Financial Analysis

COMMITMENTS, CONTINGENCIES AND CREDIT RISK In the normal course of business, there are outstanding various contingent liabilities such as claims and legal actions, which are not reflected in the consolidated financial statements. No material losses are anticipated as a result of these actions or claims. We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company used the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The commitments are principally tied to variable rates. Loan commitments as of June 30, 2026 and December 31, 2025 were as follows: (dollars in thousands) June 30, 2026 December 31, 2025 Commitments to extend credit $ 807,960 $ 821,801 Financial guarantees standby letters of credit 30,726 30,808 …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2026 2025 2026 2025 Noninterest income - in-scope of Topic 606 Wealth management revenue: Trust management/administration fees $ 7,672 $ 6,435 $ 14,842 $ 12,879 Investment advisory and brokerage fees 619 522 1,272 1,004 Other 477 422 902 846 Service charges on deposit accounts: Nonsufficient fund fees 2,162 2,018 4,250 3,971 Other 1,287 1,333 2,554 2,685 Interchange revenues 3,553 3,463 7,081 6,614 Other income: Merchant services revenue 345 359 679 697 Other 452 823 1,096 1,116 Noninterest income - out-of-scope of Topic 606 7,201 8,159 13,214 11,485 Total noninterest income $ 23,768 $ 23,534 $ 45,890 $ 41,297

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FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1: Unadjusted quoted prices for identical assets or liabilities traded in active markets. Level 2: Significant other observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a companys 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: Investment securities. The fair value of investment securities available for sale are determined by quoted market prices, if available (Level 1). For investment securities available for sale where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For investment securities available for sale where quoted prices or market prices of similar sec …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

GOODWILL The carrying amount of goodwill at both June 30, 2026 and December 31, 2025 was $7.9 million. For the six months ended June 30, 2026, there were no changes in the carrying amount of goodwill. Additionally, the Company did not identify any events or changes in circumstances during the quarter that would indicate that it is more likely than not that the fair value of any reporting unit was less than its carrying amount. Accordingly, no interim goodwill impairment test was considered required or performed. In the first quarter of 2025, the Company determined that a triggering event had occurred at the Company's Banking reporting unit as a result of deteriorated credit quality coupled with trends in the Company's stock price. The Company performed a quantitative impairment test on its Banking reporting unit as of March 31, 2025, and engaged a third-party service provider to assist with the determination of the fair value. The resulting calculation indicated that the carrying amount exceeded the fair value of the Company's Banking reporting unit. As a result of the assessment, the Company recognized a $154.0 million goodwill impairment charge in the first quarter of 2025.

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Accounting Guidance Not Yet Adopted FASB ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses - In November 2024, the FASB issued ASU 2024-03 in order to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The amendments in ASU 2024-03 require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses in interim and year-end reporting periods. The amendments in this ASU apply to all public business entities and are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments are to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company will update the related disclosures upon adoption. FASB ASU No. 2025-06, Intangibles - Goodwill and Other--Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software - In September 2025, the FASB issued ASU 2025-06, changing the criteria for capitalizing software costs to the following: (1) a commitment has bee …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

REVENUE FROM CONTRACTS WITH CUSTOMERS The Companys revenue from contracts with customers in the scope of Topic 606 is recognized within noninterest income in the consolidated statements of income. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2026 2025 2026 2025 Noninterest income - in-scope of Topic 606 Wealth management revenue: Trust management/administration fees $ 7,672 $ 6,435 $ 14,842 $ 12,879 Investment advisory and brokerage fees 619 522 1,272 1,004 Other 477 422 902 846 Service charges on deposit accounts: Nonsufficient fund fees 2,162 2,018 4,250 3,971 Other 1,287 1,333 2,554 2,685 Interchange revenues 3,553 3,463 7,081 6,614 Other income: Merchant services revenue 345 359 679 697 Other 452 823 1,096 1,116 Noninterest income - out-of-scope of Topic 606 7,201 8,159 13,214 11,485 Total noninterest income $ 23,768 $ 23,534 $ 45,890 $ 41,297 Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and investment securities. In addition, certain noninterest income streams such as commercial FHA revenue, residential mortgage banking revenue, credit enhancement income, and gain on sales of investment securities, net, are also not in scope of Topic 606. Topic 606 is applicable to noninterest income streams such as wealth manage …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

SEGMENT INFORMATION The Company's reportable segments are determined by the Chief Executive Officer, who is the designated chief operating decision maker, based upon information provided about the Company's products and services offered, primarily distinguished between Banking, Wealth Management and Corporate. They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and customers are similar. The chief operating decision maker analyzes the financial performance of the Company's segments, allocates resources and assesses compensation of certain employees by evaluating revenue streams, significant expenses and budget to actual results. The performance of the Banking segment is assessed by monitoring the margin between interest income and interest expense related to loans, investments, deposits and other borrowings. Pre-tax profit and loss is used to assess the performance of the Wealth Management segment. Interest expense, provisions for credit losses and payroll provide the significant expenses in the Banking segment, while payroll provides the significant expenses in the Wealth Management segment. The Banking segment provides a wide range of financial products and services to consumers and businesses, including commercial, commercial real estate, mortgage and other consu …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing