What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 325 added, 178 removed, 472 unchanged (52% of the section changed)

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Cautionary Statements Regarding Forward-Looking Information

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on us.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control.

We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

The statements contained herein that are not historical facts are forward-looking statements based on current expectations and beliefs of the Company ("TriCo") and First Hawaiian, Inc.

and its subsidiaries (including First Hawaiian Bank) ("FHI") concerning future developments and their potential effects on TriCo and FHI.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of TriCo and FHI.

TriCo and FHI caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

These risks and uncertainties include, but are not limited to, the following:

macroeconomic, geopolitical, and other challenges and uncertainties, including those related to actual or potential policies and actions from the U.S.

administration, such as tariffs and reciprocal actions by other countries or regions and their ultimate impact on us, our customers, financial markets, and the overall U.S.

and global economies;

the uncertainty of rapidly evolving and changing U.S.

trade policies and practices;

inflation/deflation, interest rate, market and monetary fluctuations/volatility;

increases in unemployment rates;

slowing economic growth or recession in the U.S.

and other countries or regions;

the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit;

the impact of changes in financial services industry policies, laws and regulations;

regulatory restrictions or adverse regulatory findings affecting our ability to successfully market and price our products to consumers;

systemic or non-systemic bank failures or crises and any related impact on depositor behavior or investor sentiment;

the impacts of international hostilities, wars, terrorism or geopolitical events;

risks related to the sufficiency of liquidity, including our ability to attract and maintain deposits;

the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning;

extreme weather, natural disasters and other catastrophic events and their effects on our customers and the economic and business environments in which we operate;

current and future economic and market conditions of the local economies in which we conduct operations;

declines in housing and commercial real estate prices and changes in the financial performance and/or condition of our borrowers;

the market value of our investment securities and possible other-than-temporary impairment of securities held by us due to changes in credit quality or rates;

the availability of, and cost of, sources of funding and the demand for our products;

the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital;

the costs or effects of mergers, acquisitions or dispositions, as well as whether we are able to obtain any required governmental approvals in connection with any such activities, or identify and complete favorable transactions in the future and/or realize the anticipated financial and business benefits;

the volatility of the stock market and its impact on our stock price and our ability to conduct acquisitions;

the regulatory and financial impacts associated with exceeding $10 billion in total assets;

the ability to execute our business plan in new markets;

our future operating or financial performance, including our outlook for future growth and our ability to control expenses;

changes in the level and direction of our nonperforming assets and charge-offs and the appropriateness of the allowance for credit losses;

the effectiveness of us managing the mix of earning assets and in improving, resolving or liquidating lower-quality assets;

changes in accounting standards and practices;

changes in consumer spending, borrowing and savings habits;

the effects of changes in the level or cost of checking or savings account deposits on our funding costs and net interest margin;

the impact of alternative currencies such as stablecoin and other cryptocurrencies on our ability to attract deposits;

increasing noninterest expense and its impact on our financial performance;

competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional competitors including retail businesses and technology companies;

potential changes to loss allocations between financial institutions and customers, including for losses incurred from the use of our products and services, including electronic payments and payment of checks, that were authorized by the customer but induced by fraud;

the challenges of attracting, integrating and retaining key employees;

the impact of the 2023 cyber security ransomware incident, including the pending litigation, on our operations and reputation;

the vulnerability of our operational or security systems or infrastructure, the systems of third- and fourth-party vendors or other service providers with whom we contract, and our customers to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and data/security breaches and the cost to defend against and respond to such incidents;

increased data security risks due to work from home arrangements and email vulnerability;

failure to safeguard personal information, and any resulting litigation;

the effect of a fall in stock market prices on our brokerage and wealth management businesses;

the effectiveness of our risk management framework and quantitative models;

the emergence or continuation of widespread health emergencies or pandemics;

changes in general economic, political, or industry conditions, and in conditions impacting the banking industry specifically;

uncertainty in U.S.

fiscal, monetary and trade policy, including the interest rate policies of the Federal Reserve Board or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, continued or renewed inflation, the impact of proposed or imposed tariffs by the U.S.

government or retaliatory tariffs proposed or imposed by U.S.

trading partners that could have an adverse impact on customers or any recession or slowdown in economic growth particularly in the markets in which TriCo and FHI conduct business, including California, Hawaii, Guam and Saipan;

volatility and disruptions in global capital and credit markets;

the impact of bank failures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks;

changes in interest rates that could significantly reduce net interest income and negatively affect asset yields and valuations and funding sources, including impacts on prepayment speeds;

competitive pressures among financial institutions and nontraditional providers of financial services, including on product pricing and services;

concentrations within TriCo's or FHI’s loan portfolio (including commercial real estate loans) or other asset classes, and the parties’ ability to attract and retain customer deposits, large loans to certain borrowers, access liquidity and capital, and manage deposit costs and funding sources;

the success, impact, and timing of TriCo's and FHI’s respective business strategies, including market acceptance of any new products or services and TriCo's and FHI’s ability to successfully implement strategic, operational, technology and integration initiatives;

the failure to properly use and protect customer and employee information and data;

cybersecurity risks (such as TriCo's 2023 cyber security ransomware incident), including the occurrence of fraudulent activity or a material breach of, or disruption to, the security of FHI’s, TriCo’s or their vendors’ systems;

risks related to the development, implementation, use and management of artificial intelligence and other emerging technologies;

the effects of failures or interruptions of information, communications or third-party service-provider systems;

the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations;

changes in laws or regulations;

adverse weather conditions, natural disasters and other catastrophic events such as wildfires;

the challenges of attracting, integrating and retaining key employees, especially while the merger of TriCo with FHI (the "Transaction") is pending;

the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement to which TriCo and FHI are parties;

the outcome of any legal proceedings that may be instituted against TriCo or FHI, including potential litigation relating to the Transaction;

delays in completing the Transaction;

the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transaction);

the failure to obtain stockholder or shareholder approvals, as applicable, or to satisfy any of the other conditions to the closing of the Transaction on a timely basis or at all;

changes in TriCo's or FHI’s share price before closing, including as a result of the financial performance of the other party prior to closing, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies;

the possibility that the anticipated benefits of the Transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where TriCo and FHI do business;

certain restrictions during the pendency of the proposed Transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions;

the possibility that the Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

diversion of management’s attention from ongoing business operations and opportunities;

potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Transaction;

the ability to complete the Transaction and integration of TriCo and FHI promptly and successfully;

the dilution caused by FHI’s issuance of additional shares of its capital stock in connection with the Transaction;

potential judgments, orders, settlements, penalties, fines and reputational damage resulting from pending or future litigation and regulatory investigations, proceedings and enforcement actions;

and our ability to manage the risks involved in the foregoing.

There can be no assurance that future developments affecting us will be the same as those anticipated by management.

Additional factors that could cause results to differ materially from those described above can be found in our filings with the U.S.

Securities and Exchange Commission, including without limitation the “Risk Factors” Section of TriCo’s Annual Report on Form 10-K for the year ended December 31, 2025, Such filings are also available in the “Investor Relations” section of our website, https://www.tcbk.com/investor-relations .

each company's ability to manage the risks involved in the foregoing;

and other factors that may affect the future results of TriCo and FHI.

The foregoing factors should not be considered an exhaustive list and should be read together with the other cautionary statements set forth in TriCo’s Annual Report on Form 10-K for the year ended December 31, 2025 and its latest Quarterly Report on Form 10-Q, which are on file with the Securities and Exchange Commission (the "SEC") and available on TriCo’s website, in the “Investor Relations” section of TriCo's website, www.tcbk.com, under the “About” tab and the “Investor Relations” link and then under the heading “SEC Filings” and in other documents TriCo files with the SEC, and in FHI’s Annual Report on Form 10-K for the year ended December 31, 2025 and its latest Quarterly Report on Form 10-Q, which are on file with the SEC and available on FHI’s investor relations website, https://ir.fhb.com, under the heading “SEC Filings,” and in other documents FHI files with the SEC.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

Accordingly, you should not place undue reliance on any such forward-looking statements.

Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results.

We undertake no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Neither TriCo nor FHI undertakes any obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

As TriCo Bancshares (referred to in this report as “we”, “our” or the “Company”) has not commenced any business operations independent of Tri Counties Bank (the “Bank”), the following discussion pertains primarily to the Bank.

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Interest income and net interest income are shown on a non-FTE basis in the Part I - Financial Information section of this Form 10-Q, and a reconciliation of the FTE and non-FTE presentations is provided below in the discussion of net interest income.

Recent Developments

On July 12, 2026, TriCo entered into an Agreement and Plan of Reorganization and Merger (the “merger agreement”) with First Hawaiian, Inc., a Delaware corporation (“First Hawaiian”) and Horizon Merger Sub, Inc., a California corporation and wholly owned subsidiary of First Hawaiian (“Merger Sub”).

The merger agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into TriCo (the “merger”), with TriCo surviving the merger (the “Surviving Corporation”), and immediately following the merger, the Surviving Corporation will merge with and into First Hawaiian (the “second step merger,” and together with the merger, the “mergers”), with First Hawaiian continuing as the surviving entity in the second step merger.

Promptly following the second step merger, Tri Counties Bank will merge with and into First Hawaiian’s wholly owned bank subsidiary, First Hawaiian Bank (the “bank merger”), with First Hawaiian Bank surviving the bank merger.

The merger agreement was unanimously approved and adopted by the board of directors of each of TriCo, FHI and Merger Sub.

Subject to the terms and conditions of the merger agreement, at the effective time of the merger (the “effective time”), each share of TriCo common stock outstanding immediately prior to the effective time, other than shares owned, directly or indirectly, by TriCo, First Hawaiian or any of their respective subsidiaries, will be converted into the right to receive 2.095 shares of common stock, par value $0.01 per share, of First Hawaiian.

Holders of TriCo’s common stock will receive cash in lieu of fractional shares.

Upon closing of the transaction, First Hawaiian and TriCo shareholders are expected to own approximately 65 % and 35 %, respectively, of the combined company.

The transaction is expected to close by the end of 2026, subject to the receipt of required regulatory approvals, approval by First Hawaiian and TriCo shareholders and the satisfaction of customary closing conditions.

A summary of the terms of the merger agreement and other related agreements are summarized in, and the merger agreement has been filed as an exhibit to, the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 15, 2026.

Critical Accounting Policies and Estimates

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The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, the Company evaluates its estimates, including those that materially affect the financial statements and are related to the adequacy of the allowance for loan losses, investments, mortgage servicing rights, fair value measurements, retirement plans and intangible assets.

On an on-going basis, the Company evaluates its estimates, including those that materially affect the financial statements and are related to the adequacy of the allowance for credit losses, investments, mortgage servicing rights, fair value measurements, retirement plans and intangible assets.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Financial Highlights

Performance highlights and other developments for the Company as of or for the three months ended March 31, 2026, included the following:

• Net income was $33.7 million or $1.04 per diluted share as compared to $33.6 million or $1.03 per diluted share in the trailing quarter, and an increase of $7.3 million or 27.8% from the first quarter of 2025

• Net interest income (FTE) was $91.5 million, a decrease of $1.0 million or 1.1% over the trailing quarter;

Performance highlights and other developments for the Company as of or for the three and six months ended June 30, 2026, included the following:

• Net income was $34.2 million or $1.06 per diluted share as compared to $33.7 million or $1.04 per diluted share in the trailing quarter, and an increase of $6.6 million or 24.1% from the second quarter of 2025

• Net interest income (FTE) was $93.9 million, an increase of $2.4 million or 2.6% over the trailing quarter;

net interest margin (FTE) was 4.11%, an increase of 4 basis points over 4.07% in the trailing quarter

• Loan balances decreased $42.9 million or 2.4% (annualized) from the trailing quarter and increased $247.4 million or 3.6% from the same quarter of the prior year

• Deposit balances increased $139.7 million or 6.8% (annualized) from the trailing quarter and increased $198.3 million or 2.4% from the same quarter of the prior year

• Loan balances increased $242.9 million or 13.7% (annualized) from the trailing quarter and increased $352.1 million or 5.1% from the same quarter of the prior year

• Deposit balances decreased $34.8 million or 1.7% (annualized) from the trailing quarter and $7.0 million or 0.1% from the same quarter of the prior year.

One-way sell deposit balances totaled $68.8 million at quarter end, as compared to zero for both the trailing quarter and same quarter of the prior period

• Average non-interest bearing deposits grew by 2.5% year over year and were 30.7% of total deposits at quarter end

• Yield on average earning assets was 5.31%, an increase of 5 basis points over the 5.26% in the trailing quarter;

yield on average loans was 5.78%, an increase of 1 basis point over the 5.77% in the trailing quarter

• The average cost of total deposits was 1.26%, a decrease of 3 basis points as compared to 1.29% in the trailing quarter, and a decrease of 17 basis points from 1.43% in the same quarter of the prior year

• For the quarter ended March 31, 2026, the Company’s return on average assets was 1.38%, while the return on average equity was 10.08%;

for the trailing quarter ended December 31, 2025, the Company’s return on average assets was 1.34%, while the return on average equity was 10.02%

• Diluted earnings per share were $1.04 for the first quarter of 2026, compared to $1.03 for the trailing quarter and $0.80 during the first quarter of 2025

• Shares of common stock outstanding decreased by 424,384 during the quarter as 447,211 shares were repurchased at an average price of $48.30 per share

• The loan to deposit ratio was 84.11% as of March 31, 2026, as compared to 86.05% for the trailing quarter end

• The efficiency ratio was 54.55% for the quarter ended March 31, 2026, as compared to 54.68% for the trailing quarter

• The provision for credit losses was $3.3 million during the quarter ended March 31, 2026, as compared to $3.0 million during the trailing quarter

• The allowance for credit losses (ACL) to total loans was 1.81% as of March 31, 2026, compared to 1.77% as of the trailing quarter end, and 1.88% as of March 31, 2025.

Non-performing assets to total assets were 0.77% on March 31, 2026, as compared to 0.72% as of December 31, 2025, and 0.59% on March 31, 2025

yield on average loans was 5.85%, an increase of 7 basis points over the 5.78% in the trailing quarter

• The average cost of total deposits was 1.27%, an increase of 1 basis point as compared to 1.26% in the trailing quarter, and a decrease of 10 basis points from 1.37% in the same quarter of the prior year

• For the quarter ended June 30, 2026, the Company’s return on average assets was 1.37%, while the return on average equity was 10.15%;

for the trailing quarter ended March 31, 2026, the Company’s return on average assets was 1.38%, while the return on average equity was 10.08%

• Diluted earnings per share were $1.06 for the second quarter of 2026, compared to $1.04 for the trailing quarter and $0.84 during the second quarter of 2025

• The loan to deposit ratio was 87.36% as of June 30, 2026, as compared to 84.11% for the trailing quarter end

• The efficiency ratio was 56.25% for the quarter ended June 30, 2026, as compared to 54.55% for the trailing quarter, inclusive of $0.9 million in merger related expenses during the current quarter, versus none in the trailing quarter

• The provision for credit losses was $2.7 million during the quarter ended June 30, 2026, as compared to $3.3 million during the trailing quarter

• The allowance for credit losses (ACL) to total loans was 1.78% as of June 30, 2026, compared to 1.81% as of the trailing quarter end, and 1.79% as of June 30, 2025.

Non-performing assets to total assets were 0.76% on June 30, 2026, as compared to 0.77% as of March 31, 2026, and 0.68% on June 30, 2025

TRICO BANCSHARES

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Three months ended

June 30, Six months ended

2026 2025 2026 2025

Net interest income $ 93,630 $ 86,519 $ 184,856 $ 169,061

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Three months ended

(in thousands) March 31,

2026 December 31,

(in thousands) June 30,

2026 March 31,

2026 Change % Change

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4.07 % 4.01 % 0.06 %

Three months ended March 31,

Three months ended June 30,

(in thousands) 2026 2025 Change % Change

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4.07 % 3.82 % 0.25 %

Six months ended June 30,

(in thousands) 2026 2025 Change % Change

Interest income $ 238,813 $ 230,438 $ 8,375 3.6 %

Interest expense (53,957) (61,377) 7,420 (12.1) %

Fully tax-equivalent adjustment (FTE) (1)

519 529 (10) (1.9) %

Net interest income (FTE) $ 185,375 $ 169,590 $ 15,785 9.3 %

Net interest margin (FTE) 4.09 % 3.81 %

Acquired loans discount accretion, net:

Amount (included in interest income) $ 2,376 $ 3,242 $ (866) (26.7) %

Net interest margin less effect of acquired loan discount accretion (1)

4.04 % 3.73 % 0.31 %

(1) Certain information included herein is presented on a FTE basis and/or to present additional financial details which may be desired by users of this financial information.

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Despite the elevated rate environment, the prepayment rate of portfolio loans, inclusive of those acquired at a premium or discount, remains generally consistent.

During the quarters ended March 31, 2026, December 31, 2025 and March 31, 2025, the purchased loan discount accretion was $1.4 million, $0.9 million and $2.0 million, respectively.

During the quarters ended June 30, 2026, March 31, 2026 and June 30, 2025, the purchased loan discount accretion was $1.0 million, $1.4 million and $1.2 million, respectively.

Summary of Average Balances, Yields/Rates and Interest Differential

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Yields on securities and certain loans have been adjusted upward to reflect the effect of income thereon exempt from federal income taxation at the current statutory tax rate (dollars in thousands).

Three months ended March 31,

Three months ended June 30,

Balance Interest

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(3) Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of i nterest-earning assets, then annualized based on the number of days in the given period .

Net interest income (FTE) during the three months ended March 31, 2026, increased $8.7 million or 10.5% to $91.5 million compared to $82.8 million during the three months ended March 31, 2025.

Net interest margin totaled 4.07% for the three months ended March 31, 2026, an increase of 34 basis points from the same quarter in 2025.

The primary drivers behind the change in net interest margin is related to an increase in average loan balances, improving interest income by $3.8 million, coupled with a decline in yields paid on interest-bearing deposits improving net interest income by $2.9 million, with yields paid declining by 24 basis points between the quarter ended March 31, 2026, and the same quarter of the prior year.

The accretion of discounts from acquired loans added 8 basis points and 12 basis points to loan yields during the quarters ended March 31, 2026 and March 31, 2025, respectively.

Finally, the average balance of noninterest-bearing deposits increased by $37.1 million from the three-month average as of March 31, 2026.

Net interest income (FTE) during the three months ended June 30, 2026, increased $7.1 million or 8.2% to $93.9 million compared to $86.8 million during the three months ended June 30, 2025.

Net interest margin totaled 4.11% for the three months ended June 30, 2026, an increase of 23 basis points from the same quarter in 2025.

The primary drivers behind the change in net interest margin is related to an increase in average loan balances, improving interest income by $4.3 million, coupled with a decline in yields paid on interest-bearing deposits improving net interest income by $1.3 million, with yields paid declining by 14 basis points between the quarter ended June 30, 2026, and the same quarter of the prior year.

The accretion of discounts from acquired loans added 6 basis points and 8 basis points to loan yields during the quarters ended June 30, 2026 and June 30, 2025, respectively.

Finally, the average balance of noninterest-bearing deposits increased by $63.0 million from the three-month average as of June 30, 2026.

Six months ended June 30,

Balance Interest

Expense Rates

/Paid Average

Balance Interest

Expense Rates

Loans $ 7,109,631 $ 204,944 5.81 % $ 6,827,469 $ 194,073 5.73 %

Investments-taxable 1,725,730 28,968 3.39 % 1,851,439 30,673 3.34 %

Investments-nontaxable (1)

130,186 2,250 3.49 % 132,980 2,292 3.48 %

Total investments 1,855,916 31,218 3.39 % 1,984,419 32,965 3.35 %

Cash at Federal Reserve and other banks 172,138 3,170 3.71 % 175,315 3,929 4.52 %

Total earning assets 9,137,685 239,332 5.28 % 8,987,203 230,967 5.18 %

Other assets, net 802,484 806,241

Total assets $ 9,940,169 $ 9,793,444

Liabilities and shareholders’ equity

Interest-bearing demand deposits $ 1,883,678 $ 13,451 1.44 % $ 1,817,515 $ 12,297 1.36 %

Savings deposits 2,784,265 20,796 1.51 % 2,765,057 24,444 1.78 %

Time deposits 1,138,360 18,341 3.25 % 1,111,382 20,162 3.66 %

Total interest-bearing deposits 5,806,303 52,588 1.83 % 5,693,954 56,903 2.02 %

Other borrowings 11,043 8 0.15 % 55,902 1,061 3.83 %

Junior subordinated debt 41,238 1,361 6.66 % 101,219 3,413 6.80 %

Total interest-bearing liabilities 5,858,584 53,957 1.86 % 5,851,075 61,377 2.12 %

Noninterest-bearing deposits 2,565,650 2,515,508

Other liabilities 163,117 164,259

Shareholders’ equity 1,352,818 1,262,602

Total liabilities and shareholders’ equity $ 9,940,169 $ 9,793,444

Net interest rate spread (1) (2)

3.42 % 3.06 %

Net interest income and margin (1) (3)

$ 185,375 4.09 % $ 169,590 3.81 %

Summary of Changes in Interest Income and Expense due to Changes in Average Asset and Liability Balances and Yields Earned and Rates Paid

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The following commentary regarding net interest income, interest income and interest expense may be best understood while referencing the Summary of Average Balances, Yields/Rates and Interest Differential and the Summary of Changes in Interest Income and Expense due to Changes in Average Asset and Liability Balances and Yields Earned and Rates Paid shown above.

Three months ended March 31, 2026

compared with three months ended March 31, 2025

Three months ended June 30, 2026

compared with three months ended June 30, 2025

(in thousands) Volume Rate Total

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Increase in net interest income $ 3,777 $ 3,329 $ 7,106

Net interest income (FTE) during the three months ended March 31, 2026 increased $8.7 million to $91.5 million compared to $82.8 million during the three months ended March 31, 2025.

As noted above, the increase in net interest income (FTE) was due largely to higher average loan balances and lower rates paid for interest-bearing deposits, both of which have a beneficial impact on net interest income.

Net interest income (FTE) during the three months ended June 30, 2026 increased $7.1 million to $93.9 million compared to $86.8 million during the three months ended June 30, 2025.

As noted above, the increase in net interest income (FTE) was due largely to:

higher average loan balances, lower rates paid for interest-bearing deposits, and lower average balances for borrowings, all of which have a beneficial impact on net interest income.

Six months ended June 30, 2026

compared with six months ended June 30, 2025

(in thousands) Volume Rate Total

Increase (decrease) in interest income:

Loans $ 8,084 $ 2,787 $ 10,871

Investment securities

(2,148) 401 (1,747)

Cash at Federal Reserve and other banks (72) (687) (759)

Total interest-earning assets 5,864 2,501 8,365

Increase (decrease) in interest expense:

Interest-bearing demand deposits 450 704 1,154

Savings deposits 171 (3,819) (3,648)

Time deposits 494 (2,315) (1,821)

Other borrowings (859) (194) (1,053)

Junior subordinated debt (2,039) (13) (2,052)

Total interest-bearing liabilities (1,783) (5,637) (7,420)

Increase in net interest income $ 7,647 $ 8,138 $ 15,785

Asset Quality and Credit Loss Provisioning

During the three months ended March 31, 2026, the Company recorded a provision for credit losses of $3.3 million, as compared to $3.0 million during the trailing quarter, and $3.7 million during the first quarter of 2025.

Three months ended

(dollars in thousands) March 31,

2026 December 31,

During the three months ended June 30, 2026, the Company recorded a provision for credit losses of $2.7 million, as compared to $3.3 million during the trailing quarter, and $4.7 million during the second quarter of 2025.

Three months ended Six months ended

(dollars in thousands) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

Addition to allowance for credit losses $ 2,585 $ 2,970 $ 4,525 $ 5,555 $ 7,188

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Total provision for credit losses $ 2,655 $ 3,325 $ 4,665 $ 5,980 $ 8,393

The allowance for credit losses (ACL) was $127.9 million or 1.81% of total loans as of March 31, 2026.

The provision for credit losses on loans of $3.3 million recorded allocated approximately $2.9 million toward individually evaluated loans and $0.4 million to replenish quarterly net charge-offs.

Three months ended March 31,

The ACL was $130.2 million or 1.78% of total loans as of June 30, 2026.

The provision for credit losses on loans of $2.6 million recorded allocated approximately $2.3 million toward collectively evaluated loans and $0.3 million to replenish quarterly net charge-offs.

Three months ended June 30, Six months ended June 30,

(dollars in thousands) 2026 2025 2026 2025

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The net charge-offs incurred during the quarter were spread amongst numerous borrowers and loan types.

The net change in reserves on collective loan pools was minimal as of the quarter ended March 31, 2026.

On a gross basis, the Company did benefit from declining required general reserves for consumer loans, which was offset by increases in required general reserves for commercial real estate lending.

Additionally, Management notes that economic indicators through the end of the current quarter, as well as actual and forecasted trends including, but not limited to, unemployment, gross domestic product, and corporate borrowing rates continued to evidence stability and were supportive of general economic expansion, and generally consistent with the trailing period ended December 31, 2025, which is aligned with the Company's direct experiences with borrowers.

Management's proactive portfolio management policies and ongoing dialogue with borrowers suggests caution continues to be warranted.

Actions by the Federal Reserve to further cut rates during 2026 or stimulative policies by the Federal government may help further improve this outlook overall, but the uncertainty associated with the extent and timing of these potential reductions has inhibited a material change to monetary policy assumptions.

The $2.2 million increase in allowance for credit losses was primarily attributed to net loan growth during the quarter, which totaled $242.9 million.

Additionally, Management notes that economic indicators through the end of the current quarter, as well as actual and forecasted trends including, but not limited to, unemployment, gross domestic product, and corporate borrowing rates continued to evidence stability and were supportive of general economic expansion, and were consistent with, if not slightly improved from the period ended March 31, 2026, which is aligned with the Company's direct experiences with borrowers.

Management's proactive portfolio management policies and ongoing dialogue with borrowers suggest caution continues to be warranted, with emphasis on the consumer portfolio.

Actions by the Federal Reserve during 2026 or stimulative policies by the Federal government may impact this outlook overall, but the uncertainty associated with the extent and timing of these potential reductions has inhibited a material change to monetary policy assumptions.

Furthermore, political policy risks both domestic and international remain unresolved, which could quickly lead to further negative effects on domestic economic outcomes.

The uncertainties related to the extent and duration of escalation within the Middle East, and potential domestic economic impact from volatility in oil prices and the impact on inflation risks, continue to present challenges in correlating potential improvement of credit risks within the Company's loan portfolio.

The lingering uncertainties related to the extent and duration of escalation within the Middle East, and potential domestic economic impact from volatility in oil prices and the impact on inflation risks, continue to present challenges in correlating potential improvement of credit risks within the Company's loan portfolio.

Therefore, management continues to believe that certain credit weaknesses are present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors.

(dollars in thousands) As of March 31, 2026 % of Loans Outstanding As of December 31, 2025 % of Loans Outstanding As of March 31, 2025 % of Loans Outstanding

(dollars in thousands) As of June 30, 2026 % of Loans Outstanding As of March 31, 2026 % of Loans Outstanding As of June 30, 2025 % of Loans Outstanding

Pass $ 7,050,687 96.43 % $ 6,813,091 96.39 % $ 6,751,005 97.01 %

5 unchanged sentences

ACL to non-performing loans 189.11 % 184.20 % 192.11 %

The ratio of classified loans to total loans of 2.00% as of March 31, 2026, was an increase of 22 basis points from December 31, 2025, and 6 basis points from the comparative quarter ended 2025.

The change in classified loans outstanding as compared to the trailing quarter represented an increase of approximately $14.6 million.

Loans past due 30 days or more increased by $11.0 million during the quarter ended March 31, 2026, to $48.9 million, as compared to $37.9 million at December 31, 2025.

The ratio of classified loans to total loans of 1.93% as of June 30, 2026, was a decrease of 7 basis points from March 31, 2026, and 1 basis point from the comparative quarter ended 2025.

The change in classified loans outstanding as compared to the trailing quarter represented a decrease of approximately $0.5 million.

Loans past due 30 days or more increased by $0.7 million during the quarter ended June 30, 2026, to $49.6 million, as compared to $48.9 million at March 31, 2026.

The majority of loans identified as past due are well-secured by collateral, and approximately $27.5 million are less than 90 days delinquent.

Non-performing loans increased by $5.2 million during the quarter ended March 31, 2026 to $69.5 million as compared to $64.2 million at December 31, 2025.

Non-performing loans decreased by $0.6 million during the quarter ended June 30, 2026, to $68.8 million as compared to $69.5 million at March 31, 2026.

The credit and collateral profiles of non-performing loans remain generally consistent with the trailing quarter.

1 unchanged sentence

Management anticipates that these proactive strategies, specifically within agricultural real estate secured and agricultural commercial loans, will further benefit from the continued improvement in agricultural commodity prices, stable water supply, and growing crop demand.

Of the $69.5 million loans designated as non-performing as of March 31, 2026, approximately $38.2 million are current or less than 30 days past due with respect to payments required under their existing loan agreements.

Of the $68.8 million loans designated as non-performing as of June 30, 2026, approximately $43.9 million are current or less than 30 days past due with respect to payments required under their existing loan agreements.

Management continues to proactively assess the repayment capacity of borrowers that will be subject to rate resets in the near term.

To date this analysis as well as management's observations of loans that have experienced a rate reset, have resulted in an insignificant need to provide concessions to borrowers.

As of March 31, 2026, other real estate owned consisted of 14 properties with a carrying value of approximately $7.0 million, as compared to 12 properties with a carrying value of $6.2 million at December 31, 2025.

Non-performing assets of $76.4 million at March 31, 2026,

represented 0.77% of total assets, a change from $70.5 million or 0.72% and $57.5 million or 0.59% as of December 31, 2025 and March 31, 2025, respectively.

As of June 30, 2026, other real estate owned consisted of 14 properties with a carrying value of approximately $6.8 million, as compared to 14 properties with a carrying value of $7.0 million at March 31, 2026.

Non-performing assets of $75.6 million at June 30, 2026, represented 0.76% of total assets, a change from $76.4 million or 0.77% and $67.5 million or 0.68% as of March 31, 2026 and June 30, 2025, respectively.

Non-interest Income

15 unchanged sentences

(Loss) gain on marketable equity securities (11) 8 (19) (237.5) %

Other income 771 80 691 863.8 %

Total other non-interest income 4,248 3,440 808 23.5 %

Total non-interest income $ 18,246 $ 17,090 $ 1,156 6.8 %

Non-interest income increased $1.2 million or 6.8% to $18.2 million during the three months ended June 30, 2026, compared to $17.1 million during the comparative quarter ended June 30, 2025.

Changes in non-interest income line items were modest but generally improved during the quarter.

Other income during the three months ended June 30, 2026 increased by $0.7 million, largely attributed to approximately $0.6 million in proceeds from various insurance matters.

Six months ended

(in thousands) 2026 2025 $ Change % Change

ATM and interchange fees $ 13,040 $ 12,696 $ 344 2.7 %

Service charges on deposit accounts 10,662 10,103 559 5.5 %

Other service fees 3,016 2,844 172 6.0 %

Mortgage banking service fees 846 877 (31) (3.5) %

Change in value of mortgage servicing rights (406) (192) (214) (111.5) %

Total service charges and fees 27,158 26,328 830 3.2 %

Increase in cash value of life insurance 1,691 1,662 29 1.7 %

Asset management and commission income 3,810 3,123 687 22.0 %

Gain on sale of loans 882 847 35 4.1 %

Lease brokerage income 145 116 29 25.0 %

Sale of customer checks 683 663 20 3.0 %

Gain (loss) on sale or exchange of investment securities 17 (1,142) 1,159 101.5 %

Gain (loss) on marketable equity securities (28) 47 (75) (159.6) %

Other 920 1,519 (599) (39.4) %

1 unchanged sentence

Total non-interest income $ 35,278 $ 33,163 $ 2,115 6.4 %

Non-interest income increased $1.0 million or 6.0% to $17.0 million during the three months ended March 31, 2026, compared to $16.1 million during the comparative quarter ended March 31, 2025.

Growth in deposit related transactional activities contributed to the elevated service fees, which increased by a combined $0.5 million as compared to the equivalent period in 2025.

Further, elevated activity and volume of assets under management drove an increase of $0.6 million or 37.7% in asset management and commission income for the period ended March 31, 2026, as compared to the same period in 2025.

Other income during the three months ended March 31, 2026 decreased by $1.3 million, reflecting the absence of excess cash flows from death benefit proceeds totaling $1.2 million in the comparative quarter.

In addition, gains on investment security sales totaling $17.0 thousand were recorded during the current quarter as compared to losses on sales of $1.1 million during the same quarter of the prior year.

Non-interest income increased $2.1 million or 6.4% to $35.3 million during the six months ended June 30, 2026, compared to $33.2 million during the comparative period ended June 30, 2025.

As noted above, service charges and customer fees in the 2026 period drove an increase of $0.8 million.

Further, elevated activity and volume of assets under management resulted in an increase of $0.7 million or 22.0% in related income.

Other income for the six months ended June 30, 2026 and 2025 included excess insurance related proceeds of $560,000 and $1,207,000, respectively.

Non-interest Expense

15 unchanged sentences

Regulatory assessments and insurance 1,300 1,297 3 0.2 %

Merger and acquisition expense 850 — 850 n/m

Postage 407 385 22 5.7 %

1 unchanged sentence

Courier service 576 544 32 5.9 %

(Gain) loss on disposal of fixed assets — 5 (5) (100.0) %

Other miscellaneous expense 4,175 4,682 (507) (10.8) %

Total other non-interest expense 23,953 22,845 1,108 4.9 %

Total non-interest expense $ 62,925 $ 61,131 $ 1,794 2.9 %

Average full time equivalent staff 1,110 1,171 (61) (5.2) %

Total non-interest expense increased $1.8 million or 2.9% to $62.9 million during the three months ended June 30, 2026, as compared to $61.1 million for the quarter ended June 30, 2025.

Total salaries and benefits expense increased by $0.7 million or 1.8% on a net basis, led by incentive compensation attributed to the loan and deposit production activity in the quarter as well as the Company's overall financial performance.

Merger and acquisitions costs during the quarter totaled $0.9 million and were related to the proposed merger with First Hawaiian, Inc.

announced on July 13, 2026.

The remaining changes in other non-interest expense line items were mixed during the quarter ended June 30, 2026, but essentially flat and due to timing differences rather than unique changes in operations.

Six months ended

(in thousands) 2026 2025 $ Change % Change

Base salaries, net of deferred loan origination costs $ 49,719 $ 51,158 $ (1,439) (2.8) %

Incentive compensation 11,256 9,261 1,995 21.5 %

Benefits and other compensation costs 14,142 14,722 (580) (3.9) %

Total salaries and benefits expense 75,117 75,141 (24) — %

Occupancy 8,819 8,277 542 6.5 %

Data processing and software 10,726 10,017 709 7.1 %

Equipment 2,655 2,473 182 7.4 %

Intangible amortization 860 997 (137) (13.7) %

Advertising 1,564 2,012 (448) (22.3) %

ATM and POS network charges 3,719 3,694 25 0.7 %

Professional fees 3,230 3,185 45 1.4 %

Telecommunications 919 1,001 (82) (8.2) %

Regulatory assessments and insurance 2,605 2,580 25 1.0 %

Merger and acquisition expense 850 — 850 n/m

Postage 753 705 48 6.8 %

Operational losses 787 694 93 13.4 %

Courier service 1,096 1,032 64 6.2 %

(Gain) loss on sale or acquisition of foreclosed assets — (3) 3 (100.0) %

4 unchanged sentences

Average full time equivalent staff 1,114 1,183 (69) (5.8) %

Total non-interest expense decreased $0.5 million or 0.9% to $59.1 million during the three months ended March 31, 2026, as compared to $59.6 million for the quarter ended March 31, 2025.

Total salaries and benefits expense decreased by $0.7 million or 1.9% on a net basis, largely attributed to the reductions in FTE.

Changes in other non-interest expense line items were mixed during the quarter ended March 31, 2026, but essentially flat and due to timing differences rather than unique changes in operations, resulting in a net increase of $0.2 million, led by an increase in occupancy expense of $0.4 million following the Company's expansion in the Bay Area.

The Company’s effective tax rate was 26.6% for the quarter ended March 31, 2026, as compared to 27.8% for the quarter ended December 31, 2025, and 26.3% for the quarter ended March 31, 2025.

Non-interest expense increased $1.3 million or 1.0% to $122.0 million during the six months ended June 30, 2026, as compared to $120.7 million for the trailing six months ended.

Excluding the aforementioned merger expenses, changes in other non-interest expense line items were mixed during the six months period ended June 30, 2026, but essentially flat and due to timing differences rather than unique changes in operations.

As noted above, increases in incentive compensation were attributed to the loan and deposit production activity as well as the Company's overall financial performance.

The Company’s effective tax rate was 26.2% for the quarter ended June 30, 2026, as compared to 26.6% for the quarter ended March 31, 2026, and 27.2% for the quarter ended June 30, 2025.

Differences between the Company's effective tax rate and applicable federal and state blended statutory rate of approximately 29.6% are due to the proportion of non-taxable revenues, non-deductible expenses, and benefits from tax credits as compared to the levels of pre-tax earnings.

2 unchanged sentences

The following is a comparison of the quarterly change in certain assets and liabilities:

Ending balances March 31,

2026 December 31,

Ending balances June 30,

2026 March 31,

2026 Annualized

5 unchanged sentences

Total other borrowings 10,519 11,455 (936) (32.7)

Loans outstanding decreased by $42.9 million or 2.4% on an annualized basis during the quarter ended March 31, 2026.

During the quarter, gross loan originations/draws totaled approximately $388.7 million while gross payoffs/repayments of loans totaled $442.2 million, which compares to gross originations/draws and gross payoffs/repayments during the trailing quarter ended of $502.8 million and $418.1 million, respectively.

Origination volume contracted from the trailing quarter but expanded by comparison with the same quarter of prior years.

However, the level of payoff and paydown was elevated during the quarter by comparison to both the trailing and prior year quarters.

Loans outstanding increased by $242.9 million or 13.7% on an annualized basis during the quarter ended June 30, 2026.

During the quarter, gross loan originations/draws totaled approximately $632.9 million while gross payoffs/repayments of loans totaled $412.8 million, which compares to gross originations/draws and gross payoffs/repayments during the trailing quarter ended of $388.7 million and $442.2

million, respectively.

Origination volume was elevated relative to historical norms, while repayments were in line with recent periods.

Domestically, the macro-economic outlook remains optimistic for borrowers following the passage of tax and spending legislation that is expected to promote continued economic expansion through the remainder of 2026.

The activity within loan payoffs/repayments remains generally consistent with recent quarters and spread amongst numerous borrowers, regions and loan types.

Investment security balances increased $28.7 million or 6.2% on an annualized basis during the quarter as a result of purchases of $90.7 million, partially offset by net prepayments/maturities of $55.2 million and net decreases in the market value of securities of $6.6 million.

Investment security purchases were comprised of fixed rate agency mortgage-backed securities.

Investment security balances decreased $74.8 million or 16.0% on an annualized basis during the quarter as a result of prepayments/maturities of $113.1 million and net decreases in the market value of securities of $3.6 million, partially offset by purchases totaling $42.1 million.

Investment security purchases were comprised of fixed rate agency mortgage-backed securities and collateralized loan obligations.

While management intends to primarily utilize cash flows from the investment security portfolio and organic deposit growth to support loan growth, excess liquidity will be utilized for purchases of investment securities to support net interest income growth and net interest margin expansion.

Deposit balances increased by $139.7 million or 6.8% annualized during the period.

There were no deposits sold as of March 31, 2026, compared to $72.9 million as of the trailing quarter end.

Deposit balances decreased by $34.8 million or 1.7% annualized during the period, inclusive of $68.8 million in one-way sell activity at June 30, 2026, as a short-term method to reduce the Company's overall balance sheet size.

There were no deposits sold in the trailing quarter or the same quarter of the prior year.

The following is a comparison of the year over year change in certain assets and liabilities:

Ending balances As of March 31, % Change

Ending balances As of June 30, % Change

(dollars in thousands) 2026 2025 $ Change

5 unchanged sentences

Investment Securities

The following table presents the available for sale debt securities portfolio by major type as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table presents the available for sale debt securities portfolio by major type as of June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

(in thousands) Fair Value % Fair Value %

7 unchanged sentences

Total debt securities available for sale $ 1,695,669 100.0 % $ 1,731,931 100.0 %

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(in thousands) Amortized

5 unchanged sentences

Total debt securities held to maturity $ 80,789 100.0 % $ 90,544 100.0 %

Investment securities held to maturity decreased $4.8 million to $85.7 million as of March 31, 2026, as compared to December 31, 2025.

Investment securities held to maturity decreased $9.8 million to $80.8 million as of June 30, 2026, as compared to December 31, 2025.

This decrease is attributable to calls and principal repayments of $9.7 million, and amortization of net purchase premiums of $0.1 million.

3 unchanged sentences

The majority of the Company’s loans are direct loans made to individuals, and local or regional businesses which service a variety of industries.

The Company relies substantially on local promotional activity and personal contacts by bank officers, directors and employees to compete with other financial institutions.

The Company relies substantially on local promotional activity and personal contacts by bank officers, directors and employees to

compete with other financial institutions.

The Company makes loans to borrowers whose applications include a sound purpose, a viable repayment source and a plan of repayment established at inception and generally backed by a secondary source of repayment.

The following table shows the Company’s loan balances, net of deferred loan costs and discounts, as of the dates indicated:

(in thousands) March 31, 2026 December 31, 2025

(in thousands) June 30, 2026 December 31, 2025

Commercial real estate $ 5,013,880 68.6 % $ 4,853,762 68.3 %

8 unchanged sentences

“Performing nonaccrual loans” are loans that may be current for both principal and interest payments, or are less than 90 days past due, but for which payment in full of both principal and interest is not expected, and are not well secured and in the process of collection:

(in thousands) March 31,

(in thousands) June 30,

2026 December 31,

9 unchanged sentences

Allowance for credit losses to nonperforming loans 189 % 196 %

Changes in nonperforming assets during the three months ended March 31, 2026

(in thousands) Balance at December 31, 2025 New NPA /

Changes in nonperforming assets during the three months ended June 30, 2026

(in thousands) Balance at March 31, 2026 New NPA /

Adjustments Pay-downs

/Upgrades Charge-offs/ (1)

Assets Balance at March 31, 2026

Assets Balance at June 30, 2026

Commercial real estate:

16 unchanged sentences

(1) The table above does not include deposit overdraft charge-offs.

Nonperforming assets increased during the three months ended March 31, 2026 by $6.0 million or 8.5% to $76.4 million compared to $70.5 million at December 31, 2025.

The increase in nonperforming assets during the first quarter of 2026 was primarily the result of nonperforming loan additions totaling $15.2 million, partially offset by pay-downs and upgrades, which totaled $8.4 million during the quarter, as well as $0.8 million in charge-offs.

Management is actively engaged in the collection and recovery efforts for all nonperforming assets and believes that the loan loss reserves associated with these loans is sufficient as of March 31, 2026.

(in thousands)

Nonperforming assets decreased during the three months ended June 30, 2026 by $0.8 million or 1.1% to $75.6 million compared to $76.4 million at March 31, 2026.

The decrease in nonperforming assets during the second quarter of 2026 was primarily the result of nonperforming loan additions totaling $3.3 million, offset by pay-downs and upgrades, which totaled $3.6 million during the quarter, as well as $0.3 million in charge-offs.

Changes in nonperforming assets during the six months ended June 30, 2026

(in thousands) Balance at December 31, 2025 New NPA /

Adjustments Pay-downs

/Upgrades Charge-offs/ (1)

Assets Balance at June 30, 2026

Commercial real estate:

CRE non-owner occupied $ 7,089 1,728 (637) — — $ 8,180

CRE owner occupied 7,733 10,877 (516) — — 18,094

Multifamily 435 506 (15) — — 926

Farmland 31,615 — (6,354) — — 25,261

Total commercial real estate loans 46,872 13,111 (7,522) — — 52,461

SFR 1-4 1st DT liens 6,246 1,336 (992) — (220) 6,370

SFR HELOCs and junior liens 5,474 1,543 (2,626) (75) — 4,316

Other 459 347 (42) (224) — 540

Total consumer loans 12,179 3,226 (3,660) (299) (220) 11,226

Commercial and industrial 4,013 1,834 (431) (768) — 4,648

Construction 650 42 (15) (70) (501) 106

Agriculture production 505 40 (386) — — 159

Leases — 242 — — — 242

Total nonperforming loans 64,219 18,495 (12,014) (1,137) (721) 68,842

Foreclosed assets 6,245 (188) — — 721 6,778

Total nonperforming assets $ 70,464 18,307 (12,014) (1,137) — $ 75,620

The Components of the Allowance for Credit Losses for Loans

The following table sets forth the allowance for credit losses for loans as of the dates indicated:

(in thousands) March 31,

(in thousands) June 30,

2026 December 31,

2025 March 31,

2025 June 30,

Allowance for credit losses:

3 unchanged sentences

Allowance for credit losses for loans / total loans 1.78 % 1.77 % 1.79 %

For additional information regarding the allowance for loan losses, including changes in specific, formula, and environmental factors allowance categories, see “Asset Quality and Loan Loss Provisioning” at “Results of Operations” , above.

For additional information regarding the allowance for credit losses, including changes in specific, formula, and environmental factors allowance categories, see “Asset Quality and Loan Loss Provisioning” at “Results of Operations” , above.

For additional information on the current ACL methodology, see "Allowance for Credit Losses - Loans" within footnote 1 of the Company's 10-Q/10-K.

Based on the current conditions of the loan portfolio, management believes that the $127.9 million allowance for credit losses at March 31, 2026 is adequate to absorb expected losses inherent in the Bank’s loan portfolio.

Based on the current conditions of the loan portfolio, management believes that the $130.2 million allowance for credit losses at June 30, 2026 is adequate to absorb expected losses inherent in the Bank’s loan portfolio.

No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

The following table summarizes the allocation of the allowance for credit losses between loan types and by percentage of the total allowance for credit losses on loans as of the dates indicated:

(in thousands) March 31, 2026 December 31, 2025 March 31, 2025

(in thousands) June 30, 2026 December 31, 2025 June 30, 2025

Commercial real estate $ 79,660 61.2 % $ 75,532 60.1 % $ 74,484 59.8 %

6 unchanged sentences

The following table summarizes the allocation of the allowance for credit losses as a percentage of the total loans for each loan category as of the dates indicated:

(in thousands) March 31, 2026 December 31, 2025 March 31, 2025

(in thousands) June 30, 2026 December 31, 2025 June 30, 2025

Commercial real estate 1.59 % 1.56 % 1.57 %

7 unchanged sentences

Three months ended

June 30, Six months ended

(in thousands) 2026 2025 2026 2025

7 unchanged sentences

Multifamily — — — —

Farmland — — — —

SFR 1-4 1st DT liens — — — —

4 unchanged sentences

Agriculture production — (11) — (11)

Leases — — — —

Total loans charged-off (455) (8,595) (1,367) (8,969)

4 unchanged sentences

Multifamily — — — —

Farmland — — — —

SFR 1-4 1st DT liens — — — —

SFR HELOCs and junior liens 42 4 49 16

Other 49 36 101 73

Commercial and industrial 26 60 74 166

1 unchanged sentence

Agriculture production — 1 11 614

Leases — — — —

Total recoveries of previously charged-off loans 118 102 237 870

6 unchanged sentences

Foreclosed Assets, Net of Allowance for Losses

The following table details the components and summarize the activity in foreclosed assets, net of allowances for losses, for the three months ended March 31, 2026:

The following table details the components and summarize the activity in foreclosed assets, net of allowances for losses, for the six months ended June 30, 2026:

(in thousands) Balance at December 31,

1 unchanged sentence

Adjustments Transfers

from Loans Balance at March 31, 2026

from Loans Balance at June 30, 2026

Land & construction $ 3,592 $ — $ (104) $ 501 $ 3,989

2 unchanged sentences

Total foreclosed assets $ 6,245 $ — $ (187) $ 720 $ 6,778

During the three months ended March 31, 2026, the Company’s deposits increased by $139.7 million to $8.4 billion at quarter end.

There were no brokered deposits included in the deposit balances as of March 31, 2026 and December 31, 2025.

Estimated uninsured deposits totaled $2.7 billion and $2.9 billion as of March 31, 2026 and December 31, 2025, respectively.

During the six months ended June 30, 2026, the Company’s deposits increased by $104.9 million to $8.4 billion at quarter end.

There were no brokered deposits included in the deposit balances as of June 30, 2026 and December 31, 2025.

Estimated uninsured deposits totaled $2.9 billion and $2.9 billion as of June 30, 2026 and December 31, 2025, respectively.

Off-Balance Sheet Arrangements

6 unchanged sentences

The 2025 Program has no expiration date but the Board may suspend or discontinue the program at any time.

During the three months ended March 31, 2026, the Company repurchased 447,211 shares with market value totaling $21.6 million.

There were no shares repurchased in 2025 under the 2025 Program, however, during the three months ended March 31, 2025 the Company purchased 89,654 shares with market value of $3.7 million under the 2021 Share Repurchase Program.

As of March 31, 2026, approximately 1,553,000 shares remain authorized for repurchase.

Total shareholders' equity decreased by $4.0 million during the quarter ended March 31, 2026, as net income of $33.7 million was offset by a $4.6 million increase in accumulated other comprehensive losses, $11.5 million in cash dividends on common stock and $21.6 million in share repurchase activity.

As a result, the Company’s book value increased to $41.49 per share at March 31, 2026, compared to $41.07 at December 31, 2025.

The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $31.82 per share at March 31, 2026, as compared to $31.52 at December 31, 2025.

The following is a comparison of various capital ratios for the current period with the trailing quarter and applicable minimum regulatory requirements.

March 31, 2026 December 31, 2025

During the three months ended June 30, 2026, the Company repurchased zero shares.

During the six months ended June 30, 2026, the Company repurchased 447,211 shares with a market value totaling $21.6 million under the 2025 Program.

There were no shares repurchased in 2025 under the 2025 Program, however, during the three and six months ended June 30, 2025 the Company purchased 379,978 and 469,632 shares with market values of $15.2 million and $18.9 million under the 2021 Share Repurchase Program.

As of June 30, 2026, approximately 1,553,000 shares remain authorized for repurchase

Total shareholders' equity increased by $19.6 million during the quarter ended June 30, 2026, as net income of $34.2 million was partially offset by a $2.5 million increase in accumulated other comprehensive losses and $11.5 million in cash dividends on common stock.

As a result, the Company’s book value increased to $42.03 per share at June 30, 2026, compared to $41.49 at March 31, 2026.

The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $32.40 per share at June 30, 2026, as compared to $31.82 at March 31, 2026.

The following is a comparison of various capital ratios for the current period with the most recent fiscal year-end and applicable minimum regulatory requirements.

June 30, 2026 December 31, 2025

Ratio Minimum

5 unchanged sentences

See Note 10 and Note 16 to the condensed consolidated financial statements at Item 1 of Part I of this report for additional information about the Company’s capital resources.

As of March 31, 2026, we had an effective shelf registration statement on file with the Securities and Exchange Commission that allows us to issue various types of debt securities, as well as common stock, preferred stock, warrants, depository shares representing fractional interest in shares of preferred stock, purchase contracts and units from time to time in one or more offerings.

As of June 30, 2026, we had an effective shelf registration statement on file with the Securities and Exchange Commission that allows us to issue various types of debt securities, as well as common stock, preferred stock, warrants, depository shares representing fractional interest in shares of preferred stock, purchase contracts and units from time to time in one or more offerings.

Each issuance under the shelf registration statement will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued.

2 unchanged sentences

The Company's primary sources of liquidity include the following for the periods indicated:

(dollars in thousands) March 31, 2026 December 31, 2025

(dollars in thousands) June 30, 2026 December 31, 2025

Borrowing capacity at correspondent banks and FRB $ 2,963,499 $ 2,905,789

5 unchanged sentences

Total primary liquidity $ 3,974,992 $ 3,967,481

At March 31, 2026, the Company's primary sources of liquidity represented 51% of total deposits and 156% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively.

At June 30, 2026, the Company's primary sources of liquidity represented 47% of total deposits and 139% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively.

As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $76.7 million, including approximately $4.1 million in net unrealized losses.

The Company’s profitability during the first three months of 2026 generated cash flows from operations of $33.7 million compared to $24.5 million during the first three months of 2025.

Net cash from investing activities was $5.1 million for the three months ended March 31, 2026, compared to net cash from investing activities of $33.9 million during the three months ending 2025.

Financing activities provided $105.5 million during the three months ended March 31, 2026, compared to using $104.9 million during the three months ended March 31, 2025.

The Company’s profitability during the first six months of 2026 generated cash flows from operations of $58.8 million compared to $53.8 million during the first six months of 2025.

Net cash from investing activities was $167.1 million for the six months ended June 30, 2026, compared to net cash from investing activities of $59.4 million during the six months ending 2025.

Financing activities provided $56.5 million during the six months ended June 30, 2026, compared to using $174.9 million during the six months ended June 30, 2025.

The types of contractual obligations of the Company and Bank, include but are not limited to term subordinated debt, operating leases, deferred compensation and supplemental retirement plans as well as off-balance sheet commitments such as unfunded loans and letters of credit, are consistent with those as of December 31, 2025.

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In addition, as the balance of investment securities has declined, so has the balance of unpledged securities.

In total, and as illustrated above, the balance of total primary liquidity has increased during the first three months of 2026.

In total, and as illustrated above, the balance of total primary liquidity has increased during the first six months of 2026.

The Company is dependent upon the payment of cash dividends by the Bank to service its commitments, which have historically included dividends to shareholders, scheduled debt service payments, and general operations.

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However, the Company and its ability to generate liquidity through either the issuance of stock or debt, also serves as a potential source of strength for the Bank.

Dividends paid by the Company to holders of its common stock used $11.5 million of cash during the three months ended March 31, 2026.

Dividends paid by the Company to holders of its common stock used $23.0 million of cash during the six months ended June 30, 2026.

The Company’s liquidity is dependent on dividends received from the Bank.

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For a reconciliation of these non-GAAP financial measures, see the tables below:

Three months ended

(dollars in thousands) March 31,

2026 March 31,

Three months ended Six months ended

(dollars in thousands) June 30,

2026 June 30,

2025 June 30,

2026 June 30,

Net interest margin

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Net interest margin less effect of acquired loan discount accretion (Non-GAAP) 4.07 % 3.82 % 4.04 % 3.73 %

Three months ended

(dollars in thousands) March 31,

2026 March 31,

Three months ended Six months ended

(dollars in thousands) June 30,

2026 June 30,

2025 June 30,

2026 June 30,

Pre-tax pre-provision return on average assets or equity

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Pre-tax pre-provision return on average equity (Non-GAAP) (annualized) 14.54 % 13.38 % 14.63 % 13.02 %

Three months ended

(dollars in thousands) March 31,

2026 March 31,

Three months ended Six months ended

(dollars in thousands) June 30,

2026 June 30,

2025 June 30,

2026 June 30,

Return on tangible common equity

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Return on average tangible common equity (Non-GAAP) 13.27 % 11.61 % 13.22 % 11.57 %

(dollars in thousands) March 31,

(dollars in thousands) June 30,

2026 December 31,

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Tangible shareholders' equity to tangible assets (Non-GAAP) 10.76 % 10.71 %

(dollars in thousands) March 31,

(dollars in thousands) June 30,

2026 December 31,

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis