tier 1 capital of the Company for regulatory capital purposes as allowed by the FRB (NBT Bank owns $1.0 million of CNBF Trust I securities) through March 31, 2025.

The Dodd-Frank Wall Street Reform and Consumer Protection Act

of 2010 requires bank holding companies with assets greater than $500 million to be subject to the same capital requirements as insured depository institutions, meaning, for instance, that such bank holding companies will not be able to count

trust preferred securities issued after May 19, 2010 as Tier 1 capital.

The aforementioned Trusts are grandfathered with respect to this enactment based on their date of issuance.

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

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 $1.91 billion represented 11.81% of total assets at March 31, 2026 compared with $1.90 billion, or 11.85% of total assets, as of December 31, 2025.

Stockholders’ equity

increased $18.2 million from December 31, 2025 driven by net income of $51.1 million for the three months ended March 31, 2026, partially offset by dividends declared of $19.2 million, the repurchase of common stock of $11.0 million and a $4.7

million increase in accumulated other comprehensive loss due primarily to the change in the fair value of securities available for sale.

The Company purchased 250,000 shares of its common stock during the three months ended March 31, 2026, for a total of $11.0 million at an average price of $44.06 per share under its previously

announced stock repurchase program.

Under its stock 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 March 31, 2026, there were 1,500,000 shares available for repurchase under this program authorized on October 27, 2025, which is set to expire on December 31, 2027.

As the capital ratios in the following table indicate, the Company remained “well capitalized” at March 31, 2026 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

capital ratios must be 5%, 6.5%, 8% and 10%, respectively.

Capital Measurements

March 31, 2026

December 31, 2025

Tier 1 leverage ratio

Common equity tier 1 capital ratio

Tier 1 capital ratio

Total risk-based capital ratio

Cash dividends as a percentage of net income

Per common share:

Tangible book value (1)

Tangible equity ratio (2)

Stockholders’ equity less goodwill and intangible assets divided by common shares outstanding.

Non-GAAP measure - Stockholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets.

Liquidity and Interest Rate Sensitivity Management

Interest rate risk is the most significant market risk affecting the Company.

Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the

normal course of the Company’s business activities or are immaterial to the results of operations.

Interest rate risk is defined as an exposure to a movement in interest rates that could have an adverse effect on the Company’s net interest income.

Net interest income is susceptible to interest

rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than earning assets.

When interest-bearing liabilities mature or reprice more quickly than earning assets in a given period, a significant increase

in market rates of interest could adversely affect net interest income.

Similarly, when earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.

To manage the Company’s exposure to changes in interest rates, management monitors the Company’s interest rate risk.

Management’s Asset Liability Committee (“ALCO”) meets monthly to review the

Company’s interest rate risk position and profitability and to recommend strategies for consideration by the Board of Directors (the “Board”).

Management also reviews loan and deposit pricing and the Company’s securities portfolio, formulates

investment and funding strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner.

Notwithstanding the Company’s interest rate risk management activities, the

potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

In managing the Company’s asset/liability position, the Board and management aim to manage the Company’s interest rate risk while minimizing NIM compression.

At times, depending on the level of

general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to

increase its NIM.

The Company’s results of operations and net portfolio values remain vulnerable to changes in interest rates and fluctuations in the difference between long and short-term interest rates.

The primary tool utilized by the ALCO to manage interest rate risk is earnings at risk modeling (interest rate sensitivity analysis).

Information, such as principal balance, interest rate, maturity

date, cash flows, next repricing date (if needed) and current rates are uploaded into the model to create an ending balance sheet.

In addition, the ALCO makes certain assumptions regarding prepayment speeds for loans and mortgage related

investment securities along with any optionality within the deposits and borrowings.

The model is first run under an assumption of a flat rate scenario (e.g., no change in current interest rates) with a static balance sheet.

Six additional models

are run in which gradual increases of 300 bps, 200 bps and 100 bps, and gradual decreases of 100 bps, 200 bps and 300 bps takes place over a 12-month period with a static balance sheet.

Under these scenarios, assets subject to prepayments are

adjusted to account for faster or slower prepayment assumptions.

Any investment securities or borrowings that have callable options embedded in them are handled accordingly based on the interest rate scenario.

The resulting changes in net

interest income are then measured against the flat rate scenario.

The Company also runs other interest rate scenarios to highlight potential interest rate risk.

The Company’s Interest Rate Sensitivity has remained in a near neutral position.

In the declining rate scenarios, net interest income is projected to modestly decrease when compared to the

forecasted net interest income in the flat rate scenario through the simulation period.

The decrease in net interest income is a result of earning assets repricing and rolling over at lower yields at a faster pace than interest-bearing

liabilities decline and/or reach their floors.

Conversely in the rising rate scenarios, net interest income increases modestly, impacted by slowing prepayment speeds and increased deposit reactivity;

the magnitude of potential impact on earnings

may be affected by the ability to lag deposit repricing on interest-bearing checking, savings, MMDA and time accounts.

Net interest income for the next twelve months in the +300/+200/+100/-100/-200/-300 bps scenarios, as described above, is

within the internal policy risk limits of not more than a 5.0% reduction in net interest income in the +100/-100 bps scenarios, of not more than a 7.5% reduction in net interest income in the +200/-200 bps scenarios and of not more than a 12.0%

reduction in net interest income in the +300/-300 bps scenarios.

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 March 31, 2026 balance sheet position:

Interest Rate Sensitivity Analysis

Change in interest rates

Percent change in

net interest income

Provision for loan losses

Net interest income after provision for loan losses

Noninterest income

Service charges on deposit accounts

Card services income

Retirement plan administration fees

Wealth management

Insurance services

Bank owned life insurance income

Net securities gains (losses)

Total noninterest income

Noninterest expense

Salaries and employee benefits

Technology and data services

Professional fees and outside services

Office supplies and postage

FDIC assessment

Amortization of intangible assets

Loan collection and other real estate owned, net

Acquisition expenses

Total noninterest expense

Income before income tax expense

Income tax expense

Intangible assets, net

(1) Included in All Other is the

revenue and expenses from certain other non-bank subsidiaries of the parent, including the insurance subsidiary, along with eliminating amounts that do not meet the definition of an operating segment.

NBT BANCORP INC.

AND SUBSIDIARIES

The Company anticipates that the trajectory of net interest income will continue to depend significantly on the timing and path of short to mid-term interest rates which are heavily driven by

inflationary pressures and FOMC monetary policy.

In 2025, the FOMC shifted to an easing cycle, cutting the federal funds rate three times (September, October and December) by 25 bps each, bringing the target range down from 4.25-4.50% towards a

more neutral stance of 3.50-3.75% as inflation pressures eased but growth softened.

Actions included rate cuts, open market operations to manage liquidity, and adjustments to reinvestment policies for Treasury and mortgage-backed securities.

Fed remains committed to its 2% inflation target and maximum employment goals.

The recent federal funds rate reductions and initial expectations for continued reductions in 2026 provided the catalyst for the Company to begin reducing deposit

rates in late 2025 and early 2026.

However, the onset of the Iran War in 2026 has contributed to higher interest rates and an expectation for an elevated yield curve in the near term.

The Company continues to focus on managing deposit expense in

an environment of still elevated short-term interest rates (compared to recent years) while maintaining lending spreads in an effort to allow new and repricing asset yields to remain above existing portfolio asset yields where possible.

Liquidity Risk

Liquidity risk arises from the possibility that the Company may not be able to satisfy current or future financial commitments or may become unduly reliant on alternate funding sources.

objective of liquidity management is to ensure the Company can fund balance sheet growth, meet the cash flow requirements of depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their

credit needs.

ALCO is responsible for liquidity management and has developed guidelines, which cover all assets and liabilities, as well as off-balance sheet items that are potential sources or uses of liquidity.

Liquidity policies must also

provide the flexibility to implement appropriate strategies, along with regular monitoring of liquidity and testing of the contingent liquidity plan.

Requirements change as loans grow, deposits and securities mature and payments on borrowings are

Liquidity management includes a focus on interest rate sensitivity management with a goal of avoiding widely fluctuating net interest margins through periods of changing economic conditions.

Loan repayments and maturing investment

securities are a relatively predictable source of funds.

However, deposit flows, calls of investment securities and prepayments of loans and mortgage-related securities are strongly influenced by interest rates, the housing market, general and

local economic conditions, and competition in the marketplace.

Management continually monitors marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.

The primary liquidity measurement the Company utilizes is called “Basic Surplus,” which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix

of average liabilities.

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.

31, 2026, the Company’s Basic Surplus measurement was 19.2% of total assets, or $3.10 billion, as compared to the December 31, 2025 Basic Surplus of 18.7%, or $2.98 billion, and was above the Company’s minimum of 5% (calculated at $810.2 million

and $799.8 million of period end total assets as of March 31, 2026 and December 31, 2025, respectively) set forth in its liquidity policies.

At March 31, 2026 and December 31, 2025, FHLB advances outstanding totaled $43.0 million.

At March 31, 2026 and December 31, 2025, the Bank had $435.0 million and $353.0 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 $2.02 billion at March 31, 2026 and $2.10 billion at December 31, 2025.

addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $1.08 billion and $1.11 billion at March 31, 2026 and December 31, 2025, 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 $2.64 billion at March

31, 2026 and $2.53 billion at December 31, 2025.

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 March 31, 2026 and

December 31, 2025, the Bank had the capacity to borrow $1.19 billion and $1.18 billion, respectively, from this program.

The Company’s internal policies authorize borrowing up to 25% of assets.

Under this policy, remaining available borrowing

capacity totaled $3.99 billion at March 31, 2026 and $3.94 billion at December 31, 2025.

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

By tempering the need for cash flow liquidity with reliable

borrowing facilities, the Company is able to operate with a more fully invested and, therefore, higher interest income generating securities portfolio.

The makeup and term structure of the securities portfolio is, in part, impacted by the overall

interest rate sensitivity of the balance sheet.

Investment decisions and deposit pricing strategies are impacted by the liquidity position.

The Company considers its Basic Surplus position to be strong.

However, certain events may adversely

impact the Company’s liquidity position in 2026.

While short-term interest rates have declined, they remain elevated relative to recent history, which could result in deposit declines as depositors continue to have alternative opportunities for

yield on their excess funds.

In the current economic environment, draws against lines of credit could drive asset growth higher.

Disruptions in wholesale funding markets could spark increased competition for deposits.

These scenarios could lead

to a decrease in the Company’s Basic Surplus measure below the minimum policy level of 5%.

At March 31, 2026, 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.

Various laws and regulations restrict the ability of banks to pay dividends to their stockholders.

Generally, the payment of

dividends by the Company in the future as well as the payment of interest on the capital securities will require the generation of sufficient future earnings by its subsidiaries.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends.

The approval of the OCC is required to pay dividends when a bank fails 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 March 31, 2026 and December 31, 2025, approximately $100.5 million and $115.9 million, respectively, of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC.

ability to pay dividends also is 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information called for by Item 3 is contained in the Liquidity and Interest Rate Sensitivity Management section of the Management’s Discussion and Analysis of Financial Condition and Results of

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 1. Financial Statements