COMMUNITY FINANCIAL SYSTEM, INC.

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) primarily reviews the financial condition and results of operations of Community Financial System, Inc. (the “Company” or “CFSI”) as of and for the three and six months ended June 30, 2026 and 2025, although in some circumstances the first quarter of 2026 is also discussed in order to more fully explain recent trends. The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and related notes that appear on pages 3 through 40. All references in the discussion of the financial condition and results of operations refer to the consolidated position and results of the Company and its subsidiaries taken as a whole. Unless otherwise noted, the term “this year” and equivalent terms refers to results in calendar year 2026, “last year” and equivalent terms refer to calendar year 2025, “second quarter” refers to the three months ended June 30, 2026, “YTD” refers to the six months ended June 30, 2026 and earnings per share (“EPS”) figures refer to diluted EPS.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) primarily reviews the financial condition and results of operations of Community Financial System, Inc. (the “Company” or “CFSI”) as of and for the three and nine months ended September 30, 2026 and 2025, although in some circumstances the first and second quarters of 2026 are also discussed in order to more fully explain recent trends. The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and related notes that appear on pages 3 through 40. All references in the discussion of the financial condition and results of operations refer to the consolidated position and results of the Company and its subsidiaries taken as a whole. Unless otherwise noted, the term “this year” and equivalent terms refers to results in calendar year 2026, “last year” and equivalent terms refer to calendar year 2025, “third quarter” refers to the three months ended September 30, 2026, “YTD” refers to the nine months ended September 30, 2026 and earnings per share (“EPS”) figures refer to diluted EPS.

Previous wording

The allowance for credit losses (“ACL”) represents management’s judgment of an estimated amount of lifetime losses on outstanding loans at the balance sheet date. This is estimated using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. The determination of the appropriateness of the ACL is complex and applies significant and highly subjective estimates. The ACL is measured on a collective (pooled) basis for loan segments that share similar risk characteristics, including collateral type, credit ratings/scores, size, duration, interest rate structure, origination vintage and payment structure. The Company utilizes three methods for calculating the ACL: cumulative loss, vintage loss and line loss. Historical credit loss experience provides the basis for the estimation of expected future credit losses in all three methodologies. Qualitative adjustments are made for differences in portfolio risk characteristics such as differences in underwriting standards, portfolio mix, acquisition status, current levels of delinquencies, net charge-offs and risk ratings, as well as actual and forecasted macroeconomic variables. Macroeconomic data includes unemployment rates, changes in collateral values such as home prices, commercial real estate prices including office property-specific price forecasts, office property-specific vacancy rates, automobile prices, gross domestic product, and median household income net of inflation. Management utilizes judgment in determining and applying the qualitative factors and weighting the economic scenarios used, which include baseline, upside and downside forecasts. During the first quarter of 2026, the Company updated the ACL model to add 2025 data into the historical data used for calculating the quantitative and qualitative factors as part of the annual model update procedures. With the update, the quantitative reserve in the first quarter of 2026 now includes loss history for business loans that previously was not captured in the historical quantitative loss data and was instead addressed through the use of qualitative overlays. As a result, the Company decreased the additional qualitative reserve for business loans related to size and volume of the loans in that portfolio during the first quarter of 2026 and again in the second quarter of 2026, as other components of the model were determined to have adequately captured the risk associated with these loans. The decreases in the business lending qualitative factor decreased the ACL by $7.5 million as compared to the prior factor in use at December 31, 2025. The update to the historical quantitative loss data increased the ACL by $3.5 million as compared to the quantitative loss rates in use at December 31, 2025.

Current wording

The allowance for credit losses (“ACL”) represents management’s judgment of an estimated amount of lifetime losses on outstanding loans at the balance sheet date. This is estimated using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. The determination of the appropriateness of the ACL is complex and applies significant and highly subjective estimates. The ACL is measured on a collective (pooled) basis for loan segments that share similar risk characteristics, including collateral type, credit ratings/scores, size, duration, interest rate structure, origination vintage and payment structure. The Company utilizes three methods for calculating the ACL: cumulative loss, vintage loss and line loss. Historical credit loss experience provides the basis for the estimation of expected future credit losses in all three methodologies. Qualitative adjustments are made for differences in portfolio risk characteristics such as differences in underwriting standards, portfolio mix, acquisition status, current levels of delinquencies, net charge-offs and risk ratings, as well as actual and forecasted macroeconomic variables. Macroeconomic data includes unemployment rates, changes in collateral values such as home prices, commercial real estate prices including office property-specific price forecasts, office property-specific vacancy rates, automobile prices, gross domestic product, and median household income net of inflation. Management utilizes judgment in determining and applying the qualitative factors and weighting the economic scenarios used, which include baseline, upside and downside forecasts. During the first quarter of 2026, the Company updated the ACL model to add 2025 data into the historical data used for calculating the quantitative and qualitative factors as part of the annual model update procedures. With the update, the quantitative reserve for 2026 now includes loss history for business loans that previously was not captured due to the changes in size and volume of the loans and frequency of losses in the historical quantitative loss data and was instead addressed through the use of qualitative overlays. As a result, the Company decreased the additional qualitative reserve for business loans related to size and volume of the loans in that portfolio during the first quarter of 2026 and the second quarter of 2026, as other components of the model were determined to have adequately captured the risk associated with these loans. The Company subsequently increased this reserve during the third quarter of 2026 as certain individually assessed loans were charged off and it was determined that the additional reserve was necessary to address the underlying risk of similar loans, however the total qualitative adjustment percentage remains below what was in use at December 31, 2025. The net decrease in the business lending qualitative factor decreased…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

One of the most significant estimates and judgments influencing the results of the ACL calculation is the macroeconomic forecasts. Changes in these economic forecasts could significantly affect the estimated expected credit losses and lead to materially different amounts from one period to the next. To illustrate the sensitivity of the ACL calculation to these economic forecasts, management performed a hypothetical sensitivity analysis using a weighting of 100% to the downside forecast, rather than the existing weighting of baseline, upside and downside of 40%, 20% and 40%, respectively. The scenario-weighted average unemployment rate and GDP growth forecasts used in the ACL model at June 30, 2026 were 5.4% and 1.3%, respectively, compared to 5.5% and 1.3%, respectively, at December 31, 2025. The hypothetical downside forecast includes assumptions of a weakening economy represented by a cumulative decline in real GDP of 2.6%, enhanced geopolitical tensions, rising energy prices, a peak unemployment rate of 8.5% and an average unemployment rate of 7.1%. The Company calculated that this hypothetical scenario would increase the ACL and provision for credit losses as of and for the three and six months ended June 30, 2026 by approximately $4.5 million, and decrease net income by $3.4 million (net of tax). This change is reflective of the sensitivity of the various economic factors used in the ACL model. The resulting difference is not intended to represent an expected increase in allowance levels, as future conditions are uncertain and there are several other quantitative and qualitative factors that will also fluctuate at the same time that economic conditions are changing, which would affect the results of the ACL calculation. The impact that the economic factors have on the model is affected by the upside or downside severity of the scenarios used, the product type mix, and the interaction of the economic factors with other quantitative and qualitative factors in the model, as changes in any particular factor or input may not occur at the same rate or be directionally consistent across all loan segments. Improvements in one factor may offset deterioration in other factors, both qualitative and quantitative. The third-party downside economic forecast used in the hypothetical scenario described does not predict a severe economic downturn, but rather a moderate recessionary environment. The Company’s geographic distribution of loans being primarily outside of major metropolitan areas, combined with low statistical correlation between its historical losses and national economic indicators, is reflected in the current methodology that would produce changes to the allowance that are less significant as compared to economic metric-based modeling that is more directly correlated, and therefore sensitive, to fluctuations in historical and projected national economic activity.

Current wording

One of the most significant estimates and judgments influencing the results of the ACL calculation is the macroeconomic forecasts. Changes in these economic forecasts could significantly affect the estimated expected credit losses and lead to materially different amounts from one period to the next. To illustrate the sensitivity of the ACL calculation to these economic forecasts, management performed a hypothetical sensitivity analysis using a weighting of 100% to the downside forecast, rather than the existing weighting of baseline, upside and downside of 40%, 20% and 40%, respectively. The scenario-weighted average unemployment rate and GDP growth forecasts used in the ACL model at September 30, 2026 were 5.4% and 1.4%, respectively, compared to 5.5% and 1.3%, respectively, at December 31, 2025. The hypothetical downside forecast includes assumptions of a weakening economy represented by a cumulative decline in real GDP of 2.7%, enhanced geopolitical tensions, rising energy prices, a peak unemployment rate of 8.4% and an average unemployment rate of 6.9%. The Company calculated that this hypothetical scenario would increase the ACL and provision for credit losses as of and for the three and nine months ended September 30, 2026 by approximately $4.1 million, and decrease net income by $3.1 million (net of tax). This change is reflective of the sensitivity of the various economic factors used in the ACL model. The resulting difference is not intended to represent an expected increase in allowance levels, as future conditions are uncertain and there are several other quantitative and qualitative factors that will also fluctuate at the same time that economic conditions are changing, which would affect the results of the ACL calculation. The impact that the economic factors have on the model is affected by the upside or downside severity of the scenarios used, the product type mix, and the interaction of the economic factors with other quantitative and qualitative factors in the model, as changes in any particular factor or input may not occur at the same rate or be directionally consistent across all loan segments. Improvements in one factor may offset deterioration in other factors, both qualitative and quantitative. The third-party downside economic forecast used in the hypothetical scenario described does not predict a severe economic downturn, but rather a moderate recessionary environment. The Company’s geographic distribution of loans is primarily outside of major metropolitan areas, which when combined with low statistical correlation between its historical losses and national economic indicators, is reflected in the current methodology that would produce changes to the allowance that are less significant as compared to economic metric-based modeling that is more directly correlated, and therefore sensitive, to fluctuations in historical and projected national economic activity.

Previous wording

The Company also provides supplemental reporting of its results on an “operating” or “tangible” basis. Results on an “operating” basis exclude the after-tax effects of acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual, gain (loss) on equity securities, restructuring expenses and amortization of intangible assets. Results on a “tangible” basis exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities. In addition, the Company provides supplemental reporting for “operating pre-tax, pre-provision net revenues,” which excludes the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual, gain (loss) on equity securities, restructuring expenses and amortization of intangible assets from income before income taxes. Although operating pre-tax, pre-provision net revenue is a non-GAAP measure, the Company’s management believes this information helps investors and analysts measure and compare the Company’s performance through a credit cycle by excluding the volatility in the provision for credit losses associated with Current Expected Credit Loss (“CECL”) allowance methods, helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities. The Company also provides supplemental reporting of its interest income, net interest income and net interest margin on a fully tax-equivalent (“FTE”) basis, which includes an adjustment to interest income and net interest income that represents taxes that would have been paid had nontaxable investment securities and loans been taxable. Although fully tax-equivalent interest income, net interest income and net interest margin are non-GAAP measures, the Company’s management believes this information helps enhance comparability of the performance of earning assets that have different tax profiles. Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 14.

Current wording

The Company also provides supplemental reporting of its results on an “operating” or “tangible” basis. Results on an “operating” basis exclude the after-tax effects of acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual, gain (loss) on investment securities, restructuring expenses and amortization of intangible assets. Results on a “tangible” basis exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities. In addition, the Company provides supplemental reporting for “operating pre-tax, pre-provision net revenues,” which excludes the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual, gain (loss) on investment securities, restructuring expenses and amortization of intangible assets from income before income taxes. Although operating pre-tax, pre-provision net revenue is a non-GAAP measure, the Company’s management believes this information helps investors and analysts measure and compare the Company’s performance through a credit cycle by excluding the volatility in the provision for credit losses associated with Current Expected Credit Loss (“CECL”) allowance methods, helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities. The Company also provides supplemental reporting of its interest income, net interest income and net interest margin on a fully tax-equivalent (“FTE”) basis, which includes an adjustment to interest income and net interest income that represents taxes that would have been paid had nontaxable investment securities and loans been taxable. Although fully tax-equivalent interest income, net interest income and net interest margin are non-GAAP measures, the Company’s management believes this information helps enhance comparability of the performance of earning assets that have different tax profiles. Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 14.

Previous wording

The Company’s core operating objectives are: (i) maintain diverse revenue streams to achieve positive operating results in all four of the Company’s business units: banking and corporate, employee benefit services, insurance services, and wealth management services, (ii) increase the noninterest component of total revenues through both organic and acquisition strategies, (iii) optimize the branch network and digital banking delivery systems, primarily through disciplined acquisition strategies, de novo expansions and divestitures/consolidations, (iv) build profitable loan and deposit bases using both organic and acquisition strategies, (v) utilize technology to deliver customer-responsive products and services and improve efficiencies, and (vi) manage an investment securities portfolio to complement the Company’s loan and deposit strategies and mitigate interest rate and liquidity risk and optimize net interest income generation.

Current wording

The Company’s core operating objectives are: (i) maintain diverse revenue streams to achieve positive operating results in all four of the Company’s business units: banking and corporate, employee benefit services, insurance services, and wealth management services, (ii) increase the noninterest component of total revenues through both organic and acquisition strategies, (iii) optimize the branch network and digital banking delivery systems, primarily through disciplined acquisition strategies, de novo expansions and divestitures/consolidations, (iv) build profitable loan and deposit bases using both organic and acquisition strategies, (v) utilize technology to deliver customer-responsive products and services and improve efficiencies, and (vi) manage an investment securities portfolio and select hedging activities to complement the Company’s loan and deposit strategies and mitigate interest rate and liquidity risk and optimize net interest income generation.

Previous wording

Significant factors reviewed by management to evaluate achievement of the Company’s operating objectives, results and financial condition include, but are not limited to: net income and earnings per share; return on assets and equity; components of net interest margin; noninterest revenues; noninterest expenses; asset quality metrics; loan and deposit growth; capital management; performance of individual banking and financial services units; performance of specific product lines and customers; liquidity and interest rate sensitivity; enhancements to customer products and services and their underlying performance characteristics; technology advancements; market share; peer comparisons; the performance of recently acquired businesses and the performance of recently opened and consolidated branch offices.

Current wording

Significant factors reviewed by management to evaluate achievement of the Company’s operating objectives, results and financial condition include, but are not limited to: net income and earnings per share; return on assets and equity; components of net interest margin; noninterest revenues; noninterest expenses; asset quality metrics; loan and deposit growth; capital management; performance of individual banking and financial services units; performance of specific product lines and customers; liquidity and interest rate sensitivity; technology advancements; market share; peer comparisons; the performance of recently acquired businesses and the performance of recently opened and consolidated branch offices.

Previous wording

The Company reported net income of $61.3 million for the second quarter which increased $10.0 million, or 19.5%, from the prior year’s second quarter, while YTD net income of $118.6 million increased $17.6 million, or 17.4%, compared to the equivalent 2025 timeframe. Earnings per share of $1.16 for the second quarter increased $0.19, or 19.6%, from the second quarter of 2025, while YTD earnings per share of $2.24 increased $0.34, or 17.9%, from the 2025 YTD period. The increases in net income and earnings per share were primarily driven by increases in net interest income and noninterest revenues, partially offset by increases in noninterest expenses and income taxes.

Current wording

The Company reported net income of $61.3 million for the third quarter which increased $6.2 million, or 11.3%, from the prior year’s third quarter, while YTD net income of $179.9 million increased $23.8 million, or 15.3%, compared to the equivalent 2025 timeframe. Earnings per share of $1.16 for the third quarter increased $0.12, or 11.5%, from the third quarter of 2025, while YTD earnings per share of $3.39 increased $0.45, or 15.3%, from the 2025 YTD period. The increases in net income and earnings per share were primarily driven by increases in net interest income and noninterest revenues, partially offset by increases in noninterest expenses and income taxes.

Previous wording

Net interest income increased to $139.1 million in the second quarter, a $14.4 million, or 11.5%, increase from the prior year’s second quarter. YTD net interest income of $273.9 million increased $28.9 million, or 11.8%, from the prior YTD period. The increases were primarily due to lower funding costs, along with increases in the yield on average interest-earning assets and average loan balances. The provision for credit losses of $4.6 million in the second quarter increased $0.5 million, or 11.9%, from last year’s second quarter while the YTD provision for credit losses of $10.2 million decreased $0.6 million, or 5.2% from the 2025 YTD period, reflective of stability in the Company's asset quality metrics between the periods.

Current wording

Net interest income increased to $143.5 million in the third quarter, a $15.4 million, or 12.0%, increase from the prior year’s third quarter. YTD net interest income of $417.4 million increased $44.3 million, or 11.9%, from the prior YTD period. The increases were primarily due to increases in the yield on average interest-earning assets and average loan balances, along with lower funding costs. The provision for credit losses of $5.6 million in the third quarter was consistent with last year’s third quarter while the YTD provision for credit losses of $15.8 million decreased $0.6 million, or 3.5%, from the 2025 YTD period.

Previous wording

Noninterest expenses were $137.7 million in the second quarter, an increase of $8.6 million, or 6.7%, from the prior year’s second quarter. YTD noninterest expenses of $270.8 million increased $16.4 million, or 6.4%, from the comparable 2025 YTD period. The increases in noninterest expenses were driven primarily by increases in salaries and employee benefits, data processing and communications expenses and occupancy and equipment. These increases were due in part to annual merit-based salary increases, the Company’s continued investment in customer-facing and back-office technologies and operating expenses associated with acquisitions completed and de novo branches and regional headquarters opened between the periods. Income taxes increased for the quarter and YTD periods, driven by increases in pre-tax income and certain state income taxes.

Current wording

Noninterest expenses were $141.0 million in the third quarter, an increase of $12.7 million, or 9.9%, from the prior year’s third quarter. YTD noninterest expenses of $411.8 million increased $29.1 million, or 7.6%, from the comparable 2025 YTD period. The increases in noninterest expenses were driven primarily by increases in salaries and employee benefits, data processing and communications expenses and occupancy and equipment. These increases were due in part to annual merit-based salary increases, higher employee medical costs, performance-based incentive compensation, the Company’s continued investment in customer-facing and back-office technologies and operating expenses associated with acquisitions completed and de novo branches and regional headquarters opened between the periods. Income taxes increased for the quarter and YTD periods, primarily driven by increases in pre-tax income.

Previous wording

Net interest margin for the second quarter of 3.46% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.49% both increased 19 basis points from the prior year’s second quarter. YTD net interest margin of 3.45% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.47% increased 21 basis points and 20 basis points, respectively, from the 2025 YTD period. The yield on average interest earning assets increased 5 basis points compared to the prior year’s second quarter and increased 8 basis points on a YTD basis, primarily driven by higher loan yields. The Company’s total cost of funds decreased 14 basis points from both the prior year’s second quarter and the prior YTD period primarily due to decreases in the rate paid on interest-bearing deposits.

Current wording

Net interest margin for the third quarter of 3.54% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.56% increased 24 basis points and 23 basis points, respectively, from the prior year’s third quarter. YTD net interest margin of 3.48% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.50% increased 22 basis points and 21 basis points, respectively, from the 2025 YTD period. The yield on average interest-earning assets increased 8 basis points compared to both the prior year’s third quarter and on a YTD basis, primarily driven by an increase in the proportion of loan balances to total interest-earning assets as a result of organic loan growth and the sale of $296.8 million of lower-yielding available-for-sale U.S. Treasury securities. The Company’s total cost of funds decreased 17 basis points from the prior year’s third quarter and 15 basis points from the prior YTD period primarily due primarily to decreases in the average rate paid on interest-bearing deposits and a lower cost of funds and proportion of funding from external borrowings.

Previous wording

The Company’s average and ending interest-earning assets both increased as compared to the prior year second quarter and YTD period, primarily reflective of strong organic loan growth. Average and ending deposits also increased as compared to the prior year second quarter and YTD period, primarily driven by organic growth in non-governmental deposit balances, along with the deposits assumed in the Santander Bank N.A. (“Santander”) branch and ClearPoint Federal Bank & Trust (“ClearPoint”) acquisitions. Average and ending borrowings decreased from the prior year’s second quarter and YTD reflective of growth in deposit balances outpacing loan growth, including the net funding provided from the Santander branch acquisition.

Current wording

The Company’s average and ending interest-earning assets both increased as compared to the prior year third quarter and YTD period, primarily reflective of strong organic loan growth. Average and ending deposits also increased as compared to the prior year third quarter and YTD period, primarily driven by organic growth in non-governmental deposit balances, in addition to the deposits assumed in the Santander Bank N.A. (“Santander”) branch and ClearPoint Federal Bank & Trust (“ClearPoint”) acquisitions. Average and ending borrowings decreased from the prior year’s third quarter and YTD periods reflective of the Company’s redeployment of cash from the sale of U.S. Treasury securities to repay overnight borrowings.

Previous wording

Asset quality remained solid in the second quarter. The net charge-off ratio decreased from 20 basis points of average loans in the second quarter of 2025 to 12 basis points of average loans in the second quarter of 2026. On a YTD basis, the net charge-off ratio decreased 5 basis points versus the prior year period to 11 basis points of average loans. The nonperforming loan ratio decreased 1 basis point from June 30, 2025 to 0.50% of loans outstanding at June 30, 2026, while the delinquent loan ratio increased 3 basis points compared to twelve months earlier to 1.04% of loans outstanding.

Current wording

Asset quality remained strong compared to the banking industry in the third quarter. The net charge-off ratio increased from 9 basis points of average loans in the third quarter of 2025 to 18 basis points of average loans in the third quarter of 2026. The increase in the quarterly net charge-off ratio was primarily driven by $2.7 million of charge-offs recognized in the third quarter of 2026 on 2 individually assessed business lending relationships for which specific allowance allocations had previously been established. On a YTD basis, the net charge-off ratio was consistent at 14 basis points of average loans. The nonperforming loan ratio was consistent with September 30, 2025 at 0.52% of loans outstanding at the end of the third quarter of 2026, while the delinquent loan ratio increased 16 basis points compared to twelve months earlier to 1.16% of loans outstanding primarily driven by an increase in delinquent business and consumer mortgage loans.

Previous wording

Second quarter and YTD operating net income, a non-GAAP measure, increased $6.1 million, or 10.9%, as compared to the second quarter of 2025 and increased $15.2 million, or 14.1%, compared to June YTD 2025. Second quarter and YTD operating earnings per share, a non-GAAP measure, increased $0.12, or 11.5%, compared to the second quarter of 2025 and increased $0.29, or 14.4%, compared to June YTD 2025. Second quarter and YTD operating pre-tax, pre-provision net revenue (“PPNR”), a non-GAAP measure, increased $10.5 million, or 13.9%, compared to the second quarter of 2025 and increased $21.7 million, or 14.5%, compared to June YTD 2025. Second quarter and YTD operating PPNR per share, a non-GAAP measure, increased $0.21, or 14.9%, compared to the second quarter of 2025 and increased $0.42, or 14.9%, compared to June YTD 2025. These results demonstrate improvement in the Company’s core operating performance between the periods, particularly net interest margin expansion.

Current wording

Third quarter and YTD operating net income, a non-GAAP measure, increased $9.0 million, or 15.4%, as compared to the third quarter of 2025 and increased $24.1 million, or 14.6%, compared to September YTD 2025. Third quarter and YTD operating earnings per share, a non-GAAP measure, increased $0.18, or 16.5%, compared to the third quarter of 2025 and increased $0.46, or 14.7%, compared to September YTD 2025. Third quarter and YTD operating pre-tax, pre-provision net revenue (“PPNR”), a non-GAAP measure, increased $11.2 million, or 13.6%, compared to the third quarter of 2025 and increased $32.9 million, or 14.2%, compared to September YTD 2025. Third quarter and YTD operating PPNR per share, a non-GAAP measure, increased $0.21, or 13.5%, compared to the third quarter of 2025 and increased $0.62, or 14.2%, compared to September YTD 2025. These results demonstrate improvement in the Company’s core operating performance between the periods, net interest margin expansion in particular.

Previous wording

As shown in Table 1, net income for the second quarter and June YTD of $61.3 million and $118.6 million, respectively, increased $10.0 million, or 19.5%, as compared to the second quarter of 2025 and increased $17.6 million, or 17.4%, compared to June YTD 2025. Earnings per share of $1.16 for the second quarter of 2026 increased $0.19, or 19.6%, compared to the second quarter of 2025, while earnings per share for the first six months of 2026 of $2.24 increased $0.34, or 17.9%, compared to the first six months of 2025. The increase in net income and earnings per share for the quarter was the result of increases in net interest income and noninterest revenues, partially offset by increases in the provision for credit losses, noninterest expenses and income taxes. The increase in net income and earnings per share for the YTD period as compared to the prior year was the result of an increase in net interest income and noninterest revenues as well as a decrease in the provision for credit losses, partially offset by increases in noninterest expenses and income taxes. Operating net income, a non-GAAP measure, of $61.5 million and $122.6 million for the second quarter and June YTD 2026, respectively, increased $6.1 million, or 10.9%, as compared to the second quarter of 2025 and increased $15.2 million, or 14.1%, compared to June YTD 2025. Operating earnings per share, a non-GAAP measure, of $1.16 for the second quarter increased $0.12 compared to the second quarter of 2025, while operating earnings per share of $2.32 for the first six months of 2026 increased $0.29 compared to the first six months of 2025. See Table 14 for Reconciliation of GAAP to Non-GAAP Measures.

Current wording

As shown in Table 1, net income for the third quarter and September YTD of $61.3 million and $179.9 million, respectively, increased $6.2 million, or 11.3%, as compared to the third quarter of 2025 and increased $23.8 million, or 15.3%, compared to September YTD 2025. Earnings per share of $1.16 for the third quarter of 2026 increased $0.12, or 11.5%, compared to the third quarter of 2025, while earnings per share for the first nine months of 2026 of $3.39 increased $0.45, or 15.3%, compared to the first nine months of 2025. The increase in net income and earnings per share for the quarter and YTD period was the result of increases in net interest income and noninterest revenues and a decrease in the provision for credit losses, partially offset by an increase in noninterest expenses and income taxes. Operating net income, a non-GAAP measure, of $67.0 million and $189.6 million for the third quarter and September YTD 2026, respectively, increased $9.0 million, or 15.4%, as compared to the third quarter of 2025 and increased $24.1 million, or 14.6%, compared to September YTD 2025. Operating earnings per share, a non-GAAP measure, of $1.27 for the third quarter increased $0.18 compared to the third quarter of 2025, while operating earnings per share of $3.58 for the first nine months of 2026 increased $0.46 compared to the first nine months of 2025. See Table 14 for Reconciliation of GAAP to Non-GAAP Measures.

Previous wording

As reflected in Table 1, second quarter net interest income of $139.1 million increased $14.4 million, or 11.5%, from the comparable prior year period. Net interest income for the first six months of 2026 increased $28.9 million, or 11.8%, compared to the first six months of 2025. The quarterly and YTD increases were the result of higher yields on interest-earning assets and a decrease in the rate paid on interest-bearing liabilities.

Current wording

As reflected in Table 1, third quarter net interest income of $143.5 million increased $15.4 million, or 12.0%, from the comparable prior year period. Net interest income for the first nine months of 2026 increased $44.3 million, or 11.9%, compared to the first nine months of 2025. The quarterly and YTD increases were the result of higher volume and yields on interest-earning assets and a decrease in the rate paid on interest-bearing liabilities.

Previous wording

Reflective of stable credit quality metrics and organic loan growth, the provision for credit losses of $4.6 million for the second quarter and $10.2 million for June YTD increased $0.5 million as compared to the prior year second quarter and decreased $0.6 million as compared to the first six months of 2025.

Current wording

The provision for credit losses of $5.6 million for the third quarter and $15.8 million for September YTD was consistent as compared to the prior year third quarter and decreased $0.6 million as compared to the first nine months of 2025.

Previous wording

Second quarter and YTD noninterest revenues totaled $84.0 million and $162.6 million, respectively, which increased $9.5 million, or 12.8%, from the second quarter of 2025 and increased $12.0 million, or 8.0%, from the first six months of 2025. Total operating noninterest revenues, a non-GAAP measure, for the second quarter and June YTD were $79.3 million and $158.3 million, respectively, an increase of $4.8 million, or 6.4%, and $8.0 million, or 5.3%, from the prior year second quarter and YTD period, respectively. The increase over the prior year second quarter was driven by a $3.6 million, or 6.5%, increase in nonbanking financial services business revenues and a $1.2 million, or 6.1%, increase in banking noninterest revenues, as well as a $4.7 million increase in gains on equity securities. The increase over the prior June YTD period was driven by a $4.0 million, or 3.6%, increase in nonbanking financial services business revenues and a $3.9 million, or 10.0%, increase in banking noninterest revenues, as well as a $4.1 million increase in gain on equity securities. The increase in nonbanking financial services business revenues for the second quarter of 2026 and June YTD period was comprised of increases in employee benefit services revenue of $2.5 million and $4.4 million, respectively; an increase in wealth management services revenue of $1.7 million and $2.2 million, respectively, including $0.7 million of revenue related to the ClearPoint acquisition in the second quarter of 2026; partially offset by a decrease in insurance services revenue of $0.2 million and $1.8 million, respectively and a loss from equity method investments of $0.4 million and $0.8 million, respectively.

Current wording

Third quarter and YTD noninterest revenues totaled $83.7 million and $246.3 million, respectively, representing increases of $4.9 million, or 6.2%, and $16.9 million, or 7.4%, respectively, compared with the corresponding prior-year periods. Total operating noninterest revenues, a non-GAAP measure, for the third quarter and September YTD were $86.7 million and $244.9 million, respectively, representing increases of $8.0 million, or 10.2%, and $16.0 million, or 7.0%, from the prior year third quarter and YTD period, respectively. The increase over the prior year third quarter was driven by a $5.9 million, or 10.3%, increase in nonbanking financial services business revenues and a $1.3 million, or 6.2%, increase in banking noninterest revenues, as well as a $0.8 million gain from equity method investments, partially offset by a $3.1 million change in the loss on investment securities. The increase over the prior September YTD period was driven by a $10.7 million, or 6.4%, increase in nonbanking financial services business revenues and a $5.2 million, or 8.7%, increase in banking noninterest revenues, and a $0.9 million change in loss on investment securities. The increase in nonbanking financial services business revenues for the third quarter of 2026 and September YTD period was comprised of increases in employee benefit services revenue of $2.0 million and $6.4 million, respectively; an increase in wealth management services revenue of $3.4 million and $5.6 million, respectively, including $2.1 million and $2.9 million of revenue related to the ClearPoint acquisition in the third quarter of 2026 and September YTD period, respectively; and an increase in insurance services revenue of $0.5 million for the third quarter of 2026 and a decrease of $1.3 million for the September YTD period.

Previous wording

Noninterest expenses of $137.7 million and $270.8 million for the second quarter and June YTD periods, respectively, reflected an increase of $8.6 million, or 6.7%, from the second quarter of 2025 and an increase of $16.4 million, or 6.4%, from the first six months of 2025. The increase in noninterest expenses for the second quarter and June YTD periods was primarily driven by higher salaries and employee benefits expenses, data processing and communications expenses, and occupancy and equipment expenses, partially offset by a decrease in business development and marketing expenses and restructuring expenses. Operating noninterest expenses, a non-GAAP measure, increased $8.7 million, or 7.0%, from the prior year second quarter and $15.2 million, or 6.2%, from the prior June YTD.

Current wording

Noninterest expenses of $141.0 million and $411.8 million for the third quarter and September YTD periods, respectively, reflected an increase of $12.7 million, or 9.9%, from the third quarter of 2025 and an increase of $29.1 million, or 7.6%, from the first nine months of 2025. The increase in noninterest expenses for the third quarter and September YTD periods was primarily driven by higher salaries and employee benefits expenses, data processing and communications expenses, and occupancy and equipment expenses, partially offset by a decrease in business development and marketing expenses. Operating noninterest expenses, a non-GAAP measure, increased $12.2 million, or 9.9%, from the prior year third quarter and $27.4 million, or 7.4%, from the prior September YTD.

Previous wording

The effective income tax rates were 24.1% and 23.7% for the second quarter and YTD 2026, respectively, as compared to 22.3% and 22.5% for the comparable prior year periods, primarily due to an increase in pre-tax income and certain state income taxes.

Current wording

The effective income tax rates were 24.0% and 23.8% for the third quarter and YTD 2026, respectively, as compared to 24.7% and 23.3% for the comparable prior year periods. The YTD increase was primarily due to an increase in pre-tax income and certain state income taxes.

Previous wording

Net interest income totaled $139.1 million for the second quarter of 2026 compared to $124.7 million for the second quarter of 2025. As shown in Table 2a, fully tax-equivalent net interest income, a non-GAAP measure, for the second quarter was $140.0 million, an increase of $14.4 million from the prior year second quarter. The increase was driven by a 5 basis point increase in the yield on average interest-earning assets, an $823.2 million increase in average interest-earning asset balances and an 18 basis point decrease in the rate paid on average interest-bearing liabilities, partially offset by a $539.7 million increase in average interest-bearing liability balances in comparison to the second quarter of 2025. As reflected in Table 3 for the quarter, the favorable net interest income impacts of the volume increase in average interest-earning asset balances of $9.4 million, the increase in the yield on average interest-earning assets of $2.0 million and the decrease in the rate paid on average interest-bearing liabilities of $5.2 million were partially offset by the volume increase in average interest-bearing liability balances of $2.3 million. Net interest margin of 3.46% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.49% for the second quarter of 2026 both increased 19 basis points compared to the prior year period.

Current wording

Net interest income totaled $143.5 million for the third quarter of 2026 compared to $128.2 million for the third quarter of 2025. As shown in Table 2a, fully tax-equivalent net interest income, a non-GAAP measure, for the third quarter was $144.6 million, an increase of $15.5 million from the prior year third quarter. The increase was driven by an 8 basis point increase in the yield on average interest-earning assets, a $697.2 million increase in average interest-earning asset balances and a 21 basis point decrease in the rate paid on average interest-bearing liabilities, partially offset by a $414.1 million increase in average interest-bearing liability balances in comparison to the third quarter of 2025. As reflected in Table 3 for the quarter, the favorable net interest income impacts of the volume increase in average interest-earning asset balances of $8.2 million, the increase in the yield on average interest-earning assets of $2.9 million and the decrease in the rate paid on average interest-bearing liabilities of $6.2 million were partially offset by the volume increase in average interest-bearing liability balances of $1.8 million. Net interest margin of 3.54% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.56% for the third quarter of 2026 increased 24 basis points and 23 basis points, respectively, compared to the prior year period.

Previous wording

Net interest income totaled $273.9 million for the first six months of 2026 compared to $245.0 million for the first six months of 2025. As shown in Table 2b, June YTD fully tax-equivalent net interest income, a non-GAAP measure, of $275.6 million increased $28.9 million from the prior year period. The June YTD increase was driven by a 7 basis point increase in the yield on average interest-earning assets, a $799.2 million increase in average interest-earning asset balances and a 17 basis point decrease in the rate paid on average interest-bearing liabilities, partially offset by a $561.4 million increase in average interest-bearing liability balances. As reflected in Table 3 for June YTD, the favorable net interest income impacts of the volume increase in average interest-earning asset balances of $18.2 million, the increase in the yield on average interest-earning assets of $5.6 million and the decrease in the rate paid on average interest-bearing liabilities of $9.7 million were partially offset by the volume increase in average interest-bearing liability balances of $4.6 million. Net interest margin of 3.45% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.47% for the June YTD 2026 increased 21 basis points and 20 basis points, respectively, compared to the prior year period.

Current wording

Net interest income totaled $417.4 million for the first nine months of 2026 compared to $373.1 million for the first nine months of 2025. As shown in Table 2b, September YTD fully tax-equivalent net interest income, a non-GAAP measure, of $420.2 million increased $44.4 million from the prior year period. The September YTD increase was driven by an 8 basis point increase in the yield on average interest-earning assets, a $764.8 million increase in average interest-earning asset balances and an 18 basis point decrease in the rate paid on average interest-bearing liabilities, partially offset by a $511.8 million increase in average interest-bearing liability balances. As reflected in Table 3 for September YTD, the favorable net interest income impacts of the volume increase in average interest-earning asset balances of $26.4 million, the increase in the yield on average interest-earning assets of $8.5 million and the decrease in the rate paid on average interest-bearing liabilities of $16.1 million were partially offset by the volume increase in average interest-bearing liability balances of $6.6 million. Net interest margin of 3.48% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.50% for the September YTD 2026 period increased 22 basis points and 21 basis points, respectively, compared to the prior year period.

Previous wording

The 5 basis point increase in the average yield on interest-earning assets for the quarter was the result of increases in the yield on average loans while the yield on average investments, including cash equivalents, remained consistent with the prior year periods. The yield on average loans for the second quarter increased 3 basis points compared to the second quarter of 2025. The increase in loan yields was reflective of an increase in the proportion of higher rate loan originations over recent periods. The 7 basis point increase in the average yield on interest-earning assets for the June YTD period was driven by the same factors, with a 7 basis point increase in the yield on average loans and a consistent yield on average investments, including cash equivalents that carried a lower rate in 2026, when compared with the prior year period.

Current wording

The 8 basis point increase in the average yield on interest-earning assets for the quarter was the result of increases in the yield on both average loans and average investments, including cash equivalents, due in part to the sale of lower-yielding U.S. Treasury securities in August 2026. The yield on average loans for the third quarter increased 1 basis point compared to the third quarter of 2025. The increase in loan yields was reflective of an increase in the proportion of higher rate loan originations over recent periods. The yield on average investments for the third quarter, including cash equivalents, increased 2 basis points. The 8 basis point increase in the average yield on interest-earning assets for the September YTD period was driven by the same factors, with a 5 basis point increase in the yield on average loans and a 1 basis point increase in the yield on average investments, including cash equivalents, when compared with the prior year period.

Previous wording

The second quarter and YTD average book balance of investments, including cash equivalents, increased $101.7 million and $124.7 million, respectively, as compared to the corresponding prior year period primarily due to the ClearPoint acquisition in the second quarter of 2026, partially offset by investment maturities, calls and principal payments during the periods. The cash equivalents component of average interest-earning assets increased $61.4 million and $80.6 million for the second quarter and June YTD periods, respectively, compared to the corresponding prior year periods. Average loan balances increased $721.5 million for the quarter and $674.5 million YTD as compared to the prior year, with increases in all five major loan portfolios between both periods primarily due to organic growth.

Current wording

The third quarter and YTD average book balance of investments, including cash equivalents, decreased $32.9 million and increased $71.6 million, respectively, as compared to the corresponding prior year period, with the YTD change reflecting the impact of the ClearPoint acquisition in the second quarter of 2026 and purchases of held-to-maturity government agency mortgage-backed securities, partially offset by investment sales, maturities, calls and principal payments during the period, while the quarterly change was primarily driven by investment sales, maturities, calls and principal payments. The cash equivalents component of average interest-earning assets increased $43.4 million and $68.0 million for the third quarter and September YTD periods, respectively, compared to the corresponding prior year periods. Average loan balances increased $730.1 million for the quarter and $693.2 million YTD as compared to the prior year, with increases in all five major loan portfolios between both periods primarily due to organic growth.

Previous wording

The rate paid on average interest-bearing liabilities decreased 18 basis points compared to the prior year quarter as the average rate paid on interest-bearing deposits decreased 15 basis points and the average rate paid on external borrowings increased 7 basis points from the comparable prior period. For the first six months of 2026, the rate paid on average interest-bearing liabilities decreased 17 basis points as the rate paid on average interest-bearing deposits decreased 14 basis points and the average rate paid on external borrowings decreased 1 basis point. The decrease in the rate paid on average interest-bearing deposits and changes in the rate paid on average borrowings were due to market-related interest rate changes between the periods, as well as a change in the proportion of overnight borrowings and term borrowings to total borrowings during the periods.

Current wording

The rate paid on average interest-bearing liabilities decreased 21 basis points compared to the prior year quarter as the average rate paid on interest-bearing deposits decreased 19 basis points and the average rate paid on external borrowings decreased 13 basis points from the comparable prior period. For the first nine months of 2026, the rate paid on average interest-bearing liabilities decreased 18 basis points as the rate paid on average interest-bearing deposits decreased 15 basis points and the average rate paid on external borrowings decreased 4 basis points. The decrease in the rate paid on average interest-bearing deposits and changes in the rate paid on average borrowings were due to market-related interest rate changes between the periods, as well as a decrease in the proportion of term borrowings because of principal paydowns and maturities and overnight borrowings due in part to the paydown of those borrowings from the proceeds of the investment securities sale in August 2026.

Previous wording

Average interest-bearing deposits increased $740.1 million compared to the prior year quarter and $779.4 million compared to the prior YTD period, including increases in demand deposits, interest checking, savings, and money market for both periods. The average balance of time deposits decreased in the second quarter compared to the prior year, while the average balance increased for the June YTD period as compared to the prior year. The average borrowing balance, which primarily includes borrowings at the Federal Home Loan Banks of New York, Boston, and Indianapolis (collectively, “FHLB”) and securities sold under agreement to repurchase (customer repurchase agreements), decreased $200.5 million for the quarter and $218.0 million for the June YTD period.

Current wording

Average interest-bearing deposits increased $568.2 million compared to the prior year quarter and $708.2 million compared to the prior YTD period, including increases in demand deposits, interest checking, savings, and money market and a decrease in time deposits for both periods. These increases were also driven by total deposits of $663.8 million added through the Santander and ClearPoint acquisitions. The average borrowing balance, which primarily includes borrowings at the Federal Home Loan Banks of New York, Boston, and Indianapolis (collectively, “FHLB”) and securities sold under agreement to repurchase (customer repurchase agreements), decreased $154.0 million for the quarter and $196.5 million for the September YTD period.

Previous wording

Tables 2a and 2b below sets forth information related to average interest-earning assets and interest-bearing liabilities and their associated yields and rates for the periods indicated. Interest income and yields are on a fully tax-equivalent (“FTE”) basis using a marginal income tax rate of 25.2% in 2026 and 25.1% in 2025. Average balances are computed by totaling the daily ending balances in a period and dividing by the number of days in that period. Loan interest income and yields include amortization of deferred loan income and costs, loan prepayment, late and other fees and the amortization or accretion of acquired loan purchase discounts and premiums, decreasing loan interest income by $7.2 million for the second quarter and $14.1 million for June YTD period. Average loan balances include acquired loan purchase discounts and premiums, nonaccrual loans and loans held for sale.

Current wording

Tables 2a and 2b below sets forth information related to average interest-earning assets and interest-bearing liabilities and their associated yields and rates for the periods indicated. Interest income and yields are on a FTE basis using a marginal income tax rate of 25.1% in 2026 and 2025. Average balances are computed by totaling the daily ending balances in a period and dividing by the number of days in that period. Loan interest income and yields include amortization of deferred loan income and costs, loan prepayment, late and other fees and the amortization or accretion of acquired loan purchase discounts and premiums, decreasing loan interest income by $7.3 million for the third quarter and $21.3 million for September YTD period. Average loan balances include acquired loan purchase discounts and premiums, nonaccrual loans and loans held for sale.

Previous wording

The Company’s sources of noninterest revenues are of four primary types: 1) general banking services related to loans, including mortgage banking, deposits, customer interest rate swap fees, commercial real estate (“CRE”) financing and structuring fees, and other core customer activities typically provided through the branch network, commercial banking offices, and digital banking channels (performed by CBNA); 2) employee benefit trust, collective investment fund, transfer agency, actuarial, benefit plan administration and recordkeeping services (performed by BPAS and its subsidiaries); 3) wealth management services, comprised of trust services (performed by the Nottingham Trust and ClearPoint Trust divisions within CBNA), broker-dealer and investment advisory products and services (performed by NISI) and Nottingham Wealth Partners, Inc.) and asset management services (performed by Nottingham Advisors, Inc.), collectively referred to as Nottingham Financial Group; and 4) insurance and risk management products and services (performed by OneGroup). Additionally, the Company has other transactions that impact noninterest revenues, including income earned on bank owned life insurance, realized and unrealized gains or losses on investment securities, and income or losses on equity method investments.

Current wording

The Company generates four primary types of noninterest revenue: 1) general banking services related to deposits and loans, including mortgage banking, customer interest rate swap fees, commercial real estate (“CRE”) financing and structuring fees, and other core customer activities, all of which are typically provided through the branch network, commercial banking offices, mortgage loan originators, and digital banking channels (performed by CBNA); 2) employee benefit trust, collective investment fund, transfer agency, actuarial, benefit plan administration and recordkeeping services (performed by BPAS and its subsidiaries); 3) wealth management services, comprised of trust services (performed by the Nottingham Trust and ClearPoint Trust divisions within CBNA), broker-dealer and investment advisory products and services (performed by Nottingham Investment Services, Inc. (“NISI”) and Nottingham Wealth Partners, Inc.) and asset management services (performed by Nottingham Advisors, Inc.), collectively referred to as Nottingham Financial Group; and 4) insurance and risk management products and services (performed by OneGroup). Additionally, the Company has other transactions that impact noninterest revenues, including realized and unrealized gains or losses on investment securities and gains or losses on equity method investments.

Previous wording

As displayed in Table 4, noninterest revenues totaled $84.0 million for the second quarter of 2026 and $162.6 million for the first six months of 2026. This represents an increase of $9.5 million, or 12.8%, for the quarter and an increase of $12.0 million, or 8.0%, in comparison to the equivalent 2025 periods. The Company recognized a $4.7 million gain on equity securities during the second quarter of 2026 including a $3.3 million gain associated with the sale of a limited partnership investment and a $0.9 million gain associated with the conversion of certain Visa Class B shares to Visa Class C shares. Operating noninterest revenues, a non-GAAP measure as defined in the table above, totaled $79.3 million and $158.3 million for the second quarter of 2026 and June YTD periods, respectively, an increase of $4.8 million, or 6.4%, from the prior year’s second quarter and $8.0 million, or 5.3%, from the prior June YTD period.

Current wording

As displayed in Table 4, noninterest revenues totaled $83.7 million for the third quarter of 2026 and $246.3 million for the first nine months of 2026. This represents an increase of $4.9 million, or 6.2%, for the quarter and an increase of $16.9 million, or 7.4%, in comparison to the equivalent 2025 periods. The Company recognized a $3.0 million loss on sales of investment securities during the third quarter of 2026, with the proceeds used to repay higher cost overnight borrowings. The Company also recognized a $4.4 million gain on equity securities during the September YTD period, including a $3.3 million gain associated with the sale of a limited partnership investment and a $0.9 million gain associated with the conversion of certain Visa Class B shares to Visa Class C shares. Operating noninterest revenues, a non-GAAP measure as defined in the table above, totaled $86.7 million and $244.9 million for the third quarter of 2026 and September YTD periods, respectively, an increase of $8.0 million, or 10.2%, from the prior year’s third quarter and $16.0 million, or 7.0%, from the prior September YTD period.

Previous wording

Employee benefit services revenues increased $2.5 million, or 7.7%, and $4.4 million, or 6.8%, for the three and six months ended June 30, 2026, respectively, as compared to the equivalent prior year periods. The increases were driven by revenue growth in the recordkeeping and third-party administration services business line due in part to revenue growth from acquisitions and higher average market values of assets under administration.

Current wording

Employee benefit services revenues increased $2.0 million, or 5.8%, and $6.4 million, or 6.5%, for the three and nine months ended September 30, 2026, respectively, as compared to the equivalent prior year periods. The increases were driven by revenue growth in the recordkeeping and third-party administration services business line due primarily to higher average market values of assets under administration and in part to incremental revenue growth from acquisitions.

Previous wording

Insurance services revenues decreased $0.2 million, or 1.4%, and $1.8 million, or 6.6%, for the three and six months ended June 30, 2026, respectively, primarily due to decreases in contingent commission revenues.

Current wording

Insurance services revenues increased $0.5 million, or 3.4%, and decreased $1.3 million, or 3.2%, for the three and nine months ended September 30, 2026, respectively, with the quarterly increase due to revenue growth from acquisitions while the YTD decrease was primarily due to decreases in contingent commission revenues.

Previous wording

Wealth management services revenues increased $1.7 million, or 19.8%, and $2.2 million, or 11.8%, for the three and six months ended June 30, 2026, respectively, reflective of higher average market values of assets under management and revenue growth from the ClearPoint acquisition in the second quarter of 2026.

Current wording

Wealth management services revenues increased $3.4 million, or 38.4%, and $5.6 million, or 20.5%, for the three and nine months ended September 30, 2026, respectively, reflective of higher average market values of assets under management and incremental revenue growth from the ClearPoint acquisition completed in the second quarter of 2026.

Previous wording

Banking noninterest revenues increased $1.2 million, or 6.1%, between the second quarter of 2025 and 2026 and increased $3.9 million, or 10.0%, between the first six months of 2025 and 2026. Deposit service charges and fees increased $0.3 million, or 3.3%, and $1.4 million, or 8.6%, compared to the prior year second quarter and June YTD periods, respectively. Other banking revenues for the second quarter were consistent with the prior year and increased $1.0 million, or 12.3%, for the June YTD period, driven by increases in CRE financing and structuring fees and an increase in the cash surrender value of bank-owned life insurance policies. Debit interchange and ATM fees increased $0.7 million, or 10.8%, for the second quarter and $1.2 million, or 9.4%, for the June YTD period, and mortgage banking revenues increased $0.2 million, or 22.5% for the second quarter and $0.3 million, or 16.3%, for the June YTD period.

Current wording

Banking noninterest revenues increased $1.3 million, or 6.2%, between the third quarter of 2025 and 2026 and increased $5.2 million, or 8.7%, between the first nine months of 2025 and 2026. Deposit service charges and fees increased $0.2 million, or 2.7%, and $1.6 million, or 6.6%, compared to the prior year third quarter and September YTD periods, respectively. Other banking revenues for the third quarter increased $0.2 million, or 4.5%, compared to the prior year third quarter and increased $1.2 million, or 9.5%, for the September YTD period, driven by increases in CRE financing and structuring fees and commercial swap fees. Debit interchange and ATM fees increased $0.7 million, or 9.9%, for the third quarter and $1.9 million, or 9.5%, for the September YTD period. Mortgage banking revenues increased $0.2 million, or 15.5% for the third quarter and $0.5 million, or 16.0%, for the September YTD period. The increases in banking noninterest revenues were due in part to incremental revenue from the Santander acquisition completed in 2025.

Previous wording

The ratio of noninterest revenues to total revenues was 37.6% for the second quarter of 2026 and 37.3% for the first six months of 2026, compared to 37.4% and 38.1% for the prior year’s second quarter and June YTD periods, respectively. The quarterly increase was due to noninterest revenues increasing 12.8%, including the $4.7 million gain on equity securities, while net interest income increased 11.5%. The YTD decrease was due to net interest income increasing 11.8% for June YTD while noninterest revenues increased 8.0%.

Current wording

The ratio of noninterest revenues to total revenues was 36.8% for the third quarter of 2026 and 37.1% for the first nine months of 2026, compared to 38.1% for the prior year’s third quarter and September YTD periods, respectively. The quarterly decrease was due to net interest income increasing 12.0% while noninterest revenues increased 6.2%. The YTD decrease was due to net interest income increasing 11.9% for September YTD while noninterest revenues increased 7.4%. Net interest income growth was augmented by earning asset growth and net interest margin expansion in the current year, in large part due to market interest rate trends and balance sheet mix changes.

Previous wording

The ratio of operating noninterest revenues to operating revenues (FTE), a non-GAAP measure as defined in the table above, was 36.2% for the quarter and 36.5% for June YTD, compared to 37.2% and 37.9% for the respective prior year periods. The decreases between the quarterly and YTD periods were due to an 11.5% and 11.7% increase, respectively, in fully tax-equivalent net interest income, a non-GAAP measure, while operating noninterest revenues, a non-GAAP measure, increased 6.4% and 5.3%, respectively, excluding the $4.7 million gain on equity securities.

Current wording

The ratio of operating noninterest revenues to operating revenues (FTE), a non-GAAP measure as defined in the table above, was 37.5% for the quarter and 36.8% for September YTD, compared to 37.9% for the respective prior year periods. The decreases between the quarterly and YTD periods were due to a 12.0% and 11.8% increase, respectively, in fully tax-equivalent net interest income, a non-GAAP measure, while operating noninterest revenues, a non-GAAP measure, increased 10.2% and 7.0%, respectively.

Previous wording

As shown in Table 5, the Company recorded noninterest expenses of $137.7 million for the second quarter of 2026 and $270.8 million for the June YTD period, representing an increase of $8.6 million, or 6.7%, and $16.4 million, or 6.4%, from the respective prior year periods. The change was primarily attributable to an increase in salaries and employee benefits (an increase of $3.4 million for the quarter and $7.3 million YTD), data processing and communications (an increase of $3.0 million for the quarter and $4.7 million YTD), and occupancy and equipment (an increase of $2.4 million for the quarter and $4.6 million YTD). The remaining change to noninterest expenses is attributable to other expenses (an increase of $1.4 million for the quarter and $0.5 million YTD), amortization of intangible assets (an increase of $1.0 million for the quarter and $1.8 million YTD), business development and marketing (a decrease of $1.4 million for the quarter and $2.0 million YTD), acquisition expenses (an increase of $0.1 million for the quarter and $0.5 million YTD), legal and professional fees (a decrease of $0.1 million for the quarter and an increase of $0.2 million YTD), litigation accrual (an increase of $0.3 million for the quarter and $0.4 million YTD), and restructuring expenses (a decrease of $1.5 million for the quarter and YTD).

Current wording

As shown in Table 5, the Company recorded noninterest expenses of $141.0 million for the third quarter of 2026 and $411.8 million for the September YTD period, representing an increase of $12.7 million, or 9.9%, and $29.1 million, or 7.6%, from the respective prior year periods. The change was primarily attributable to an increase in salaries and employee benefits (an increase of $7.4 million for the quarter and $14.7 million YTD), data processing and communications (an increase of $2.5 million for the quarter and $7.2 million YTD), and occupancy and equipment (an increase of $2.6 million for the quarter and $7.2 million YTD). The remaining change to noninterest expenses is attributable to other expenses (an increase of $1.4 million for the quarter and $1.9 million YTD), amortization of intangible assets (an increase of $1.1 million for the quarter and $2.9 million YTD), business development and marketing (a decrease of $2.2 million for the quarter and $4.2 million YTD), acquisition expenses (a decrease of $0.5 million for the quarter and an increase of $0.1 million YTD), legal and professional fees (an increase of $0.4 million for the quarter and $0.6 million YTD), litigation accrual (an increase of $0.4 million YTD), and restructuring expenses (a decrease of $1.5 million YTD).

Previous wording

The increase in salaries and benefits expense for the quarter was primarily driven by incremental costs associated with acquisitions and de novo bank branches opened between the periods, along with the impact of annual merit-based increases. Data processing increases were reflective of the Company’s continued investment in customer-facing and back-office technologies, including artificial intelligence applications and other workflow efficiency initiatives. Increases in occupancy and equipment expenses were primarily due to incremental costs associated with the opening of de novo bank branches and regional headquarters and the Santander branch acquisition. Amortization of intangible assets increased primarily due to the Santander and ClearPoint acquisitions. The increase in acquisition expenses was driven by the transaction-related costs associated with the ClearPoint acquisition. The decreases in business development and marketing expenses was attributable to the Company’s efforts to more selectively allocate marketing resources toward channels with higher expected returns.

Current wording

The increase in salaries and benefits expense for the quarter was primarily driven by incremental costs associated with acquisitions completed between the periods, higher performance-based incentive compensation, increased employee medical costs and annual merit-based increases. Data processing increases were reflective of the Company’s continued investment in customer-facing and back-office technologies, including artificial intelligence applications and other workflow efficiency initiatives. The increase also reflected a one-time $0.8 million consulting expense related to the renegotiation of a debit card processor contract, which is expected to generate future cost savings. Increases in occupancy and equipment expenses were primarily due to incremental costs associated with the opening of de novo bank branches and regional headquarters and the Santander branch acquisition. Amortization of intangible assets increased primarily due to the Santander and ClearPoint acquisitions. The decrease in acquisition expenses was driven by the transaction-related costs associated with the ClearPoint and Santander acquisitions in prior periods compared to limited acquisition activity in the third quarter of 2026. The decreases in business development and marketing expenses was attributable to the Company’s efforts to more selectively allocate marketing resources toward channels with higher expected returns.

Previous wording

The Company’s efficiency ratio was 61.7% for the second quarter of 2026, 3.1 percentage points favorable to the comparable quarter of 2025. This resulted from total revenues increasing 12.0%, primarily due to higher net interest income, while total noninterest expenses increased 6.7% due to the factors noted above. The efficiency ratio for June YTD of 62.0% was 2.3 percentage points favorable to the prior June YTD period, resulting from total revenues increasing 10.4% while total noninterest expenses increased 6.4%.

Current wording

The Company’s efficiency ratio was 62.0% for the third quarter of 2026, consistent with the comparable quarter of 2025. This resulted from total revenues increasing 9.8%, primarily due to higher net interest income, while total noninterest expenses increased 9.9% due to the factors noted above. The efficiency ratio for September YTD of 62.0% was 1.5 percentage points favorable to the prior September YTD period, resulting from total revenues increasing 10.2% while total noninterest expenses increased 7.6%.

Previous wording

The Company’s operating efficiency ratio, a non-GAAP measure as defined in the table above, was 60.6% for the second quarter, 1.4 percentage points favorable to the comparable quarter of 2025. This resulted from operating revenues (FTE), a non-GAAP measure as defined in Table 5, increasing 9.5% while operating noninterest expenses, a non-GAAP measure as described above, increased 7.0%. The Company’s operating efficiency ratio, a non-GAAP measure, of 60.2% for the June YTD period was 1.8 percentage points favorable to the comparable period of 2025, a result of operating revenues (FTE), a non-GAAP measure as defined in Table 5, increasing 9.3% while operating noninterest expenses, a non-GAAP measure as described above, increased 6.2%.

Current wording

The Company’s operating efficiency ratio, a non-GAAP measure as defined in the table above, was 59.0% for the third quarter, 0.9 percentage points favorable to the comparable quarter of 2025. This resulted from operating revenues (FTE), a non-GAAP measure as defined in Table 5, increasing 11.3% while operating noninterest expenses, a non-GAAP measure as described above, increased 9.8%. The Company’s operating efficiency ratio, a non-GAAP measure, of 59.8% for the September YTD period was 1.4 percentage points favorable to the comparable period of 2025, a result of operating revenues (FTE), a non-GAAP measure as defined in Table 5, increasing 10.0% while operating noninterest expenses, a non-GAAP measure as described above, increased 7.4%.

Previous wording

The second quarter and June YTD effective income tax rate were 24.1% and 23.7%, respectively, as compared to 22.3% and 22.5% for the comparable periods of 2025. The increase in the second quarter and June YTD effective income tax rate is primarily attributable to an increase in certain state income taxes. The second quarter and June YTD tax expense associated with the amortization of income tax credit investments was $0.8 million and $1.9 million, respectively, as compared to $3.0 million and $3.3 million for the comparable periods of 2025. In addition, the tax benefit associated with stock-based compensation for the second quarter of 2026 was immaterial and was $0.7 million for June YTD, as compared to a $0.1 million and $0.6 million tax benefit for the comparable periods of 2025. The effective tax rates adjusted to exclude the income tax impact of stock-based compensation and amortization of income tax credit investments for the second quarter and YTD 2026 were 23.1% and 23.0%, respectively, as compared to 18.0% and 20.5% for the comparable periods of 2025. These increases reflect a decrease in federal income tax credits associated with the Company’s investment in tax credits generated by a solar energy producing company.

Current wording

The third quarter and September YTD effective income tax rate were 24.0% and 23.8%, respectively, as compared to 24.7% and 23.3% for the comparable periods of 2025. The increase in the September YTD effective income tax rate is primarily attributable to an increase pre-tax income and certain state income taxes. The third quarter and September YTD tax expense associated with the amortization of income tax credit investments was $0.8 million and $2.8 million, respectively, as compared to $2.9 million and $6.2 million for the comparable periods of 2025. In addition, the tax benefit associated with stock-based compensation for the third quarter of 2026 was immaterial and was $0.8 million for September YTD, as compared to a $0.1 million and $0.7 million tax benefit for the comparable periods of 2025. The effective tax rate adjusted to exclude the income tax impact of stock-based compensation and amortization of income tax credit investments for both the third quarter and YTD 2026 was 23.0%, as compared to 20.8% and 20.6% for the comparable periods of 2025. These increases reflect a decrease in federal income tax credits associated with the Company’s investment in tax credits generated by a solar energy producing company.

Previous wording

The carrying value of investment securities (including unrealized gains and losses) was $4.52 billion at the end of the second quarter, an increase of $117.4 million, or 2.7%, from December 31, 2025 and an increase of $174.1 million, or 4.0%, from June 30, 2025. The book value of investment securities (excluding unrealized gains and losses) of $4.80 billion at the end of the second quarter increased $122.7 million, or 2.6%, from December 31, 2025 and increased $115.9 million, or 2.5%, from June 30, 2025. The increase from the end of the prior year’s second quarter was primarily driven by acquiring $118.1 million of investment securities obtained through the ClearPoint acquisition, which was completed during the second quarter of 2026. Exclusive of the investments acquired from ClearPoint, during the first six months of 2026 the Company purchased $30.9 million of U.S. government agency mortgage-backed securities with an average yield of 4.99%, which the Company classified as held-to-maturity. These additions were offset by $51.3 million of investment maturities, calls and principal payments during the first six months of 2026. Additionally, there was $19.2 million of net accretion of discounts on investment securities during the first six months of 2026. The effective duration of the investment securities portfolio was 5.0 years at the end of the second quarter of 2026, as compared to 5.8 years at the end of the second quarter of 2025.

Current wording

The carrying value of investment securities (including unrealized gains and losses) was $4.12 billion at the end of the third quarter, a decrease of $286.6 million, or 6.5%, from December 31, 2025 and a decrease of $260.4 million, or 5.9%, from September 30, 2025. The book value of investment securities (excluding unrealized gains and losses) of $4.49 billion at the end of the third quarter decreased $190.1 million, or 4.1%, from December 31, 2025 and decreased $188.7 million, or 4.0%, from September 30, 2025. The decreases were primarily driven by the August 2026 sale of $296.8 million of lower-yielding available-for-sale U.S. Treasury securities, partially offset by the acquisition of $118.2 million of investment securities obtained through the ClearPoint acquisition. Exclusive of the investments acquired from ClearPoint, during the first nine months of 2026, the Company purchased $49.5 million of U.S. government agency mortgage-backed securities with an average yield of 5.13%, which the Company classified as held-to-maturity. These additions were offset by $376.1 million of investment sales, maturities, calls and principal payments during the first nine months of 2026. Additionally, there was $29.0 million of net accretion of discounts on investment securities during the first nine months of 2026. The effective duration of the investment securities portfolio was 5.1 years at the end of the third quarter of 2026, as compared to 5.6 years at the end of the third quarter of 2025.