[10-Q] LAKELAND FINANCIAL CORP Quarterly Earnings Report

Rhea-AI Filing Summary

Lakeland Financial Corporation reported stronger Q3 results. Net income was $26.4 million (diluted EPS $1.03) versus $23.3 million ($0.91) a year ago, as lower funding costs and steady earning assets supported profitability.

Net interest income rose to $56.1 million from $49.3 million, while interest expense declined to $38.8 million from $45.7 million. The provision for credit losses was $2.0 million versus $3.1 million last year. Noninterest income was $13.0 million and noninterest expense was $35.0 million, reflecting higher compensation and processing costs.

Balance sheet growth continued: total assets reached $6.90 billion (from $6.68 billion at year-end), loans were $5.18 billion, and deposits were $6.02 billion. Stockholders’ equity increased to $747.4 million with accumulated other comprehensive loss improving to $(140.7) million. The company added $56.2 million in FHLB advances. A cash dividend of $0.50 per share was paid in the quarter. Shares outstanding were 25,528,732 as of September 30, 2025.

Insights

Banking sector analyst

Q3 profit improved on lower funding costs and stable growth.

LKFN delivered higher earnings with net income at $26.4M and diluted EPS of $1.03. Net interest income increased to $56.1M as deposit costs eased, evident in interest expense falling to $38.8M from the prior year. The credit provision was $2.0M, indicating stable credit costs in the quarter.

Balance sheet metrics show modest expansion: loans at $5.18B, deposits at $6.02B, and assets at $6.90B. Equity rose to $747.4M alongside an improvement in accumulated other comprehensive loss to $(140.7)M, tracking rate-driven securities marks.

Liquidity and funding flexibility included new FHLB advances of $56.2M. A dividend of $0.50 per share was paid. Overall tone is operationally steady; actual impact will hinge on deposit mix, loan yields, and credit trends in subsequent periods.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

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: 0-11487

LAKELAND FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana									35-1559596
(State or Other Jurisdiction									(IRS Employer
of Incorporation or Organization)									Identification No.)
202 East Center Street,
Warsaw			,			Indiana			46580
(Address of principal executive offices)									(Zip Code)

(574) 267‑6144

(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

Common stock, No par value

LKFN

The NASDAQ Stock Market LLC

(Nasdaq Global Select Market)

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 ☒   No ☐

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 ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☒   Accelerated filer ☐   Non-accelerated filer ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at October 23, 2025:  25,528,732

Table of Contents

TABLE OF CONTENTS

						Page
PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements
			Consolidated Balance Sheets — September 30, 2025 and December 31, 2024			1
			Consolidated Statements of Income — three and nine months ended September 30, 2025 and 2024			2
			Consolidated Statements of Comprehensive Income — three and nine months ended September 30, 2025 and 2024			3
			Consolidated Statements of Changes in Stockholders’ Equity — three and nine months ended September 30, 2025 and 2024			4
			Consolidated Statements of Cash Flows — nine months ended September 30, 2025 and 2024			6
			Notes to the Consolidated Financial Statements			7
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			39
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			57
Item 4.			Controls and Procedures			58
PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			58
Item 1A.			Risk Factors			58
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			58
Item 3.			Defaults Upon Senior Securities			59
Item 4.			Mine Safety Disclosures			59
Item 5.			Other Information			59
Item 6.			Exhibits			59
SIGNATURES						60

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data)

			September 30, 2025						December 31, 2024
			(Unaudited)
ASSETS
Cash and due from banks			$	67,496					$	71,733
Short-term investments			125,340						96,472
Total cash and cash equivalents			192,836						168,205
Securities available-for-sale, at fair value			1,031,938						991,426
Securities held-to-maturity, at amortized cost (fair value of $113,804 and $113,107, respectively)			132,799						131,568
Real estate mortgage loans held-for-sale			725						1,700
Loans, net of allowance for credit losses of $68,168 and $85,960			5,180,451						5,031,988
Land, premises and equipment, net			64,928						60,489
Bank owned life insurance			128,618						113,320
Federal Reserve and Federal Home Loan Bank stock			21,420						21,420
Accrued interest receivable			28,667						28,446
Goodwill			4,970						4,970
Other assets			107,676						124,842
Total assets			$	6,895,028					$	6,678,374
LIABILITIES
Noninterest bearing deposits			$	1,268,241					$	1,297,456
Interest bearing deposits			4,756,077						4,603,510
Total deposits			6,024,318						5,900,966
Borrowings - Federal Home Loan Bank advances:
Short-term advance			55,000						0
Long-term advance			1,200						0
Total borrowings			56,200						0
Accrued interest payable			8,628						15,117
Other liabilities			58,379						78,380
Total liabilities			6,147,525						5,994,463
STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value
26,023,644 shares issued and 25,528,732 outstanding as of September 30, 2025
25,978,831 shares issued and 25,509,592 outstanding as of December 31, 2024			134,434						129,664
Retained earnings			771,291						736,412
Accumulated other comprehensive income (loss)			(140,703)						(166,500)
Treasury stock at cost (494,912 shares as of September 30, 2025, 469,239 shares as of December 31, 2024)			(17,608)						(15,754)
Total stockholders’ equity			747,414						683,822
Noncontrolling interest			89						89
Total equity			747,503						683,911
Total liabilities and equity			$	6,895,028					$	6,678,374

The accompanying notes are an integral part of these consolidated financial statements.

1

Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (unaudited - dollars in thousands, except share and per share data)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
NET INTEREST INCOME
Interest and fees on loans
Taxable			$	85,490					$	86,118					$	251,648					$	252,386
Tax exempt			287						298						870						1,830
Interest and dividends on securities
Taxable			3,489						2,908						10,335						9,051
Tax exempt			3,915						3,921						11,742						11,800
Other interest income			1,706						1,773						5,132						4,721
Total interest income			94,887						95,018						279,727						279,788
Interest on deposits			38,446						45,556						114,015						131,083
Interest on short-term borrowings			368						189						1,888						3,720
Total interest expense			38,814						45,745						115,903						134,803
NET INTEREST INCOME			56,073						49,273						163,824						144,985
Provision for credit losses			2,000						3,059						11,800						13,059
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			54,073						46,214						152,024						131,926
NONINTEREST INCOME
Wealth advisory fees			2,855						2,718						8,389						7,770
Investment brokerage fees			557						438						1,559						1,438
Service charges on deposit accounts			2,921						2,835						8,522						8,332
Loan and service fees			3,419						2,955						9,309						8,855
Merchant and interchange fee income			892						898						2,568						2,653
Bank owned life insurance income			1,567						1,068						2,929						2,994
Interest rate swap fee income			0						0						20						0
Mortgage banking income (loss)			(6)						(7)						67						68
Net securities gains (losses)			0						0						0						(46)
Net gain (loss) on Visa shares			0						(15)						0						8,996
Other income			749						1,027						2,005						3,908
Total noninterest income			12,954						11,917						35,368						44,968
NONINTEREST EXPENSE
Salaries and employee benefits			20,414						16,476						55,412						49,467
Net occupancy expense			1,877						1,721						5,604						5,159
Equipment costs			1,475						1,452						4,294						4,207
Data processing fees and supplies			4,116						3,768						12,533						11,419
Corporate and business development			1,563						1,369						4,129						4,015
FDIC insurance and other regulatory fees			878						966						2,517						2,571
Professional fees			1,726						2,089						5,812						6,675
Other expense			2,916						2,552						7,859						10,918
Total noninterest expense			34,965						30,393						98,160						94,431
INCOME BEFORE INCOME TAX EXPENSE			32,062						27,738						89,232						82,463
Income tax expense			5,658						4,400						15,777						13,175
NET INCOME			$	26,404					$	23,338					$	73,455					$	69,288
BASIC WEIGHTED AVERAGE COMMON SHARES			25,703,699						25,684,407						25,708,543						25,673,275
BASIC EARNINGS PER COMMON SHARE			$	1.03					$	0.91					$	2.86					$	2.70
DILUTED WEIGHTED AVERAGE COMMON SHARES			25,821,360						25,767,739						25,804,322						25,754,357
DILUTED EARNINGS PER COMMON SHARE			$	1.03					$	0.91					$	2.85					$	2.69

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - dollars in thousands)

			Three months ended September 30,												Nine months ended September 30,
			2025						2024						2025						2024
Net income			$	26,404					$	23,338					$	73,455					$	69,288
Other comprehensive income
Change in available-for-sale and transferred securities:
Unrealized holding gain on securities available-for-sale arising during the period			25,345						40,411						31,149						20,031
Reclassification adjustment for amortization of unrealized losses on securities transferred to held-to-maturity			489						488						1,468						1,473
Reclassification adjustment for (gains) losses included in net income			0						0						0						46
Net securities gain (loss) activity during the period			25,834						40,899						32,617						21,550
Tax effect			(5,426)						(8,589)						(6,850)						(4,526)
Net of tax amount			20,408						32,310						25,767						17,024
Defined benefit pension plans:
Amortization of net actuarial loss			14						16						40						47
Net gain activity during the period			14						16						40						47
Tax effect			(4)						(4)						(10)						(12)
Net of tax amount			10						12						30						35
Total other comprehensive income, net of tax			20,418						32,322						25,797						17,059
Comprehensive income			$	46,822					$	55,660					$	99,252					$	86,347

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited - dollars in thousands, except share and per share data)

			Three Months Ended
			Common Stock												Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Stockholders’ Equity						Noncontrolling Interest						Total Equity
			Shares						Stock
Balance at July 1, 2024			25,503,744						$	126,871					$	713,541					$	(170,458)					$	(15,453)					$	654,501					$	89					$	654,590
Comprehensive income:
Net income															23,338																		23,338												23,338
Other comprehensive income, net of tax																					32,322												32,322												32,322
Cash dividends declared and paid, $0.48 per share															(12,329)																		(12,329)												(12,329)
Treasury shares purchased under deferred directors' plan			(3,510)						215																		(215)						0												0
Stock activity under equity compensation plans			5,850						0																								0												0
Stock based compensation expense									1,260																								1,260												1,260
Balance at September 30, 2024			25,506,084						$	128,346					$	724,550					$	(138,136)					$	(15,668)					$	699,092					$	89					$	699,181
Balance at July 1, 2025			25,525,105						$	130,664					$	757,739					$	(161,121)					$	(17,384)					$	709,898					$	89					$	709,987
Comprehensive income:
Net income															26,404																		26,404												26,404
Other comprehensive income, net of tax																					20,418												20,418												20,418
Cash dividends declared and paid, $0.50 per share															(12,852)																		(12,852)												(12,852)
Treasury shares purchased under deferred directors' plan			(3,523)						224																		(224)						0												0
Stock activity under equity compensation plans			7,150						0																								0												0
Stock based compensation expense									3,546																								3,546												3,546
Balance at September 30, 2025			25,528,732						$	134,434					$	771,291					$	(140,703)					$	(17,608)					$	747,414					$	89					$	747,503

The accompanying notes are an integral part of these consolidated financial statements.

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			Nine Months Ended
			Common Stock												Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Stockholders’ Equity						Noncontrolling Interest						Total Equity
			Shares						Stock
Balance at January 1, 2024			25,430,566						$	127,692					$	692,760					$	(155,195)					$	(15,553)					$	649,704					$	89					$	649,793
Impact of ASU 2023-02 adoption, net of tax															(532)																		(532)												(532)
Adjusted balance January 1, 2024			25,430,566						127,692						692,228						(155,195)						(15,553)						649,172						89						649,261
Comprehensive income:
Net income															69,288																		69,288												69,288
Other comprehensive income, net of tax																					17,059												17,059												17,059
Cash dividends declared and paid, $1.44 per share															(36,966)																		(36,966)												(36,966)
Treasury shares purchased under deferred directors' plan			(8,088)						506																		(506)						0												0
Treasury shares sold and distributed under deferred directors' plan			13,275						(391)																		391						0												0
Stock activity under equity compensation plans			70,331						(2,596)																								(2,596)												(2,596)
Stock based compensation expense									3,135																								3,135												3,135
Balance at September 30, 2024			25,506,084						$	128,346					$	724,550					$	(138,136)					$	(15,668)					$	699,092					$	89					$	699,181
Balance at January 1, 2025			25,509,592						$	129,664					$	736,412					$	(166,500)					$	(15,754)					$	683,822					$	89					$	683,911
Comprehensive income:
Net income															73,455																		73,455												73,455
Other comprehensive income, net of tax																					25,797												25,797												25,797
Cash dividends declared and paid, $1.50 per share															(38,576)																		(38,576)												(38,576)
Treasury shares purchased under share repurchase plan			(30,300)																								(1,705)						(1,705)												(1,705)
Treasury shares purchased under deferred directors' plan			(8,117)						524																		(524)						0												0
Treasury shares sold and distributed under deferred directors' plan			12,744						(375)																		375						0												0
Stock activity under equity compensation plans			44,813						(1,493)																								(1,493)												(1,493)
Stock based compensation expense									6,114												0												6,114												6,114
Balance at September 30, 2025			25,528,732						$	134,434					$	771,291					$	(140,703)					$	(17,608)					$	747,414					$	89					$	747,503

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)

Nine Months Ended September 30,						2025						2024
Cash flows from operating activities:
Net income						$	73,455					$	69,288
Adjustments to reconcile net income to net cash from operating activities:
Depreciation						4,449						4,475
Provision for credit losses						11,800						13,059
Amortization of loan servicing rights						337						373
Loans originated for sale, including participations						(14,891)						(14,399)
Net gain on sales of loans						(425)						(342)
Proceeds from sale of loans, including participations						16,165						12,657
Net gain on Visa shares						0						(8,996)
Net (gain) loss on sales of premises and equipment						29						74
Net (gain) loss on sales and calls of securities available-for-sale						0						46
Net securities amortization						3,043						3,638
Stock based compensation expense						6,114						3,135
Earnings on life insurance						(2,929)						(2,994)
Gain on life insurance						(219)						(243)
Tax expense (benefit) of stock award issuances						136						(208)
Net change:
Interest receivable and other assets						1,497						4,749
Interest payable and other liabilities						(17,397)						(20,515)
Total adjustments						7,709						(5,491)
Net cash from operating activities						81,164						63,797
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale						0						7,136
Proceeds from sale of Visa shares						0						8,996
Proceeds from maturities, calls and principal paydowns of securities available-for-sale						48,135						44,569
Purchases of securities available-for-sale						(60,304)						0
Purchase of life insurance						(12,813)						(282)
Net (increase) decrease in total loans						(160,263)						(166,860)
Proceeds from sales of land, premises and equipment						1						8
Purchases of land, premises and equipment						(8,918)						(6,645)
Proceeds from life insurance						0						536
Net cash from investing activities						(194,162)						(112,542)
Cash flows from financing activities:
Net increase (decrease) in total deposits						123,352						116,788
Net increase (decrease) in short-term borrowings						0						30,000
Proceeds from short-term FHLB borrowings						55,000						0
Proceeds from long-term FHLB borrowings						1,200						0
Net payments on short-term FHLB borrowings						0						(50,000)
Common dividends paid						(38,563)						(36,953)
Preferred dividends paid						(13)						(13)
Payments related to equity incentive plans						(1,493)						(2,596)
Purchase of treasury stock						(2,229)						(506)
Sale of treasury stock						375						391
Net cash from financing activities						137,629						57,111
Net change in cash and cash equivalents						24,631						8,366
Cash and cash equivalents at beginning of the period						168,205						151,824
Cash and cash equivalents at end of the period						$	192,836					$	160,190
Cash paid during the period for:
Interest						$	122,392					$	140,912
Income taxes						13,986						17,100
Supplemental non-cash disclosures:
Right-of-use assets obtained in exchange for lease liabilities						926						2,699

The accompanying notes are an integral part of these consolidated financial statements.

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NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the "Company"), which has one wholly owned subsidiary, Lake City Bank (the "Bank"). Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment securities portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2025. The Company’s 2024 Annual Report on Form 10-K should be read in conjunction with these statements.

Operating Segments

All of the Company's financial results are similar and considered by management to be aggregated into one reportable segment. While the Company has assigned certain management responsibilities by region and business-line, the Company's Chief Operating Decision Maker ("CODM") evaluates financial performance on a Company-wide basis. The majority of the Company's revenue is from the business of banking and the Company's assigned regions have similar economic characteristics, products, services and customers.

Financial performance is reported to the CODM monthly, and the primary measure of performance is consolidated net income. The allocation of resources throughout the Company is determined annually based upon consolidated net income performance. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Company's consolidated balance sheets and consolidated statements of income. Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, net occupancy expense, equipment costs, data processing fees and supplies and professional fees.

Adoption of New Accounting Standards

On December 13, 2023, the FASB issued ASU 2023-08, "Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets", to provide improved accounting and disclosure guidance for crypto assets. Stakeholders stated that current accounting guidance, except as provided in GAAP for certain specialized industries, surrounding crypto asset holdings as indefinite-lived intangible assets fails to provide financial statement users with decision-useful information. To remedy these shortcomings, the amendments in this update require an entity present (1) crypto assets measured at fair value separately from other intangible assets reported in the balance sheet and (2) changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. While the amendments in the update do not otherwise change the presentation requirements for the statement of cash flows, they do require specific presentation of cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business and are converted nearly immediately into cash.

The amendments in the update also provide for several enhancements related to disclosure of an entity's crypto asset holdings. For annual and interim reporting periods, the amendments in the update require an entity disclose the following information: (1) the name, cost basis, fair value, and number of units for each significant crypto asset holding and aggregate fair values and costs bases of the crypto asset holdings that are not individually significant; and (2) for crypto assets that are subject to contractual sale restrictions, the fair value of those crypto assets, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse. For annual reporting periods, the amendments in the update require an entity disclose the following information: (1) a rollforward, in the aggregate, of activity in the reporting period for crypto asset holdings, including additions (with a description of the activities that resulted in the additions), dispositions, gains, and losses; (2) for any dispositions for crypto assets in the reporting period, the difference between the disposal price and the cost basis and a description of the activities that resulted in the dispositions; (3) if gains and losses are not presented separately, the income statement line item in which those gains and losses are recognized; and (4) the method for determining the cost basis of crypto assets.

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The amendments in this update are effective for public business entities for annual periods beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The amendments in this update require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. This standard did not have an impact on the consolidated financial statements based upon the nature of the Company's current operations.

On March 18, 2025, the FASB issued ASU 2025-02, "Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122", which provided amendments to SEC paragraphs pursuant to Staff Accounting Bulletin 122. This amendment removed text related to "Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Its Platform Users" from ASU 405-10-S99-1, as Staff Accounting Bulletin 122 rescinded the topic.

Newly Issued But Not Yet Effective Accounting Standards

On October 9, 2023, the FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative", which modified the disclosure or presentation requirements of a variety of Topics in the Codification and was intended to both clarify or improve such requirements and align the requirements with the SEC's regulations. The amendments to Topics of Codification provided in this update apply to all reporting entities within the scope of the affected Topics unless otherwise indicated by the update. Given the variety of Topics amended, a broad range of entities may be affected by one or more of the amendments provided in the update. The Company evaluated the amendments provided in the update and believes certain of the disclosure improvements are applicable to the Company's interim or annual disclosures. Subtopic 230-10, as amended, requires disclosure within the accounting policy in annual periods of where cash flows associated with derivative instruments and their related gains and losses are presented within the statement of cash flows. Subtopic 260-10, as amended, requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods. Subtopic 470-10, as amended, requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest rate on short-term borrowings outstanding as of the date of each balance sheet presented.

The effective date for each amendment for entities subject to the SEC's existing disclosure requirements is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The amendments in the update are to be applied prospectively. The Company will apply prospectively the provisions provided in the amendments as such provisions become effective, and does not believe the application of these modified disclosure requirements will have a material impact on the consolidated financial statements. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment in the update will be removed from the Codification and will not become effective.

On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", to address investor requests for greater transparency in regards to income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments are designed to enhance transparency surrounding income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation; and (2) income taxes paid disaggregation by taxing jurisdiction, which will allow investors to better assess, in their capital allocation decisions, how an entity's operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. Other amendments in this update are designed to improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (loss) and income tax expense (benefit) to be consistent with the SEC's Regulation S-X 210.4-08(h), Rules of General Application-General Notes to Financial Statements: Income Tax Expense; and (2) removing disclosures that are no longer considered cost beneficial or relevant.

The amendments in this update are effective for public business entities for annual periods beginning after December 31, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the impact of this update on its disclosures, however does not expect the adoption of this update to have a material impact on the year-end consolidated financial statements and related footnotes.

On November 8, 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", to improve the disclosures surrounding a public business entity's expenses and address requests from investors for more detailed information

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about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development).

The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity (1) Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an is an expense caption presented on the face of the income statement within continuing operations that contains any of the following expense categories listed in (a)-(e); (2) Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as other disaggregation requirements; (3) Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (4) Disclose the total amount of selling expenses, and in annual reporting periods, an entity's definition of selling expenses. An entity is not precluded from providing additional voluntarily disclosures that may provide investors with additional decision-useful information.

On January 6, 2025, the FASB issued ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date", to clarify the effective date of the ASU 2024-03. The update amends the effective date of Update 2024-03 to annual reporting periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. The Company is currently evaluating the impact of this update on its disclosures, however does not expect the adoption of this update to have a material impact on the consolidated financial statements.

On September 18, 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal Use-Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software", to modernize the accounting for software costs to better align the guidance with current software development practices. Specifically, many entities have shifted from using a prescriptive and sequential ("linear") development method to using an incremental and iterative ("agile") development method, the latter of which is not contemplated in the current guidance and presents a challenge to stakeholders in determining when to begin capitalizing internal-use software costs.

The amendments in this update remove all references to linear project stages, and instead require an entity to start capitalizing software costs when both of the following occur: (1) Management has authorized and committed to funding the software project and (2) It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty".) The two factors to consider in determining whether the re is significant development uncertainty are whether: (1) The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing and (2) The entity has determined what it needs the software to do, including whether the entity has identified or continues to substantially revise the software's significant performance requirements. The amendments in the update specify that internal-use software costs must be disclosed according to applicable property, plant and equipment guidance, regardless of how such costs are presented in the financial statements. Furthermore, the amendments in the update supersede website development costs guidance and incorporate the recognition requirements for website-specific development costs into Subtopic 350-40.

The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in the update may be applied using a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption or a retrospective transition approach. The Company is currently evaluating the impact of this update on its disclosures, however does not expect the adoption of this update to have a material impact on the consolidated financial statements.

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NOTE 2. SECURITIES

Debt securities purchased with the intent and ability to hold to their maturity are classified as held-to-maturity securities. All other investment securities are classified as available-for-sale securities.

Available-for-Sale Securities

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) is provided in the table below.

(dollars in thousands)						Amortized Cost						Gross Unrealized Gain						Gross Unrealized Losses						Allowance for Credit Losses						Fair Value
September 30, 2025
U.S. Treasury securities						$	5,011					$	0					$	(10)					$	0					$	5,001
U.S. government sponsored agencies						139,611						83						(22,627)						0						117,067
Mortgage-backed securities: residential						504,570						829						(57,191)						0						448,208
State and municipal securities						542,672						130						(81,140)						0						461,662
Total						$	1,191,864					$	1,042					$	(160,968)					$	0					$	1,031,938
December 31, 2024
U.S. government sponsored agencies						$	137,150					$	0					$	(27,715)					$	0					$	109,435
Mortgage-backed securities: residential						500,278						83						(77,952)						0						422,409
State and municipal securities						545,073						17						(85,508)						0						459,582
Total						$	1,182,501					$	100					$	(191,175)					$	0					$	991,426

Held-to-Maturity Securities

Information related to the amortized cost, fair value and allowance for credit losses of securities held-to-maturity and the related gross unrealized gains and losses is presented in the table below.

(dollars in thousands)						Amortized Cost						Gross Unrealized Gain						Gross Unrealized Losses						Allowance for Credit Losses						Fair Value
September 30, 2025
State and municipal securities						$	132,799					$	0					$	(18,995)					$	0					$	113,804
December 31, 2024
State and municipal securities						$	131,568					$	0					$	(18,461)					$	0					$	113,107

The Company has the current intent and ability to hold held-to-maturity securities until maturity. All of the Company's securities designated as held-to-maturity were transferred from the available-for-sale classification. The net unrealized gain or loss on the transferred securities was recorded as a component of accumulated other comprehensive income (loss) at the time of the transfer and is amortized over the remaining life of the underlying securities as an adjustment to the yield on those securities. The net amount of the unamortized unrealized loss on the transferred securities included in accumulated other comprehensive income (loss) was $17.5 million ($13.8 million, net of tax) at September 30, 2025.

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Information regarding the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by maturity as of September 30, 2025 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

						Available-for-Sale												Held-to-Maturity
(dollars in thousands)						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Due in one year or less						$	0					$	0					$	0					$	0
Due after one year through five years						17,577						17,193						0						0
Due after five years through ten years						93,212						86,472						7,315						6,657
Due after ten years						576,505						480,065						125,484						107,147
						687,294						583,730						132,799						113,804
Mortgage-backed securities						504,570						448,208						0						0
Total debt securities						$	1,191,864					$	1,031,938					$	132,799					$	113,804

Available-for-sale securities proceeds, gross gains and gross losses are presented below.

						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)						2025						2024						2025						2024
Sales of securities available-for-sale
Proceeds						$	0					$	0					$	0					$	7,136
Gross gains						0						0						0						0
Gross losses						0						0						0						(46)
Number of securities						0						0						0						15

In accordance with ASU No. 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with fair values of $547.7 million and $560.2 million were pledged as of September 30, 2025 and December 31, 2024, respectively, as collateral for borrowings from the Federal Home Loan Bank ("FHLB") and Federal Reserve Bank and for other purposes as permitted or required by law.

Unrealized Loss Analysis on Available-for-Sale and Held-to-Maturity Securities

Information regarding available-for-sale securities with unrealized losses as of September 30, 2025 and December 31, 2024 is presented on the following page. The table divides the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

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						Less than 12 months												12 months or more												Total
(dollars in thousands)						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
September 30, 2025
U.S. Treasury securities						$	5,001					$	10					$	0					$	0					$	5,001					$	10
U.S. government sponsored agencies						4,988						12						106,997						22,615						111,985						22,627
Mortgage-backed securities: residential						12,173						63						374,823						57,128						386,996						57,191
State and municipal securities						15,580						150						430,161						80,990						445,741						81,140
Total available-for-sale						$	37,742					$	235					$	911,981					$	160,733					$	949,723					$	160,968
December 31, 2024
U.S. government sponsored agencies						$	0					$	0					$	109,435					$	27,715					$	109,435					$	27,715
Mortgage-backed securities: residential						23,204						249						390,483						77,703						413,687						77,952
State and municipal securities						12,928						439						443,569						85,069						456,497						85,508
Total available-for-sale						$	36,132					$	688					$	943,487					$	190,487					$	979,619					$	191,175

Information regarding held-to-maturity securities with unrealized losses as of September 30, 2025 and December 31, 2024 is presented below. The table divides the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

						Less than 12 months												12 months or more												Total
(dollars in thousands)						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
September 30, 2025
State and municipal securities						$	0					$	0					$	113,804					$	18,995					$	113,804					$	18,995
December 31, 2024
State and municipal securities						$	0					$	0					$	113,107					$	18,461					$	113,107					$	18,461

The total number of securities with unrealized losses as of September 30, 2025 and December 31, 2024 is presented below.

			Available-for-Sale																		Held-to-Maturity
			Less than 12 months						12 months or more						Total						Less than 12 months						12 months or more						Total
September 30, 2025
U.S. Treasury securities			1						0						1						0						0						0
U.S. government sponsored agencies			1						17						18						0						0						0
Mortgage-backed securities: residential			3						121						124						0						0						0
State and municipal securities			18						380						398						0						41						41
Total temporarily impaired			23						518						541						0						41						41
December 31, 2024
U.S. government sponsored agencies			0						17						17						0						0						0
Mortgage-backed securities: residential			9						124						133						0						0						0
State and municipal securities			23						392						415						0						41						41
Total temporarily impaired			32						533						565						0						41						41

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the consolidated income statement. For available-for-sale debt securities that do not

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meet the above criteria and for held-to-maturity securities, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. For available-for-sale debt securities, any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes.

No allowance for credit losses for available-for-sale or held-to-maturity debt securities was recorded at September 30, 2025 or December 31, 2024. Accrued interest receivable on securities totaled $7.1 million and $7.5 million at September 30, 2025 and December 31, 2024, respectively, and is excluded from the estimate of credit losses.

The U.S. Treasury, U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. State and municipal securities credit losses are benchmarked against highly rated municipal securities of similar duration, as published by Moody's, resulting in an immaterial allowance for credit losses.

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NOTE 3. LOANS

(dollars in thousands)						September 30, 2025																		December 31, 2024
Commercial and industrial loans:
Working capital lines of credit loans						$	709,645					13.5		%																$	649,609					12.7		%
Non-working capital loans						808,371						15.4																		801,256						15.6
Total commercial and industrial loans						$	1,518,016					28.9																		$	1,450,865					28.3
Commercial real estate and multi-family residential loans:
Construction and land development loans						574,896						10.9																		567,781						11.1
Owner occupied loans						804,253						15.3																		807,090						15.8
Nonowner occupied loans						863,085						16.5																		872,671						17.0
Multifamily loans						413,016						7.9																		344,978						6.7
Total commercial real estate and multi-family residential loans						$	2,655,250					50.6																		$	2,592,520					50.6
Agri-business and agricultural loans:
Loans secured by farmland						153,904						2.9																		156,609						3.1
Loans for agricultural production						186,068						3.6																		230,787						4.5
Total agri-business and agricultural loans						$	339,972					6.5																		$	387,396					7.6
Other commercial loans						91,833						1.7																		95,584						1.9
Total commercial loans						$	4,605,071					87.7																		$	4,526,365					88.4
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans						273,580						5.2																		259,286						5.1
Open end and junior lien loans						241,256						4.6																		214,125						4.2
Residential construction and land development loans						18,706						0.4																		16,818						0.3
Total consumer 1-4 family mortgage loans						$	533,542					10.2																		$	490,229					9.6
Other consumer loans						112,430						2.1																		104,041						2.0
Total consumer loans						$	645,972					12.3																		$	594,270					11.6
Subtotal						$	5,251,043					100.0		%																$	5,120,635					100.0		%
Less: Allowance for credit losses						(68,168)																								(85,960)
Net deferred loan fees						(2,424)																								(2,687)
Loans, net						$	5,180,451																							$	5,031,988

The recorded investment in loans does not include accrued interest, which totaled $21.0 million and $20.3 million as of September 30, 2025 and December 31, 2024, respectively.

The Company had $1.2 million and $424,000 in residential real estate loans in the process of foreclosure as of September 30, 2025 and December 31, 2024, respectively.

NOTE 4. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances

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of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, material modification status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool, which is updated at least annually. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.

Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an immaterial unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.

For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

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The following tables present the activity in the allowance for credit losses by portfolio segment for the periods shown:

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Three Months Ended September 30, 2025
Beginning balance, July 1						$	25,882					$	31,082					$	3,299					$	720					$	3,590					$	1,579					$	400					$	66,552
Provision for credit losses						1,447						(197)						(80)						(29)						460						428						(29)						2,000
Loans charged-off						(222)						0						0						0						(4)						(347)						0						(573)
Recoveries						42						27						0						0						16						104						0						189
Net loans (charged-off) recovered						(180)						27						0						0						12						(243)						0						(384)
Ending balance						$	27,149					$	30,912					$	3,219					$	691					$	4,062					$	1,764					$	371					$	68,168

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Three Months Ended September 30, 2024
Beginning balance, July 1						$	39,161					$	31,687					$	3,668					$	820					$	3,586					$	1,390					$	399					$	80,711
Provision for credit losses						3,498						(355)						(254)						(86)						(16)						308						(36)						3,059
Loans charged-off						(72)						0						0						0						(3)						(156)						0						(231)
Recoveries						18						26						0						0						4						40						0						88
Net loans (charged-off) recovered						(54)						26						0						0						1						(116)						0						(143)
Ending balance						$	42,605					$	31,358					$	3,414					$	734					$	3,571					$	1,582					$	363					$	83,627

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Nine Months Ended September 30, 2025
Beginning balance, January 1						$	45,539					$	30,865					$	3,541					$	743					$	3,358					$	1,531					$	383					$	85,960
Provision for credit losses						10,335						(32)						(322)						(52)						878						1,005						(12)						11,800
Loans charged-off						(28,848)						0						0						0						(226)						(1,119)						0						(30,193)
Recoveries						123						79						0						0						52						347						0						601
Net loans (charged-off) recovered						(28,725)						79						0						0						(174)						(772)						0						(29,592)
Ending balance						$	27,149					$	30,912					$	3,219					$	691					$	4,062					$	1,764					$	371					$	68,168

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Nine Months Ended September 30, 2024
Beginning balance, January 1						$	30,338					$	31,335					$	4,150					$	1,129					$	3,474					$	1,174					$	372					$	71,972
Provision for credit losses						12,452						784						(736)						(395)						73						890						(9)						13,059
Loans charged-off						(278)						(840)						0						0						(25)						(668)						0						(1,811)
Recoveries						93						79						0						0						49						186						0						407
Net loans (charged-off) recovered						(185)						(761)						0						0						24						(482)						0						(1,404)
Ending balance						$	42,605					$	31,358					$	3,414					$	734					$	3,571					$	1,582					$	363					$	83,627

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Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans, which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

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The following table summarizes the risk category of loans by loan segment and year of origination as of September 30, 2025:

(dollars in thousands)			2025						2024						2023						2022						2021						Prior						Term Total						Revolving						Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass			$	3,230					$	1,453					$	41					$	1,369					$	1,109					$	400					$	7,602					$	632,039					$	639,641
Special Mention			0						0						0						0						0						0						0						40,541						40,541
Substandard			0						0						1,994						926						194						422						3,536						25,717						29,253
Doubtful			0						0						0						0						0						0						0						0						0
Total			3,230						1,453						2,035						2,295						1,303						822						11,138						698,297						709,435
Working capital lines of credit loans:
Current period gross write offs			0						0						0						28,607						0						12						28,619						45						28,664
Non-working capital loans:
Pass			139,759						138,535						110,236						128,247						42,929						30,873						590,579						184,237						774,816
Special Mention			2,904						7,777						92						5,066						1,145						623						17,607						3,442						21,049
Substandard			553						330						2,106						1,553						105						3,923						8,570						395						8,965
Doubtful			0						0						0						0						6						91						97						0						97
Not Rated			733						346						858						710						155						203						3,005						0						3,005
Total			143,949						146,988						113,292						135,576						44,340						35,713						619,858						188,074						807,932
Non-working capital loans:
Current period gross write offs			1						2						0						0						0						0						3						181						184
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass			20,736						38,696						14,779						22,015						731						0						96,957						474,820						571,777
Special Mention			1,242						0						0						0						0						0						1,242						0						1,242
Total			21,978						38,696						14,779						22,015						731						0						98,199						474,820						573,019
Construction and land development loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Owner occupied loans:
Pass			128,715						101,726						94,865						116,945						132,676						170,689						745,616						34,205						779,821
Special Mention			1,331						109						2,361						14,863						0						1,906						20,570						0						20,570
Substandard			0						309						295						0						1,350						1,446						3,400						0						3,400
Total			130,046						102,144						97,521						131,808						134,026						174,041						769,586						34,205						803,791
Owner occupied loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0

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(dollars in thousands)			2025						2024						2023						2022						2021						Prior						Term Total						Revolving						Total
Nonowner occupied loans (continued):
Pass			85,779						131,308						109,516						138,120						100,613						166,703						732,039						116,959						848,998
Special Mention			0						0						11,414						103						0						0						11,517						1,954						13,471
Total			85,779						131,308						120,930						138,223						100,613						166,703						743,556						118,913						862,469
Nonowner occupied loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Multifamily loans:
Pass			138,409						55,109						86,793						21,567						31,832						33,257						366,967						45,486						412,453
Special Mention			0						0						0						295						0						0						295						0						295
Total			138,409						55,109						86,793						21,862						31,832						33,257						367,262						45,486						412,748
Multifamily loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass			18,873						13,886						16,686						31,934						21,064						34,144						136,587						14,786						151,373
Special Mention			1,986						118						197						0						34						148						2,483						0						2,483
Substandard			0						0						0						0						0						55						55						0						55
Total			20,859						14,004						16,883						31,934						21,098						34,347						139,125						14,786						153,911
Loans secured by farmland:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Loans for agricultural production:
Pass			3,226						14,310						22,508						19,401						22,026						13,389						94,860						83,279						178,139
Special Mention			0						0						666						265						0						4						935						7,079						8,014
Substandard			0						0						0						13						0						0						13						0						13
Total			3,226						14,310						23,174						19,679						22,026						13,393						95,808						90,358						186,166
Loans for agricultural production:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other commercial loans:
Pass			4,284						6,405						15,756						26,873						2,763						13,530						69,611						20,353						89,964
Special Mention			0						0						0						0						0						1,783						1,783						0						1,783
Total			4,284						6,405						15,756						26,873						2,763						15,313						71,394						20,353						91,747
Other commercial loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0

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(dollars in thousands)			2025						2024						2023						2022						2021						Prior						Term Total						Revolving						Total
Consumer 1-4 family mortgage loans (continued):
Closed end first mortgage loans:
Pass			11,627						10,766						7,293						7,501						10,510						5,790						53,487						4,711						58,198
Special Mention			191						119						218						158						62						0						748						0						748
Substandard			24						331						236						443						89						839						1,962						0						1,962
Not Rated			27,506						27,780						51,600						43,186						30,020						32,227						212,319						0						212,319
Total			39,348						38,996						59,347						51,288						40,681						38,856						268,516						4,711						273,227
Closed end first mortgage loans:
Current period gross write offs			0						0						0						0						0						24						24						0						24
Open end and junior lien loans:
Pass			118						537						697						0						198						4						1,554						10,132						11,686
Special Mention			289						0						0						0						0						0						289						0						289
Substandard			1,994						7						101						0						8						0						2,110						54						2,164
Not Rated			21,652						14,734						11,446						12,137						2,370						1,338						63,677						165,575						229,252
Total			24,053						15,278						12,244						12,137						2,576						1,342						67,630						175,761						243,391
Open end and junior lien loans:
Current period gross write offs			0						0						0						29						2						22						53						149						202
Residential construction loans:
Not Rated			4,928						8,258						596						1,712						1,213						1,904						18,611						0						18,611
Total			4,928						8,258						596						1,712						1,213						1,904						18,611						0						18,611
Residential construction loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other consumer loans:
Pass			286						0						947						136						29						0						1,398						31,817						33,215
Special Mention			0						0						0						475						0						26						501						0						501
Substandard			0						129						121						97						6						13						366						0						366
Not Rated			16,256						17,572						15,956						8,442						4,678						3,725						66,629						11,461						78,090
Total			16,542						17,701						17,024						9,150						4,713						3,764						68,894						43,278						112,172
Other consumer loans:
Current period gross write offs			4						154						265						140						58						0						621						498						1,119
Total Loans			$	636,631					$	590,650					$	580,374					$	604,552					$	407,915					$	519,455					$	3,339,577					$	1,909,042					$	5,248,619
Total period gross write offs			$	5					$	156					$	265					$	28,776					$	60					$	58					$	29,320					$	873					$	30,193

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The following table summarizes the risk category of loans by loan segment and year of origination as of December 31, 2024:

(dollars in thousands)			2024						2023						2022						2021						2020						Prior						Term Total						Revolving						Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass			$	1,599					$	114					$	1,640					$	1,647					$	651					$	0					$	5,651					$	525,179					$	530,830
Special Mention			0						0						0						0						0						0						0						48,301						48,301
Substandard			0						0						933						0						195						219						1,347						25,878						27,225
Doubtful			0						3,090						39,994						0						0						0						43,084						0						43,084
Total			1,599						3,204						42,567						1,647						846						219						50,082						599,358						649,440
Working capital lines of credit loans:
Current period gross write offs			0						0						94						0						0						0						94						136						230
Non-working capital loans:
Pass			151,920						157,276						173,274						58,591						32,909						28,582						602,552						164,106						766,658
Special Mention			3,901						2,614						2,024						1,637						393						1,894						12,463						6,491						18,954
Substandard			0						2,986						1,598						107						4,142						584						9,417						406						9,823
Doubtful			0						0						0						21						386						0						407						0						407
Not Rated			1,297						1,657						1,149						395						395						23						4,916						0						4,916
Total			157,118						164,533						178,045						60,751						38,225						31,083						629,755						171,003						800,758
Non-working capital loans:
Current period gross write offs			0						383						0						542						179						44						1,148						237						1,385
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass			23,264						69,737						43,228						2,566						0						0						138,795						426,577						565,372
Special Mention			603						0						0						0						0						0						603						0						603
Total			23,867						69,737						43,228						2,566						0						0						139,398						426,577						565,975
Construction and land development loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Owner occupied loans:
Pass			98,847						138,299						120,191						143,642						109,451						129,051						739,481						35,003						774,484
Special Mention			6,295						2,728						14,777						0						619						2,488						26,907						0						26,907
Substandard			318						318						0						3,101						1,457						0						5,194						0						5,194
Total			105,460						141,345						134,968						146,743						111,527						131,539						771,582						35,003						806,585
Owner occupied loans:
Current period gross write offs			0						0						0						0						0						840						840						0						840

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(dollars in thousands)			2024						2023						2022						2021						2020						Prior						Term Total						Revolving						Total
Nonowner occupied loans (continued):
Pass			152,963						118,517						168,387						101,064						119,612						77,497						738,040						110,441						848,481
Special Mention			0						15,650						108						5,868						0						0						21,626						1,895						23,521
Total			152,963						134,167						168,495						106,932						119,612						77,497						759,666						112,336						872,002
Nonowner occupied loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Multifamily loans:
Pass			70,497						61,679						11,708						52,995						29,177						9,794						235,850						108,486						344,336
Special Mention			0						0						307						0						0						0						307						0						307
Total			70,497						61,679						12,015						52,995						29,177						9,794						236,157						108,486						344,643
Multifamily loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass			14,574						21,241						29,601						23,043						25,192						18,312						131,963						24,249						156,212
Special Mention			122						209						0						0						0						0						331						0						331
Substandard			0						0						0						0						0						71						71						0						71
Total			14,696						21,450						29,601						23,043						25,192						18,383						132,365						24,249						156,614
Loans secured by farmland:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Loans for agricultural production:
Pass			15,945						26,704						21,611						24,374						21,446						1,450						111,530						118,090						229,620
Special Mention			0						0						0						0						0						0						0						1,275						1,275
Total			15,945						26,704						21,611						24,374						21,446						1,450						111,530						119,365						230,895
Loans for agricultural production:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other commercial loans:
Pass			6,639						17,137						29,985						3,397						11,310						5,544						74,012						19,609						93,621
Special Mention			0						0						0						0						0						1,872						1,872						0						1,872
Total			6,639						17,137						29,985						3,397						11,310						7,416						75,884						19,609						95,493
Other commercial loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans:
Pass			11,104						8,511						9,274						11,278						6,252						4,685						51,104						4,299						55,403

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(dollars in thousands)			2024						2023						2022						2021						2020						Prior						Term Total						Revolving						Total
Closed end first mortgage loans (continued):
Special Mention			122						226						165						66						0						0						579						0						579
Substandard			0						83						319						90						0						629						1,121						0						1,121
Not Rated			28,706						55,641						47,355						34,173						13,543						22,396						201,814						0						201,814
Total			39,932						64,461						57,113						45,607						19,795						27,710						254,618						4,299						258,917
Closed end first mortgage loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Open end and junior lien loans:
Pass			574						738						0						438						0						5						1,755						10,090						11,845
Special Mention			0						0						0						0						309						0						309						0						309
Substandard			0						104						0						15						0						81						200						118						318
Not Rated			21,929						16,134						18,053						4,660						644						2,894						64,314						139,351						203,665
Total			22,503						16,976						18,053						5,113						953						2,980						66,578						149,559						216,137
Open end and junior lien loans:
Current period gross write offs			0						0						79						0						0						0						79						15						94
Residential construction loans:
Not Rated			10,030						1,154						2,045						1,386						759						1,348						16,722						0						16,722
Total			10,030						1,154						2,045						1,386						759						1,348						16,722						0						16,722
Residential construction loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other consumer loans:
Pass			79						971						234						109						0						0						1,393						20,742						22,135
Special Mention			0						0						475						0						157						0						632						0						632
Substandard			0						128						54						76						17						0						275						0						275
Not Rated			23,508						22,250						11,824						6,688						3,743						1,782						69,795						10,930						80,725
Total			23,587						23,349						12,587						6,873						3,917						1,782						72,095						31,672						103,767
Other consumer loans:
Current period gross write offs			49						303						236						33						0						26						647						272						919
Total loans			$	644,836					$	745,896					$	750,313					$	481,427					$	382,759					$	311,201					$	3,316,432					$	1,801,516					$	5,117,948
Total current period gross write offs			$	49					$	686					$	409					$	575					$	179					$	910					$	2,808					$	660					$	3,468

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Nonaccrual and Past Due Loans:

The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of September 30, 2025 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)						Loans Not Past Due						30-89 Days Past Due						Greater than 89 Days Past Due and Accruing						Total Accruing						Total Nonaccrual						Nonaccrual With No Allowance For Credit Loss						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	704,522					$	0					$	0					$	704,522					$	4,867					$	444					$	709,389
Non-working capital loans						800,376						46						0						800,422						7,556						103						807,978
Commercial real estate and multi-family residential loans:
Construction and land development loans						573,019						0						0						573,019						0						0						573,019
Owner occupied loans						801,880						170						0						802,050						1,741						0						803,791
Nonowner occupied loans						862,469						0						0						862,469						0						0						862,469
Multifamily loans						412,748						0						0						412,748						0						0						412,748
Agri-business and agricultural loans:
Loans secured by farmland						153,856						0						0						153,856						55						0						153,911
Loans for agricultural production						186,153						0						0						186,153						13						13						186,166
Other commercial loans						91,747						0						0						91,747						0						0						91,747
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans						271,197						61						7						271,265						1,962						793						273,227
Open end and junior lien loans						240,938						289						0						241,227						2,164						155						243,391
Residential construction loans						18,611						0						0						18,611						0						0						18,611
Other consumer loans						111,390						415						0						111,805						367						6						112,172
Total						$	5,228,906					$	981					$	7					$	5,229,894					$	18,725					$	1,514					$	5,248,619

An insignificant amount of interest income was recognized on nonaccrual loans during the three and nine month periods ended September 30, 2025.

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The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2024 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)						Loans Not Past Due						30-89 Days Past Due						Greater than 89 Days Past Due and Accruing						Total Accruing						Total Nonaccrual						Nonaccrual With No Allowance For Credit Loss						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	603,016					$	1,082					$	0					$	604,098					$	45,342					$	594					$	649,440
Non-working capital loans						792,577						663						3						793,243						7,515						37						800,758
Commercial real estate and multi-family residential loans:
Construction and land development loans						565,975						0						0						565,975						0						0						565,975
Owner occupied loans						804,810						0						0						804,810						1,775						318						806,585
Nonowner occupied loans						872,002						0						0						872,002						0						0						872,002
Multifamily loans						344,643						0						0						344,643						0						0						344,643
Agri-business and agricultural loans:
Loans secured by farmland						156,543						0						0						156,543						71						0						156,614
Loans for agricultural production						230,895						0						0						230,895						0						0						230,895
Other commercial loans						95,493						0						0						95,493						0						0						95,493
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans						256,486						1,284						26						257,796						1,121						665						258,917
Open end and junior lien loans						215,505						314						0						215,819						318						318						216,137
Residential construction loans						16,722						0						0						16,722						0						0						16,722
Other consumer loans						102,565						927						0						103,492						275						17						103,767
Total						$	5,057,232					$	4,270					$	29					$	5,061,531					$	56,417					$	1,949					$	5,117,948

An insignificant amount of interest income was recognized on nonaccrual loans during the year ended December 31, 2024.

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

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The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

						September 30, 2025
(dollars in thousands)						Real Estate						General Business  Assets						Other						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	536					$	22,945					$	638					$	24,119
Non-working capital loans						52						7,633						5						7,690
Commercial real estate and multi-family residential loans:
Owner occupied loans						309						1,741						0						2,050
Agri-business and agricultural loans:
Loans secured by farmland						0						55						0						55
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans						1,962						0						0						1,962
Open end and junior lien loans						2,164						0						0						2,164
Other consumer loans						0						0						283						283
Total						$	5,023					$	32,374					$	926					$	38,323

						December 31, 2024
(dollars in thousands)						Real Estate						General Business  Assets						Other						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	50					$	64,023					$	447					$	64,520
Non-working capital loans						1,891						6,585						19						8,495
Commercial real estate and multi-family residential loans:
Owner occupied loans						318						3,512						0						3,830
Agri-business and agricultural loans:
Loans secured by farmland						0						71						0						71
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans						1,121						0						0						1,121
Open end and junior lien loans						318						0						0						318
Other consumer loans						0						0						272						272
Total						$	3,698					$	74,191					$	738					$	78,627

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses using historical loss information. The Company uses a probability of default/loss given default model to determine an estimate which is recorded for each asset upon origination. Occasionally, the Company has reason to modify certain terms of loans for borrowers experiencing financial distress by providing the following forms of relief: forgiveness of loan principal, extension of repayment terms, interest rate reduction or an other than insignificant payment delay. The Company can make any or all of these types of concessions as part of such modifications. Since an estimate for historical losses is already included as a component of the allowance for credit losses, a change to the allowance for credit losses is generally not recorded at the time of such modifications unless the loan is individually analyzed and the modification changes the specific reserve allocation. In the event forgiveness of principal is provided, the amount of the forgiveness is charged off against the allowance for credit losses.

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The following table presents the amortized cost basis at the end of the reporting period of loans that were experiencing financial difficulty and received a modification of terms during the three and nine months ended September 30, 2025, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables at the end of the reporting period is also presented below:

(dollars in thousands)												Combination Principal Forgiveness and Interest Rate Reduction																								Total Modifications						Total Class of Financing Receivable
Three and Nine Months Ended September 30, 2025
Consumer 1-4 family mortgage loans:
Open end and junior lien loans												$	1,994																							$	1,994					0.82		%
Total consumer 1-4 family mortgage loans												1,994																								1,994						0.37
Total consumer loans												1,994																								1,994						0.31
Total loan modifications made to borrowers experiencing financial difficulty												$	1,994																							$	1,994					0.04		%

The Company has no material commitments to lend additional funds to borrowers included in the previous table.

During the three and nine months ended September 30, 2024, no modifications were made to loans for borrowers experiencing financial difficulty.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty:

(dollars in thousands)						Principal Forgiveness						Weighted Average Interest Rate Reduction
Three and Nine Months Ended September 30, 2025
Commercial and industrial loans:
Working capital lines of credit loans (1)						$	28,607					7.00		%
Total commercial and industrial loans						28,607						7.00		%
Total commercial loans						28,607						7.00		%
Total financial effect of loan modifications made to borrowers experiencing financial difficulty						$	28,607					7.00		%

(1) Principal forgiveness of $28.6 million represents one $30.6 million working capital line of credit loan, of which $28.6 million was charged off. The remaining $2.0 million was financed into an open end and junior lien loan with a personal guarantor of the forgiven loan. The modified note is collateralized by several of the guarantor's commercial and residential real estate properties.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty by reviewing the delinquency and payment default status of such loans to understand the effectiveness of its relief efforts.

At September 30, 2025, no loans receiving a modification due to borrower financial difficulty within the previous twelve months were greater than 30 days or more past due.

Upon the Company's determination that a modified loan (or portion thereof) has subsequently been deemed uncollectible, the loan (or a portion thereof) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

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NOTE 5. BORROWINGS

For the periods ended below, advances from the Federal Home Loan Bank of Indianapolis ("FHLBI") were as follows:

(dollars in thousands)						September 30, 2025						December 31, 2024
Short-term fixed rate bullet advance, 4.31%, due October 3, 2025						$	55,000					$	0
Long-term fixed rate bullet advance, 0.00%, due March 12, 2035						1,200						0
Total						$	56,200					$	0

For the period ended September 30, 2025, the Company had advances outstanding from the Federal Home Loan Bank of Indianapolis ("FHLBI") of $56.2 million. The fixed rate bullet advance of $55.0 million due October 3, 2025 had an interest rate of 4.31%. The fixed rate bullet advance of $1.2 million due March 12, 2035 had an interest rate of 0.00%. The $1.2 million advance is a rate-subsidized Community Development Financial Institution ("CDFI") Rate Buydown Advance offered by the FHLBI. The Company extended a low cost loan to a qualifying CDFI within its operating footprint that was then funded by the fixed rate advance from the Rate Buydown Advance program. For the period ended December 31, 2024, the Company had no advances outstanding with the FHLBI. There were no Federal Funds purchased outstanding at September 30, 2025 and December 31, 2024.

On October 10, 2025, the Company renewed an unsecured revolving credit agreement with a financial institution allowing the Company to borrow up to $30.0 million. The credit agreement has a one year term which may be amended, extended, modified or renewed. Funds provided under the agreement can be used to repurchase shares of the Company’s common stock under the share repurchase program, which was reauthorized by the Company’s board of directors on April 8, 2025, and expires on April 30, 2027, and for general operations. The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of the Bank. There was no outstanding balance on the credit agreement at September 30, 2025 and December 31, 2024.

NOTE 6. FAIR VALUE DISCLOSURES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1  Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2  Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs).

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The Company’s Finance Department, which is responsible for all accounting and SEC disclosure compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are new assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector: municipal securities +/-5%, government MBS/CMO +/-3% and U.S. treasuries +/-1%. If any securities fall outside the tolerance threshold and have a variance of $100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material changes are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

Mortgage banking derivative:  The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Collateral dependent loans:  Collateral dependent loans with specific allocations of the allowance for credit losses are generally based on the fair value of the underlying collateral when repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of collateral dependent loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 30-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw materials inventory is discounted from its cost or book value by 40-60%, depending on the marketability of the goods; (b) finished goods are generally discounted by 40-60%, depending on the ease of marketability, cost of transportation or scope of use of the finished good; (c) work in process inventory is typically discounted by 60%-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base; (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 20-50% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are discounted by 10%-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights:  As of September 30, 2025, the value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $1.7 million, carried at amortized cost and no valuation reserve. These residential mortgage loans have a weighted average interest rate of 3.9%, a weighted average maturity of 20 years and are secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A third-party valuation is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate,

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cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At September 30, 2025, the constant prepayment speed (“PSA”) used was 163 and used a discount rate of 9.5%. At December 31, 2024, the PSA used was 157 and the discount rate used was 10.0%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties, classified as other real estate owned, are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held-for-sale: Real estate mortgage loans held-for-sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification.

The tables below present the balances of assets measured at fair value on a recurring basis:

						September 30, 2025
						Fair Value Measurements Using																		Assets at Fair Value
(dollars in thousands)						Level 1						Level 2						Level 3
Assets:
U.S. Treasury securities						$	5,001					$	0					$	0					$	5,001
U.S. government sponsored agency securities						0						117,067						0						117,067
Mortgage-backed securities: residential						0						448,208						0						448,208
State and municipal securities						0						457,212						4,450						461,662
Total securities available-for-sale						5,001						1,022,487						4,450						1,031,938
Mortgage banking derivative						0						73						0						73
Interest rate swap derivative						0						15,641						0						15,641
Total assets						$	5,001					$	1,038,201					$	4,450					$	1,047,652
Liabilities:
Mortgage banking derivative						$	0					$	1					$	0					$	1
Interest rate swap derivative						0						15,642						0						15,642
Total liabilities						$	0					$	15,643					$	0					$	15,643

						December 31, 2024
						Fair Value Measurements Using																		Assets at Fair Value
(dollars in thousands)						Level 1						Level 2						Level 3
Assets:
U.S. government sponsored agency securities						$	0					$	109,435					$	0					$	109,435
Mortgage-backed securities: residential						0						422,409						0						422,409
State and municipal securities						0						454,922						4,660						459,582
Total securities available-for-sale						0						986,766						4,660						991,426
Mortgage banking derivative						0						94						0						94
Interest rate swap derivative						0						25,403						0						25,403
Total assets						$	0					$	1,012,263					$	4,660					$	1,016,923
Liabilities:
Interest rate swap derivative						$	0					$	25,403					$	0					$	25,403
Total liabilities						$	0					$	25,403					$	0					$	25,403

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The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

The tables below present the balances of assets measured at fair value on a nonrecurring basis:

						September 30, 2025
						Fair Value Measurements Using																		Assets at Fair Value
(dollars in thousands)						Level 1						Level 2						Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans						$	0					$	0					$	1,671					$	1,671
Non-working capital loans						0						0						3,118						3,118
Commercial real estate and multi-family residential loans:
Owner occupied loans						0						0						817						817
Agri-business and agricultural loans:
Loans secured by farmland						0						0						21						21
Total collateral dependent loans						0						0						5,627						5,627
Total assets						$	0					$	0					$	5,627					$	5,627

						December 31, 2024
						Fair Value Measurements Using																		Assets at Fair Value
(dollars in thousands)						Level 1						Level 2						Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans						$	0					$	0					$	23,174					$	23,174
Non-working capital loans						0						0						3,281						3,281
Commercial real estate and multi-family residential loans:
Owner occupied loans						0						0						664						664
Agri-business and agricultural loans:
Loans secured by farmland						0						0						32						32
Total collateral dependent loans						0						0						27,151						27,151
Total assets						$	0					$	0					$	27,151					$	27,151

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2025:

(dollars in thousands)						Fair Value						Valuation Methodology						Unobservable Inputs						Average						Range of Inputs
Collateral dependent loans:
Commercial and industrial						$	4,789					Collateral based measurements						Discount to reflect current market conditions and ultimate collectability						44		%				1%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans						817						Collateral based measurements						Discount to reflect current market conditions and ultimate collectability						37		%				13%-61%
Collateral dependent loans:
Agri-business and agricultural						21						Collateral based measurements						Discount to reflect current market conditions and ultimate collectability						61		%

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The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2024:

(dollars in thousands)

Fair Value

Valuation Methodology

Unobservable Inputs

Average

Range of Inputs

Collateral dependent loans:

Commercial and industrial

$

26,455

Collateral based measurements

Discount to reflect current market conditions and ultimate collectability

51

%

4%-99%

Collateral dependent loans:

Commercial real estate and multi-family residential loans

664

Collateral based measurements

Discount to reflect current market conditions and ultimate collectability

54

%

Collateral dependent loans:

Agri-business and agricultural

32

Collateral based measurements

Discount to reflect current market conditions and ultimate collectability

54

%

The following tables contain the estimated fair values and the related carrying values of the Company’s financial instruments. Items that are not financial instruments are not included.

						September 30, 2025
						Carrying Value						Estimated Fair Value
(dollars in thousands)												Level 1						Level 2						Level 3						Total
Financial Assets:
Cash and cash equivalents						$	192,836					$	192,836					$	0					$	0					$	192,836
Securities available-for-sale						1,031,938						5,001						1,022,487						4,450						1,031,938
Securities held-to-maturity						132,799						0						113,804						0						113,804
Real estate mortgages held-for-sale						725						0						739						0						739
Loans, net						5,180,451						0						0						5,110,207						5,110,207
Mortgage banking derivative						73						0						73						0						73
Interest rate swap derivative						15,641						0						15,641						0						15,641
Federal Reserve and Federal Home Loan Bank Stock						21,420						N/A						N/A						N/A						N/A
Accrued interest receivable						28,667						0						7,730						20,937						28,667
Financial Liabilities:
Certificates of deposit						$	785,749					$	0					$	783,237					$	0					$	783,237
All other deposits						5,238,569						5,238,569						0						0						5,238,569
Federal Home Loan Bank advances:
Short-term advance						55,000						55,000						0						0						55,000
Long-term advance						1,200						0						781						0						781
Mortgage banking derivative						1						0						1						0						1
Interest rate swap derivative						15,642						0						15,642						0						15,642
Standby letters of credit						262						0						0						262						262
Accrued interest payable						8,628						430						8,198						0						8,628

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						December 31, 2024
						Carrying Value						Estimated Fair Value
(dollars in thousands)												Level 1						Level 2						Level 3						Total
Financial Assets:
Cash and cash equivalents						$	168,205					$	168,205					$	0					$	0					$	168,205
Securities available-for-sale						991,426						0						986,766						4,660						991,426
Securities held-to-maturity						131,568						0						113,107						0						113,107
Real estate mortgages held-for-sale						1,700						0						1,733						0						1,733
Loans, net						5,031,988						0						0						4,916,231						4,916,231
Mortgage banking derivative						94						0						94						0						94
Interest rate swap derivative						25,403						0						25,403						0						25,403
Federal Reserve and Federal Home Loan Bank Stock						21,420						N/A						N/A						N/A						N/A
Accrued interest receivable						28,446						0						8,178						20,268						28,446
Financial Liabilities:
Certificates of deposit						$	855,876					$	0					$	851,933					$	0					$	851,933
All other deposits						5,045,090						5,045,090						0						0						5,045,090
Interest rate swap derivative						25,403						0						25,403						0						25,403
Standby letters of credit						294						0						0						285						285
Accrued interest payable						15,117						425						14,692						0						15,117

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at September 30, 2025 and December 31, 2024.

						September 30, 2025
						Gross Amounts of Recognized Assets/Liabilities						Gross Amounts Offset in the Statement of Financial Position						Net Amounts presented in the Statement of Financial Position						Gross Amounts Not Offset in the Statement of Financial Position												Net Amount
(dollars in thousands)																								Financial Instruments						Cash Collateral Position
Assets
Interest Rate Swap Derivatives						$	15,641					$	0					$	15,641					$	0					$	(13,515)					$	2,126
Total Assets						$	15,641					$	0					$	15,641					$	0					$	(13,515)					$	2,126
Liabilities
Interest Rate Swap Derivatives						$	15,642					$	0					$	15,642					$	0					$	0					$	15,642
Total Liabilities						$	15,642					$	0					$	15,642					$	0					$	0					$	15,642

						December 31, 2024
						Gross Amounts of Recognized Assets/Liabilities						Gross Amounts Offset in the Statement of Financial Position						Net Amounts presented in the Statement of Financial Position						Gross Amounts Not Offset in the Statement of Financial Position												Net Amount
(dollars in thousands)																								Financial Instruments						Cash Collateral Position
Assets
Interest Rate Swap Derivatives						$	25,403					$	0					$	25,403					$	0					$	(21,815)					$	3,588
Total Assets						$	25,403					$	0					$	25,403					$	0					$	(21,815)					$	3,588
Liabilities
Interest Rate Swap Derivatives						$	25,403					$	0					$	25,403					$	0					$	0					$	25,403
Total Liabilities						$	25,403					$	0					$	25,403					$	0					$	0					$	25,403

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If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

NOTE 8. EARNINGS PER SHARE

Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period, which includes shares held in treasury on behalf of participants in the Company’s Directors Fee Deferral Plan, and share repurchases. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Weighted average shares outstanding for basic earnings per common share			25,703,699						25,684,407						25,708,543						25,673,275
Dilutive effect of stock based awards			117,661						83,332						95,779						81,082
Weighted average shares outstanding for diluted earnings per common share			25,821,360						25,767,739						25,804,322						25,754,357
Basic earnings per common share			$	1.03					$	0.91					$	2.86					$	2.70
Diluted earnings per common share			$	1.03					$	0.91					$	2.85					$	2.69

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended September 30, 2025 and 2024, all shown net of tax:

(dollars in thousands)						Unrealized Gains and Losses on Available- for-Sales Securities						Defined Benefit Pension Items						Total
Balance at July 1, 2025						$	(160,573)					$	(548)					$	(161,121)
Other comprehensive income (loss) before reclassification						20,023						0						20,023
Amounts reclassified from accumulated other comprehensive income (loss)						385						10						395
Net current period other comprehensive income (loss)						20,408						10						20,418
Balance at September 30, 2025						$	(140,165)					$	(538)					$	(140,703)

(dollars in thousands)						Unrealized Gains and Losses on Available- for-Sales Securities						Defined Benefit Pension Items						Total
Balance at July 1, 2024						$	(169,746)					$	(712)					$	(170,458)
Other comprehensive income (loss) before reclassification						31,925						0						31,925
Amounts reclassified from accumulated other comprehensive income (loss)						385						12						397
Net current period other comprehensive income (loss)						32,310						12						32,322
Balance at September 30, 2024						$	(137,436)					$	(700)					$	(138,136)

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The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the nine months ended September 30, 2025 and 2024, all shown net of tax:

(dollars in thousands)						Unrealized Gains and Losses on Available- for-Sales Securities						Defined Benefit Pension Items						Total
Balance at January 1, 2025						$	(165,932)					$	(568)					$	(166,500)
Other comprehensive income (loss) before reclassification						24,608						0						24,608
Amounts reclassified from accumulated other comprehensive income (loss)						1,159						30						1,189
Net current period other comprehensive income (loss)						25,767						30						25,797
Balance at September 30, 2025						$	(140,165)					$	(538)					$	(140,703)

(dollars in thousands)						Unrealized Gains and Losses on Available- for-Sales Securities						Defined Benefit Pension Items						Total
Balance at January 1, 2024						$	(154,460)					$	(735)					$	(155,195)
Other comprehensive income (loss) before reclassification						15,825						0						15,825
Amounts reclassified from accumulated other comprehensive income (loss)						1,199						35						1,234
Net current period other comprehensive income (loss)						17,024						35						17,059
Balance at September 30, 2024						$	(137,436)					$	(700)					$	(138,136)

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Reclassifications out of other accumulated other comprehensive income (loss) for the three months ended September 30, 2025 are as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified From Accumulated Other Comprehensive Income (Loss)

Affected Line Item in the Statement Where Net Income is Presented

(dollars in thousands)

Amortization of unrealized losses on held-to-maturity securities

$

(489)

Interest income

Tax effect

104

Income tax expense

(385)

Net of tax

Amortization of defined benefit pension items

(14)

Other expense

Tax effect

4

Income tax expense

(10)

Net of tax

Total reclassifications for the period

$

(395)

Net income

Reclassifications out of other accumulated comprehensive income (loss) for the three months ended September 30, 2024 are as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified From Accumulated Other Comprehensive Income (Loss)

Affected Line Item in the Statement Where Net Income is Presented

(dollars in thousands)

Amortization of unrealized losses on held-to-maturity securities

$

(488)

Interest income

Tax effect

103

Income tax expense

(385)

Net of tax

Amortization of defined benefit pension items

(16)

Other expense

Tax effect

4

Income tax expense

(12)

Net of tax

Total reclassifications for the period

$

(397)

Net income

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Reclassifications out of accumulated comprehensive income (loss) for the nine months ended September 30, 2025 are as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified From Accumulated Other Comprehensive Income (Loss)

Affected Line Item in the Statement Where Net Income is Presented

(dollars in thousands)

Amortization of unrealized losses on held-to-maturity securities

$

(1,468)

Interest income

Tax effect

309

Income tax expense

(1,159)

Net of tax

Amortization of defined benefit pension items

(40)

Other expense

Tax effect

10

Income tax expense

(30)

Net of tax

Total reclassifications for the period

$

(1,189)

Net income

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2024 are as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified From Accumulated Other Comprehensive Income (Loss)

Affected Line Item in the Statement Where Net Income is Presented

(dollars in thousands)

Amortization of unrealized losses on held-to-maturity securities

$

(1,473)

Interest income

Realized gains and (losses) on available-for-sale securities

(46)

Net securities gains (losses)

Tax effect

320

Income tax expense

(1,199)

Net of tax

Amortization of defined benefit pension items

(47)

Other expense

Tax effect

12

Income tax expense

(35)

Net of tax

Total reclassifications for the period

$

(1,234)

Net income

NOTE 10. LEASES

The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2044 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease asset and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as a practical expedient of the standard.

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The following is a maturity analysis of the operating lease liabilities as of September 30, 2025:

Years ending December 31, (in thousands)						Operating Lease Obligation
2025						$	250
2026						971
2027						919
2028						869
2029						743
2030 and thereafter						5,852
Total undiscounted lease payments						9,604
Less imputed interest						(2,355)
Lease liability						$	7,249
Right-of-use asset						$	7,249

						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)						2025						2024						2025						2024
Lease cost
Operating lease cost						$	233					$	198					$	630					$	544
Short-term lease cost						1						2						3						6
Total lease cost						$	234					$	200					$	633					$	550
Other information
Operating cash outflows from operating leases						$	233					$	198					$	630					$	544
Weighted-average remaining lease term - operating leases						6.8 years						7.9 years						6.8 years						7.9 years
Weighted average discount rate - operating leases						3.8		%				3.6		%				3.8		%				3.6		%

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

OVERVIEW

Net income in the first nine months of 2025 was $73.5 million, which increased $4.2 million, or 6.0%, from $69.3 million for the comparable period of 2024. Diluted earnings per common share was $2.85 in the first nine months of 2025, an increase of 5.9% from $2.69 in the comparable period of 2024. The increase in net income for 2025 was primarily due to an increase to net interest income of $18.8 million, or 13.0%, and a decrease in the provision for credit losses of $1.3 million, or 9.6%. Offsetting these positive contributions was a decrease in noninterest income of $9.6 million, or 21.3%, and an increase in noninterest expense of $3.7 million, or 3.9%. Pretax pre-provision earnings, a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense, were $101.0 million in the first nine months of 2025, an increase of $5.5 million, or 5.8%, compared to $95.5 million for the comparable period of 2024. Core operational profitability, a non-GAAP measure that excludes the impact of certain non-routine operating events that occurred during 2024, improved by $8.3 million, or 12.7%, from $65.2 million to $73.5 million for the nine months ended September 30, 2024 and 2025, respectively.

Return on average total equity was 13.96% in the first nine months of 2025 versus 14.21% in the comparable period of 2024. Return on average total assets was 1.44% in the first nine months of 2025 versus 1.40% for the comparable period of 2024. The Company's average equity to average assets ratio was 10.29% in the first nine months of 2025 versus 9.84% in the comparable period of 2024.

Net income in the third quarter of 2025 was $26.4 million, an increase of $3.1 million, or 13.1%, from $23.3 million for the comparable period of 2024. Diluted earnings per common share was $1.03 in the third quarter of 2025, an increase of 13.2% from $0.91 in the comparable period of 2024. The increase was driven primarily by an increase in net interest income of $6.8 million, or 13.8%, a decrease in provision for credit losses of $1.1 million, or 34.6% and an increase in noninterest income of $1.0 million, or 8.7%. Offsetting these positive contributions was an increase in noninterest expense of $4.6 million, or 15.0%. Pretax pre-provision earnings in the third quarter of 2025 were $34.1 million, an increase of $3.3 million, or 10.6%, compared to $30.8 million for the comparable period of 2024.

Return on average total equity was 14.60% in the third quarter of 2025 versus 13.85% in the comparable period of 2024. Return on average total assets was 1.53% in the third quarter of 2025 versus 1.39% in the comparable period of 2024. The average equity to average assets ratio was 10.47% in the third quarter of 2025 versus 10.07% in the comparable period of 2024.

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.79% at September 30, 2025, improved from 10.47% at September 30, 2024 and 10.19% at December 31, 2024. Unrealized losses from available-for-sale investment securities were $159.9 million at September 30, 2025, compared to $154.5 million at September 30, 2024 and $191.1 million at December 31, 2024. When excluding the impact of accumulated other comprehensive income (loss) ("AOCI") on tangible common equity and tangible assets, the Company's adjusted tangible common equity to adjusted tangible assets ratio, which is a non-GAAP financial measure, was 12.57% at September 30, 2025, improved from 12.29% at September 30, 2024 and 12.37% at December 31, 2024.

Total assets were $6.895 billion as of September 30, 2025 versus $6.678 billion as of December 31, 2024, an increase of $216.7 million, or 3.2%. Balance sheet expansion was driven by increases to total loans, net of the allowance for credit losses, which increased $148.5 million, or 3.0%, available-for-sale securities, which increased $40.5 million, or 4.1%, and cash and cash equivalents, which increased $24.6 million, or 14.6%. The balance sheet expansion from December 31, 2024 to September 30, 2025 was funded by an increase in total deposits of $123.4 million, or 2.1%, and borrowings of $56.2 million. Total equity increased $63.6 million, or 9.3%, from $683.9 million at December 31, 2024 to $747.5 million at September 30, 2025. Retained earnings increased $34.9 million, or 4.7%, primarily as a result of net income of $73.5 million less dividends declared and paid of $38.6 million and an improvement in accumulated other comprehensive income (loss) of $25.8 million.

CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that

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are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Some of the facts and circumstances which could affect these judgments include changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for credit losses. See “Note 4 – Allowance for Credit Losses and Credit Quality” for more information on this critical accounting policy.

RESULTS OF OPERATIONS

Overview

Selected income statement information for the three and nine months ended September 30, 2025 and 2024 is presented in the following table:

						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)						2025						2024						2025						2024
Income Statement Summary:
Net interest income (A)						$	56,073					49,273						$	163,824					$	144,985
Provision for credit losses						2,000						3,059						11,800						13,059
Noninterest income (B)						12,954						11,917						35,368						44,968
Noninterest expense (C)						34,965						30,393						98,160						94,431
Other Data:
Efficiency ratio (1)						50.65		%				49.67		%				49.28		%				49.71		%
Diluted EPS						$	1.03					$	0.91					$	2.85					$	2.69
Average Equity/Average Assets						10.47		%				10.07		%				10.29		%				9.84		%
Tangible capital ratio (2)						10.79						10.47						10.79						10.47
Adjusted tangible capital ratio (3)						12.57						12.29						12.57						12.29
Net charge-offs to average loans						0.03						0.01						0.76						0.04
Net interest margin						3.50						3.16						3.44						3.16
Noninterest income to total revenue						18.77						19.48						17.76						23.67
Pretax pre-provision earnings (4)						$	34,062					$	30,797					$	101,032					$	95,522

(1)Noninterest expense (C) / (Net interest income (A) + Noninterest income (B)) = Efficiency Ratio

(2)Non-GAAP financial measure. Calculated by subtracting intangible assets, net of deferred tax, from total assets and total equity. Management believes this is an important measure because it is useful for planning and forecasting purposes. See reconciliation on the following pages.

(3)Non-GAAP financial measure. Calculated by removing the fair market value adjustment impact of the available-for-sale investment securities portfolio included in accumulated other comprehensive income (loss) ("AOCI") from tangible equity and tangible assets. Management believes this is an important measure because it provides better comparability to periods preceding the recent increase in prevailing interest rates and demonstrates long-term trends capital strength. See reconciliation on the following pages.

(4)Non-GAAP financial measure. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Management believes this is an important measure because it may enable investors to identify the trends in the Company's earnings exclusive of the effects of tax and provision expense, which may vary significantly from period to period. See reconciliation on the following pages.

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The Company believes that providing non-GAAP financial measures provides investors with information useful to understanding the Company's financial performance.

Tangible common equity, adjusted tangible common equity, tangible assets, adjusted tangible assets, tangible book value per common share, tangible common equity to tangible assets, adjusted tangible common equity to adjusted tangible assets, and pretax pre-provision earnings are non-GAAP financial measures calculated based on GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in accumulated other comprehensive income (loss) ("AOCI"). Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the Company’s value meaningful to understanding of the Company’s financial information and performance.

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

						As of and For The												As of and For The
						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands, except per share data)						2025						2024						2025						2024
Total Equity						$	747,503					$	699,181					$	747,503					$	699,181
Less: Goodwill						(4,970)						(4,970)						(4,970)						(4,970)
Plus: Deferred Tax Assets Related to Goodwill						1,167						1,167						1,167						1,167
Tangible Common Equity (A)						743,700						695,378						743,700						695,378
Market Value Adjustment in AOCI						140,165						137,435						140,165						137,435
Adjusted Tangible Common Equity (C)						883,865						832,813						883,865						832,813
Total Assets						$	6,895,028					$	6,645,371					$	6,895,028					$	6,645,371
Less: Goodwill						(4,970)						(4,970)						(4,970)						(4,970)
Plus: Deferred Tax Assets Related to Goodwill						1,167						1,167						1,167						1,167
Tangible Assets (B)						6,891,225						6,641,568						6,891,225						6,641,568
Market Value Adjustment in AOCI						140,165						137,435						140,165						137,435
Adjusted Tangible Assets (D)						7,031,390						6,779,003						7,031,390						6,779,003
Ending Common Shares Issued (E)						25,704,243						25,684,916						25,704,243						25,684,916
Tangible Book Value per Common Share (A/E)						$	28.93					$	27.07					$	28.93					$	27.07
Tangible Capital Ratio (A/B)						10.79		%				10.47		%				10.79		%				10.47		%
Adjusted Tangible Capital Ratio (C/D)						12.57		%				12.29		%				12.57		%				12.29		%
Net Interest Income						$	56,073					$	49,273					$	163,824					$	144,985
Plus: Noninterest Income						12,954						11,917						35,368						44,968
Minus: Noninterest Expense						(34,965)						(30,393)						(98,160)						(94,431)
Pretax Pre-Provision Earnings						$	34,062					$	30,797					$	101,032					$	95,522

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Adjusted core noninterest income, adjusted core noninterest expense, adjusted earnings before income taxes, core operational profitability, core operational diluted earnings per common share and adjusted core efficiency ratio are non-GAAP financial measures calculated based on GAAP amounts. These adjusted amounts are calculated by excluding the impact of the net gain on Visa shares, legal accrual and insurance recovery for the periods presented below. Management considers these measures of financial performance to be meaningful to understanding the Company’s core business performance for these periods.

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

						Three Months Ended												Nine Months Ended
(dollars in thousands, except per share data)						Sep. 30, 2025						Sep. 30, 2024						Sep. 30, 2025						Sep. 30, 2024
Noninterest Income						$	12,954					$	11,917					$	35,368					$	44,968
Less: Net (Gain) Loss on Visa Shares						0						15						0						(8,996)
Less: Insurance Recovery						0						0						0						(1,000)
Adjusted Core Noninterest Income						$	12,954					$	11,932					$	35,368					$	34,972
Noninterest Expense						$	34,965					$	30,393					$	98,160					$	94,431
Less: Legal Accrual						0						0						0						(4,537)
Adjusted Core Noninterest Expense						$	34,965					$	30,393					$	98,160					$	89,894
Earnings Before Income Taxes						$	32,062					$	27,738					$	89,232					$	82,463
Adjusted Core Impact:
Noninterest Income						0						15						0						(9,996)
Noninterest Expense						0						0						0						4,537
Total Adjusted Core Impact						0						15						0						(5,459)
Adjusted Earnings Before Income Taxes						32,062						27,753						89,232						77,004
Tax Effect						(5,658)						(4,404)						(15,777)						(11,817)
Core Operational Profitability (1)						$	26,404					$	23,349					$	73,455					$	65,187
Diluted Earnings Per Common Share						$	1.03					$	0.91					$	2.85					$	2.69
Impact of Adjusted Core Items						0.00						0.00						0.00						(0.16)
Core Operational Diluted Earnings Per Common Share						$	1.03					$	0.91					$	2.85					$	2.53
Adjusted Core Efficiency Ratio						50.65		%				49.66		%				49.28		%				49.95		%

(1)     Core operational profitability was $11,000 higher than reported net income for the three months ended September 30, 2024 and $4.1 million lower for the nine months ended September 30, 2024.

Net Income

Net income was $73.5 million in the first nine months of 2025, which increased $4.2 million, or 6.0%, from $69.3 million for the comparable period of 2024. Diluted earnings per common share was $2.85 in the first nine months of 2025, an increase of 5.9% from $2.69 in the comparable period of 2024. The increase in net income for the first nine months of 2025 was primarily due to an increase to net interest income of $18.8 million, or 13.0%, and a decrease in the provision for credit losses of $1.3 million, or 9.6%. Offsetting these positive contributions was a decrease to noninterest income of $9.6 million, or 21.3%, and an increase in noninterest expense of $3.7 million, or 3.9%. Core operational profitability, a non-GAAP measure that excludes the impact of certain non-routine operating events that occurred during 2024, improved by $8.3 million, or 12.7%, from $65.2 million to $73.5 million for the nine months ended September 30, 2024 and 2025, respectively.

Net income during the third quarter of 2025 was $26.4 million, an improvement of 13.1% from $23.3 million for the comparable period of 2024. Diluted earnings per common share was $1.03 in the third quarter of 2025, an increase of 13.2% from $0.91 in the comparable period of 2024. The increase was driven primarily by an increase in net interest income of $6.8 million, or 13.8%, a decrease in the provision for credit losses of $1.1 million, or 34.6%, and an increase in noninterest income

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of $1.0 million, or 8.7%. Offsetting these positive contributions was an increase in noninterest expense of $4.6 million, or 15.0%.

Net Interest Income

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

						Nine Months Ended September 30,
						2025																		2024
(fully tax equivalent basis, dollars in thousands)						Average Balance						Interest Income						Yield (1)/ Rate						Average Balance						Interest Income						Yield (1)/ Rate
Earning Assets
Loans:
Taxable (2)(3)						$	5,181,704					$	251,648					6.49		%				$	4,982,891					$	252,386					6.77		%
Tax exempt (1)						25,501						1,074						5.63						40,665						2,267						7.45
Investments:
Securities (1)						1,129,664						25,199						2.98						1,135,304						23,987						2.82
Short-term investments						2,863						83						3.88						2,796						103						4.92
Interest bearing deposits						158,511						5,049						4.26						119,021						4,618						5.18
Total earning assets						$	6,498,243					$	283,053					5.82		%				$	6,280,677					$	283,361					6.03		%
Less:  Allowance for credit losses						(82,671)																		(76,003)
Nonearning Assets
Cash and due from banks						66,766																		65,608
Premises and equipment						62,079																		58,695
Other nonearning assets						295,345																		289,125
Total assets						$	6,839,762																	$	6,618,102
Interest Bearing Liabilities
Savings deposits						$	284,797					$	127					0.06		%				$	288,283					$	141					0.07		%
Interest bearing checking accounts						3,662,917						90,955						3.32						3,206,452						97,511						4.06
Time deposits:
In denominations under $100,000						208,872						5,255						3.36						218,755						5,702						3.48
In denominations over $100,000						595,367						17,678						3.97						814,034						27,729						4.55
Short-term borrowings						54,706						1,888						4.61						88,605						3,720						5.61
Long-term borrowings						888						0						0.00						0						0						0.00
Total interest bearing liabilities						$	4,807,547					$	115,903					3.22		%				$	4,616,129					$	134,803					3.90		%
Noninterest Bearing Liabilities
Demand deposits						1,248,876																		1,249,710
Other liabilities						79,775																		100,806
Stockholders' Equity						703,564																		651,457
Total liabilities and stockholders' equity						$	6,839,762																	$	6,618,102
Interest Margin Recap
Interest income/average earning assets												283,053						5.82		%										283,361						6.03		%
Interest expense/average earning assets												115,903						2.38												134,803						2.87
Net interest income and margin												$	167,150					3.44		%										$	148,558					3.16		%

(1)Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $3.3 million and $3.6 million for the nine-month periods ended September 30, 2025 and September 30, 2024, respectively.

(2)Loan fees, which are immaterial in relation to total taxable loan interest income for the nine months ended September 30, 2025 and 2024, are included as taxable loan interest income.

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

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						Three Months Ended September 30,
						2025																								2024
(fully tax equivalent basis, dollars in thousands)						Average Balance						Interest Income						Yield (1)/ Rate																								Average Balance						Interest Income						Yield (1)/ Rate
Earning Assets
Loans:
Taxable (2)(3)						$	5,180,847					$	85,490					6.55		%																						$	5,037,855					$	86,118					6.80		%
Tax exempt (1)						24,986						354						5.62																								26,493						366						5.50
Investments:
Securities (1)						1,127,094						8,444						2.97																								1,128,705						7,871						2.77
Short-term investments						2,795						27						3.83																								2,841						35						4.90
Interest bearing deposits						156,918						1,679						4.25																								133,393						1,738						5.18
Total earning assets						$	6,492,640					95,994						5.87		%																						$	6,329,287					96,128						6.04		%
Less:  Allowance for credit losses						(67,115)																																				(81,353)
Nonearning Assets
Cash and due from banks						62,671																																				63,744
Premises and equipment						64,391																																				59,493
Other nonearning assets						298,084																																				285,293
Total assets						$	6,850,671																																			$	6,656,464
Interest Bearing Liabilities
Savings deposits						$	284,553					$	41					0.06		%																						$	280,180					$	45					0.06		%
Interest bearing checking accounts						3,731,706						31,382						3.34																								3,295,911						33,822						4.08
Time deposits:
In denominations under $100,000						204,997						1,678						3.25																								215,020						1,914						3.54
In denominations over $100,000						563,920						5,345						3.76																								844,882						9,775						4.60
Short-term borrowings						31,739						368						4.60																								13,752						189						5.48
Long-term borrowings						1,200						0						0.00																								0						0						0.00
Total interest bearing liabilities						$	4,818,115					$	38,814					3.20		%																						$	4,649,745					$	45,745					3.91		%
Noninterest Bearing Liabilities
Demand deposits						1,244,381																																				1,244,184
Other liabilities						70,747																																				92,375
Stockholders' Equity						717,428																																				670,160
Total liabilities and stockholders' equity						$	6,850,671																																			$	6,656,464
Interest Margin Recap
Interest income/average earning assets												95,994						5.87		%																												96,128						6.04		%
Interest expense/average earning assets												38,814						2.37																														45,745						2.88
Net interest income and margin												$	57,180					3.50		%																												$	50,383					3.16		%

(1)Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $1.1 million and $1.1 million in the three-month periods ended September 30, 2025 and September 30, 2024, respectively.

(2)Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended September 30, 2025 and 2024, are included as taxable loan interest income.

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

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Net interest income, on a fully tax equivalent basis, increased $18.6 million, or 12.5%, to $167.2 million for the nine months ended September 30, 2025, compared to $148.6 million for the first nine months of 2024. The increase in net interest income on a fully tax equivalent basis was driven by a decrease in deposit interest expense of $17.1 million, or 13.0%, from $131.1 million to $114.0 million. Borrowings expense declined by $1.8 million, or 49.2%. Securities interest income contributed further to the increase in fully tax equivalent net interest income, increasing by $1.2 million, or 5.1%. A decline in loan interest income negatively impacted fully tax equivalent net interest income, decreasing $1.9 million, or 0.8%, from $254.7 million to $252.7 million between the two periods, due primarily to the decline in interest income from variable rate loans that resulted from the decline in interest rates.

Total average earning assets were $6.498 billion for the nine months ended September 30, 2025, an increase of $217.6 million, or 3.5%, compared to $6.281 billion for the nine months ended September 30, 2024. Average loans outstanding drove the increase to total average earning assets, increasing $183.6 million, or 3.7%, to $5.207 billion from $5.024 billion for the nine months ended September 30, 2025 and 2024, respectively. Offsetting this increase was a decrease to average investment securities of $5.6 million, or 0.5%, to $1.130 billion from $1.135 billion between the respective periods. Total average interest bearing liabilities were $4.808 billion for the nine months ended September 30, 2025, an increase of $191.4 million, or 4.1%, from $4.616 billion for the nine months ended September 30, 2024. This increase was driven by growth in average interest bearing deposits of $224.4 million, or 5.0%, from $4.528 billion for the nine months ended September 30, 2024 to $4.752 billion for the nine months ended September 30, 2025. Offsetting the increase to average interest bearing deposits was a decrease in total average borrowings of $33.0 million, or 37.3%, to $55.6 million from $88.6 million for the nine months ended September 30, 2025 and 2024, respectively. Noninterest bearing demand deposits decreased $834,000, or 0.1%, to $1.249 billion from $1.250 billion between the two periods.

The tax equivalent net interest margin was 3.44% for the nine months ended September 30, 2025, compared to 3.16% during the first nine months of 2024, representing a 28 basis point expansion between the two periods. The net interest margin increase was primarily driven by a decrease to interest expense as a percentage of average earning assets, which decreased to 2.38% for the nine months ended September 30, 2025, down from 2.87% for the comparable period of 2024, or a decrease of 49 basis points. This decline was attributable to a decrease in the rate for total interest bearing liabilities of 68 basis points from 3.90% to 3.22% between the respective periods. These decreases were driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank. The decrease in the rate for interest bearing liabilities was driven by a decrease in the average rate for interest bearing deposits of 66 basis points, from 3.87% to 3.21%. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 107 basis points from 5.61% to 4.54%. The Company anticipates the cost of funds would continue to respond favorably to any further monetary policy easing by the Federal Reserve Bank.

The improvement in interest expense as a percentage of average earning assets was offset by a 21 basis point reduction in interest income as a percentage of average earning assets, which declined from 6.03% to 5.82%. This decrease was primarily attributable to a decline in average loan yields, which decreased 28 basis points to 6.49% for the nine months ended September 30, 2025, down from 6.77% for the comparable period of 2024. This decrease was offset by an increase to investment securities yields, which increased 16 basis points from 2.82% to 2.98%. The Company expects that any continued easing of monetary policy by the Federal Reserve Bank, which commenced in September 2024, would exert downward pressure on loan yields as variable rate commercial loans reprice lower. During the nine months ended September 30, 2025, the Company recorded a prepayment fee of $541,000 from the early payment of a fixed rate commercial loan, which was recorded as part of interest income. The prepayment fee benefited tax equivalent net interest margin by 1 basis point during the nine months ended September 30, 2025.

Net interest income, on a fully tax equivalent basis, increased by $6.8 million, or 13.5%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase in net interest income on a fully tax equivalent basis was driven by a decrease in deposit interest expense of $7.1 million, or 15.6%, from $45.6 million to $38.4 million. Securities interest income increased $573,000, or 7.3%, from $7.8 million to $8.4 million between the two periods. A decline in loan interest income negatively impacted fully tax equivalent net interest income, decreasing $640,000, or 0.7%, from $86.5 million to $85.8 million. Borrowings expense increased $179,000, or 94.7%, from $189,000 to $368,000.

Total average earning assets were $6.493 billion for the third quarter of 2025, an increase of $163.4 million, or 2.6%, compared to $6.329 billion for the third quarter of 2024. The increase in average earning assets was driven by an increase in average loans of $141.5 million, or 2.8%, from $5.064 billion for the third quarter of 2024 to $5.206 billion for the third quarter of 2025. Average investment securities decreased $1.6 million, or 0.1%, from $1.129 billion for the third quarter of 2024 to $1.127 billion for the third quarter of 2025. Total average interest bearing liabilities were $4.818 billion for the third quarter of 2025, an increase of $168.4 million, or 3.6%, from $4.650 billion for the third quarter of 2024. This increase was driven by growth in interest bearing deposits of $149.2 million, or 3.2%, from $4.636 billion for the third quarter of 2024 to $4.785 billion for the third quarter of 2025. Noninterest bearing demand deposits increased $197,000, or 0.2%, at $1.244 billion for the

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third quarter of 2025 and 2024. Average borrowings increased $19.2 million, or 139.5%, from $13.8 million for the third quarter of 2024 to $32.9 million for the third quarter of 2025.

The tax equivalent net interest margin expanded by 34 basis points, or 10.8%, to 3.50% for the third quarter of 2025, compared to 3.16% for the third quarter of 2024. The net interest margin expansion was primarily driven by a decrease in interest expense as a percentage of average earning assets, which decreased to 2.37% for the three months ended September 30, 2025, down from 2.88% for the comparable period of 2024, for a decrease of 51 basis points. This decrease was attributable to a decrease in the rate for total interest bearing liabilities of 71 basis points from 3.91% to 3.20% between the respective periods. This decrease was driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank. The average rate for interest bearing deposits declined 72 basis points from 3.91% to 3.19%. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 105 basis points from 5.48% to 4.43%. The improvement in interest expense as a percentage of average earning assets was offset by a 17 basis point reduction in interest income as a percentage of average earning assets, which declined from 6.04% for the third quarter of 2024 to 5.87% for the third quarter of 2025. This decrease was primarily attributable to a decrease in loan yields, which decreased 25 basis points from 6.79% to 6.54% between the two periods. This decrease was offset by an increase to investment securities yields, which increased 20 basis points from 2.77% to 2.97% between the two periods.

Provision for Credit Losses

The Company recorded provision for credit losses expense of $11.8 million for the nine months ended September 30, 2025, compared to provision expense of $13.1 million during the comparable period of 2024, a decrease of $1.3 million, or 9.6%. Net charge-offs were $29.6 million during the nine month period ended September 30, 2025, compared to $1.4 million during the comparable period of 2024, an increase of $28.2 million. The increase in net charge offs between the respective periods was attributable to a partial charge off related to a previously disclosed nonperforming credit for an industrial company in Northern Indiana. This credit was reserved for prior to the partial charge off.

The Company recorded provision expense of $2.0 million during the third quarter of 2025, compared to $3.1 million during the third quarter of 2024. Net charge-offs were $384,000 during the third quarter of 2025 compared to $143,000 during the third quarter of 2024.

Additional factors considered by management in determining provision expense included key loan quality metrics, reserve coverage of nonperforming loans, economic conditions in the Company’s markets, and changes in the facts and circumstances of watch list credits, which includes the security position of the borrower. Management’s overall view on current credit quality was also a factor in the determination of the provision for credit losses. The Company’s management continues to monitor the adequacy of the provision based on loan levels, asset quality, economic conditions and other factors that may influence the assessment of the collectability of loans.

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Noninterest Income

Noninterest income categories for the three and nine months ended September 30, 2025 and 2024 are shown in the following tables:

						Nine Months Ended September 30,
(dollars in thousands)						2025						2024						Dollar Change						Percent Change
Wealth advisory fees						$	8,389					$	7,770					$	619					8.0		%
Investment brokerage fees						1,559						1,438						121						8.4
Service charges on deposit accounts						8,522						8,332						190						2.3
Loan and service fees						9,309						8,855						454						5.1
Merchant and interchange fee income						2,568						2,653						(85)						(3.2)
Bank owned life insurance income						2,929						2,994						(65)						(2.2)
Interest rate swap fee income						20						0						20						100.0
Mortgage banking income (loss)						67						68						(1)						(1.5)
Net securities gains (losses)						0						(46)						46						100.0
Net gain (loss) on Visa shares						0						8,996						(8,996)						(100.0)
Other income						2,005						3,908						(1,903)						(48.7)
Total noninterest income						$	35,368					$	44,968					$	(9,600)					(21.3)		%
Noninterest income to total revenue						17.76		%				23.67		%

						Three Months Ended September 30,
(dollars in thousands)						2025						2024						Dollar Change						Percent Change
Wealth advisory fees						$	2,855					$	2,718					$	137					5.0		%
Investment brokerage fees						557						438						119						27.2
Service charges on deposit accounts						2,921						2,835						86						3.0
Loan and service fees						3,419						2,955						464						15.7
Merchant and interchange fee income						892						898						(6)						(0.7)
Bank owned life insurance income						1,567						1,068						499						46.7
Mortgage banking income (loss)						(6)						(7)						1						(14.3)
Net gain (loss) on Visa shares						0						(15)						15						(100.0)
Other income						749						1,027						(278)						(27.1)
Total noninterest income						$	12,954					$	11,917					$	1,037					8.7		%
Noninterest income to total revenue						18.77		%				19.48		%

Noninterest income decreased by $9.6 million, or 21.3%, to $35.4 million for the nine months ended September 30, 2025, compared to $45.0 million for the prior year nine-month period. Noninterest income was elevated during the first nine months of 2024 as compared to the comparable period of 2025 primarily because of the net gain on Visa shares of $9.0 million and a $1.0 million insurance recovery. Adjusted core noninterest income, a non-GAAP financial measure that excludes the impact of these non-routine events, improved $396,000, or 1.1%, to $35.4 million from $35.0 million for the nine months ended September 30, 2025 and 2024, respectively. Wealth advisory fees improved $619,000, or 8.0%, loan and service fees improved $454,000, or 5.1%, service charges on deposit accounts improved $190,000, or 2.3%, and investment brokerage fees improved $121,000, or 8.4%. The increase to wealth advisory fees was driven by continued growth in customers and assets under management. Loan and service fees income benefitted from the recognition of a loan syndication fee in Indianapolis. Investment brokerage fees was driven higher by increased volume and commissions on product mix. Other income decreased $1.9 million, or 48.7%. Other income during the first nine months of 2024 benefited from the $1.0 million insurance recovery. Additionally, reduced limited partnership investment income further contributed to the decline between the periods.

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The Company’s noninterest income increased $1.0 million, or 8.7%, to $13.0 million for the third quarter of 2025, compared to $11.9 million for the third quarter of 2024. Loan and service fees income increased $464,000, or 15.7%, wealth advisory fees increased $137,000, or 5.0%, and investment brokerage fees increased $119,000, or 27.2%. Bank owned life insurance income increased $499,000, or 46.7%, from increased income from additional general account policies purchased in 2025 and from improved market performance of the bank's variable owned life insurance policies, which correlate to returns in the equities markets. Offsetting these increases was a decrease to other income of $278,000, or 27.1%, primarily driven by reduced limited partnership investment income.

Noninterest Expense

Noninterest expense categories for the three and nine months ended September 30, 2025 and 2024 are shown in the following tables:

						Nine Months Ended September 30,
(dollars in thousands)						2025						2024						Dollar Change						Percent Change
Salaries and employee benefits						$	55,412					$	49,467					$	5,945					12.0		%
Net occupancy expense						5,604						5,159						445						8.6
Equipment costs						4,294						4,207						87						2.1
Data processing fees and supplies						12,533						11,419						1,114						9.8
Corporate and business development						4,129						4,015						114						2.8
FDIC insurance and other regulatory fees						2,517						2,571						(54)						(2.1)
Professional fees						5,812						6,675						(863)						(12.9)
Other expense						7,859						10,918						(3,059)						(28.0)
Total noninterest expense						$	98,160					$	94,431					$	3,729					3.9		%
Efficiency ratio						49.28		%				49.71		%

						Three Months Ended September 30,
(dollars in thousands)						2025						2024						Dollar Change						Percent Change
Salaries and employee benefits						$	20,414					$	16,476					$	3,938					23.9		%
Net occupancy expense						1,877						1,721						156						9.1
Equipment costs						1,475						1,452						23						1.6
Data processing fees and supplies						4,116						3,768						348						9.2
Corporate and business development						1,563						1,369						194						14.2
FDIC insurance and other regulatory fees						878						966						(88)						(9.1)
Professional fees						1,726						2,089						(363)						(17.4)
Other expense						2,916						2,552						364						14.3
Total noninterest expense						$	34,965					$	30,393					$	4,572					15.0		%
Efficiency ratio						50.65		%				49.67		%

Noninterest expense increased by $3.7 million, or 3.9%, for the nine months ended September 30, 2025 to $98.2 million compared to $94.4 million for the nine months ended September 30, 2024. Salaries and employee benefits expense increased $5.9 million, or 12.0%, due to performance-based incentive compensation accruals of $3.8 million, salaries and wages of $2.3 million, and health insurance of $385,000. Offsetting these increases was a decrease in variable deferred compensation expense of $549,000. Data processing fees and supplies expense increased $1.1 million, or 9.8%, and net occupancy expense increased $445,000, or 8.6%. The increase to data processing fees and supplies expense was driven by continued investment in customer-facing and operational technology solutions. Net occupancy expense increased due to the continued expansion of the Bank's physical branch network, with the Bank's 55th branch location opening in Westfield, Indiana, during the third quarter. Offsetting these increases was a decrease to other expense of $3.1 million, or 28.0%, and a decrease in professional fees of $863,000, or 12.9%. Adjusted core noninterest expense, a non-GAAP financial measure, increased $8.3 million, or 9.2%, to $98.2 million from $89.9 million at September 30, 2025 and 2024, respectively.

Noninterest expense increased $4.6 million, or 15.0%, to $35.0 million for the third quarter of 2025, compared to $30.4 million during the third quarter of 2024. Salaries and benefits expense increased by $3.9 million, or 23.9%, primarily the result of increased accruals related to performance-based incentive compensation plans. Other expense increased by $364,000, or 14.3%, was driven by semi-annual stock-based compensation awards to directors, which are paid in January and July. Data

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and processing fees and supplies expense increased $348,000, or 9.2%. Corporate and business development expense increased $194,000, or 14.2%, due to increased advertising spending, corporate development expenses, and charitable and community-driven contributions. Net occupancy expense expanded by $156,000, or 9.1%. Offsetting these increases was a decrease to professional fees of $363,000, or 17.4%.

The Company's income tax expense increased $2.6 million, or 19.7%, to $15.8 million in the nine months ended September 30, 2025, compared to $13.2 million for the same period in 2024. The effective tax rate was 17.7% in the nine months ended September 30, 2025, compared to 16.0% for the comparable period of 2024, driven by a reduction in the tax benefit recognized from stock-based compensation vesting of shares for plan participants.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing U.S. tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act and repealing certain clean energy initiatives, in addition to other changes. The Company anticipates an insignificant impact to deferred tax assets and liabilities and to income taxes payable in the period of enactment. The Company continues to evaluate the impact the new legislation will have on the consolidated financial statements.

FINANCIAL CONDITION

Overview

Total assets were $6.895 billion as of September 30, 2025 versus $6.678 billion as of December 31, 2024, an increase of $216.7 million, or 3.2%. Balance sheet expansion was driven by increases to total loans, net of the allowance for credit losses, which increased $148.5 million, or 3.0%, available-for-sale securities, which increased $40.5 million, or 4.1%, and cash and cash equivalents, which increased $24.6 million, or 14.6%. The balance sheet expansion from December 31, 2024 to September 30, 2025 was funded by an increase in total deposits of $123.4 million, or 2.1% and borrowings of $56.2 million. The increase in total deposits was driven by an increase in interest bearing deposits of $152.6 million, or 3.3%, and was offset by a decrease in noninterest bearing deposits of $29.2 million, or 2.3%. Total equity increased $63.6 million, or 9.3%, from $683.9 million at December 31, 2024 to $747.5 million at September 30, 2025. Retained earnings increased $34.9 million, or 4.7%, as a result of net income of $73.5 million less dividends declared and paid of $38.6 million and an improvement in accumulated other comprehensive income (loss) of $25.8 million.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents increased by $24.6 million, or 14.6%, to $192.8 million at September 30, 2025, from $168.2 million at December 31, 2024. Cash and cash equivalents include short-term investments. The fluctuation in cash and cash equivalents at September 30, 2025 was driven by an increase in interest bearing short-term investment accounts of $28.9 million, or 29.9%, which were deposited primarily at the Federal Reserve Bank of Chicago. Cash and due from banks decreased $4.2 million, or 5.9%.

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Investment Portfolio

The amortized cost and the fair value of securities as of September 30, 2025 and December 31, 2024 were as follows:

						September 30, 2025												December 31, 2024
(dollars in thousands)						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Available-for-Sale
U.S Treasury securities						$	5,011					$	5,001					$	0					$	0
U.S government sponsored agencies						139,611						117,067						137,150						109,435
Mortgage-backed securities: residential						504,570						448,208						500,278						422,409
State and municipal securities						542,672						461,662						545,073						459,582
Total available-for-sale						$	1,191,864					$	1,031,938					$	1,182,501					$	991,426
Held-to-Maturity
State and municipal securities						$	132,799					$	113,804					$	131,568					$	113,107
Total Investment Portfolio						$	1,324,663					$	1,145,742					$	1,314,069					$	1,104,533

At September 30, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. government agencies and government sponsored entities, in an amount greater than 10% of stockholders’ equity. Management is aware that the directional change in the fair value of the available-for-sale investment securities portfolio is inversely related to the directional movement of the interest rate environment, with the resulting impact being reflected in the unrealized gain (loss) of the available-for-sale investment securities portfolio. Since the majority of the bonds in the investment portfolio are fixed-rate, with only a few adjustable-rate bonds, we would expect our investment portfolio to follow this market value pattern. This is taken into consideration when evaluating the gain or loss of investment securities in the portfolio and the potential for an allowance for credit losses.

Purchases of available-for-sale securities were $60.3 million in the first nine months of 2025. Investment securities represented 16.9% of total assets on September 30, 2025, compared to 16.8% of total assets on December 31, 2024. The Company anticipates receiving principal and interest cash flows of approximately $34.1 million during the remainder of 2025 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as to fund reinvestments to the investment securities portfolio. Tax equivalent adjusted effective duration for the investment securities portfolio was 5.8 years at September 30, 2025 and 6.0 years at December 31, 2024. Paydowns from prepayments and scheduled payments of $48.1 million were received in the first nine months of 2025, and the amortization of premiums, net of the accretion of discounts, was $3.0 million. There were no sales of available-for-sale investment securities in the first nine months of 2025. No allowance for credit losses was recognized for available-for-sale or held-to-maturity securities as of September 30, 2025 and December 31, 2024.

The fair value of the available-for-sale investment securities portfolio as of September 30, 2025 included net unrealized losses of $159.9 million, compared to net unrealized losses of $191.1 million as of December 31, 2024. Unrealized losses in the available-for-sale investment securities portfolio resulted from the declines in market values of the investment securities resulting from the rise in interest rates.

The investment portfolio is managed by a third-party firm to provide for an appropriate balance between liquidity, credit risk, interest rate risk management and investment return and to limit the Company’s exposure to credit risk in the investment securities portfolio. The Company does not trade or invest in or sponsor certain unregistered investment companies defined as hedge funds and private equity funds under what is commonly referred to as the “Volcker Rule” of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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Real Estate Mortgage Loans Held-for-Sale

Real estate mortgage loans held-for-sale decreased by $975,000, or 57.4%, to $725,000 at September 30, 2025, from $1.7 million at December 31, 2024. The balance of this asset category is subject to a high degree of variability depending on, among other factors, recent mortgage loan rates and the timing of loan sales into the secondary market. The Company generally sells conforming qualifying mortgage loans it originates on the secondary market. Proceeds from sales of residential mortgages totaled $16.2 million in the first nine months of 2025, compared to $12.7 million in the first nine months of 2024. Management expects the volume of loans originated for sale in the secondary market to increase if long-term interest rates decline from current levels. Demand for mortgage loans has been impacted by elevated interest rates, limited housing inventory and existing home owners locked in at historically low rates. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $299.0 million and $313.0 million, as of September 30, 2025 and December 31, 2024, respectively.

Loan Portfolio

The loan portfolio by portfolio segment as of September 30, 2025 and December 31, 2024 is summarized as follows:

(dollars in thousands)						September 30, 2025												December 31, 2024												Current Period Change
Commercial and industrial loans						$	1,518,016					28.9		%				$	1,450,865					28.3		%				$	67,151
Commercial real estate and multi-family residential loans						2,655,250						50.6						2,592,520						50.6						62,730
Agri-business and agricultural loans						339,972						6.5						387,396						7.6						(47,424)
Other commercial loans						91,833						1.7						95,584						1.9						(3,751)
Consumer 1-4 family mortgage loans						533,542						10.2						490,229						9.6						43,313
Other consumer loans						112,430						2.1						104,041						2.0						8,389
Subtotal, gross loans						5,251,043						100.0		%				5,120,635						100.0		%				130,408
Less: Allowance for credit losses						(68,168)												(85,960)												17,792
Net deferred loan fees						(2,424)												(2,687)												263
Loans, net						$	5,180,451											$	5,031,988											$	148,463

Total net loans, excluding real estate mortgage loans held-for-sale, increased by $148.5 million, or 3.0%, to $5.180 billion at September 30, 2025 from $5.032 billion at December 31, 2024. The increase was primarily driven by originations of loans concentrated in the commercial and industrial loans, commercial real estate and multi-family residential loans and consumer 1-4 family mortgage loans categories and was offset by paydowns in the agri-business and agricultural loans segment, which traditionally experiences seasonal fluctuations in activity.

The following table summarizes the Company’s non-performing assets as of September 30, 2025 and December 31, 2024:

(dollars in thousands)						September 30, 2025						December 31, 2024
Nonaccrual loans						$	18,701					$	56,431
Loans past due over 90 days and still accruing						7						28
Total nonperforming loans						18,708						56,459
Other real estate owned						284						284
Repossessions						82						143
Total nonperforming assets						$	19,074					$	56,886
Individually analyzed loans						$	39,497					$	78,647
Nonperforming loans to total loans						0.36		%				1.10		%
Nonperforming assets to total assets						0.28		%				0.85		%

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Total nonperforming assets decreased by $37.8 million, or 66.5%, to $19.1 million during the nine month period ended September 30, 2025. The ratio of nonperforming assets to total assets decreased 57 basis points from 0.85% at December 31, 2024 to 0.28% at September 30, 2025. The decrease in nonperforming assets was driven by the $28.6 million partial charge off of a previously disclosed nonperforming loan to a northern Indiana industrial company.

A loan is individually analyzed when full payment under the original loan terms is not expected. The analysis for smaller loans that are similar in nature and which are not in nonaccrual or modified status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans. If a loan is individually analyzed, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows or at the fair value of collateral if repayment is expected solely from the collateral. Total individually analyzed loans decreased by $39.2 million, or 49.8%, to $39.5 million at September 30, 2025 from $78.6 million at December 31, 2024. The decrease to individually analyzed loans was primarily related to the previously disclosed partial loan charge off, which was fully allocated within the allowance for credit losses.

Loans are charged against the allowance for credit losses when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb current expected credit losses relating to specifically identified loans based on an evaluation of the loans by management, as well as other current expected losses in the loan portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect the borrower’s ability to repay. Management also considers trends in adversely classified loans based upon a monthly review of those credits. General allowance is determined after considering the following factors: application of loss percentages using a probability of default/loss given default approach subject to a floor, emerging market risk, commercial loan focus and large credit concentrations, new industry lending activity and current economic conditions. Federal regulations require insured institutions to classify their own assets on a regular basis. The regulations provide for three categories of classified loans: Substandard, Doubtful and Loss. The regulations also contain a Special Mention category. Special Mention applies to loans that do not currently expose an insured institution to a sufficient degree of risk to warrant classification as Substandard, Doubtful or Loss but do possess credit deficiencies or potential weaknesses deserving management’s close attention. The Company’s policy is to establish a specific allowance for credit losses for any assets where management has identified conditions or circumstances that indicate an asset is nonperforming. If an asset or portion thereof is classified as a loss, the Company’s policy is to either establish specified allowances for credit losses in the amount of 100% of the portion of the asset classified loss or charge-off such amount.

At September 30, 2025, the allowance for credit losses was 1.30% of total loans, a decrease of 38 basis points from 1.68% at December 31, 2024. The decline was primarily attributed to the previously disclosed charge-off. At September 30, 2025, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions deteriorate, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses. The process of identifying credit losses is a subjective process.

The Company has a relatively high percentage of commercial and commercial real estate loans, which are extended to businesses with a broad range of revenue and within a wide variety of industries. Traditionally, this type of lending may have more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by utilizing relatively conservative credit structures, by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and market area. The Company has limited exposure to commercial office space borrowers, all of which are located in the Bank's Indiana markets. Loans totaling $107.4 million for this sector represented 2.1% of total loans at September 30, 2025. Additionally, commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 213.1% of the Bank's risk-based capital at September 30, 2025. The Company continues to monitor the impact of tariffs on its borrowers.

As of September 30, 2025, based on management’s review of the loan portfolio, the Company had 97 credit relationships with principal balances totaling $157.2 million on the classified loan list versus 81 credit relationships with principal balances totaling $211.1 million as of December 31, 2024. As of September 30, 2025, the Company had $111.0 million of assets classified as Special Mention, $46.2 million classified as Substandard, $97,000 classified as Doubtful and $0 classified as Loss as compared to $123.6 million, $44.0 million, $43.5 million and $0, respectively, at December 31, 2024. Watch list loans as a percentage of total loans were 3.00% as of September 30, 2025, down 113 basis points from 4.13% at December 31, 2024. In addition to the previously disclosed partial loan charge off, net paydowns and upgrades to other watch list credits further contributed to the decrease in classified loans between December 31, 2024 and September 30, 2025.

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Allowance estimates are developed by management after taking into account actual loss experience adjusted for current economic conditions and a reasonably supportable forecast period. The Company has annual discussions regarding this methodology with regulatory authorities. Allowance estimates are considered a prudent measurement of the risk in the Company’s loan portfolio based upon loan segment. In accordance with applicable accounting guidance, the allowance is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. For a more thorough discussion of the allowance for credit losses methodology see the "Critical Accounting Policies" section of this Item 2.

The allowance for credit losses decreased $17.8 million, or 20.7%, from $86.0 million at December 31, 2024 to $68.2 million at September 30, 2025. The decrease was primarily driven by net charge offs of $29.6 million, offset by provision for credit losses expense. Net charge offs for the nine months ended September 30, 2025 primarily consisted of the previously disclosed $28.6 million partial loan charge off. As the bulk of the Company’s lending activity is concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits, management has historically considered growth and portfolio composition when determining credit loss allocations.

Sources of Funds

The Company's sources of funds include a diversified deposit base gathered throughout the Company's footprint and includes a growing mix of commercial, retail and public funds deposit accounts. While the traditional base of core deposits represents the primary source of funding for the Company, the Company has access to a robust array of other liquidity sources, including secured borrowings available from the Federal Home Loan Bank and the Federal Reserve Bank Discount Window. In addition, the Company has access to unsecured borrowing capacity through long established relationships within the brokered deposit markets, Federal Funds lines from correspondent bank partners and Insured Cash Sweep (ICS) one-way buy funds available from the Intrafi network. As of September 30, 2025, the Company had access to $3.585 billion in unused liquidity available from these aggregate sources as compared to $3.681 billion at December 31, 2024.

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the nine months ended September 30, 2025 and 2024 are summarized in the following table:

						Nine months ended September 30,
						2025												2024
(dollars in thousands)						Balance						Rate						Balance						Rate
Noninterest bearing demand deposits						$	1,248,876					0.00		%				$	1,249,710					0.00		%
Savings and transaction accounts:
Savings deposits						284,797						0.06						288,283						0.07
Interest bearing demand deposits						3,662,917						3.32						3,206,452						4.06
Time deposits:
Deposits of $100,000 or more						595,367						3.97						814,034						4.55
Other time deposits						208,872						3.36						218,755						3.48
Total deposits						$	6,000,829					2.54		%				$	5,777,234					3.03		%
FHLB advances and other borrowings						55,594						4.54						88,605						5.61
Total funding sources						$	6,056,423					2.56		%				$	5,865,839					3.07		%

Average total deposits were $6.001 billion for the nine months ended September 30, 2025, an increase of $223.6 million, or 3.9%, from the comparable period in 2024. Average total borrowings were $55.6 million for the nine months ended September 30, 2025, a decrease of $33.0. million, or 37.3%, from the comparable period in 2024. Total average deposit costs decreased 49 basis points from 3.03% for the nine months ended September 30, 2024, to 2.54% for the nine months ended September 30, 2025. Total average borrowing costs decreased 107 basis points from 5.61% for the nine months ended September 30, 2024 to 4.54% for the nine months ended September 30, 2025. As a result, the total cost of funding sources decreased by 51 basis points from 3.07% for the nine months ended September 30, 2024, to 2.56% for the nine months ended September 30, 2025. The decrease in the cost of funding sources between the two periods was attributable to easing of monetary policy by the Federal Reserve Bank which allowed deposit costs to reprice to lower levels and reduced the borrowings average rates.

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Deposits and Borrowings

As of September 30, 2025, total deposits increased by $123.4 million, or 2.1%, from December 31, 2024. Core deposits, which excludes brokered deposits, decreased by $10.7 million, or 0.2%, to $5.849 billion as of September 30, 2025 from $5.859 billion as of December 31, 2024. Total brokered deposits were $175.6 million at September 30, 2025, compared to $41.6 million at December 31, 2024, an increase of $134.1 million, or 322.6%.

The following table summarizes deposit composition at September 30, 2025 and December 31, 2024:

(dollars in thousands)						September 30, 2025						Percentage of Total						December 31, 2024						Percentage of Total						Current Period Change
Retail						$	1,724,983					28.6		%				$	1,780,726					30.2		%				$	(55,743)
Commercial						2,288,701						38.0						2,269,049						38.4						19,652
Public funds						1,834,987						30.5						1,809,631						30.7						25,356
Core deposits						$	5,848,671					97.1		%				$	5,859,406					99.3		%				$	(10,735)
Brokered deposits						175,647						2.9						41,560						0.7						134,087
Total deposits						$	6,024,318					100.0		%				$	5,900,966					100.0		%				$	123,352

On September 30, 2025, commercial deposits represented 38.0% of total deposits versus 38.4% at December 31, 2024. Retail deposits represented 28.6% at September 30, 2025 versus 30.2% at December 31, 2024. Public Funds deposits represented 30.5% at September 30, 2025 versus 30.7% at December 31, 2024. Brokered deposits represented 2.9% of total deposits at September 30, 2025 versus 0.7% at December 31, 2024. Commercial deposits expanded $19.7 million, or 0.9%, from $2.269 billion at December 31, 2024 to $2.289 billion at September 30, 2025; public funds deposits expanded $25.4 million, or 1.4%, from $1.810 billion at December 31, 2024 to $1.835 billion at September 30, 2025, due to growth in public funds customers in our footprint; and retail deposits contracted $55.7 million, or 3.1%, from $1.781 billion at December 31, 2024 to $1.725 billion at September 30, 2025.

Deposits not covered by FDIC deposit insurance were 57.0% as of September 30, 2025, versus 62.1% at December 31, 2024. Deposits not covered by FDIC deposit insurance or the Indiana Public Deposit Insurance Fund, which insures public fund deposits in Indiana, were 27.0% of total deposits as of September 30, 2025, versus 32.3% as of December 31, 2024. As of September 30, 2025 and December 31, 2024, 97.9% and 98.0% of deposit accounts had deposit balances less than $250,000, respectively.

Capital

As of September 30, 2025, total stockholders’ equity was $747.5 million, an increase of $63.6 million, or 9.3%, from $683.9 million at December 31, 2024. The increase to total stockholders' equity was driven by net income of $73.5 million less dividends declared and paid of $38.6 million and an improvement of $25.8 million in accumulated other comprehensive income (loss).

The impact on equity for other comprehensive income (loss) is not included in regulatory capital. The banking regulators have established guidelines for leverage capital requirements, expressed in terms of Tier 1, or core capital, as a percentage of average assets, to measure the soundness of a financial institution. In addition, banking regulators have established risk-based capital guidelines for U.S. banking organizations. As of September 30, 2025, the Company's capital levels remained characterized as “well-capitalized”.

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The actual capital amounts and ratios of the Company and the Bank as of September 30, 2025 and December 31, 2024, are presented in the table below. Capital ratios for September 30, 2025 are preliminary until the Call Report and FR Y-9C are filed.

						Actual												Minimum Required For Capital Adequacy Purposes												For Capital Adequacy Purposes Plus Capital Conservation Buffer												Minimum Required to Be Well Capitalized Under Prompt Corrective Action Regulations
(dollars in thousands)						Amount						Ratio						Amount						Ratio						Amount						Ratio						Amount						Ratio
As of September 30, 2025:
Total Capital (to Risk Weighted Assets)
Consolidated						$	951,402					16.22		%				$	469,250					8.00		%				$	615,891					N/A						N/A						N/A
Bank						$	945,313					16.12		%				$	469,150					8.00		%				$	615,759					10.50		%				$	586,437					10.00		%
Tier I Capital (to Risk Weighted Assets)
Consolidated						$	883,145					15.06		%				$	351,938					6.00		%				$	498,579					N/A						N/A						N/A
Bank						$	877,056					14.96		%				$	351,862					6.00		%				$	498,472					8.50		%				$	469,150					8.00		%
Common Equity Tier 1 (CET1)
Consolidated						$	883,145					15.06		%				$	263,953					4.50		%				$	410,594					N/A						N/A						N/A
Bank						$	877,056					14.96		%				$	263,897					4.50		%				$	410,506					7.00		%				$	381,184					6.50		%
Tier I Capital (to Average Assets)
Consolidated						$	883,145					12.56		%				$	281,287					4.00		%				$	281,287					N/A						N/A						N/A
Bank						$	877,056					12.48		%				$	281,084					4.00		%				$	281,084					4.00		%				$	351,355					5.00		%
As of December 31, 2024:
Total Capital (to Risk Weighted Assets)
Consolidated						$	917,769					15.90		%				$	461,847					8.00		%				$	606,175					N/A						N/A						N/A
Bank						$	909,232					15.76		%				$	461,612					8.00		%				$	605,866					10.50		%				$	577,015					10.00		%
Tier I Capital (to Risk Weighted Assets)
Consolidated						$	845,352					14.64		%				$	346,385					6.00		%				$	490,713					N/A						N/A						N/A
Bank						$	836,845					14.50		%				$	346,209					6.00		%				$	490,463					8.50		%				$	461,612					8.00		%
Common Equity Tier 1 (CET1)
Consolidated						$	845,352					14.64		%				$	259,789					4.50		%				$	404,116					N/A						N/A						N/A
Bank						$	836,845					14.50		%				$	259,657					4.50		%				$	403,911					7.00		%				$	375,060					6.50		%
Tier I Capital (to Average Assets)
Consolidated						$	845,352					12.15		%				$	278,369					4.00		%				$	278,369					N/A						N/A						N/A
Bank						$	836,845					12.03		%				$	278,240					4.00		%				$	278,240					4.00		%				$	347,800					5.00		%

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FORWARD-LOOKING STATEMENTS

This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in the federal securities law. Forward-looking statements are not historical facts and are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “project,” “possible,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including, without limitation:

•the effects of future economic, business and market conditions and changes, particularly in our Indiana market area, including prevailing interest rates and the rate of inflation;

•governmental trade, monetary, tax and fiscal policies, including effects of the ongoing shutdown of the federal government;

•the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities;

•changes in borrowers’ credit risks and payment behaviors;

•the failure of assumptions and estimates used in our reviews of our loan portfolio, underlying the establishment of reserves for possible credit losses, our analysis of our capital position and other estimates;

•the performance of our commercial real estate loan portfolio, including the effects of the elevated interest rate environment, the strength of the commercial real estate market in our Indiana markets, and recent changes in retail and office usage patterns;

•risk of cybersecurity attacks that could result in damage to the Company's or third-party service providers' networks or data of the Company;

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

•the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

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

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

•the effects of disruption and volatility in capital markets on the value of our investment portfolio;

•changes in the prices, values and sales volumes of residential real estate;

•changes in the scope and cost of FDIC insurance, the state of Indiana’s Public Deposit Insurance Fund and other coverages;

•the impact of litigation and other claims we may be subject to from time to time;

•changes in the availability and cost of credit and capital in the financial markets;

•changes in technology or products that may be more difficult or costly, or less effective than anticipated;

•changes in accounting policies, rules and practices;

•the risks related to mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; and

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•the risks noted in the Risk Factors discussed under Item 1A of Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2024, as well as other risks and uncertainties set forth from time to time in the Company’s other filings with the SEC.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk represents the Company’s primary market risk exposure. The Company does not have a material exposure to foreign currency exchange risk, does not have a material amount of derivative financial instruments and does not maintain a trading portfolio. The use of financial derivatives is limited to the back-to-back swap program for borrowers. The Corporate Risk Committee of the Board of Directors annually reviews and approves the policy used to manage interest rate risk. The policy was last reviewed and approved in July 2025. The policy sets guidelines for balance sheet structure, which are designed to protect the Company from the impact that interest rate changes could have on net income but do not necessarily indicate the effect on future net interest income. The Company, through the Bank's Asset and Liability Committee, manages interest rate risk by monitoring the computer simulated earnings impact of various rate scenarios and general market conditions. The Company then modifies its long-term risk parameters by attempting to generate the types of loans, investments, and deposits that currently fit the Company’s needs, as determined by the Asset and Liability Committee. This computer simulation analysis measures the net interest income impact of various interest rate scenario changes during the next twelve months. The Company continually evaluates the assumptions used in the model. The current balance sheet structure is considered to be within acceptable risk levels.

Interest rate scenarios for the base, falling 300 basis points, falling 200 basis points, falling 100 basis points, falling 50 basis points, falling 25 basis points, rising 25 basis points, rising 50 basis points, rising 100 basis points, rising 200 basis points and rising 300 basis points are listed below based upon the Company’s rate sensitive assets and liabilities at September 30, 2025. The net interest income shown represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

The base scenario is an annual calculation that is highly dependent on numerous assumptions embedded in the model. While the base sensitivity analysis incorporates management’s best estimate of interest rate and balance sheet dynamics under various market rate movements, the actual behavior and resulting earnings impact will likely differ from that projected. For certain assets, the base simulation model captures the expected prepayment behavior under changing interest rate environments. Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity core deposit products, such as savings, money market, NOW and demand deposits reflect management’s best estimate of expected future behavior.

(dollars in thousands)						Base												Falling (300 Basis Points)						Falling (200 Basis Points)						Falling (100 Basis Points)						Falling (50 Basis Points)						Falling (25  Basis Points)						Rising (25  Basis Points)						Rising (50  Basis Points)						Rising (100 Basis Points)						Rising (200  Basis Points)						Rising (300  Basis Points)
Net interest income						$	238,093											$	229,971					$	233,937					$	236,647					$	237,556					$	237,920					$	238,220					$	238,224					$	238,200					$	237,985					$	237,658
Variance from Base																		$	(8,122)					$	(4,156)					$	(1,446)					$	(537)					$	(173)					$	127					$	131					$	107					$	(108)					$	(435)
Percent of change from Base																		(3.41)		%				(1.75)		%				(0.61)		%				(0.23)		%				(0.07)		%				0.05		%				0.06		%				0.04		%				(0.05)		%				(0.18)		%

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ITEM 4 – CONTROLS AND PROCEDURES

As required by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of September 30, 2025. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended September 30, 2025, there were no changes to the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which the Company or its subsidiaries is a party other than ordinary, routine litigation incidental to their respective businesses.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of Part I of the Company’s Form 10-K for the year ended December 31, 2024. Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PARTIES

On April 8, 2025, the Company's board of directors reauthorized and extended a share repurchase program through April 30, 2027, under which the Company is authorized to repurchase, from time to time as the Company deems appropriate, shares of the Company's common stock with an aggregate purchase price of up to $30.0 million. Repurchases may be made in the open market, through block trades or otherwise, and in privately negotiated transactions. The repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended or discontinued at any time.

There were no share repurchases under the plan during the third quarter of 2025, with $28.3 million of authorization remaining available under the plan. No shares were repurchased under the plan during the third quarter of 2025. The Company continues to evaluate the share repurchase program pursuant to its previously established criteria for utilization.

The following table provides information as of September 30, 2025 with respect to shares of common stock repurchased by the Company during the quarter then ended:

Period						Total Number of Shares Purchased (a)						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Maximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (b)
July 1 - 31						2,105						$	65.29					0						$	28,305,044
August 1 - 31						1,418						61.51						0						28,305,044
September 1 - 30						0						0.00						0						28,305,044
Total						3,523						$	63.77					0						$	28,305,044

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(a)The shares purchased during July and August were credited to the deferred share accounts of non-employee directors under the Company’s directors’ deferred compensation plan. These shares are held in treasury stock of the Company and were purchased in the ordinary course of business and consistent with past practice.

(b)The maximum dollar value of shares that may yet be repurchased under the current reauthorized program is $28.3 million.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

31.1			Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2			Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
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			Interactive Data File
			Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2025 and September 30, 2024; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and September 30, 2024; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2025 and September 30, 2024; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and September 30, 2024; and (vi) Notes to Unaudited Consolidated Financial Statements.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LAKELAND FINANCIAL CORPORATION

(Registrant)

Date: October 29, 2025			/s/ David M. Findlay
			David M. Findlay – Chairman and Chief Executive Officer
Date: October 29, 2025			/s/ Lisa M. O’Neill
			Lisa M. O’Neill – Executive Vice President and
			Chief Financial Officer
			(principal financial officer)
Date: October 29, 2025			/s/ Brok A. Lahrman
			Brok A. Lahrman – Senior Vice President and Chief Accounting Officer
			(principal accounting officer)

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FAQ

What was LKFN’s Q3 2025 net income and EPS?

Net income was $26.4 million and diluted EPS was $1.03.

How did Lakeland Financial’s net interest income and expense change in Q3?

Net interest income rose to $56.1 million, while interest expense fell to $38.8 million.

What were LKFN’s deposits and loans as of September 30, 2025?

Deposits were $6.02 billion and loans were $5.18 billion.

What were LKFN’s credit costs in Q3 2025?

The provision for credit losses was $2.0 million.

What dividend did LKFN pay in the quarter?

The company paid a cash dividend of $0.50 per share.

How did stockholders’ equity and AOCI look at quarter-end?

Stockholders’ equity was $747.4 million and AOCI was $(140.7) million.

Did LKFN use wholesale funding in Q3?

Yes. Federal Home Loan Bank advances totaled $56.2 million.