Central Bancompany (NASDAQ: CBC) posts higher Q1 2026 profit and stronger margins
Filing Impact
Filing Sentiment
Form Type
10-Q
Central Bancompany delivered stronger profitability in the three months ended March 31, 2026. Net income rose to $111.1 million, with diluted EPS of $0.46 versus $0.43 a year earlier. Net interest income increased 10.2% and net interest margin improved to 4.32%.
Return on average assets was 2.20%, while the efficiency ratio improved to 46.3%. Loans held for investment reached $11.53 billion and deposits were $15.47 billion. Asset quality remained solid with nonperforming loans at 0.45% of loans and an allowance for credit losses of 1.30%. Capital levels were high, with CET1 of 28.6% at the company level.
Positive
- Profitability materially higher: Q1 2026 net income rose to $111.1 million, a 17.2% increase year over year, with net interest margin expanding to 4.32% and the efficiency ratio improving to 46.3%, signaling stronger earnings and cost control.
Negative
- None.
Insights
Q1 2026 shows stronger earnings, solid credit quality, and very high capital.
Central Bancompany grew net income to $111.1 million, up 17.2% year over year, as net interest income rose 10.2% and net interest margin expanded from 4.19% to 4.32%. Noninterest income increased 10.7%, helped by higher fiduciary and brokerage fees and a gain on the consumer lease portfolio liquidation.
Credit costs stayed modest, with a $3.1 million provision, net charge-offs of 0.10% of average loans, and nonperforming loans at only 0.45% of loans. The allowance covered 287.83% of nonperforming loans, indicating substantial loss absorption capacity.
Liquidity and capital were strong. Readily available liquidity was about $7.0 billion, and company CET1 stood at 28.6% with Tier 1 leverage of 17.4%, well above “well-capitalized” thresholds. While deposits declined 2.5% from year-end, management attributes this mainly to seasonal public-funds outflows, with underlying credit and earnings trends remaining favorable this quarter.
Key Figures
Net income: $111.1M
Diluted EPS: $0.46
Net interest margin: 4.32%
+5 more
8 metrics
Net income
$111.1M
Three months ended March 31, 2026
Diluted EPS
$0.46
Q1 2026, up from $0.43 in Q1 2025
Net interest margin
4.32%
Q1 2026, vs 4.19% in Q1 2025
Return on average assets
2.20%
Q1 2026 annualized
Loans held for investment
$11.53B
Balance at March 31, 2026
Total deposits
$15.47B
Balance at March 31, 2026
Nonperforming loans ratio
0.45%
Nonperforming loans / loans held for investment at March 31, 2026
CET1 capital ratio (company)
28.6%
As of March 31, 2026
Key Terms
Net interest margin, Efficiency ratio, Allowance for credit losses, Nonperforming loans, +2 more
6 terms
Net interest margin financial
"Our net interest margin increased 13 basis points to 4.32% for the quarter compared to 2025"
Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.
Efficiency ratio financial
"Efficiency ratio of 46.3%; Adjusted efficiency ratio1 of 45.7%, compared to 49.3% and 48.7%"
A measure of how much a company spends to produce each dollar of revenue, usually shown as operating expenses divided by revenue and expressed as a percentage. Think of it as a household’s budget: a lower percentage means more of each dollar earned stays as profit, while a higher number means costs are eating into returns. Investors use it to judge cost control and compare how efficiently companies turn revenue into earnings, especially in banks and financial firms.
Allowance for credit losses financial
"At March 31, 2026, the allowance for credit losses was $149.9 million, or 1.30% of our total loan and leases portfolio"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
Nonperforming loans financial
"Nonperforming loans to period end loans | 0.45% | 0.40%"
Nonperforming loans are loans on which borrowers have stopped making the scheduled interest or principal payments for an extended period (commonly 90 days or more) or are otherwise in serious danger of default. Think of them as IOUs that aren’t being repaid: they tie up a lender’s money, reduce future interest income, and force the lender to hold extra reserves or take losses. For investors, a rising share of nonperforming loans signals weakening credit quality, higher potential losses, and greater risk to a bank’s profitability and capital.
Assets under advice financial
"Assets under advice | $ | 16,012,029 | $ | 16,012,029"
Economic value of equity financial
"Changes in EVE indicate the potential impact on the long-term earnings capacity of the balance sheet"
Earnings Snapshot
Total revenue (net interest + noninterest income): $273.7M
Q1 2026
Total revenue (net interest + noninterest income)
$273.7M
Net income
$111.1M
+17.2% YoY
Diluted EPS
$0.46
Net interest income
$208.6M
+10.2% YoY
Noninterest income
$65.1M
+10.7% YoY
Net interest margin
4.32%
+0.13 percentage points YoY
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
_________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 001-42965
_________________________
(Exact name of registrant as specified in its charter)
_________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) | ||||
(573 ) 634-1111
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o | Accelerated filer | o | |||||||||||
| x | Smaller reporting company | |||||||||||||
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had 239,768,162 outstanding shares as of May 10, 2026.
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10Q
TABLE OF CONTENTS
| Page | |||||
EXPLANATORY NOTE | 3 | ||||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 4 | ||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. Financial Statements | 25 | ||||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 6 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 56 | ||||
Item 4. Controls and Procedures | 56 | ||||
PART II - OTHER INFORMATION | |||||
Item 1. Legal Proceedings | 57 | ||||
Item 1A. Risk Factors | 57 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 57 | ||||
Item 3. Defaults Upon Senior Securities | 57 | ||||
Item 4. Mine Safety Disclosures | 57 | ||||
Item 5. Other Information | 57 | ||||
Item 6. Exhibits | 58 | ||||
SIGNATURES | 59 | ||||
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EXPLANATORY NOTE
Except as otherwise stated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:
•We, Our, Us, and the Company - Central Bancompany, Inc., and its subsidiaries
•the Bank - The Central Trust Bank
•Business Segments - Consumer Banking, Commercial Banking and Wealth Management
•ACL - Allowance for credit losses
•AFS - Available for sale
•ALCO - Asset/Liability Management Committee
•Articles - refers to our Second Amended and Restated Articles of Incorporation
•ASC - Accounting Standards Codification
•ASU - Accounting Standards Update
•bps - Basis points (one basis point equals 1/100 of 1 percent)
•Bylaws - refers to our Amended and Restated Bylaws
•C&D - Construction and development loans
•C&I - Commercial, financial & agricultural loans
•CET1 - Common Equity Tier 1
•CODM - Chief Operating Decision Maker
•CRE - Commercial real estate
•CREPI - Commercial Real Estate Price Index
•Exchange Act - The Securities and Exchange Act of 1934, as amended
•EVE - Economic value of equity
•FASB - Financial Accounting Standards Board
•Federal Reserve - refers to the Board of Governors of the Federal Reserve System
•FDIC - The Federal Deposit Insurance Corporation
•FHLB - Federal Home Loan Bank
•FHLMC or Freddie Mac - Federal Home Loan Mortgage Corporation
•FNMA or Fannie Mae - Federal National Mortgage Association
•FRB - Federal Reserve Bank
•FTE - Fully-taxable equivalent
•FTP - Funds transfer pricing
•GAAP - Generally Accepted Accounting Principles in the U.S.
•GDP - Gross domestic product.
•GNMA or Ginnie Mae - Government National Mortgage Association
•GSE - Government sponsored enterprises
•HELOC - Home equity lines of credit
•HPI - House Price Index
•HTM - Held to maturity
•IPO - Initial public offering
•IRLC - Interest rate lock commitments
•Nasdaq - National Association of Securities Dealers Automated Quotations, or Nasdaq Stock Market LLC
•N.M. - Not meaningful
•OMSR - Originated mortgage servicing rights
•PCA - Prompt corrective action framework
•RMBS - Residential mortgage-backed securities
•ROAA - Annualized return on average assets
•ROTCE - Annualized return on tangible common equity
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•RSA - Restricted stock awards
•SBA - Small Business Administration
•SEC - U.S. Securities and Exchange Commission
•SERP - Supplemental Executive Retirement Plan
•U.S. - United States
•VISA - the Visa, U.S.A. Inc. card association or its affiliates, collectively
•Voting Trust Agreement - refers to the amended and restated voting trust agreement, dated March 5, 2025 (such voting trust, the “Voting Trust”), among the Company, the extended members of the Sam Baker Cook family, certain employees, the descendants of former employees and certain other shareholders parties thereto (collectively, the “Voting Trust Members”), and S. Bryan Cook, Robert M. Robuck, and Robert R. Hermann, Jr., as trustees (collectively, the “Trustees”)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27 A of the Securities Act and Section 21E of the Exchange Act. You should not place undue reliance on forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and business, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other variations or comparable terminology and expressions. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following:
•general economic conditions, including higher inflation and its impacts, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses;
•conditions in the securities markets and real estate markets or the banking industry;
•changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio;
•changes in interest rates, which may affect our net income, prepayment penalty income, and other future cash flows, or the market value of our assets, including our investment securities;
•changes in the quality or composition of our loan or securities portfolios;
•changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases, among others;
•heightened regulatory focus on commercial real estate and on commercial real estate loan concentrations;
•changes in competitive pressures among financial institutions or from non-financial institutions;
•changes in deposit flows and wholesale borrowing facilities;
•our ability to maintain sufficient liquidity and funding to fulfill cash obligations and commitments when they become due in the short-term and long-term;
•changes in the demand for deposit, loan, and investment products and other financial services in the markets we serve;
•our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers;
•our ability to obtain timely stockholder and regulatory approvals of any capital raise transactions, corporate restructurings or other significant transactions we may propose;
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•our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our potential exposure to unknown or contingent liabilities of companies we have acquired, may acquire, or target for acquisition;
•the ability to invest effectively in new information technology systems and platforms;
•changes in future allowance for credit losses requirements under relevant accounting and regulatory requirements;
•the ability to pay future dividends, including as a result of the failure to receive any required regulatory approval to pay a dividend, or for any other reasons;
• the ability to hire and retain key personnel and qualified members of our Board of Directors;
•the ability to execute on our strategic plan, including the sufficiency of our internal resources, procedures and systems;
•the ability to achieve our strategic financial and other strategic goals;
•the ability to attract new customers and retain existing ones in the manner anticipated;
•changes in our customer base or in the financial or operating performances of our customers' businesses;
•any interruption in customer service due to circumstances beyond our control;
•cybersecurity incidents, including any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems managed either by us or third parties;
•operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent;
•the ability to keep pace with, and implement on a timely basis, technological changes;
•the success of our fintech activities, investments and strategic partnerships;
•changes in legislation, regulation, policies, guidance, or administrative practices, whether by judicial, governmental, or legislative action, and other changes pertaining to banking, securities, taxation, financial accounting and reporting, environmental protection, insurance, and the ability to comply with such changes in a timely manner;
•changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System;
•changes in accounting principles, policies, practices, and guidelines;
•changes in regulatory expectations relating to predictive models we use in connection with stress testing and other forecasting or in the assumptions on which such modeling and forecasting are predicated;
•changes to federal, state, and local income tax laws;
•changes in our credit ratings, or in our ability to access the capital markets;
•increases in our FDIC insurance premium or future assessments;
•the potential impact to the Company from climate change, including higher regulatory compliance, increased expenses, operational changes, and reputational risks;
•the effects of geopolitical instability and unforeseen or catastrophic events including natural disasters, war, conflicts, terrorist activities, civil unrest, pandemics, epidemics, and other health emergencies, and the potential impact, directly or indirectly, on our business;
•other economic, competitive, governmental, regulatory, technological, and geopolitical factors affecting our operations, pricing, and services;
•the ability to limit the outflow of deposits, and to successfully retain and manage any loans;
•our ability to effectively manage liquidity, including our success in deploying any liquidity arising from a transaction into assets bearing sufficiently high yields without incurring unacceptable credit or interest rate risk or to utilize available collateral to obtain funding;
•the ability to obtain cost savings and control incremental non-interest expense;
•the ability to retain and attract appropriate personnel;
•the ability to generate acceptable levels of net interest income and non-interest income, including fee income, from acquired operations; and
•other risks and uncertainties inherent to our business, including those discussed under “Part 1, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, "Item 1A. Risk
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Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, or any of the Company’s current reports.
Readers should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this report. We do not assume any obligation to revise or update these forward-looking statements except as may be required by law.
PART I. FINANCIAL INFORMATION
Item2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our consolidated financial statements and accompanying notes presented elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion included in Part 2, Item 8 on Form 10-K for the year ended December 31, 2025. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. All of such forward-looking statements are expressly qualified by reference to the cautionary statements provided under the caption "Cautionary Note Regarding Forward-Looking Statements" included in this Quarterly Report on Form 10-Q. Furthermore, a number of known and unknown factors may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. Therefore, you are encouraged to read in its entirety the information provided under the caption "Item IA, Part I — Risk Factors" included in Form 10-K for the year ended December 31, 2025 for a discussion of risk factors that may negatively impact our expected results, performance, or achievements discussed below.
Overview
We are a bank holding company headquartered in Jefferson City, Missouri. Through our full-service community banking subsidiary, The Central Trust Bank, we provide a comprehensive suite of consumer, commercial and wealth management products and services to our communities primarily in Missouri, Kansas, Oklahoma and Colorado. As of March 31, 2026, we operate 156 full-service branch locations.
We are a community bank organized around our 11 Primary Markets, serving 79 communities. Our business is predominantly located in Missouri, a state known for its business-friendly environment, diversified and stable markets, favorable tax regime and convenient location in the central U.S., making it a hub for industries such as transportation, logistics and trade.
We have a highly diversified loan and lease portfolio that has demonstrated steady growth through multiple economic cycles. In addition, we provide a full range of deposit products to individuals, businesses, governments and community organizations, serving as a primary funding source for the Bank.
We operate our business through three operating segments: Consumer Banking, Commercial Banking and Wealth Management. Consumer Banking serves the holistic financial service needs of individuals, providing a full set of deposit products, state-of-the-art digital banking solutions, a range of consumer lending solutions, including home equity lines of credit, and a credit card portfolio. Commercial Banking provides full-service relationship banking solutions to businesses, agencies and community organizations. Wealth Management provides a full range of “fee-only” wealth management solutions, including investment management, fiduciary services, financial, estate, and tax planning services to individuals, businesses, and foundations.
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Results of Operations
The following table presents selected financials from our income statement and the performance ratios discussed below.
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||
| Income Statement Data: | |||||||||||||||||
| Net interest income | $ | 208,617 | $ | 189,273 | |||||||||||||
Net interest income (FTE) (non-GAAP)1, 2 | 210,421 | 190,854 | |||||||||||||||
| Provision for credit losses | 3,146 | 2,920 | |||||||||||||||
| Noninterest income | 65,088 | 58,788 | |||||||||||||||
| Noninterest expense | 126,616 | 122,261 | |||||||||||||||
| Income tax expense | 32,855 | 28,082 | |||||||||||||||
| Net income | 111,088 | 94,798 | |||||||||||||||
| Earnings per Common Share | |||||||||||||||||
| Earnings per share - basic | $ | 0.46 | $ | 0.43 | |||||||||||||
| Earnings per share - diluted | $ | 0.46 | $ | 0.43 | |||||||||||||
| Performance Ratios: | |||||||||||||||||
| Net interest margin | 4.32 | % | 4.19 | % | |||||||||||||
Net interest margin (FTE) (non-GAAP)1, 2 | 4.36 | % | 4.23 | % | |||||||||||||
| Return on average total assets | 2.20 | % | 2.00 | % | |||||||||||||
Return on average common equity (non-GAAP)1 | 11.8 | % | 12.1 | % | |||||||||||||
Return on average tangible common equity (non-GAAP)1 | 13.0 | % | 13.7 | % | |||||||||||||
| Fee income ratio | 23.8 | % | 23.7 | % | |||||||||||||
| Efficiency ratio | 46.3 | % | 49.3 | % | |||||||||||||
Efficiency ratio (FTE) (non-GAAP)1 | 45.7 | % | 48.7 | % | |||||||||||||
| Effective tax rate | 22.8 | % | 22.9 | % | |||||||||||||
__________________
1These are non-GAAP financial measures we believe are helpful in interpreting our financial results. For more information on non-GAAP measures and for a reconciliation to the most directly comparable GAAP financial measure, see “—Non-GAAP Financial Measures Reconciliations.”
2Fully-tax equivalent basis.
Key highlights for the three months ended March 31, 2026:
•Net income of $111.1 million, or $0.46 per fully diluted share, compared to $94.8 million and $0.43 for the three months ended March 31, 2025.
•ROAA of 2.20% compared to ROAA of 2.00% in the prior year quarter.
•Efficiency ratio of 46.3%; Adjusted efficiency ratio1 of 45.7%, compared to 49.3% and 48.7% respectively in the prior year quarter.
Net Interest Income and Net Interest Margin
The following table summarizes the distribution of average balances, average yields and costs (on an annualized basis for interim periods), and changes in net interest income on an FTE basis. Average balances are daily average balances and include nonaccrual loans. The table below includes the effect of deferred fees and expenses, discounts and premiums, as well as purchase accounting adjustments that are amortized or accreted to interest income or expense.
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| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Average Balance | Interest (FTE)1 | Yield / Cost2 | Average Balance | Interest (FTE)1 | Yield / Cost | ||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
Interest-bearing cash and bank deposits 1 | $ | 1,531,094 | 14,565 | 3.86 | % | $ | 955,427 | 10,960 | 4.65 | % | |||||||||||||
Investment securities 1 | 6,564,376 | 68,464 | 4.23 | % | 5,765,263 | 53,846 | 3.79 | % | |||||||||||||||
Gross loans 1, 2 | 11,491,801 | 176,829 | 6.24 | % | 11,582,986 | 176,984 | 6.20 | % | |||||||||||||||
| Total interest-earning assets | 19,587,271 | 259,858 | 5.38 | % | 18,303,676 | 241,790 | 5.36 | % | |||||||||||||||
| Allowance for credit losses | (149,545) | (153,760) | |||||||||||||||||||||
| Noninterest-earning assets | 1,075,769 | 1,025,221 | |||||||||||||||||||||
| Total assets | $ | 20,513,495 | $ | 19,175,137 | |||||||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 5,512,732 | $ | 5,074,272 | |||||||||||||||||||
| Savings & interest-bearing deposits | 8,381,593 | 31,871 | 1.54 | % | 8,004,524 | 30,486 | 1.54 | % | |||||||||||||||
| Time deposits | 1,631,224 | 11,554 | 2.87 | % | 1,685,989 | 13,244 | 3.19 | % | |||||||||||||||
| Total deposits | 15,525,549 | 43,425 | 1.13 | % | 14,764,785 | 43,730 | 1.20 | % | |||||||||||||||
| Federal funds purchased and customer repurchase agreements | 1,072,669 | 6,012 | 2.27 | % | 1,084,995 | 7,206 | 2.69 | % | |||||||||||||||
| Total customer funds | 16,598,218 | 49,437 | 1.21 | % | 15,849,780 | 50,936 | 1.30 | % | |||||||||||||||
| FHLB advances and other borrowings | - | - | - | - | |||||||||||||||||||
| Total interest-bearing liabilities | 11,085,486 | 49,437 | 1.81 | % | 10,775,508 | 50,936 | 1.92 | % | |||||||||||||||
| Total cost of funds | 16,598,218 | 49,437 | 1.21 | % | 15,849,780 | 50,936 | 1.30 | % | |||||||||||||||
| Noninterest-bearing liabilities | 85,692 | 143,694 | |||||||||||||||||||||
| Stockholders' equity | 3,829,585 | 3,181,663 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 20,513,495 | $ | 19,175,137 | |||||||||||||||||||
| Net interest spread | 3.57 | % | 3.44 | % | |||||||||||||||||||
| Net interest income (FTE) and net interest margin (FTE) | 210,421 | 4.36 | % | 190,854 | 4.23 | % | |||||||||||||||||
| Less: Tax equivalent adjustment | 1,804 | 1,581 | |||||||||||||||||||||
| Net interest income and net interest margin | $ | 208,617 | 4.32 | % | $ | 189,273 | 4.19 | % | |||||||||||||||
1Interest income and yields are reported on an FTE basis, using a blended federal and state effective marginal tax rate of 23.84% for all periods. The tax-equivalent interest income and yields give effect to the tax-exempt interest income net of the disallowance of interest expense, for federal income tax purposes related to certain tax-free assets.
2Loan balances include mortgage loans held for sale and nonaccrual loans of $51.4 million and $48.8 million as of March 31, 2026 and 2025, respectively.
Net interest income totaled $208.6 million for the three months ended March 31, 2026, an increase of $19.3 million, or 10.2%, compared to $189.3 million for the three months ended March 31, 2025. On an FTE basis, net interest income (FTE) (non-GAAP) increased to $210.4 million from $190.9 million, an increase of 10.3%. Our net interest margin increased 13 basis points to 4.32% for the quarter compared to 2025, driven by solid underlying average earning asset growth of $1.3 billion, or 7%, resulting from growing deposits, earnings retention and our IPO. These funds have largely been invested in securities and short-term earning assets. Our net interest margin (FTE) (non-GAAP) increased to 4.36% in the same three months of 2026, compared to 4.23% for the same period in 2025.
Total interest income was $258.1 million for the three months ended March 31, 2026, an increase of $17.8 million, or 7.4%, compared to $240.2 million for the same period in 2025. On an FTE basis, total interest income (FTE) (non-GAAP) was $259.9 million for the quarter, an increase of $18.1 million, or 7.5%, compared to $241.8 million in the same quarter of the prior year. The increase was primarily due to the repositioning of the investment portfolio, from lower-yielding bonds to higher-yielding investments at higher market rates, the investment of IPO proceeds, and the growth in deposits.
Interest expense decreased $1.5 million, or 2.9%, to $49.4 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease was driven by reduced costs on time deposits, federal funds purchased, and customer repurchase agreements, as rates began to lower after rate cuts by the Federal Reserve began in 2024, partially offset by increased volume on savings and interest bearing deposits.
8
The table below identifies changes related to volumes (average balances) and rates on our net interest income during the period shown, with respect to (i) changes in volume (change in volume times old rate), (ii) changes in rates (change in rate times old volume) and (iii) changes in rate / volume (change in rate times the change in volume, including difference in the number of days). Any change in interest not due solely to volume or rate has been allocated in proportion to the respective absolute dollar amounts of the change in volume or rate.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 vs 2025 | |||||||||||||||||||||||
| Volume | Rate | Total | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Increase (decrease) in interest income: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 5,725 | $ | (2,120) | $ | 3,605 | |||||||||||||||||
| Investment securities | 7,936 | 6,682 | 14,618 | ||||||||||||||||||||
| Loans | (1,398) | 1,243 | (155) | ||||||||||||||||||||
| Total increase (decrease) in interest income | 12,263 | 5,805 | 18,068 | ||||||||||||||||||||
| Increase (decrease) in interest expense: | |||||||||||||||||||||||
| Savings & interest-bearing deposits | 1,434 | (49) | 1,385 | ||||||||||||||||||||
| Time deposits | (420) | (1,270) | (1,690) | ||||||||||||||||||||
| Federal funds purchased and customer repurchase agreements | (81) | (1,113) | (1,194) | ||||||||||||||||||||
| FHLB advances and other borrowings | - | - | - | ||||||||||||||||||||
| Total increase (decrease) in interest expense | 933 | (2,432) | (1,499) | ||||||||||||||||||||
| Increase (decrease) in net interest income (FTE) | $ | 11,330 | $ | 8,237 | $ | 19,567 | |||||||||||||||||
Provision for Credit Losses
The provision for credit losses, including provision for off-balance sheet credit exposures, was $3.1 million for the three months ended March 31, 2026, an increase of $0.2 million, or 7.7%, compared to $2.9 million for the three months ended March 31, 2025. The increase compared to prior-year quarter primarily reflected higher average loan balances during the first quarter of 2026, whereas loan balances declined during the three months ended March 31, 2025, in addition to the impact of portfolio mix and economic assumptions incorporated into the allowance for credit losses methodology.
Noninterest Income
The following table presents noninterest income for the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||
Service charges and commissions | $ | 14,413 | $ | 13,944 | $ | 469 | 3.4 | % | |||||||||||||||||||||
Payment services revenue | 16,370 | 15,976 | 394 | 2.5 | % | ||||||||||||||||||||||||
Brokerage services | 7,936 | 6,714 | 1,222 | 18.2 | % | ||||||||||||||||||||||||
Fees for fiduciary services | 14,307 | 12,463 | 1,844 | 14.8 | % | ||||||||||||||||||||||||
Mortgage banking revenues, net | 9,536 | 8,727 | 809 | 9.3 | % | ||||||||||||||||||||||||
| Investment securities gains, net | - | 109 | (109) | (100.0) | % | ||||||||||||||||||||||||
Other Income | 2,526 | 855 | 1,671 | 195.4 | % | ||||||||||||||||||||||||
Total noninterest income | 65,088 | 58,788 | 6,300 | 10.7 | % | ||||||||||||||||||||||||
Less: Investment securities gains (losses), net | - | 109 | (109) | (100.0 | %) | ||||||||||||||||||||||||
Adjusted noninterest income (non-GAAP)1 | $ | 65,088 | $ | 58,679 | $ | 6,409 | 10.9 | % | |||||||||||||||||||||
Noninterest income was $65.1 million for the three months ended March 31, 2026, an increase of $6.3 million, or 10.7%, compared to $58.8 million for the three months ended March 31, 2025. The increase was primarily due to a 14.8%, or $1.8 million, increase in fees for fiduciary services along with growth in brokerage services of 18.2%, or $1.2 million. Additionally, in the current quarter, a $1.7 million gain was recognized in other income from the liquidation of the consumer lease portfolio. Significant components of the increase in noninterest income are described in further detail below.
1 This is a non-GAAP financial measure we believe is helpful in interpreting our financial results. For more information on non-GAAP measures and for a reconciliation to the most directly comparable GAAP financial measure, see “—Non-GAAP Financial Measures Reconciliations.”
9
Brokerage services and fees for fiduciary services. Brokerage services and fees for fiduciary services relate to our wealth management services and comprise of fees earned for management of trust assets and investment services. Brokerage services increased $1.2 million, or 18.2%, to $7.9 million for the first three months of 2026, compared to the same period in 2025. The increase primarily reflected higher average assets under advice driven by continued strong net new AUA, partially offset by a reduction from market movement during the quarter. Fees for fiduciary services increased 14.8%, or $1.8 million, to $14.3 million for the same period.
Other income. Other income includes bank owned life insurance income, check commission, gain on sale of assets, and other miscellaneous income items. Other income increased $1.7 million, to $2.5 million for the first three months of 2026, compared to the same period in 2025. The increase was driven by a $1.7 million gain that was recognized from the liquidation of the consumer lease portfolio in the first three months of 2026.
Noninterest Expense
The following table presents the major components of our noninterest expense for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 76,039 | $ | 71,247 | $ | 4,792 | 6.7 | % | |||||||||||||||||||||
Net occupancy and equipment | 12,166 | 11,847 | 319 | 2.7 | % | ||||||||||||||||||||||||
Computer software and maintenance | 5,977 | 6,056 | (79) | (1.3 | %) | ||||||||||||||||||||||||
Marketing and business development | 4,556 | 4,959 | (403) | (8.1 | %) | ||||||||||||||||||||||||
Legal and professional fees | 6,065 | 4,878 | 1,187 | 24.3 | % | ||||||||||||||||||||||||
Bankcard processing, rewards and related costs | 7,753 | 7,022 | 731 | 10.4 | % | ||||||||||||||||||||||||
Other expenses | 14,060 | 16,252 | (2,192) | (13.5 | %) | ||||||||||||||||||||||||
Total noninterest expense | $ | 126,616 | $ | 122,261 | $ | 4,355 | 3.6 | % | |||||||||||||||||||||
Total noninterest expense was $126.6 million for the three months ended March 31, 2026, an increase of $4.4 million, or 3.6%, compared to $122.3 million for the three months ended March 31, 2025. The increase was primarily due to increases in salaries and employee benefits, legal and professional fees, and bankcard processing, rewards and related costs, partially offset by a reduction in other expenses.
Salaries and Employee Benefits. These expenses were $76.0 million for the first three months of 2026, an increase of $4.8 million, or 6.7%, compared to $71.2 million for the same period in 2025. This increase was primarily the result of higher performance based compensation and regular merit increases. Full-time equivalents were flat to the prior year quarter.
Legal and Professional Fees. Legal and professional fees were $6.1 million for the first three months of 2026, an increase of $1.2 million, or 24.3%, compared to $4.9 million for the same period in 2025, primarily reflecting higher costs related to technology improvement initiatives and additional costs associated with being a public company.
Bankcard Processing, Rewards and Related Costs. Bankcard processing, rewards and related costs increased $0.7 million, or 10.4% for the first three months of 2026, compared to the same period in 2025, primarily reflecting $0.4 million in conversion-related refunds received in the first quarter of 2025 that did not recur in 2026.
Other Expenses. Other expenses decreased $2.2 million, to $14.1 million for the first three months of 2026, compared to the same period in 2025. The decrease was primarily due to $3.1 million higher residual loss expense in 2025 on the leased car portfolio as a result of declining fair market values. This was partially offset by increases in various other expense categories.
Income Taxes
The provision for income taxes varies due to the amount of taxable income, the investments in tax-advantaged securities and loans, tax credits and the rates charged by federal and state authorities in which we do business. Income tax expense was $32.9 million for the three months ended March 31, 2026, representing an effective tax rate of 22.8%, compared to $28.1 million and an effective tax rate of 22.9%, for the same period in 2025. The increase in income tax expense of $4.8 million, or 17.0%, was driven by higher pre-tax income year over year.
10
Discussion and Analysis of Business Segments
The Company has strategically aligned its operations into the following three reportable segments: Consumer Banking, Commercial Banking and Wealth Management (collectively, the “Business Segments”). The Chief Executive Officer regularly evaluates Business Segment financial results produced by the Company’s internal reporting system in deciding how to allocate resources and assess performance for individual Business Segments. The management accounting system assigns balance sheet and income statement items to each Business Segment using methodologies that are refined on an ongoing basis. See "Note 12, Business Segment Reporting," to our consolidated financial statements in this Quarterly Report on Form 10-Q.
| Segment Income Statement | Consumer | Commercial | Wealth Management | Segment Totals | Corp / Other | Total | ||||||||||||||
| Three Months Ended March 31, 2026 | (dollars in thousands) | |||||||||||||||||||
| Net interest income | $ | 81,271 | $ | 113,043 | $ | (15) | $ | 194,299 | $ | 14,318 | $ | 208,617 | ||||||||
| Provision for credit losses | 2,193 | 932 | - | 3,125 | 21 | 3,146 | ||||||||||||||
| Net interest income after provision for credit losses | 79,078 | 112,111 | (15) | 191,174 | 14,297 | 205,471 | ||||||||||||||
| Noninterest income | 32,034 | 10,732 | 21,333 | 64,099 | 989 | 65,088 | ||||||||||||||
| Noninterest expense | 62,994 | 39,623 | 13,445 | 116,062 | 10,554 | 126,616 | ||||||||||||||
| Income before income taxes | 48,118 | 83,220 | 7,873 | 139,211 | 4,732 | 143,943 | ||||||||||||||
| Income taxes | 11,530 | 19,274 | 1,894 | 32,698 | 157 | 32,855 | ||||||||||||||
| Net income | $ | 36,588 | $ | 63,946 | $ | 5,979 | $ | 106,513 | $ | 4,575 | $ | 111,088 | ||||||||
| Assets under advice | $ | - | $ | - | $ | 16,012,029 | $ | 16,012,029 | $ | - | $ | 16,012,029 | ||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| Net interest income | $ | 75,181 | $ | 106,290 | $ | (19) | $ | 181,452 | $ | 7,821 | $ | 189,273 | ||||||||
| Provision for credit losses | 1,885 | 1,031 | (3) | 2,913 | 7 | 2,920 | ||||||||||||||
| Net interest income after provision for credit losses | 73,296 | 105,259 | (16) | 178,539 | 7,814 | 186,353 | ||||||||||||||
| Noninterest income | 28,494 | 10,377 | 18,419 | 57,290 | 1,498 | 58,788 | ||||||||||||||
| Noninterest expense | 59,907 | 39,370 | 12,529 | 111,806 | 10,455 | 122,261 | ||||||||||||||
| Income before income taxes | 41,883 | 76,266 | 5,874 | 124,023 | (1,143) | 122,880 | ||||||||||||||
| Income taxes | 10,026 | 17,613 | 1,407 | 29,046 | (964) | 28,082 | ||||||||||||||
| Net income | $ | 31,857 | $ | 58,653 | $ | 4,467 | $ | 94,977 | $ | (179) | $ | 94,798 | ||||||||
| Assets under advice | $ | - | $ | - | $ | 13,543,819 | $ | 13,543,819 | $ | - | $ | 13,543,819 | ||||||||
| Q1 2026 vs Q1 2025 | ||||||||||||||||||||
| Increase (decrease) in net income - amount | $ | 4,731 | $ | 5,293 | $ | 1,512 | $ | 11,536 | $ | 4,754 | $ | 16,290 | ||||||||
| Increase (decrease) in net income - percent | 14.9 | % | 9.0 | % | 33.8 | % | 12.1 | % | NM | 17.2 | % | |||||||||
Consumer Banking Operating Results
For the three months ended March 31, 2026, Consumer Banking net income increased $4.7 million, or 14.9%, to $36.6 million compared to the same period in 2025. The increase was primarily due to increased net interest income of 8.1% and a $1.7 million gain on finalization of the consumer lease portfolio sale, partially offset by increased noninterest expenses of 5.2%.
Commercial Banking Operating Results
For the three months ended March 31, 2026, Commercial Banking net income increased $5.3 million, or 9.0%, to $63.9 million compared to the same period in 2025. The increase was primarily due to increased net interest income of 6.4% driven by an increase in the FTP paid on deposits.
Wealth Management Operating Results
For the three months ended March 31, 2026, Wealth Management net income increased $1.5 million, or 33.8%, to $6.0 million compared to the same period in 2025, as assets under advice increased $2.5 billion. The 18.2% rise in total AUA was driven by continued strong net new AUA, partially offset by a reduction from market movement.
11
Financial Condition and Risk Management
The following discussion provides an overview of the Company’s financial condition, asset quality, liquidity position, and regulatory capital as of March 31, 2026, with comparisons to the prior year quarter where relevant. This analysis highlights the key drivers of balance sheet changes, evaluates trends in credit performance, and outlines the strength of the Company’s liquidity and capital resources. Together, these measures reflect management’s ongoing focus on prudent risk management, disciplined balance sheet strategy, and maintaining a strong financial foundation to support continued operations and future growth.
As of March 31, 2026:
•Total assets remained stable with a decrease of 1.4% from December 31, 2025.
•Total loans held for investment as of March 31, 2026 totaled $11.5 billion, an increase of $98 million, or 0.9%, compared to $11.4 billion as of December 31, 2025. The increase was primarily due to increases in commercial real estate, and residential mortgage loans, partially offset by a decline in other consumer loans.
•Investment securities grew $369 million, an increase of 5.7% from December 31, 2025. As of March 31, 2026, 99.0% of our investment portfolio consisted of securities guaranteed by the U.S. government, its agencies, or sponsored enterprises and available-for-sale securities represented 99.3% of our total portfolio.
•Total deposits declined by $397.2 million, a decrease of 2.5% from December 31, 2025. The decrease was primarily due to the outflow of seasonal deposits gathered at year-end.
•Total stockholders' equity grew by $14 million, an increase of 0.4% from December 31, 2025.
The Company manages risk through an enterprise risk management framework that establishes risk appetite, governance structures, and monitoring processes across key risk categories, including credit, market, liquidity, operational, and technology risks. Risk is overseen by the Board of Directors and its committees, with management responsible for identifying, measuring, monitoring, and controlling exposures through established limits, key risk indicators, and escalation protocols.
Credit Risk Management
Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We seek to mitigate credit risk in our loan and lease portfolio by following clearly defined underwriting criteria and account management standards set by management. See "Note 3, Loans and Allowance for Credit Losses," to our consolidated financial statements in this Quarterly Report on Form 10-Q.
Our objective is to maintain a high degree of credit quality, support the customers and communities we serve, and achieve our objectives for profitability and liquidity. Maintaining strong credit quality is essential to the viability of our business model. Through our business activities we recognize and seek to mitigate three primary types of credit risk: default risk, concentration risk and systemic risk. Managing credit risk is a continuous, enterprise-wide initiative that starts with our local market bankers and leaders as our first line of defense. We leverage the strength of our bankers across markets to manage and limit risk taking complemented by our comprehensive credit policy and underwriting standards. To help ensure we balance market-level support while maintaining a diversified portfolio, we impose market-level approval limits and industry, asset and geographic limits.
To manage and enforce our portfolio metrics and diversification targets our credit committee meets periodically to evaluate credit risk migration, new business activities, stress-test activities and credit policy changes and approve or modify market lending authorities. Our internal loan review department, our third line of defense, serves as an independent function to evaluate effective underwriting and application of credit policy in both origination and portfolio management.
Loan and Lease Portfolio
We offer a broad range of lending products with a focus on commercial real estate, construction and development, commercial and industrial, multi-family and one-to-four-family residential loans in our Primary Markets in Missouri, Kansas, Oklahoma and Colorado. We deliver these products through a local, relationship-based delivery model emphasizing market-level credit authority.
12
The following table presents our loan and lease portfolio by category as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Amount | % of total | Amount | % of total | ||||||||||||||
| Loans held for investment: | (dollars in thousands) | ||||||||||||||||
| Construction and development | $ | 512,681 | 4 | % | $ | 570,749 | 5 | % | |||||||||
| Commercial, financial & agricultural | 1,740,689 | 15 | % | 1,761,287 | 15 | % | |||||||||||
| Non-owner-occupied commercial real estate | 3,267,008 | 28 | % | 3,150,269 | 28 | % | |||||||||||
| Owner-occupied commercial real estate | 1,583,461 | 14 | % | 1,580,260 | 14 | % | |||||||||||
| Commercial real estate | 4,850,469 | 42 | % | 4,730,529 | 41 | % | |||||||||||
| Total commercial loans | 7,103,839 | 62 | % | 7,062,565 | 62 | % | |||||||||||
| Residential mortgage loans | 3,423,146 | 30 | % | 3,321,101 | 29 | % | |||||||||||
| Home equity lines of credit | 422,737 | 4 | % | 410,845 | 4 | % | |||||||||||
| Consumer credit card | 93,171 | 1 | % | 98,310 | 1 | % | |||||||||||
| Other consumer loans | 499,019 | 4 | % | 551,395 | 5 | % | |||||||||||
| Total residential and consumer loans | 4,438,073 | 38 | % | 4,381,651 | 38 | % | |||||||||||
| Total unpaid principal balance | 11,541,912 | 100 | % | 11,444,216 | 100 | % | |||||||||||
| Add: Unearned income | (9,342) | - | % | (9,611) | - | % | |||||||||||
| Loans held for investment | $ | 11,532,570 | 100 | % | $ | 11,434,605 | 100 | % | |||||||||
| Loans held for sale | $ | 29,457 | $ | 54,119 | |||||||||||||
Credit quality across the loan portfolio remains strong, supported by consistent adherence to conservative underwriting standards. Portfolio‑level metrics across all loan classes continue to align with these established standards, underscoring the stability and resilience of the credit profile. Total loans held for investment increased $98 million, or 0.9%, to $12 billion as of March 31, 2026. The increase was primarily due to an increase in commercial real estate and residential real estate, partially offset by a decline in the consumer loan portfolio.
Commercial loans totaled $7 billion at March 31, 2026, representing an increase of $41 million, or 0.6%, compared to December 31, 2025. Growth during the quarter was primarily attributable to increases in both owner‑occupied and non‑owner‑occupied commercial real estate loan balances, partially offset by expected reductions in construction loan balances and a modest decline in commercial, financial, and agricultural loans. Overall credit quality within the commercial loan portfolio remained strong during the first quarter of 2026. While commercial loan delinquencies increased during the quarter, the change was primarily related to the migration of a limited number of larger commercial relationships to non‑performing status.
Residential and consumer loans totaled $4 billion at March 31, 2026, representing an increase of $56 million, or 1.3%, from December 31, 2025. During the quarter, indirect consumer lending balances continued to decline and the consumer leasing portfolio was sold. These changes reflect the Company’s ongoing, deliberate rebalancing of its consumer loan portfolio.
The residential mortgage portfolio continues to demonstrate strong credit fundamentals, reflected in an average loan‑to‑value ratio of 59%, an average debt‑to‑income ratio of 38.9%, and an average FICO score of 727. Residential mortgage loans accounted for 30% of total loans held for investment as of March 31, 2026, an increase of 3.1%, or $102 million, from December 31, 2025. The increase was primarily due to continued growth in adjustable-rate mortgages, along with growth in residential construction and development loans. The mortgage portfolio remains well diversified with originations during the quarter averaging $343 thousand per loan.
13
Asset Quality
The following table presents selected financials from our consolidated balance sheet and the asset quality ratios discussed below.
| As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Asset Quality Ratios: | |||||||||||
Nonperforming loans / loans held for investment | 0.45 | % | 0.40 | % | |||||||
Allowance for loan losses / loans held for investment | 1.30 | % | 1.31 | % | |||||||
Loan modifications / loans held for investment | 0.33 | % | 0.53 | % | |||||||
| Net charge-offs / average total loans | 0.10 | % | 0.12 | % | |||||||
Loans are analyzed for risk rating updates as part of the annual credit review process. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenants or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated “Watch,” “Substandard” or “Nonaccrual” under our internal risk grading system (as described below) may be subject to more frequent review and monitoring processes. In addition to the regular monitoring performed by the market lending personnel and credit committees, loans are subject to review by our internal loan review department, which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.
Nonperforming Loans and Assets.
Our non-performing assets consist of nonperforming loans and foreclosed real estate, if any. Our nonperforming loans consist of loans past due 90 days or more and still accruing and nonaccrual loans. We consider loans past due on the day following the contractual repayment date if the contractual repayment was not received by us as of the end of the business day. Loans for which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when, in management’s judgment, the interest is uncollectible in the normal course of business. Loans are placed on nonaccrual status when (i) deterioration in the financial condition of the borrower exists such that payment of full principal and interest is not expected, or (ii) principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income, and the loan is charged off to the extent uncollectible. Principal and interest payments received on nonaccrual loans are generally applied to principal. Interest is included in income only after all previous loan charge-offs have been recovered and is recorded only as received. The loan is returned to accrual status only when the borrower has brought all past-due principal and interest payments current and, in the opinion of management, has demonstrated the ability to make future payments of principal and interest as scheduled.
The following table presents our nonperforming loans and assets for the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
Nonaccrual loans | $ | 51,364 | $ | 44,663 | |||||||
Loans past due 90 days or more and still accruing | 711 | 1,343 | |||||||||
Total nonperforming loans | 52,075 | 46,006 | |||||||||
Foreclosed assets held for sale | 1,604 | 4,353 | |||||||||
Other repossessed assets | 1,145 | 1,601 | |||||||||
Total nonperforming assets | $ | 54,824 | $ | 51,960 | |||||||
Allowance for credit losses to period end loans | 1.30 | % | 1.31 | % | |||||||
Allowance for credit losses to period end nonperforming loans | 287.83 | % | 325.34 | % | |||||||
Nonperforming loans to period end loans | 0.45 | % | 0.40 | % | |||||||
Nonperforming assets to period end assets | 0.27 | % | 0.25 | % | |||||||
Nonaccrual loans to total loans outstanding at period end | 0.45 | % | 0.39 | % | |||||||
Allowance for credit losses to nonaccrual loans at period end | 291.82 | % | 335.12 | % | |||||||
Nonaccrual loans totaled $51.4 million as of March 31, 2026, an increase of $6.7 million, or 15.0%, compared to $44.7 million as of December 31, 2025. The increase was primarily driven by an increase in commercial, financial, and agricultural. The increase was primarily driven by one relationship migrating to nonaccrual during the quarter.
14
Allowance for Credit Losses
Allowance for credit losses reflects management’s estimate of current expected loss within the loan and lease portfolio. The computation of the allowance for credit losses includes elements of judgment and high levels of subjectivity. See “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Allowance for Credit Losses on Loans,”, in this Quarterly Report on Form 10-Q
We measure the allowance for credit losses using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type and collateral type. Loans that do not share similar risk characteristics, primarily large loans on nonaccrual status are evaluated on an individual basis.
In the three months ended March 31, 2026, we recorded net charge-offs of $2.9 million, compared to net charge-offs of $3.5 million in the three months ended March 31, 2025, a decrease of $0.5 million, or 15.7%. Net charge-offs as a percentage of average total loans were 0.10% in the three months ended March 31, 2026, compared to 0.12% from the same period in 2025.
At March 31, 2026, the allowance for credit losses was $149.9 million, or 1.30% of our total loan and leases portfolio, compared with $153.7 million, or 1.31%, in the same period in 2025.
The following tables present the allocation of the allowance for credit losses:
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||||
Allocated Reserves | % of Loan Category to Loans | % of ACL to Loan Category | Allocated Reserves | % of Loan Category to Loans | % of ACL to Loan Category | ||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Construction and development | $ | 12,219 | 4.43 | % | 2.38 | % | $ | 14,983 | 4.97 | % | 2.63 | % | |||||||||||
Commercial, financial & agricultural | 25,127 | 15.06 | % | 1.44 | % | 23,474 | 15.33 | % | 1.33 | % | |||||||||||||
Commercial real estate | 36,216 | 41.95 | % | 0.75 | % | 34,897 | 41.18 | % | 0.74 | % | |||||||||||||
Residential real estate | 54,864 | 33.52 | % | 1.43 | % | 53,883 | 32.95 | % | 1.44 | % | |||||||||||||
Consumer | 21,463 | 5.12 | % | 3.62 | % | 22,437 | 5.65 | % | 3.45 | % | |||||||||||||
Unearned income | - | (0.08 | %) | - | % | - | (0.08 | %) | - | % | |||||||||||||
Total | $ | 149,889 | 100.00 | % | 1.30 | % | $ | 149,674 | 100.00 | % | 1.31 | % | |||||||||||
Management will continue to evaluate the loan portfolio and assess economic conditions in order to determine future allowance levels and the amount of credit loss provision. We review the appropriateness of our allowance for credit losses on a quarterly basis. While we use the best information available to make evaluations, future adjustments to the allowance may become necessary if conditions change substantially from the conditions that we used in previous evaluations.
Market Risk
Interest Rate Risk
Interest rate risk is one of the most significant risks faced by the Company as one of our primary sources of earnings is net interest income, the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowings.
The Company’s Asset Liability Management Committee ("ALCO"), operating under authority granted by the Board of Directors, is responsible for measuring, monitoring, and managing interest rate risk to limit earnings volatility and protect capital and liquidity.
Investment Securities
As part of our broader risk management framework, the investment portfolio serves as a key tool for balancing interest rate exposure, preserving capital, and ensuring adequate liquidity under a range of market conditions. Ongoing monitoring of portfolio composition, valuation trends, and duration sensitivity allows us to assess how shifts in the rate environment or market dynamics may influence both earnings and economic value.
15
As of March 31, 2026, the amortized cost of our AFS and HTM investment portfolios totaled $6.8 billion, an increase of $419.1 million, or 6.5% versus December 31, 2025. As of the same date, the fair value of our AFS and HTM investment portfolios totaled $6.7 billion, an increase of $368.9 million, or 5.8% versus December 31, 2025.
During the first quarter of 2026, the Company maintained average balances of approximately $1.5 billion in short‑term interest‑earning assets held at the Federal Reserve. Early in the quarter, management began redeploying a portion of these balances into the investment securities portfolio as part of its ongoing balance sheet and interest rate risk management strategy. Management initially approached investment activity conservatively due to the interest rate environment early in the quarter, and increased the pace of purchases as market yields became more favorable later in the quarter and into April. Securities purchased consisted primarily of U.S. Treasury, agency CMBS, and RMBS securities with durations generally ranging from approximately 3.0 to 4.5 years and were intended to reduce asset sensitivity and enhance the stability of interest income.
The average tax-equivalent yield at March 31, 2026 was 4.02%, a decrease of 0.02 percentage points compared to December 31, 2025. Gross unrealized gains in our investment securities portfolio were $24.1 million and $57.2 million as of March 31, 2026 and December 31, 2025, respectively. Gross unrealized losses in our investment securities portfolio were $121.6 million and $104.6 million as of March 31, 2026 and December 31, 2025, respectively. The change in unrealized gains and losses in our investment securities portfolio was due primarily to higher market interest rates during the first three months of 2026, which adversely impacted the fair value of longer duration securities.
As of March 31, 2026, approximately 99.0% of our investment portfolio consisted of securities guaranteed by the U.S. government, its agencies, or sponsored enterprises and available-for-sale securities represented 99.3% of our total portfolio. As of the same date, the portfolio’s composition was 37% agency residential mortgage-backed securities (“RMBS”), 42% agency commercial mortgage-backed securities (“CMBS”), and 16% Treasuries, with the balance in the Small Business Administration (“SBA”), municipal, corporate and other securities.
A primary risk of holding agency RMBS comes from the variability in principal cashflows that may occur as interest rates change. In general, when interest rates rise, the prepayment of principal slows down, extending the amount of time it takes to recover and reinvest that principal. In contrast, when interest rates fall, the prepayment of principal generally increases, shortening the amount it takes to recover and reinvest that principal. We evaluate this risk through pre-purchase modeling of potential cashflows as well as continuous modeling throughout the life of the securities.
As of March 31, 2026, our best estimate of the duration of our $2.5 billion residential mortgage-backed securities portfolio held in available-for-sale was 3.3 years. As of March 31, 2026, management estimates the effective duration extends by 0.7 years assuming an immediate 200 basis point upward shock and contracts by 0.8 years assuming an immediate 200 basis point downward shock. As of the same date, our best estimate of the duration of the total investment portfolio excluding equity securities was 2.7 years. Management estimates the effective duration extends by 0.2 years assuming an immediate 200 basis point upward shock and contracts by 0.3 years assuming an immediate 200 basis point downward shock.
All securities not issued or guaranteed by the U.S. government, its agencies, or sponsored enterprises are subject to a quarterly review to test for impairment. This process is intended to adequately test for a range of credit and loss assumptions and does not rely primarily on credit ratings. This review was performed as of March 31, 2026 and December 31, 2025 and revealed no matters that would warrant impairment and result in an allowance for credit losses. The Company determined that all unrealized losses are primarily attributable to changes in interest rates and current market conditions.
During the first three months of 2026, there was no sale of common and preferred stock. $0.1 million in net gains were recorded on common or preferred stock in the first three months of 2025.
We utilize an asset/liability simulation model to evaluate the sensitivity of net interest income (short-term risk) and economic value of equity (“EVE”) (long-term risk) to changes in interest rates under various hypothetical scenarios. EVE represents the estimated present value of assets less liabilities at a point in time. Changes in EVE indicate the potential impact on the long-term earnings capacity of the balance sheet assuming rate changes remain in effect.
We monitor and stress test key modeling assumptions to assess their impact on results and identify drivers of changes in the Company’s interest rate risk profile. The table below presents the estimated impact on net interest income and EVE from immediate parallel changes in interest rates.
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| As of | March 31, 2026 | |||||||||||||||||||||||||||||||||||||
| Estimated Increase (Decrease) in Net Interest Income | Estimated Increase (Decrease) in EVE | |||||||||||||||||||||||||||||||||||||
| Year 1 | Year 2 | |||||||||||||||||||||||||||||||||||||
| Change in Rates | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
| -200 bp | $(64,408) | (7.5) | % | $(119,171) | (13.4) | % | $(573,501) | (8.7) | % | |||||||||||||||||||||||||||||
| -100 bp | (31,616) | (3.7) | % | (58,321) | (6.6) | % | (239,878) | (3.7) | % | |||||||||||||||||||||||||||||
| +100 bp | 30,475 | 3.6 | % | 56,607 | 6.4 | % | 171,686 | 2.6 | % | |||||||||||||||||||||||||||||
| +200 bp | 60,162 | 7.0 | % | 111,806 | 12.6 | % | 283,659 | 4.3 | % | |||||||||||||||||||||||||||||
The values in the table above are hypothetical and do not reflect potential management actions that could mitigate the effects of interest rate changes, including changes in pricing, balance sheet mix, or funding strategies. Actual results may differ due to variations in the timing and magnitude of interest rate movements, non-parallel yield curve changes, deposit behavior, loan prepayment speeds, or changes in asset and liability composition or growth. The simulations assume no balance sheet growth or additional rate changes beyond the initial shock and are intended to indicate sensitivity to interest rate changes rather than predict actual results. For further discussion of the Company’s interest rate risk, see the Interest Rate Risk section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2025 Annual Report on Form 10-K.
Liquidity Risk
Bank Liquidity
The objective of our liquidity management strategy is to ensure the availability of cash sufficient to fund our operations and meet present and future financial obligations at a reasonable cost. We consider the effective and prudent management of liquidity to be fundamental to our health and strength.
The Company’s ALCO has been authorized by the Board to oversee our liquidity risk to confirm that our activities comply with our funds management policy, which specifies overall objectives, metrics, limits, guidelines, reporting requirements and our contingency funding plan, which includes requirements for liquidity stress testing. The ALCO receives regular comprehensive reporting that includes information describing current levels vs. guidelines and limits for a broad set of liquidity metrics, loan and deposit trends, readily available liquidity measures, explanatory commentary relating to changes in our liquidity position and emerging risk trends and, as appropriate, recommended remedial strategies.
Our objective is to maintain prudent levels of current and contingent liquidity from stable sources that can be accessed in a timely manner at a reasonable cost, without significant adverse consequences. We seek to accomplish this mission by funding loans primarily with stable deposits, controlling dependence on wholesale funding, and by maintaining ample readily available liquidity. While our primary source of long-term, stable, and lower-cost funding is deposits, additional sources of funding include, but are not limited to, customer repurchase agreements, federal funds purchased from correspondent banks, unencumbered investment securities, and wholesale funding sources such as FHLB borrowings, dealer repurchase agreements, and wholesale/brokered deposits.
As of March 31, 2026, we had approximately $7.0 billion in readily available liquidity compared to $6.7 billion as of December 31, 2025.
| Readily Available Liquidity | March 31, 2026 | December 31, 2025 | Change | ||||||||
| (dollars in thousands) | |||||||||||
| Cash reserves at Federal Reserve | $ | 1,185,077 | $ | 1,805,215 | $ | (620,138) | |||||
| FHLB advance capacity (loan collateral) | 2,779,867 | 2,743,992 | 35,875 | ||||||||
| Unencumbered securities lending value | 3,005,170 | 2,104,941 | 900,229 | ||||||||
| Total readily available liquidity | $ | 6,970,114 | $ | 6,654,148 | $ | 315,966 | |||||
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The following table presents selected financials from our consolidated balance sheet and liquidity ratios discussed below.
| As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Liquidity Ratios: | |||||||||||
| Loan to deposit ratio | 74.8 | % | 72.4 | % | |||||||
| Cash and securities / total assets | 39.9 | % | 40.9 | % | |||||||
| Available liquidity / total assets | 34.1 | % | 32.1 | % | |||||||
Deposits
Deposits are our primary source of liquidity, as well as provides the biggest source of liquidity needs. Deposits are gathered primarily from our full-service branch locations, as well as online, mobile and ATM deposits. Central Bank offers a variety of deposit products including noninterest-bearing demand deposits, interest-bearing demand deposits, savings accounts, and certificates of deposit. The bank also utilizes the IntraFi network which allows our depositors to receive FDIC insurance on amounts greater than $250,000. Deposits larger than this threshold are broken into smaller amounts and placed in the network of other IntraFi institutions to ensure FDIC insurance covers the entire deposit.
The following tables sets forth the distribution of deposit balances as of March 31, 2026 and December 31, 2025:
| As of | |||||||||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Ending Balance | % of Total | Ending Balance | % of Total | ||||||||||||||
(dollars in thousands) | |||||||||||||||||
Noninterest-bearing demand deposits | $ | 5,563,373 | 36.0 | % | $ | 5,615,652 | 35.4 | % | |||||||||
Savings and interest-bearing demand deposits | 8,284,962 | 53.6 | % | 8,611,895 | 54.3 | % | |||||||||||
Time deposits | 1,617,106 | 10.5 | % | 1,635,078 | 10.3 | % | |||||||||||
Total deposits | $ | 15,465,441 | 100.0 | % | $ | 15,862,625 | 100.0 | % | |||||||||
Total deposit ending balances as of March 31, 2026 were $15.5 billion, a decrease of $397.2 million, or 2.5%, compared to $15.9 billion as of December 31, 2025. The decrease was due to the outflow of seasonal public funds deposits.
FDIC deposit insurance covers $250 thousand per depositor, per FDIC-insured bank, for each account ownership category. Our total estimated uninsured deposits were $6.4 billion and $6.9 billion as of March 31, 2026 and December 31, 2025, respectively.
Federal Funds Purchased and Customer Repurchase Agreements
Federal funds purchased and customer repurchase agreements totaled $1.1 billion and $1.0 billion at March 31, 2026 and December 31, 2025, respectively, which included customer repurchase agreements of $944.5 million and $945.8 million at March 31, 2026 and December 31, 2025, respectively. These are short-term borrowings that generally have a one-day maturity. The $1.3 million, or 0.1%, decrease in the first three months of 2026 was due to the normal course of business. Federal funds purchased increased $56.4 million, or 85.4%, in the first three months of 2026.
Off-Balance Sheet Arrangements
In the normal course of business, in order to meet the needs of our customers, we are subject to off-balance sheet risk which could potentially impact our financial position. These off-balance sheet arrangements include commitments to fund loans and standby letters of credit. The level of outstanding loan commitments may fluctuate based on macroeconomic conditions and customer demand, and changes in these factors could affect our consolidated balance sheets and liquidity position. See Note 9, “Commitments, Contingencies, and Guarantees” to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.
Holding Company Liquidity
The Company is an independent entity distinct from the Bank and is therefore responsible for managing its own liquidity. Its primary source of funding comes from dividends paid by the Bank. However, there are statutory and regulatory restrictions that limit the Bank’s ability to distribute dividends to the Company.
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The Bank may not declare dividends in any calendar year in an amount that would exceed its accumulated retained earnings after giving effect to any unrecognized losses and bad debts without the prior approval of the banking regulators. In addition, dividends paid by the Bank to the Company would be prohibited if they would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the three months ended March 31, 2026, the Bank paid $100 million in dividends to the Company. As of March 31, 2026, the Bank had approximately $59 million of retained earnings that could be upstreamed to the Company through dividends without prior approval from the Federal Reserve. These earnings remain at the Bank level and are included in regulatory capital.
The liquidity needs of the Company on an unconsolidated basis consist primarily of operating expenses, taxes, and dividends to stockholders. The Company’s liquidity totaled $2.0 billion as of March 31, 2026, consisting primarily of a $1.0 billion loan to the Bank and $941 million in cash and cash equivalents. The Company’s liquidity totaled $1.9 billion as of December 31, 2025, consisting of a $1.0 billion loan to the Bank, and $897 million in cash and cash equivalents.
The Company’s operating expenses totaled $3.1 million for the three months ended March 31, 2026. Dividends paid to stockholders totaled $28.9 million and the Company repurchased $31.6 million of common stock during the first three months of 2026.
Operational Risk
Operational risk refers to the risk arising from inadequate or failed internal processes or systems, the misconduct or errors of people or adverse external events, as well as risks related to compliance with laws and regulations, and exposure to legal matters. We seek to mitigate operational risks by expanding and maintaining an experienced operations team to meet customer and company demands; providing employees with relevant job-specific training; working with our vendors to use antifraud protections; establishing security procedures for our clients; employing business continuity planning and testing designed to ensure the continued operation of core functions in the event of a business disruption; and engaging in periodic independent audits of our operations and operating controls. We also seek to mitigate operational risks related to misconduct by employees or contractors by implementing internal controls, including dual authorization for monetary transactions, conducting background and credit checks for new hires, screening contractors and third parties providing critical services using a vendor management process, and offering whistleblower protections to our employees to encourage the reporting of misconduct.
Our operations are dependent on the secure and reliable functioning of our information systems and those of third-party service providers. As a result, cybersecurity threats and fraud-related risks represent an ongoing area of focus for management, particularly as the use of digital platforms and emerging technologies continues to evolve. We maintain a risk-based cybersecurity and fraud risk management program that includes preventative and detective controls, ongoing monitoring, and response protocols designed to safeguard systems and customer information and support business continuity. These risks are considered within our broader risk management framework and are monitored as part of our ongoing assessment of operational and technology-related risks that could impact our financial condition and results of operations. We continue to monitor evolving cybersecurity and fraud risks, including those related to digital activity and artificial intelligence, which did not materially impact results this quarter.
Capital
Our capital management strategy is designed to ensure that we have sufficient capital to support balance sheet growth while also maintaining sufficient reserves to absorb unexpected losses or write-downs that are risks inherent to the business of banking. We aim to strike a balance between maintaining higher capital levels to address unforeseen risks and achieving a reasonable return on the capital invested by our shareholders.
The Bank is required to meet regulatory capital standards set by federal banking authorities. If the Bank fails to meet the minimum capital requirements, it could trigger mandatory actions, and possibly additional discretionary measures, by the state and federal regulators, which may have a significant impact on the Bank’s financial position. The Bank must comply with specific capital guidelines under the capital adequacy rules and the prompt corrective action framework, which involve quantitative measures based on the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting rules. Additionally, regulators assess the Bank’s capital levels and classifications based on qualitative factors such as risk weightings, the components of capital, and other items.
The prompt corrective action (“PCA”) framework is a regulatory tool used to monitor and manage the capital levels of banks. It is designed to maintain the stability and soundness of financial institutions, particularly banks, by requiring regulatory intervention when a bank’s capital falls below certain thresholds. The primary goal of PCA is to address financial distress early, before it results in more severe consequences. These regulations, enforced by federal banking agencies, classify banks based on their capital adequacy and impose escalating supervisory actions as a bank’s capital position deteriorates.
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PCA regulations mandate that federal regulators take action when a bank’s capital falls below the required thresholds. This can involve measures such as restrictions on paying dividends or bonuses, restrictions on asset growth or expansion, enhanced monitoring and reporting requirements, required capital restoration plans, possible forced mergers or liquidation in extreme cases.
At each of March 31, 2026 and December 31, 2025 the Company’s capital ratios exceeded the regulatory requirements and the Bank’s capital ratios exceeded the threshold for “well capitalized” status. We maintain excess capital, in part, to provide ourselves with flexibility when considering potential acquisition opportunities. Actual and required capital ratios were:
| As of March 31, 2026 | ||||||||||||||||||||
| Actual | Minimum Capital Adequacy Requirement | Well- Capitalized Requirement | ||||||||||||||||||
| Amount | Ratio | Ratio | Ratio | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Total risk-based capital (to risk-weighted assets) | ||||||||||||||||||||
Company | $ | 3,686,033 | 29.8 | % | 8.0 | % | 10.0 | % | ||||||||||||
Central Trust Bank | 1,745,212 | 14.1 | % | 8.0 | % | 10.0 | % | |||||||||||||
| Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||
Company | 3,535,765 | 28.6 | % | 6.0 | % | 8.0 | % | |||||||||||||
Central Trust Bank | 1,594,944 | 12.9 | % | 6.0 | % | 8.0 | % | |||||||||||||
| Tier 1 common equity capital (to risk-weighted assets) | ||||||||||||||||||||
Company | 3,535,765 | 28.6 | % | 4.5 | % | 6.5 | % | |||||||||||||
Central Trust Bank | 1,594,944 | 12.9 | % | 4.5 | % | 6.5 | % | |||||||||||||
| Tier 1 capital (to average assets) | ||||||||||||||||||||
Company | 3,535,765 | 17.4 | % | 4.0 | % | 5.0 | % | |||||||||||||
Central Trust Bank | 1,594,944 | 7.9 | % | 4.0 | % | 5.0 | % | |||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
| Actual | Minimum Capital Adequacy Requirement | Well- Capitalized Requirement | ||||||||||||||||||
| Amount | Ratio | Ratio | Ratio | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Total risk-based capital (to risk-weighted assets) | ||||||||||||||||||||
Company | $ | 3,633,280 | 29.3 | % | 8.0 | % | 10.0 | % | ||||||||||||
Central Trust Bank | 1,742,888 | 14.1 | % | 8.0 | % | 10.0 | % | |||||||||||||
| Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||
Company | 3,483,247 | 28.1 | % | 6.0 | % | 8.0 | % | |||||||||||||
Central Trust Bank | 1,592,855 | 12.9 | % | 6.0 | % | 8.0 | % | |||||||||||||
| Tier 1 common equity capital (to risk-weighted assets) | ||||||||||||||||||||
Company | 3,483,247 | 28.1 | % | 4.5 | % | 6.5 | % | |||||||||||||
Central Trust Bank | 1,592,855 | 12.9 | % | 4.5 | % | 6.5 | % | |||||||||||||
| Tier 1 capital (to average assets) | ||||||||||||||||||||
Company | 3,483,247 | 17.9 | % | 4.0 | % | 5.0 | % | |||||||||||||
Central Trust Bank | 1,592,855 | 8.2 | % | 4.0 | % | 5.0 | % | |||||||||||||
As of March 31, 2026, we had no material contractual commitments for capital expenditures. However, the Company is currently progressing through its Core Modernization initiative, which is expected to result in capital expenditures as project phases are executed. These expenditures are expected to be funded through operating cash flows, and the Company does not expect the initiative to have a material adverse impact on its liquidity or capital position.
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Critical Accounting Policies and Estimates
Our consolidated financial statements were prepared in accordance with GAAP and follow general practices within the industry in which we operate. Application of GAAP requires management to make certain estimates and judgments which affect the amounts reported in the consolidated financial statements. Critical accounting policies are those we believe are most important to the portrayal of our consolidated financial statements and require management to make estimates and judgments which are inherently complex, difficult, uncertain and can be subject to significant change over time. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, adjustments to accounting estimates may be required.
The estimates and judgments that management believes have the most effect on the Company’s reported financial position and results of operations are set forth in “Note 1 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to the Company's critical accounting policies as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Allowance for Credit Losses on Loans
The allowance for credit losses on loans is a valuation amount that is deducted from the amortized cost basis of loans not held at fair value to present the net amount expected to be collected over the contractual term of the loans. The allowance for credit losses on loans is measured using relevant information about past events, including historical credit loss experience on loans with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flow over the contractual term of the loans. An allowance will be created upon origination or acquisition of a loan and is updated at subsequent reporting dates. The methodology is applied consistently for each reporting period and reflects management’s current expectations of credit losses. Changes to the allowance for credit losses on loans resulting from periodic evaluations are recorded through increases or decreases to the credit loss expense for loans, which is recorded in provision for credit losses on the consolidated statements of income. Loans that are deemed to be uncollectible are charged off against the related allowance for credit losses on loans. The Company maintains a policy to reverse accrued and unpaid interest when a loan is placed on non-accrual. Therefore, an allowance is not recorded for accrued interest.
The allowance for credit losses on loans is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type, and expected credit loss patterns. The Company maintains a policy to reverse accrued and unpaid interest when a loan is placed on non-accrual. Therefore, an allowance is not recorded for accrued interest. The allowance for credit losses includes significant assumptions that are uncertain and reasonably likely to have a material impact, the most significant of which are loan loss rates and prepayment speeds. Assumptions are updated based on actual performance on an annual basis. We utilize a consensus macroeconomic forecast which relies on underlying statistical models to incorporate the economic impact into each loan portfolio. Management performs a qualitative analysis considering necessary adjustments based on the potential risks inherent in the macroeconomic forecast and impacts from loan portfolio changes, including concentrations, staffing, asset quality, and policy changes. Model validations are performed to provide an independent assessment of the framework and the model’s use in producing reasonable and supportable estimates. See Note 3, “Loans and Allowance for Credit Losses” to our consolidated financial statements contained elsewhere in this Quarterly Report.
Recent Accounting Pronouncements
There have been no material changes in recently issued accounting standards from those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Non-GAAP Financial Measures Reconciliations
We provide these measures to supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations or outlook.
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However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP.
We disclose net interest income and related ratios and analysis on a FTE basis, which may be considered non-GAAP financial measures. We believe this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis. We report interest income, net interest income and net interest margin on an FTE basis using a blended federal and state effective marginal tax rate of 23.84% for the periods presented. The tax equivalent basis gives effect to the tax-exempt interest income, net of the disallowance of interest income, for federal income tax purposes related to certain tax-free assets. We believe these measures enhance comparability of net interest income arising from taxable and tax-exempt sources.
We evaluate our profitability and performance based on adjusted net income, adjusted total revenue, adjusted noninterest income, adjusted fee income and adjusted return on average total assets. We adjust each of these measures to exclude the loss on the expected sale of the consumer loan portfolio in one of our markets and adjustments that resulted from certain investment portfolio repositioning activities during the periods presented that we consider to be outside of the ordinary course of business. We believe this allows investors to assess our net income, total revenue and noninterest income exclusive of the impact of changes outside the ordinary course of business. Similarly, we evaluate our operational efficiency based on tangible noninterest expense and our adjusted efficiency ratio, which excludes the effect of amortization of intangibles (a non-cash expense item) as well as the exclusions mentioned previously in this paragraph, and includes the tax benefit associated with our tax-advantaged loans.
We evaluate our financial condition based on the ratios of our tangible common equity to our tangible assets, tangible book value per share, return and adjusted return on average common equity, and return and adjusted return on average tangible common equity. Our calculation of these ratios allows readers to assess our stockholder’s equity, exclusive of the effect of our goodwill and other intangible assets.
Reconciliations for each of these non-GAAP financial measures to the closest GAAP financial measures are included in the tables below. Each of the non-GAAP financial measures presented should be considered in context with our GAAP financial results included in this filing.
| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Interest income (FTE), net interest income (FTE) and net interest margin (FTE) | ||||||||||||||||||||
| Interest income | $ | 258,054 | $ | 240,209 | ||||||||||||||||
| Add: Tax-equivalent adjustment ¹ | 1,804 | 1,581 | ||||||||||||||||||
| Interest income (FTE) (non-GAAP) | $ | 259,858 | $ | 241,790 | ||||||||||||||||
| Net interest income | {a} | $ | 208,617 | $ | 189,273 | |||||||||||||||
| Add: Tax-equivalent adjustment ¹ | 1,804 | 1,581 | ||||||||||||||||||
| Net interest income (FTE) (non-GAAP) | {b} | $ | 210,421 | $ | 190,854 | |||||||||||||||
| Average interest-earning assets | {c} | $ | 19,587,271 | $ | 18,303,676 | |||||||||||||||
| Net interest margin ² | {a ÷ c} | 4.32 | % | 4.19 | % | |||||||||||||||
| Net interest margin (FTE) (non-GAAP) ² | {b ÷ c} | 4.36 | % | 4.23 | % | |||||||||||||||
| ¹ Effective marginal tax rate of 23.84% used for all periods. | ||||||||||||||||||||
| ² Ratios for the three months ended March 31, 2026 and 2025 are presented on an annualized basis. | ||||||||||||||||||||
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| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Adjusted noninterest income, adjusted total revenue and adjusted fee income ratio | ||||||||||||||||||||
| Noninterest income | {a} | $ | 65,088 | $ | 58,788 | |||||||||||||||
| Less: Investment securities gains, net | - | 109 | ||||||||||||||||||
| Adjusted noninterest income (non-GAAP) | {b} | $ | 65,088 | $ | - | |||||||||||||||
| Net interest income | $ | 208,617 | $ | 189,273 | ||||||||||||||||
| Noninterest income | 65,088 | 58,788 | ||||||||||||||||||
| Total revenue | {c} | 273,705 | 248,061 | |||||||||||||||||
| Less: Investment securities gains, net | - | 109 | ||||||||||||||||||
| Adjusted total revenue (non-GAAP) | {d} | $ | 273,705 | $ | 247,952 | |||||||||||||||
| Fee income ratio | {a ÷ c} | 23.8 | % | 23.7 | % | |||||||||||||||
| Adjusted fee income ratio (non-GAAP) | {b ÷ d} | 23.8 | % | 23.7 | % | |||||||||||||||
| Tangible noninterest expense, adjusted total revenue (FTE) and efficiency ratio (FTE) | ||||||||||||||||||||
| Net interest income | $ | 208,617 | $ | 189,273 | ||||||||||||||||
| Noninterest income | 65,088 | 58,788 | ||||||||||||||||||
| Total revenue | {a} | 273,705 | 248,061 | |||||||||||||||||
| Less: Investment securities gains, net | - | 109 | ||||||||||||||||||
| Add: Tax equivalent adjustment ¹ | 1,804 | 1,581 | ||||||||||||||||||
| Adjusted total revenue (FTE) (non-GAAP) | {b} | $ | 275,509 | $ | 249,533 | |||||||||||||||
| Noninterest expense | {c} | $ | 126,616 | $ | 122,261 | |||||||||||||||
| Less: Amortization of intangible assets | 804 | 807 | ||||||||||||||||||
| Tangible noninterest expense (non-GAAP) | {d} | $ | 125,812 | $ | 121,454 | |||||||||||||||
| Efficiency ratio | {c ÷ a} | 46.3 | % | 49.3 | % | |||||||||||||||
| Efficiency ratio (FTE) (non-GAAP) | {d ÷ b} | 45.7 | % | 48.7 | % | |||||||||||||||
| ¹ Effective marginal tax rate of 23.84% used for all periods. | ||||||||||||||||||||
| Adjusted net income and adjusted return on average total assets | ||||||||||||||||||||
| Net income | {a} | $ | 111,088 | $ | 94,798 | |||||||||||||||
| Add: Investment securities gains, net of taxes ¹ | - | (83) | ||||||||||||||||||
| Adjusted net income (non-GAAP) | {b} | $ | 111,088 | $ | 94,715 | |||||||||||||||
| Average total assets | {c} | $ | 20,513,495 | $ | 19,175,137 | |||||||||||||||
| Return on average total assets ² | {a ÷ c} | 2.20 | % | 2.00 | % | |||||||||||||||
| Adjusted return on average total assets (non-GAAP) ² | {b ÷ c} | 2.20 | % | 2.00 | % | |||||||||||||||
| ¹ Effective marginal tax rate of 23.84% used for all periods. | ||||||||||||||||||||
| ² Ratios for the three months ended March 31, 2026 and 2025 are presented on an annualized basis. | ||||||||||||||||||||
| Tangible common equity, tangible book value per share and tangible common equity to tangible assets | ||||||||||||||||||||
| Total stockholders' equity | {a} | $ | 3,798,326 | $ | 3,243,627 | |||||||||||||||
| Less: Goodwill and other intangible assets | 350,859 | 354,084 | ||||||||||||||||||
| Tangible common equity (non-GAAP) | {b} | $ | 3,447,467 | $ | 2,889,543 | |||||||||||||||
| Total shares of Class A common stock outstanding | {c} | 239,787 | 220,735 | |||||||||||||||||
| Book value per share | {a ÷ c} | $ | 15.84 | $ | 14.69 | |||||||||||||||
| Tangible book value per share (non-GAAP) | {b ÷ c} | $ | 14.38 | $ | 13.09 | |||||||||||||||
| Total assets | {d} | $ | 20,456,371 | $ | 19,584,460 | |||||||||||||||
| Less: Goodwill and other intangible assets | 350,859 | 354,084 | ||||||||||||||||||
| Tangible assets (non-GAAP) | {e} | $ | 20,105,512 | $ | 19,230,376 | |||||||||||||||
| Total stockholders' equity to total assets | {a ÷ d} | 18.6 | % | 16.6 | % | |||||||||||||||
| Tangible common equity to tangible assets (non-GAAP) | {b ÷ e} | 17.1 | % | 15.0 | % | |||||||||||||||
23
| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Tangible net income, adjusted tangible net income, average tangible common equity, adjusted return on average common equity, return on average tangible common equity and adjusted return on average tangible common equity | ||||||||||||||||||||
| Net income | {a} | $ | 111,088 | $ | 94,798 | |||||||||||||||
| Add: Amortization of intangible assets, net of taxes ¹ | 612 | 615 | ||||||||||||||||||
| Tangible net income (non-GAAP) | 111,700 | 95,413 | ||||||||||||||||||
| Add: Investment securities gains, net of taxes ¹ | - | (83) | ||||||||||||||||||
| Adjusted tangible net income (non-GAAP) | {b} | $ | 111,700 | $ | 95,330 | |||||||||||||||
| Average common equity | {c} | $ | 3,829,585 | $ | 3,181,663 | |||||||||||||||
| Less: Average goodwill and other intangible assets | 351,381 | 354,612 | ||||||||||||||||||
| Average tangible common equity (non-GAAP) | {d} | $ | 3,478,204 | $ | 2,827,051 | |||||||||||||||
| Return on average common equity ² | {a ÷ c} | 11.8 | % | 12.1 | % | |||||||||||||||
| Adjusted return on average common equity (non-GAAP) ² | {b ÷ c} | 11.8 | % | 12.1 | % | |||||||||||||||
| Return on average tangible common equity (non-GAAP) ² | {a ÷ d} | 13.0 | % | 13.7 | % | |||||||||||||||
| Adjusted return on average tangible common equity (non-GAAP) ² | {b ÷ d} | 13.0 | % | 13.7 | % | |||||||||||||||
| ¹ Effective marginal tax rate of 23.84% used for all periods. | ||||||||||||||||||||
| ² Ratios for the three months ended March 31, 2026 and 2025 are presented on an annualized basis. | ||||||||||||||||||||
24
Item 1. Financial Statements
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| Unaudited | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands, except share and per share data) | |||||||||||
Assets | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Short-term interest-bearing deposits | |||||||||||
| Interest-bearing deposits | |||||||||||
| Investment securities: | |||||||||||
| Available for sale | |||||||||||
Held to maturity, net of allowance for credit losses of $ | |||||||||||
| Equity | |||||||||||
| Total investment securities | |||||||||||
| Loans held for investment | |||||||||||
Less allowance for credit losses | ( | ( | |||||||||
| Net loans | |||||||||||
| Loans held for sale | |||||||||||
| Land, buildings, and equipment, net | |||||||||||
| Deferred tax assets, net | |||||||||||
| Goodwill and intangibles | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing demand | $ | $ | |||||||||
| Savings and interest-bearing demand | |||||||||||
| Time | |||||||||||
| Total deposits | |||||||||||
| Federal funds purchased and customer repurchase agreements | |||||||||||
| Total customer funds | |||||||||||
| Deferred tax liabilities, net | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
Class A voting common stock, $ | |||||||||||
Class B nonvoting common stock, $ | |||||||||||
| Capital surplus | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive (loss) | ( | ( | |||||||||
| Total stockholders' equity before treasury stock | |||||||||||
Less treasury stock of | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements
25
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||
| Interest income: | |||||||||||||||||
| Loans | $ | $ | |||||||||||||||
| Investment securities | |||||||||||||||||
| Federal funds sold and securities purchased under agreements to resell | |||||||||||||||||
| Total interest income | |||||||||||||||||
| Interest expense: | |||||||||||||||||
| Deposits | |||||||||||||||||
| Federal funds purchased and customer repurchase agreements | |||||||||||||||||
| Total interest expense | |||||||||||||||||
| Net interest income | |||||||||||||||||
| Provision for credit losses | |||||||||||||||||
| Net interest income after provision for credit losses | |||||||||||||||||
| Other income: | |||||||||||||||||
| Service charges and commissions | |||||||||||||||||
| Payment services revenue | |||||||||||||||||
| Brokerage services | |||||||||||||||||
| Fees for fiduciary services | |||||||||||||||||
| Mortgage banking revenues | |||||||||||||||||
| Investment securities gains, net | |||||||||||||||||
| Other income | |||||||||||||||||
| Total other income | |||||||||||||||||
| Other expenses: | |||||||||||||||||
| Salaries and employee benefits | |||||||||||||||||
| Net occupancy and equipment | |||||||||||||||||
| Computer software and maintenance | |||||||||||||||||
| Marketing and business development | |||||||||||||||||
| Legal and professional fees | |||||||||||||||||
| Bankcard processing, rewards and related costs | |||||||||||||||||
| Other expenses | |||||||||||||||||
| Total other expenses | |||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Income taxes | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Net income per common share - basic | $ | $ | |||||||||||||||
| Net income per common share - diluted | $ | $ | |||||||||||||||
See accompanying notes to consolidated financial statements
26
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Unrealized (losses) gains, net of tax | ( | ||||||||||||||||
| Change in pension surplus, net of tax | |||||||||||||||||
| Total other comprehensive (loss) income | ( | ||||||||||||||||
| Total comprehensive income | $ | $ | |||||||||||||||
See accompanying notes to consolidated financial statements
27
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
| Three Months Ended March 31, | ||||||||||||||||||||
| Class A Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||
| Net income | - | - | - | - | ||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||
| Purchase treasury stock | - | - | - | - | ||||||||||||||||
Cash dividends paid on common stock ($ | - | - | ( | - | - | ( | ||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||
| Issuance under equity compensation plans | - | ( | - | - | ||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||
| Net income | - | - | - | - | ||||||||||||||||
| Other comprehensive income | - | - | - | - | ( | ( | ||||||||||||||
| Purchase treasury stock | - | - | - | ( | - | ( | ||||||||||||||
Cash dividends paid on common stock ($ | - | - | ( | - | - | ( | ||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||
| Issuance under equity compensation plans | - | ( | - | ( | ||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||
See accompanying notes to consolidated financial statements
28
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash from operating activities | |||||||||||
| Depreciation and amortization | |||||||||||
| Net accretion of discounts and premiums | ( | ( | |||||||||
| Deferred income taxes | ( | ( | |||||||||
| Provision for credit losses | |||||||||||
| Net gain on sale of loans | ( | ( | |||||||||
| Net change in trading debt securities | |||||||||||
| Net investment securities gains | ( | ||||||||||
| Originations of mortgage loans held for sale | ( | ( | |||||||||
| Proceeds from sales of mortgage loans held for sale | |||||||||||
| Stock-based compensation | |||||||||||
| Decrease (increase) in other assets | ( | ||||||||||
| Increase in other liabilities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of AFS securities | ( | ( | |||||||||
| Purchase of equity securities | ( | ( | |||||||||
| Proceeds from sales of equity securities | |||||||||||
| Proceeds from maturities of AFS securities | |||||||||||
| Proceeds from maturities of HTM securities | |||||||||||
| Net change in interest-bearing deposits | |||||||||||
| Net (increase) decrease in loans | ( | ||||||||||
| Purchase of land, buildings, and equipment | ( | ( | |||||||||
| Proceeds from sale of land, buildings, and equipment | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| (Decrease) increase in deposits | ( | ||||||||||
| (Decrease) in time deposits | ( | ( | |||||||||
| Increase in federal funds purchased and customer repurchase agreements | |||||||||||
| Dividends paid | ( | ( | |||||||||
| Purchase of treasury stock | ( | ||||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of year | |||||||||||
| Cash and cash equivalents at end of year | $ | $ | |||||||||
| Cash and due from banks | $ | $ | |||||||||
| Short-term interest-bearing deposits | |||||||||||
| Federal funds sold and securities purchased under agreements to resell | |||||||||||
| Total cash and cash equivalents | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid | |||||||||||
| Loans transferred to foreclosed assets held for sale | |||||||||||
See accompanying notes to consolidated financial statements
29
CENTRAL BANCOMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(1)Basis of Presentation
The accompanying consolidated financial statements include the accounts of Central Bancompany, Inc., and its subsidiaries. Central Bancompany owns all the outstanding capital stock of The Central Trust Bank, which is headquartered in Missouri. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments necessary to present fairly the financial position and the results of operations for the interim periods have been made. In addition, all significant intercompany accounts and transactions have been eliminated. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and revenues and expenses for the periods presented. Actual results could differ significantly from those estimates.
The results of operations for the three months ended March 31, 2026 are not necessarily indicative of results to be attained for the full year or any other interim period. The consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes for the year ended December 31, 2025 contained in the Company's 2025 Annual Report on Form 10-K. Management has evaluated subsequent events for potential recognition or disclosure.
(2)Investment Securities
The table below includes the fair value of equity securities as of March 31, 2026 and December 31, 2025. Equity investments with no readily determinable fair value are carried at cost. FHLB and FRB stock represent equity interests the Company is required to hold in the Federal Reserve Bank and Federal Home Loan Bank. These amounts are also carried at cost as they do not have a readily determinable fair value because ownership of these shares is restricted, and they lack a market.
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Federal Home Loan Bank stock | $ | $ | |||||||||
| Federal Reserve Bank stock | |||||||||||
| Other - no readily determinable fair value | |||||||||||
| Total | $ | $ | |||||||||
During the first three months of 2026, there were no recorded gains or losses on common and preferred stock. During the first three months of 2025, $0.1 million in net gains were recorded on common and preferred stock. These consisted of $0.8 million in realized gains on sales, offset by a $0.7 million decrease in unrealized gains on the portfolio.
Included in the equity securities portfolio at March 31, 2026 are holdings of 33,010 of Visa Class B-2 shares, which are carried at a zero cost basis, as the Company has elected to use an alternative measurement method due to the lack of observable price changes in the market for identical or similar investments of the same issuer.
On April 13, 2026, Visa announced the commencement of an exchange offer pursuant to which holders of Class B‑2 common stock may exchange their shares for a combination of Visa Class B‑3 common stock and Class C common stock (the “Exchange Offer”). The Exchange Offer remains subject to the terms and conditions set forth by Visa.
In May 2026, the Company participated in Visa Inc.’s Exchange Offer, pursuant to which all 33,010 shares of its Class B‑2 common stock were validly tendered and accepted in exchange for a combination of Visa Class B‑3 common stock and Class C common stock, together with cash in lieu of fractional shares.
As a result of the exchange, the Company expects to recognize a pre-tax gain of approximately $8 million in the second quarter of 2026, reflecting the fair value measurement of the Class C common stock received. The fair value of the Class C shares was determined based on their as-converted equivalence to Visa Class A common stock and the closing price of Visa Class A common stock of $318.79 per share on May 8, 2026.
The remaining 16,505 shares of Visa Class B-3 common stock retain the same restrictions as the former Class B-2 shares and have a carrying value of zero , as there have not been observable price changes in orderly transactions for identical or similar investments of the same issuer.
30
The following tables show the carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of AFS and HTM securities by security type at March 31, 2026 and December 31, 2025.
| As of March 31, 2026 | ||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | Allowance for Credit Losses | Net Carrying Amount | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||
| U.S. Treasury securities | $ | $ | $ | ( | $ | $ | - | $ | ||||||||||||
| U.S. agency debentures | ( | - | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | - | ||||||||||||||||||
| Obligations of states and political subdivisions | ( | - | ||||||||||||||||||
Other securities | ( | - | ||||||||||||||||||
| Total | $ | $ | $ | ( | $ | $ | - | $ | ||||||||||||
| Held to maturity: | ||||||||||||||||||||
U.S. agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Obligations of states and political subdivisions | ( | |||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | Allowance for Credit Losses | Net Carrying Amount | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||
| U.S. Treasury securities | $ | $ | $ | ( | $ | $ | - | $ | ||||||||||||
| U.S. agency debentures | ( | - | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | - | ||||||||||||||||||
Obligations of states and political subdivisions | ( | - | ||||||||||||||||||
| Other securities | ( | - | ||||||||||||||||||
| Total | $ | $ | $ | ( | $ | $ | - | $ | ||||||||||||
| Held to maturity: | ||||||||||||||||||||
| U.S. agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
Obligations of states and political subdivisions | ( | |||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
Accrued interest receivable totaled $27.3 million and $25.1 million at March 31, 2026 and December 31, 2025, respectively, and is included within other assets on the consolidated balance sheets.
31
The amortized cost and fair value of AFS and HTM securities at March 31, 2026, by contractual maturity, are shown below:
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| U.S. government obligations and government- sponsored enterprises | Obligations of states and political subdivisions | Other securities* | |||||||||||||||||||||||||||||||||
| Amortized cost | FTE Yield | Fair value | Amortized cost | FTE Yield | Fair value | Amortized cost | FTE Yield | Fair value | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Available for sale: | |||||||||||||||||||||||||||||||||||
| Within 1 year | $ | % | $ | $ | % | $ | $ | % | $ | ||||||||||||||||||||||||||
| After 1 but within 5 years | % | % | |||||||||||||||||||||||||||||||||
| After 5 but within 10 years | |||||||||||||||||||||||||||||||||||
| After 10 years | % | ||||||||||||||||||||||||||||||||||
| Mortgage - and asset-backed securities | % | % | |||||||||||||||||||||||||||||||||
| Total | $ | % | $ | $ | % | $ | $ | % | $ | ||||||||||||||||||||||||||
| Held to maturity: | |||||||||||||||||||||||||||||||||||
| Within 1 year | $ | % | $ | $ | % | $ | $ | % | $ | ||||||||||||||||||||||||||
| After 1 but within 5 years | % | ||||||||||||||||||||||||||||||||||
| After 5 but within 10 years | |||||||||||||||||||||||||||||||||||
| After 10 years | |||||||||||||||||||||||||||||||||||
| Mortgage - and asset-backed securities | % | ||||||||||||||||||||||||||||||||||
| Total | $ | % | $ | $ | % | $ | $ | % | $ | ||||||||||||||||||||||||||
* Other securities consist primarily of corporate bonds. | |||||||||||||||||||||||||||||||||||
There were no proceeds from sales of AFS securities in the three months ended March 31, 2026 and March 31, 2025.
Investment securities with a carrying value of approximately $3.46 billion and $4.06 billion were pledged to secure public deposits, repurchase agreements, and borrowed funds at March 31, 2026 and December 31, 2025, respectively.
Allowance for credit losses on investment securities:
The expected credit losses for HTM debt securities are determined based on the likelihood of default and potential loss, using assumptions that correspond to loans with similar credit profiles. The Company recorded an allowance for credit losses on its HTM debt securities of $10 thousand at both March 31, 2026 and December 31, 2025.
All AFS securities not issued or guaranteed by the U.S. Government, its agencies, or sponsored enterprises undergo a quarterly evaluation for impairment. This evaluation involves testing various credit and loss assumptions, rather than solely relying on credit ratings. As of March 31, 2026, the Company did not identify any such securities for which a credit loss exists, and for the three months ended March 31, 2026 and 2025, the Company did not recognize a credit loss expense on any AFS securities.
Special emphasis and analysis are placed on securities that have experienced a negative credit rating event, are below investment grade, or have an uncertain financial outlook. These securities are placed on a watch list and monitored for further developments. At March 31, 2026, the fair value of securities on this watch list was $4.3 million compared to $4.9 million at December 31, 2025.
The table below summarizes debt securities AFS in an unrealized loss position, aggregated by length of impairment period, for which an allowance for credit losses has not been recorded at March 31, 2026 and December 31, 2025. Unrealized losses on these AFS securities have not been recognized as income because after review, the securities were deemed not to be impaired. The unrealized losses on these securities are primarily attributable to changes in interest rates and current market conditions. At March 31, 2026 management does not intend to sell the securities, nor is it anticipated that it would be required to sell the securities prior to the anticipated recovery.
32
| As of March 31, 2026 | ||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||
| U.S. government obligations and government- sponsored enterprises | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Obligations of states and political subdivisions | ( | ( | ||||||||||||||||||||||||
| Other securities | ( | ( | ||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||
| Fair value | Unrealized Losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||
U.S. government obligations and government- sponsored enterprises | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Obligations of states and political subdivisions | ( | ( | ||||||||||||||||||||||||
| Other securities | ( | ( | ||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Gross unrealized losses on HTM investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2026 and December 31, 2025 were as follows:
| As of March 31, 2026 | ||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||
| U.S. government obligations and government- sponsored enterprises | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||
| U.S. government obligations and government- sponsored enterprises | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
33
For obligations of states and political subdivisions, the Company's holdings are primarily in general obligation and revenue bonds. The Company monitors credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends. The underlying bonds are evaluated for credit losses in conjunction with management's estimate of the allowance for credit losses.
The following table shows the amortized cost basis by credit rating of the Company's HTM obligations of states and political subdivisions at March 31, 2026 and December 31, 2025.
| March 31, 2026 | |||||||||||||||||
| Amortized Cost Basis by Credit Rating - HTM Debt Securities | |||||||||||||||||
| Non-Rated | A | AA | AAA | Total | |||||||||||||
| Held to maturity securities: | (dollars in thousands) | ||||||||||||||||
| State and political subdivisions | $ | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | |||||||||||||||||
| Amortized Cost Basis by Credit Rating - HTM Debt Securities | |||||||||||||||||
| Non-Rated | A | AA | AAA | Total | |||||||||||||
| Held to maturity securities: | (dollars in thousands) | ||||||||||||||||
| State and political subdivisions | $ | $ | $ | $ | $ | ||||||||||||
All HTM securities were current at March 31, 2026 and December 31, 2025.
(3)Loans and Allowance for Credit Losses
Loans consisted of the following at March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Loans held for investment: | |||||||||||
| Construction and development | $ | $ | |||||||||
| Commercial, financial & agricultural | |||||||||||
Non-owner-occupied commercial real estate | |||||||||||
| Owner-occupied commercial real estate | |||||||||||
| Commercial real estate | |||||||||||
| Total commercial loans | |||||||||||
| Residential mortgage loans | |||||||||||
| Home equity lines of credit | |||||||||||
| Consumer credit card | |||||||||||
| Other consumer loans | |||||||||||
| Total residential and consumer loans | |||||||||||
| Total unpaid principal balance | |||||||||||
| Add: Unearned income | ( | ( | |||||||||
| Loans, held for investment | |||||||||||
| Loans held for sale | |||||||||||
| Total loans and leases | $ | $ | |||||||||
Accrued interest receivable totaled $46.5 million and $45.9 million at March 31, 2026 and December 31, 2025, respectively, and is included within other assets on the consolidated balance sheets.
As of March 31, 2026, loans made to related parties of the Company totaled $305.7 million. These loans primarily consist of loans made by the Bank to related parties of the Company, which were made in the ordinary course of business of the Bank and otherwise on terms consistent with those available to all customers.
34
| March 31, 2026 | |||||
| (dollars in thousands) | |||||
| Balance of loans to related parties, beginning of year | $ | ||||
| New loans | |||||
| Repayments | ( | ||||
| Change in relationship | ( | ||||
| Balance of loans to related parties, March 31, 2026 | $ | ||||
The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Company upon extension of credit is based on management's credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties. The Company's banking markets are located throughout the states of Missouri, Kansas, Oklahoma and Colorado and the Company's loan portfolio has no unusual geographic concentrations of credit risk beyond its market areas.
Allowance for Credit Losses
The allowance for credit losses is measured using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type and collateral type - construction and development, commercial, financial, and agricultural, multifamily residential real estate, non-owner occupied real estate, owner-occupied real estate, home equity lines of credit, all other residential real estate, consumer credit card, and all other consumer credit. Loans that do not share similar risk characteristics, primarily large loans on non-accrual status, are evaluated on an individual basis.
For loans evaluated for credit losses on a collective basis, an average historical loss rate is calculated for each pool using the Company's historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a look back period. Look back periods can be different based on the individual pool and represent management's credit expectations for the pool of loans over the remaining contractual period. Due to changes in portfolio composition, the Company's own historical loss rates are not fully reflective of loss expectations and have been augmented by industry and peer data. Therefore, the historical loss rates are augmented by peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, unemployment rate, various interest rates, HPI, and CREPI. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for four quarters and then reverts back to historical averages using a four-quarter straight-line reversion method. The forecast adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications. Credit cards and certain similar consumer lines of credit, included in the individual loan totals, do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.
Key model assumptions in the Company's allowance for credit loss model include the economic forecast, the reasonable and supportable forecast period, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions. The assumptions utilized in estimating the Company's allowance for credit losses at March 31, 2026 and December 31, 2025 are discussed below.
35
| Key Assumption | March 31, 2026 | December 31, 2025 | ||||||
| Overall economic forecast | - Forecast provided by Oxford Economics - The baseline forecast reflects impact from the Iran war, with consumer prices pushed markedly higher. The forecast assumes the war wraps up in coming months and is not a prolonged conflict. - Increased uncertainty and softer demand will delay labor market improvement, keeping unemployment higher for longer. | - Forecast provided by Oxford Economics - Expect the economy to continue to expand, with strong AI related investment with no sign of slowing down - The labor market is softening, affecting real disposable income growth. However, consumer spending is holding up with tariffs driving the cost of core goods. | ||||||
| Reasonable and supportable period and related reversion period | - 4 quarter reasonable and supportable period - 4 quarter reversion to historical average loss rates using straight line method | - 4 quarter reasonable and supportable period - 4 quarter reversion to historical average loss rates using straight line method | ||||||
| Forecasted macro-economic variables | - Unemployment ranging from - GDP growth forecast of -Prime rate is | - Unemployment ranging from - GDP growth forecast of -Prime rate is | ||||||
| Prepayment assumptions | - Commercial loan prepayment speeds of - Mortgage and HELOC prepayment speeds of - Consumer loan and credit card prepayment speeds of | - Commercial loan prepayment speeds of - Mortgage and HELOC prepayment speeds of . - Consumer loan and credit card prepayment speeds of | ||||||
| Qualitative factors | Qualitative adjustments for: - Economic, government policy, and geopolitical uncertainties - Impact of inflation and interest rates on borrower ability to repay - Changes in portfolio composition, concentrations, and underwriting standards | Qualitative adjustments for: - Impact of inflation, tariffs, and interest rates on borrower ability to repay - Economic, government policy, and geopolitical uncertainties - Changes in portfolio composition, concentrations, and underwriting standards | ||||||
The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded. The unfunded commitments allowance is included within other liabilities on the consolidated balance sheets.
Sensitivity in the Allowance for Credit Loss Model
The allowance for credit losses is an estimate that requires significant judgment including projections of the macro-economic environment. The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected losses.
36
The following is a summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three months ended March 31, 2026 and March 31, 2025. Included within commercial loans are the following pools – real estate development & construction, commercial real estate, owner-occupied CRE, commercial & industrial, and multifamily residential loans. Included within residential real estate are 1-4 family residential and home equity loans. Included within individual loans are consumer and credit card loans.
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| Commercial real estate | Residential real estate | Consumer | |||||||||||||||||||||||||||
| Construction & development | Commercial, financial & agricultural | Non-owner occupied CRE | Owner occupied CRE | Residential mortgage loans | Home equity line of credit | Consumer credit card | All other consumer | Total | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Allowance for credit losses on loans | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Provision for credit losses on loans | ( | ||||||||||||||||||||||||||||
| Loans charged off | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||
| Recoveries on loans previously charged off | |||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Liability for unfunded commitments | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Provision for credit losses on unfunded lending commitments | ( | ||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Allowance for credit losses on loans and liability for unfunded lending commitments | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| Commercial real estate | Residential real estate | Consumer | |||||||||||||||||||||||||||
| Construction & development | Commercial, financial & agricultural | Non-owner occupied CRE | Owner occupied CRE | Residential mortgage loans | Home equity line of credit | Consumer credit card | All other consumer | Total | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Allowance for credit losses on loans | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Provision for credit losses on loans | ( | ( | |||||||||||||||||||||||||||
| Loans charged off | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||
| Recoveries on loans previously charged off | |||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Liability for unfunded commitments | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Provision for credit losses on unfunded lending commitments | ( | ( | ( | ||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Allowance for credit losses on loans and liability for unfunded lending commitments | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
37
Age Analysis of Past Due and Nonaccrual Loans
The Company considers loans past due on the day following the contractual repayment date if the contractual repayment was not received by the Company as of the end of the business day. The following table provides aging information on the Company's past due and accruing loans, in addition to the balances of loans on non-accrual status, at March 31, 2026 and December 31, 2025. Balances in the tables below represent total unpaid principal balances gross of unearned and unamortized loan fees and costs.
| March 31, 2026 | |||||||||||||||||
Current or less than 30 days past due | 30 - 89 Days past due | 90 Days past due and still accruing | Nonaccrual | Total | |||||||||||||
| Loans held for investment: | (dollars in thousands) | ||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | ||||||||||||
| Commercial, financial & agricultural | |||||||||||||||||
| Non-owner-occupied commercial real estate | |||||||||||||||||
| Owner-occupied commercial real estate | |||||||||||||||||
| Total commercial real estate | |||||||||||||||||
| Total commercial loans | |||||||||||||||||
| Residential mortgage loans | |||||||||||||||||
| Home equity lines of credit | |||||||||||||||||
| Consumer credit card | |||||||||||||||||
| Other consumer loans | |||||||||||||||||
| Total residential and consumer loans | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | |||||||||||||||||
Current or less than 30 days past due | 30 - 89 Days past due | 90 Days past due and still accruing | Nonaccrual | Total | |||||||||||||
| Loans held for investment: | (dollars in thousands) | ||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | ||||||||||||
| Commercial, financial & agricultural | |||||||||||||||||
| Non-owner-occupied commercial real estate | |||||||||||||||||
| Owner-occupied commercial real estate | |||||||||||||||||
| Total commercial real estate | |||||||||||||||||
| Total commercial loans | |||||||||||||||||
| Residential mortgage loans | |||||||||||||||||
| Home equity lines of credit | |||||||||||||||||
| Consumer credit card | |||||||||||||||||
| Other consumer loans | |||||||||||||||||
| Total residential and consumer loans | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
At March 31, 2026 and December 31, 2025, the Company had $15.2 million and $16.9 million, respectively, of non-accrual commercial loans that had no allowance for credit loss. The interest income recorded on nonaccrual loans was approximately $0.2 million and $0.3 million in the first three months of 2026 and 2025, respectively.
The following table provides information about the credit quality of the loan portfolio using the Company's internal rating system reflecting management's risk assessment. The pass category consists of a range of loan grades that reflect low to moderate, though still acceptable, risk. Loans are placed on watch status when (1) one or more weaknesses which could jeopardize timely liquidation exists; or (2) the margin or liquidity of an asset is sufficiently tenuous that adverse trends could result in a collection problem. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified may have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. Loans are placed on nonaccrual status when (1) deterioration in the financial condition of the borrower exists for which payment of full
38
principal and interest is not expected, or (2) upon which principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection.
Loans are analyzed for risk rating updates as part of the annual credit review process. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Watch, Substandard or Non-accrual may be subject to more frequent review and monitoring processes. In addition to the regular monitoring performed by the market lending personnel and credit committees, loans are subject to review by the Loan Review Department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.
The risk category of loans in the portfolio as of March 31, 2026 and December 31, 2025 are as follows:
| March 31, 2026 | ||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving loans amortized cost basis | Total | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Construction and development | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total construction and development | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| Commercial, financial & agricultural | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total commercial, financial & agricultural | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ( | |||||||||||||||||||||||||
| Non-owner occupied CRE | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total non-owner occupied CRE | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| Owner occupied CRE | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total owner occupied CRE | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
39
| March 31, 2026 | ||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving loans amortized cost basis | Total | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Residential mortgage loans | ||||||||||||||||||||||||||
| Accrual | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total Residential mortgage loans | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| Home equity lines of credit | ||||||||||||||||||||||||||
| Accrual | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total home equity lines of credit | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| Consumer credit card | ||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| 30-89 days | ||||||||||||||||||||||||||
| 90+days | ||||||||||||||||||||||||||
| Total consumer credit card | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| All other consumer | ||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| 30-89 days | ||||||||||||||||||||||||||
| 90+ days | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total all other consumer | ||||||||||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross write-offs for the three months ended March 31, 2026 | ||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving loans amortized cost basis | Total | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Construction and development | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total construction and development | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
40
| December 31, 2025 | ||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving loans amortized cost basis | Total | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Commercial, financial & agricultural | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total commercial, financial & agricultural | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
| Non-owner occupied CRE | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total non-owner occupied CRE | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
| Owner occupied CRE | ||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Watch | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total owner occupied CRE | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
| Residential mortgage loans | ||||||||||||||||||||||||||
| Accrual | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total Residential mortgage loans | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
Home equity lines of credit | ||||||||||||||||||||||||||
| Accrual | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total home equity lines of credit | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
| Consumer credit card | ||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| 30-89 days | ||||||||||||||||||||||||||
| 90+days | ||||||||||||||||||||||||||
| Total consumer credit card | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
41
| December 31, 2025 | ||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving loans amortized cost basis | Total | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| All other consumer | ||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| 30-89 days | ||||||||||||||||||||||||||
| 90+ days | ||||||||||||||||||||||||||
| Non-accrual | ||||||||||||||||||||||||||
| Total all other consumer | ||||||||||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | ||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross write-offs for the year ended December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Collateral-dependent loans
The Company's collateral-dependent loans are comprised of loans where repayment of the loan is dependent on the sale or operation of the collateral. The Company requires that collateral-dependent loans be either over-collateralized or carry collateral equal to the amortized cost of the loan. The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2026 and December 31, 2025, by the expected source of repayment.
| March 31, 2026 | |||||||||||
| Real Estate | Business Assets | Total | |||||||||
| (dollars in thousands) | |||||||||||
| Construction and development | $ | $ | $ | ||||||||
| Commercial, financial & agricultural | |||||||||||
| Non-owner-occupied commercial real estate | |||||||||||
| Owner-occupied commercial real estate | |||||||||||
| Residential mortgage loans | |||||||||||
| Home equity lines of credit | |||||||||||
| Total | $ | $ | $ | ||||||||
| December 31, 2025 | |||||||||||
| Real Estate | Business Assets | Total | |||||||||
| (dollars in thousands) | |||||||||||
| Construction and development | $ | $ | $ | ||||||||
| Commercial, financial & agricultural | |||||||||||
| Non-owner-occupied commercial real estate | |||||||||||
| Owner-occupied commercial real estate | |||||||||||
| Residential mortgage loans | |||||||||||
| Home equity lines of credit | |||||||||||
| Total | $ | $ | $ | ||||||||
Modifications for borrowers experiencing financial difficulty
The Company adopted ASU 2022-02 on January 1, 2023 which required that the Company evaluate whether modifications represent a new loan or a continuation of existing loans. When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower to assist the borrower in repaying principal and interest owed to the Company.
The Company's modification of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty
42
are primarily loans that are substandard or non-accrual, where the maturity date was extended. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate, or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.
The following tables present the amortized cost at March 31, 2026 and 2025 of loans that were modified during the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Term Extension | Payment Delay | Interest Rate Reduction | Interest/Fees Forgiven | Other | Total | % of Total Loan Category | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Commercial, financial & agricultural | % | ||||||||||||||||||||||
| Non-owner occupied CRE | % | ||||||||||||||||||||||
| Owner occupied CRE | % | ||||||||||||||||||||||
| Total commercial real estate | % | ||||||||||||||||||||||
| Residential mortgage loans | % | ||||||||||||||||||||||
| Home equity lines of credit | % | ||||||||||||||||||||||
| Total residential loans | % | ||||||||||||||||||||||
| All other consumer | % | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
Term Extension | Payment Delay | Interest Rate Reduction | Interest/Fees Forgiven | Other | Total | % of Total Loan Category | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Commercial, financial & agricultural | % | ||||||||||||||||||||||
| Non-owner occupied CRE | % | ||||||||||||||||||||||
| Owner occupied CRE | % | ||||||||||||||||||||||
| Total commercial real estate | % | ||||||||||||||||||||||
| Residential mortgage loans | % | ||||||||||||||||||||||
| Home equity lines of credit | % | ||||||||||||||||||||||
| Total residential loans | % | ||||||||||||||||||||||
All other consumer | % | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are placed on nonaccrual status, the Company determines the allowance for credit losses on an individual evaluation, using the same process that it utilizes for other loans on nonaccrual status.
If a loan to a borrower experiencing financial difficulty is modified and when full and timely collection becomes uncertain, the allowance for credit losses continues to be based on individual evaluation, if that loan is already on nonaccrual status. For those loans, the allowance for credit losses is estimated using discounted expected cash flows or the fair value of collateral. If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the loan's risk rating is downgraded to nonaccrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.
43
The following tables summarize the financial impact of loan modifications and payment deferrals during the year ended March 31, 2026 and 2025.
| Three Months Ended March 31, 2026 | ||||||||||||||||||||
| Interest/Fees Forgiveness | Weighted-Average Months of Deferred Payments | Weighted-Average Months of Term Extensions | Weighted-Average Interest Rate Reduction | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Construction and development | $ | - | % | |||||||||||||||||
| Commercial, financial & agricultural | - | % | ||||||||||||||||||
| Non-owner occupied CRE | % | |||||||||||||||||||
| Owner occupied CRE | % | |||||||||||||||||||
| Residential mortgage loans | - | % | ||||||||||||||||||
| Home equity lines of credit | - | - | % | |||||||||||||||||
All other consumer | - | % | ||||||||||||||||||
| Total | $ | |||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
Interest/Fees Forgiveness | Weighted-Average Months of Deferred Payments | Weighted-Average Months of Term Extensions | Weighted-Average Interest Rate Reduction | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Construction and development | $ | - | % | |||||||||||||||||
| Commercial, financial & agricultural | - | % | ||||||||||||||||||
| Non-owner occupied CRE | - | % | ||||||||||||||||||
| Owner occupied CRE | - | % | ||||||||||||||||||
| Residential mortgage loans | % | |||||||||||||||||||
| Home equity lines of credit | - | - | % | |||||||||||||||||
All other consumer | % | |||||||||||||||||||
| Total | $ | |||||||||||||||||||
The following table provides the amortized cost basis of loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2026 and 2025 and were modified within the 12 months preceding the payment default. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due as to interest or principal.
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Term Extension | Payment Delay | Interest Rate Reduction | Interest/Fee Forgiveness | Other | Total | % of Total Loan Category | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Commercial, financial & agricultural | % | ||||||||||||||||||||||
| Non-owner-occupied commercial real estate | % | ||||||||||||||||||||||
| Owner-occupied commercial real estate | % | ||||||||||||||||||||||
| Total commercial real estate | % | ||||||||||||||||||||||
| Residential mortgage loans | % | ||||||||||||||||||||||
| Home equity lines of credit | % | ||||||||||||||||||||||
| Total residential loans | % | ||||||||||||||||||||||
| All other consumer | % | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
44
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
Term Extension | Payment Delay | Interest Rate Reduction | Interest/Fee Forgiveness | Other | Total | % of Total Loan Category | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Commercial, financial & agricultural | % | ||||||||||||||||||||||
| Non-owner-occupied commercial real estate | % | ||||||||||||||||||||||
| Owner-occupied commercial real estate | % | ||||||||||||||||||||||
| Total commercial real estate | % | ||||||||||||||||||||||
| Residential mortgage loans | % | ||||||||||||||||||||||
| Home equity lines of credit | % | ||||||||||||||||||||||
| Total residential loans | % | ||||||||||||||||||||||
| All other consumer | % | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
The following tables include the end of period balances by past due status and non-accrual performance for modifications to troubled borrowers modified in the previous twelve-month period by portfolio segment as of March 31, 2026 and 2025.
| March 31, 2026 | |||||||||||||||||
| Current | 30-89 Days Past Due | 90 Days Past Due | Non-accrual | Total | |||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | ||||||||||||
| Commercial, financial & agricultural | |||||||||||||||||
| Non-owner-occupied commercial real estate | |||||||||||||||||
| Owner-occupied commercial real estate | |||||||||||||||||
| Total commercial real estate | |||||||||||||||||
| Residential mortgage loans | |||||||||||||||||
| Home equity lines of credit | |||||||||||||||||
| Total residential loans | |||||||||||||||||
| All other consumer | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
| March 31, 2025 | |||||||||||||||||
| Current | 30-89 Days Past Due | 90 Days Past Due | Non-accrual | Total | |||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Construction and development | $ | $ | $ | $ | $ | ||||||||||||
| Commercial, financial & agricultural | |||||||||||||||||
| Non-owner-occupied commercial real estate | |||||||||||||||||
| Owner-occupied commercial real estate | |||||||||||||||||
| Total commercial real estate | |||||||||||||||||
| Residential mortgage loans | |||||||||||||||||
| Home equity lines of credit | |||||||||||||||||
| Total residential loans | |||||||||||||||||
| All other consumer | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
The Company had commitments of $1.2 million and $0.6 million at March 31, 2026 and December 31, 2025, respectively, to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified the terms of loans.
45
(4)Mortgage Banking Activities
The Company originates mortgage loans and sells those loans to the FHLMC, FNMA, GNMA, and private investors. Typically, these loans are sold with servicing retained by the Bank. Loans sold with servicing retained for the three months ended March 31, 2026 and 2025 aggregated $105.7 million and $71.1 million, respectively. Loans serviced for investors aggregated $4.6 billion and $4.7 billion at March 31, 2026 and March 31, 2025, respectively.
Included in mortgage banking revenues in the accompanying consolidated statements of income for March 31, 2026 and 2025 are the following:
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Gains on sale of mortgage loans | $ | $ | |||||||||||||||
Fees on real estate loans sold | |||||||||||||||||
| (Losses) on interest rate lock commitments (IRLC) and associated hedging | ( | ( | |||||||||||||||
| Servicing fees | |||||||||||||||||
| Mortgage banking revenues, net | $ | $ | |||||||||||||||
The following assumptions were used in determining the fair value of the capitalized mortgage servicing rights:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Discount rate | % | % | |||||||||
| Prepayment speed | % | % | |||||||||
| Delinquency rate | % | % | |||||||||
A summary of the mortgage servicing rights is as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Capitalized mortgage servicing rights | |||||||||||
| Amortization | ( | ( | |||||||||
| Change in valuation allowance | |||||||||||
| Balance at end of period | $ | $ | |||||||||
The valuation allowance at each of March 31, 2026 and December 31, 2025 was $0
(5)Goodwill and Intangible Assets
Goodwill and core deposit intangible assets are summarized in the following table:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Gross carrying amount | Accumulated amortization | Net amount | Gross carrying amount | Accumulated amortization | Net amount | ||||||||||||||||||
| (dollars in thousands)\ | |||||||||||||||||||||||
| Amortizable intangible assets: | |||||||||||||||||||||||
| Core deposit intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Trust customer intangible asset | ( | ( | |||||||||||||||||||||
| Total amortizable intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Goodwill: | |||||||||||||||||||||||
| Commercial Banking segment | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Consumer Banking segment | |||||||||||||||||||||||
| Wealth segment | |||||||||||||||||||||||
| Total goodwill | $ | $ | $ | $ | $ | $ | |||||||||||||||||
46
(6)Customer Repurchase Agreements
Customer repurchase agreements are short-term borrowings that generally have one day maturities.
The table below shows the remaining contractual maturities of repurchase agreements outstanding at March 31, 2026 and December 31, 2025, in addition to the various types of marketable securities that have been pledged as collateral for these borrowings.
| March 31, 2026 | ||||||||||||||
| Remaining Contractual Maturity of the Agreements | ||||||||||||||
Overnight and continuous | Up to 90 days | Greater than 90 days | Total | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Repurchase agreements, secured by: | ||||||||||||||
| U.S. government and federal agency obligations | $ | $ | $ | $ | ||||||||||
| Government-sponsored enterprise obligations | ||||||||||||||
| Mortgage-backed securities | ||||||||||||||
| Total repurchase agreements, gross amount recognized | $ | $ | $ | $ | ||||||||||
| December 31, 2025 | ||||||||||||||||||||
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and continuous | Up to 90 days | Greater than 90 days | Total | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Repurchase agreements, secured by: | ||||||||||||||||||||
| U.S. government and federal agency obligations | $ | $ | $ | $ | ||||||||||||||||
| Government-sponsored enterprise obligations | ||||||||||||||||||||
| Mortgage-backed securities | ||||||||||||||||||||
| Total repurchase agreements, gross amount recognized | $ | $ | $ | $ | ||||||||||||||||
(7)Stock-Based Compensation
The Company provides stock-based compensation to key employees in the form of restricted stock awards (RSAs) and, beginning in March 2026, restricted stock units (RSUs). The Company's stock-based compensation plans are designed to attract, retain, and reward employees while aligning the interests of the employees with the success of the Company. Awards are determined by the Company's Human Resources Committee of the Board of Directors.
The following represents a summary of changes in the Company's nonvested restricted stock shares as of March 31, 2026.
| Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested at January 1, 2026 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Nonvested at March 31, 2026 | $ | ||||||||||
For the three months ended March 31, 2026 and 2025, the total stock-based compensation expense recognized for restricted stock awards and restricted stock units was $1.0 million and $0.9 million, respectively. This expense is calculated on the graded-vesting method and is included in salaries and employee benefits.
(8)Earnings Per Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period presented, excluding nonvested restricted stock. Diluted earnings per common share is calculated by dividing net income by the weighted average number of common shares determined for the basic earnings per share computation plus the dilutive effects of stock-based compensation.
47
The income per share attributable to common stock for the three months ended March 31, 2026 and March 31, 2025 is shown in the following table.
| For the Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (dollars in thousands, except in per share data) | |||||||||||||||||
| Basic income per share: | |||||||||||||||||
| Net income attributable to Central Bancompany, Inc. | $ | $ | |||||||||||||||
| Less: Dividends declared on forfeitable nonvested restricted stock | |||||||||||||||||
| Net income allocated to common stock | $ | $ | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||
| Basic income per common share | $ | $ | |||||||||||||||
| Diluted income per common share: | |||||||||||||||||
| Net income attributable to Central Bancompany, Inc. | $ | $ | |||||||||||||||
| Less: Dividends declared on forfeitable nonvested restricted stock | |||||||||||||||||
| Net income allocated to common stock | $ | $ | |||||||||||||||
| Weighted average diluted common shares outstanding | |||||||||||||||||
| Diluted income per common share: | $ | $ | |||||||||||||||
(9)Commitments, Contingencies, and Guarantees
In the normal course of business, in order to meet the needs of customers, the Company is subject to off-balance sheet risk which could potentially impact its financial position. These off-balance sheet arrangements include commitments to fund loans and standby letters of credit.
The Company has outstanding commitments to provide loans to, and letters of credit on behalf of customers. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Letters of credit are commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as is involved in extending loan facilities to customers.
In addition, the Company may enter into interest rate swap risk participation agreements when certain clients are engaged in interest rate hedging activities in a syndicated loan or a loan in which we are a participant. This is represented as Credit Derivatives in the table below and is the only Credit Derivative activity in which the Company currently participates. Under these agreements, the Company assumes a portion of the counterparty credit risk associated with a client's interest rate swap transaction with a third-party financial institution, for which the Company receives a fee. If the client fails to meet its payment obligations under the swap, the Company may be required to fulfill those obligations up to its participation level.
The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Company upon extension of credit is based on management's credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties. The Company's banking primary markets are located within the states of Missouri, Kansas, Oklahoma, and Colorado and the Company's loan portfolio has no unusual geographic concentrations of credit risk beyond its market areas.
Such commitments and conditional obligations were as follows as of the dates presented.
| Contractual Amount | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Off Balance Sheet Commitments | |||||||||||
| Loan Commitments | $ | $ | |||||||||
| Standby Letters of Credit | |||||||||||
| Commercial Letters of Credit | |||||||||||
| Credit Derivatives | |||||||||||
48
The Company and its subsidiaries are defendants in various claims, legal actions, and complaints arising in the ordinary course of business. The Company records losses when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to the Company from legal proceedings.
(10)Fair Value Disclosures
Fair Value Hierarchy
The Company uses fair value measurements to record fair value adjustments to certain financial and nonfinancial assets and liabilities and to determine fair value disclosures. Various financial instruments such as AFS and trading securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as loans, loans held for sale, mortgage servicing rights, and certain other investment securities. These nonrecurring fair value adjustments typically involve lower of cost or market accounting or write-downs of individual assets.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value, which are in accordance with ASC 820. ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).
•Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company's best information and assumptions that a market participant would consider.
49
Instruments Measured at Fair Value on a Recurring Basis
The following table presents assets and liabilities measured at fair value on a recurring basis (including items that are required to be measured at fair value) at March 31, 2026 and December 31, 2025. There were no transfers among levels during the first three months ended March 31, 2026 or the year ended December 31, 2025.
| Fair Value March 31, 2026 | Fair value measurements at report date using | |||||||||||||
| Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| (dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Loans held for sale | $ | $ | $ | $ | ||||||||||
| Available for sale investment securities: | ||||||||||||||
| U.S. government obligations and government-sponsored enterprises | ||||||||||||||
Obligations of states and political subdivisions | ||||||||||||||
| Other securities | ||||||||||||||
| Equity investments | ||||||||||||||
| Derivatives | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
| Liabilities: | ||||||||||||||
| Derivatives | $ | $ | $ | $ | ||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||
| Fair value measurements at report date using | ||||||||||||||
| Fair Value December 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Loans held for sale | $ | $ | $ | $ | ||||||||||
| Available for sale investment securities: | ||||||||||||||
U.S. government obligations and government-sponsored enterprises | ||||||||||||||
Obligations of states and political subdivisions | ||||||||||||||
Other securities | ||||||||||||||
| Equity investments | ||||||||||||||
| Derivatives | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
| Liabilities: | ||||||||||||||
| Derivatives | $ | $ | $ | $ | ||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||
50
The following table provides the assets measured at fair value on a nonrecurring basis during the first three months of 2026 and 2025, and still held as of March 31, 2026 and 2025.
| Fair value measurements at report date using | ||||||||||||||
| Fair Value March 31, 2026 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Collateral dependent loans | $ | $ | $ | $ | ||||||||||
| Mortgage servicing rights | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
| Fair value measurements at report date using | ||||||||||||||
| Fair Value March 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Collateral dependent loans | $ | $ | $ | $ | ||||||||||
| Mortgage servicing rights | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
Fair Value of Financial Instruments
Fair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for many of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The estimated fair values of the Company's financial assets and the classification of their fair value measurement within the valuation hierarchy are as follows at March 31, 2026 and December 31, 2025:
| March 31, 2026 | ||||||||||||||
| Carrying amount | Estimated Fair Value | |||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||
| (dollars in thousands) | ||||||||||||||
| Financial Assets: | ||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | ||||||||||
| Short-term interest-bearing deposits | ||||||||||||||
| Interest-bearing deposits | ||||||||||||||
| Federal funds sold and securities purchased under agreements to resell | ||||||||||||||
| Investment securities | ||||||||||||||
| Available for sale | ||||||||||||||
| Held to maturity | ||||||||||||||
| Equity | ||||||||||||||
| Net loans held for investment | ||||||||||||||
| Loans held for sale | ||||||||||||||
| Derivatives | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
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| December 31, 2025 | ||||||||||||||
| Carrying amount | Estimated Fair Value | |||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||
| (dollars in thousands) | ||||||||||||||
| Financial Assets | ||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | ||||||||||
| Short-term interest-bearing deposits | ||||||||||||||
| Interest-bearing deposits | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | ||||||||||||||
| Investment securities | ||||||||||||||
| Available for sale | ||||||||||||||
| Held to maturity | ||||||||||||||
| Equity | ||||||||||||||
| Net loans held for investment | ||||||||||||||
| Loans held for sale | ||||||||||||||
| Derivatives | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||
The estimated fair values of the Company's financial liabilities and the classification of their fair value measurement within the valuation hierarchy are as follows at March 31, 2026 and December 31, 2025:
| March 31, 2026 | ||||||||||||||
| Carrying amount | Estimated Fair Value | |||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||
| (dollars in thousands) | ||||||||||||||
| Financial Liabilities | ||||||||||||||
| Federal funds purchased and customer repurchase agreements | $ | $ | $ | $ | ||||||||||
| Accrued interest payable | ||||||||||||||
| Derivatives | ||||||||||||||
| December 31, 2025 | ||||||||||||||
| Carrying amount | Estimated Fair Value | |||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||
| (dollars in thousands) | ||||||||||||||
| Financial Liabilities | ||||||||||||||
Federal funds purchased and customer repurchase agreements | $ | $ | $ | $ | ||||||||||
| Accrued interest payable | ||||||||||||||
| Derivatives | ||||||||||||||
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(11)Accumulated Other Comprehensive Loss
The table below shows the activity and accumulated balances of components of other comprehensive income (loss) for the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | |||||||||||||||||
| Unrealized Gains/Losses on AFS Securities | Pension Plan | Total | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Balance January 1, 2026 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Reclassification adjustment for net losses on AFS securities included in net income | |||||||||||||||||
| Current period other comprehensive (loss) income, before tax | ( | ( | |||||||||||||||
| Income tax benefit (expense) | ( | ||||||||||||||||
| Current period other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||
| Balance March 31, 2026 | $ | ( | $ | $ | ( | ||||||||||||
| Balance January 1, 2025 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||
| Reclassification adjustment for net losses on AFS securities included in net income | |||||||||||||||||
| Current period other comprehensive income, before tax | |||||||||||||||||
| Income tax (expense) | ( | ( | ( | ||||||||||||||
| Current period other comprehensive income, net of tax | |||||||||||||||||
| Balance March 31, 2025 | $ | ( | $ | $ | ( | ||||||||||||
(12) Business Segment Reporting
The Company's reportable segments are determined by its Chief Executive Officer, who is the designated Chief Operating Decision Maker (“CODM”). The company has strategically aligned its operations into the following three
To evaluate segment performance and inform resource allocation decisions, the CODM regularly reviews each segment’s revenues and net income compared to budget. This process allows the Company to (1) assess the profitability of a specific business segment by aligning relevant costs with revenue, and (2) evaluate each business segment in a way that reflects its economic impact on consolidated earnings.
During the year ended December 31, 2025, the Company modified the structure of its internal organization to better align financial reporting with the way management evaluates performance and allocates resources. Previously, the Company reported two operating segments: Community Banking and Wealth Management. As a result of the organizational changes, management now reviews operating performance and makes resource allocation decisions based on three operating segments: Consumer, Commercial, and Wealth Management.
This change represents a reconsideration of the Company’s operating and reportable segments in accordance with ASC 280, Segment Reporting. In accordance with ASC 280‑10‑50‑34, the Company has recast all prior‑period segment information presented for comparative purposes to reflect the new segment structure. The change affected the aggregation and presentation of certain revenues, expenses, and allocated corporate costs among the Company’s operating segments, but did not impact consolidated net income, total assets, shareholders’ equity, or cash flows for any periods presented.
Consistent with the requirements of ASC 250‑10‑50‑1(a), the recast of prior periods has been applied retrospectively to all comparative periods presented herein, and the nature and reason for the change in segment presentation are disclosed. The change did not result from a change in accounting principle but rather from a change in the organizational structure that constitutes a change in the internal information regularly reviewed by the CODM.
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Management believes the new segment structure provides improved transparency into the distinct customer groups served by the Company and the economic characteristics of each segment.
The Consumer Banking operating segment consists of various consumer loan and deposit products offered primarily through its 156 full-service branches. This segment also includes residential mortgage, installment lending and other consumer loan financing options, along with debit and credit card loan and fee businesses.
The Commercial Banking operating segment includes full-service relationship banking solutions to businesses, agencies and community organizations including commercial, small business and government segments. Our business payment solutions include treasury management services, merchant and commercial bank card products.
The Wealth Management operating segment provides a full range of “fee-only” wealth management solutions, including investment management, fiduciary services, financial, estate, and tax planning services to individuals, businesses, and foundations. Services are provided through Central Trust Company and Central Investment Advisors, both divisions of The Central Trust Bank.
The Company uses a funds transfer pricing method to value funds used (e.g., loans, fixed assets, cash, etc.) and funds provided (deposits, borrowings, and equity) by the business segments and their components. This process assigns a specific value to each new source or use of funds with a maturity, based on current interest rates, thus determining an interest spread at the time of the transaction. Non-maturity assets and liabilities are valued using weighted average pools. The funds transfer pricing process attempts to remove interest rate risk from valuation, allowing management to compare profitability under various rate environments. The operating segments also include a number of allocations of income and expense from various support and overhead centers within the Company. Management periodically makes changes to methods of assigning costs and income to its business segments to better reflect operating results.
Segment Financial Information
The following table presents selected financial information by segment and reconciliations of combined segment totals to consolidated totals.
| Consumer | Commercial | Wealth Management | Corp / Other | Total | |||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Three Months Ended March 31, 2026 | |||||||||||||||||
| Net interest income | $ | $ | $ | ( | $ | $ | |||||||||||
| Provision for credit losses | |||||||||||||||||
| Net interest income after provision for credit losses | ( | ||||||||||||||||
| Noninterest income | |||||||||||||||||
| Noninterest expense | |||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Income taxes | |||||||||||||||||
| Net income | $ | $ | $ | $ | $ | ||||||||||||
| Assets under advice | $ | $ | $ | $ | $ | ||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||
| Net interest income | $ | $ | $ | ( | $ | $ | |||||||||||
| Provision for credit losses | ( | ||||||||||||||||
| Net interest income after provision for credit losses | ( | ||||||||||||||||
| Noninterest income | |||||||||||||||||
| Noninterest expense | |||||||||||||||||
| Income before income taxes | ( | ||||||||||||||||
| Income taxes | ( | ||||||||||||||||
| Net income | $ | $ | $ | $ | ( | $ | |||||||||||
| Assets under advice | $ | $ | $ | $ | $ | ||||||||||||
The segment activity, as shown above, includes both direct and allocated items. Amounts in the "Corporate / Other" column include activity not related to the segments, such as administrative functions, various support and overhead
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operating units of the Company. Corporate administrative functions such as Compliance, Accounting, Credit Administration, Human Resources, and our Central Technology Services team expenses are allocated to the segments with an offset in Corp/Other noninterest expense. Expenses for the parent company, the administrative and support functions within the markets not specific to a segment, regulatory expenses, director and shareholder costs, community outreach, and other similar expenses are not allocated to the segments.
The Company's reportable segments are strategic lines of business that offer different products and services. They are managed separately because each line services a specific customer need, requiring different performance measurement analysis and marketing strategies. The performance measurement of the segments is based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. The information is also not necessarily indicative of the segments' financial condition and results of operations if they were independent entities.
(13) Employee Benefit Plans
The amount of net pension cost is shown in the table below for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Service Cost | $ | $ | |||||||||
| Interest Cost | |||||||||||
| Expected Return on Assets | ( | ( | |||||||||
| Net Amortization | |||||||||||
| Net periodic pension cost | $ | ( | $ | ( | |||||||
All benefits accrued under the Company’s defined benefit pension plan have been frozen since December 31, 2018. During the first three months of 2026, the Company made no funding contributions to its defined benefit pension plan and made minimal funding contributions to a supplemental executive retirement plan (the SERP), which carries no segregated assets.
During the first quarter of 2026, the Company initiated the process to terminate its defined benefit pension plan through a standard plan termination. The Company expects the termination process to be completed later in 2026, subject to regulatory approvals and completion of final settlement activities. Plan obligations are expected to be settled through a combination of lump‑sum distributions to participants and the purchase of group annuity contracts from a third‑party insurer.
Based on the current status of the plan, the Company expects to recognize a modest settlement gain upon completion of the termination. Any settlement gain will include the recognition of unamortized actuarial gains or losses currently recorded in accumulated other comprehensive income. The plan is currently in a surplus position, and the Company expects that excess plan assets remaining after satisfaction of all benefit obligations will be used to fund nonelective contributions to its defined contribution 401(k) plan or for other qualified purposes over a period of up to seven years .
The Company is continuing to evaluate the financial impact of the plan termination, and no settlement gains or other termination‑related impacts have been recognized in the accompanying consolidated financial statements for the quarter ended March 31, 2026. The Company does not expect the termination to have a material impact on its liquidity, capital, or results of operations.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company’s market risk from those disclosed in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10‑Q.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of this period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to Company’s management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as defined in Rule 13a 15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are defendants in various claims, legal actions and complaints arising in the ordinary course of business. We are not currently party to any legal or regulatory proceedings the resolution of which we believe would have a material adverse effect on our business, results of operation, or financial condition. See Note 9, “Commitments, Contingencies, and Guarantees” to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information regarding our legal and regulatory proceedings.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information regarding issuer purchases of equity securities during the first quarter of 2026.
| Period | Total Number Of Shares Purchased (1)(2) | Average Price Paid Per Share | Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs2 | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||
| January 1 - January 31, 2026 | - | $ | - | - | $ | - | ||||||||
| February 1 - February 28, 2026 | 93,925 | 24.34 | 93,925 | 47,714,160.90 | ||||||||||
| March 1 - March 31, 2026 | 1,222,583 | 24.00 | 1,202,324 | 18,857,084.24 | ||||||||||
| Total | 1,316,508 | $ | 24.03 | 1,296,249 | ||||||||||
| (1) Includes 20,259 shares acquired pursuant to the Central Bancompany, Inc. Restricted Stock Plan approved by the Board on February 13, 2023 ("RSA Plan"). Pursuant to the terms of the Company's RSA Plan, the Company accepts previously owned shares of common stock surrendered to satisfy tax withholding obligations associated with equity compensation. These purchases do not count against the maximum value of shares remaining available for purchase under the 2026 Repurchase Plan. | ||||||||||||||
| (2) Includes shares acquired under the Board of Directors approved 2026 Repurchase Plan. | ||||||||||||||
On February 4, 2026, the Board of Directors of the Company approved the Company to repurchase of up to $50 million of shares of the Company’s Class A common stock (the “2026 Repurchase Plan”). This 2026 Repurchase Plan authorization replaces and supersedes the Company’s prior authorizations.
The Company has not made any repurchases other than through the 2026 Repurchase Plan, but did acquire shares pursuant to the Company's RSA Plan. All share purchases pursuant to the 2026 Repurchase Plan are intended to be within the scope of Rule 10b-18 promulgated under the Exchange Act. Rule 10b-18 provides a safe harbor for certain purchases if the Company satisfies the manner, timing, price and volume conditions of the rule when purchasing its own shares of common stock.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2026, none
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Item 6. Exhibits
(a)Exhibits: See the Exhibit Index immediately preceding the signature pages hereto, which is incorporated by reference as if fully set forth herein.
EXHIBIT INDEX
| Number | Description | |||||||
3.1 | Second Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement Form S-1 filed on October 10, 2025, File No. 333-290831) | |||||||
3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement Form S-1 filed on October 10, 2025, File No. 333-290831) | |||||||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101.INS ** | XBRL Instance Document - the instance document does not appear in the interactive data file because the XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH ** | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL ** | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF ** | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB ** | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE ** | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
| ** | Furnished herewith, not filed | |||||||
58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CENTRAL BANCOMPANY, INC. | |||||||||||
| Date: | May 15, 2026 | By: | /s/ James K. Ciroli | ||||||||
Name: James K. Ciroli | |||||||||||
Title: Chief Financial Officer (Principal Financial Officer and Authorized Officer) | |||||||||||
59
FAQ
How did Central Bancompany (CBC) perform financially in Q1 2026?
Central Bancompany reported net income of $111.1 million for Q1 2026, up from $94.8 million a year earlier. Diluted EPS was $0.46, and return on average assets reached 2.20%, reflecting stronger overall profitability and balance sheet efficiency.
What happened to Central Bancompany (CBC) net interest margin and income?
Net interest income increased to $208.6 million in Q1 2026 from $189.3 million in Q1 2025. Net interest margin improved to 4.32% from 4.19%, supported by higher-yielding investments, deployment of IPO proceeds, and lower funding costs after Federal Reserve rate cuts.
How strong is Central Bancompany (CBC) asset quality and credit performance?
Asset quality remained solid, with nonperforming loans at 0.45% of loans and net charge-offs at 0.10% of average loans in Q1 2026. The allowance for credit losses was $149.9 million, or 1.30% of loans, providing coverage of about 288% of nonperforming loans.
What were Central Bancompany (CBC) loan and deposit levels at March 31, 2026?
Loans held for investment totaled $11.53 billion, up 0.9% from year-end, driven by commercial real estate and residential mortgages. Deposits were $15.47 billion, down 2.5% from December 31, 2025, mainly due to seasonal public funds outflows rather than core deposit erosion.
How well-capitalized is Central Bancompany (CBC) after Q1 2026?
Capital ratios were very strong. At March 31, 2026, company CET1 and Tier 1 risk-based capital ratios were both 28.6%, while total risk-based capital was 29.8%. These are well above regulatory “well-capitalized” thresholds, providing substantial loss-absorbing capacity.
What drove noninterest income growth for Central Bancompany (CBC) in Q1 2026?
Noninterest income rose 10.7% to $65.1 million, led by a 14.8% increase in fees for fiduciary services and 18.2% growth in brokerage services. A $1.7 million gain from liquidating the consumer lease portfolio also contributed meaningfully to the year-over-year increase.