NBTB 10-K & 10-Q changes, risk factors and insider trading

The Company’s success depends primarily on the general economic conditions in upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, central and northwestern Connecticut and the specific local markets in which the Company operates. Unlike larger national or other regional banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in the upstate New York areas of Norwich, Syracuse, Oneonta,Albany, Amsterdam-Gloversville, Albany, Binghamton, Utica-Rome, Plattsburgh,Buffalo, Glens Falls, Hudson Valley Valley, Ogdensburg-Massena, Oneonta, Plattsburgh, Rochester, Syracuse and Ogdensburg-Massena,Utica-Rome, the northeastern Pennsylvania areas of Scranton and Wilkes-Barre, Berkshire County, Massachusetts, southern New Hampshire, Vermont, southern Maine and central and northwestern Connecticut. The local economic conditions in these areas have a significant impact on the demand for the Company’s products and services as well as the ability of the Company’s customers to repay loans, the value of the collateral securing loans and the stability of the Company’s deposit funding sources.

Our branch locations and our customers’ properties may be adversely impacted by flooding, wildfires, high winds and other effects of severe weather conditions that may be caused or exacerbated by climate change.conditions. These events can force property closures, result in property damage and/or result in delays in expansion, development or renovation of our properties and those of our customers. Even if these events do not directly impact our properties or our customers’ properties, they may impact us and our customers through increased insurance, energy or other costs. In addition, changes in laws or regulations, including federal, state or city laws, relating to climate change could result in increased capital expenditures to improve the energy efficiency of our branch locations and/or our customers’ properties.

As of December 31, 2024,2025, approximately 53%56% of the Company’s loan portfolio consisted of commercial and industrial, agricultural, commercial construction and CRE loans. These types of loans generally expose a lender to greater risk of non-payment and loss than residential real estatemortgage loans because repayment of the loans often depends on the successful operation of the property, the income stream of the borrowers and, for construction loans, the accuracy of the estimate of the property’s value at completion of construction and the estimated cost of construction. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential real estatemortgage loans. Because the Company’s loan portfolio contains a significant number of commercial and industrial, agricultural, construction and CRE loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in nonperforming loans. An increase in nonperforming loans could result in a net loss of earnings from these loans, an increase in the provision for loan losses and/or an increase in loan charge-offs, all of which could have a material adverse effect on the Company’s financial condition and results of operations. See the section captioned “Loans” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations located elsewhere in this report for further discussion related to our commercial and industrial, agricultural, construction and CRE loans.

The EGRRCPA,Economic Growth, Regulatory Reform and Consumer Protection Act (“EGRRCPA”), which was enacted in 2018, amended the Dodd-Frank Act to raise the $10 billion stress testing threshold to $250 billion, among other things. The federal financial regulators issued final rules in 2019 to increase the threshold for these stress testing requirements from $10 billion to $250 billion, consistent with the EGRRCPA.

We depend upon data processing, communication systems, and information exchange on a variety of platforms and networks and over the internet to conduct business operations. In addition, we rely on the services of a variety of vendors to meet our data processing and communication needs. Although we require third party providers to maintain certain levels of security, such providers remain vulnerable to breaches, security incidents, system unavailability or other malicious attacks that could compromise sensitive information. Further, new technologies such as artificial intelligence (“AI”) may be more capable atof evading safeguard measures. The risk of experiencing security incidents and disruptions, particularly through cyber-attacks or cyber intrusions, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions by organized crime, hackers, terrorists, nation-states, activists and other external parties has increased. These security incidents may result in disruption of our operations; material harm to our financial condition, cash flows and the market price of our common stock; misappropriation of assets; compromise or corruption of confidential information; liability for information or assets stolen during the incident; remediation costs; increased cybersecurity and insurance costs; regulatory enforcement; litigation; and damage to our stakeholder and customer relationships.

We or our third-party providers may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI poses a number of risks and challenges to our business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, and we may be subject to increasing regulations related to our use of these technologies, including regulations related to privacy, data security, and intellectual property rights, which could expose us to legal risks. AI models, particularly generative AI models, may produce incorrect, biased, or misleading results, expose confidential information, or infringe on intellectual property rights. Further, we may rely on AI models developed by third parties, and, to that extent, would be subject to additional risks, including limited oversight of how these models are developed and trained and potential exposure to unauthorized data usage. If our AI models, or those developed by third parties, produce inaccurate or controversial results, we could face legal liability, regulatory scrutiny, reputational harm, or operational inefficiencies. These risks could negatively impact our business, financial results, and the perception of our security measures. The Company’s use of AI currently varies across platforms, with certain third party systems incorporating AI capabilities into routine business operations. As our adoption and internal development of AI enabled tools continues to evolve, we evaluate these technologies through our established Solutions Development Lifecycle (SDLC), which includes model validation and other risk management controls.

The business strategy of the Company has included and may continue to include growth through acquisition. Any acquisitions (including the acquisition of Evans) will be accompanied by the risks commonly encountered in acquisitions. These risks may include, among other things:

Certain statements in this filing and future filings by the Company with the SEC, in the Company’s press releases or other public or stockholder communications or in oral statements made with the approval of an authorized executive officer, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s controlcontrol, that could cause actual results to differ materially from those contemplated by the forward-looking statements. The discussion in Item 1A. Risk Factors lists some of the factors that couldmay cause our actual results to varydiffer materially from those expressed or impliedcontemplated by any forward-looking statements, and such discussion is incorporated into this discussion by reference.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made, and advises readers that various factors, including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected.

NBT Bancorp Inc. is a registered financial holding company headquartered in Norwich, NY, with total assets of $13.79$16.00 billion at December 31, 2024. 2025. The Company’s business, primarily conducted through the Bank and its full-service retirement plan administration and recordkeeping subsidiary and full-service regional insurance agency subsidiary, consists of providing commercial banking, retail banking, banking and wealth management and other financial services primarily to customers in its market area, which includes upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine and central and northwestern Connecticut. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers. The financial review that follows focuses on the factors affecting the consolidated financial condition and results of operations of the Company and its wholly-owned subsidiaries, the Bank, NBT Financial and NBT Holdings during 20242025 and, in summary form, the preceding two years. NIM is presented in this discussion on aan FTE basis. Average balances discussed are daily averages unless otherwise described. The audited consolidated financial statements and related notes as of December 31, 20242025 and 2023 2024 and for each of the years in the three-year period ended December 31, 20242025 should be read in conjunction with this review.

The SEC defines critical accounting policies as accounting policies that are most important to a company’s financial results and condition. These policies are often subjective and require management to make estimates about uncertain matters. The accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles in accordance with GAAP and to general practices within the financial services industry. In the course of normal business activity, management must select and apply many accounting policies and methodologies and make estimates and assumptions that lead to the financial results presented in the Company’s consolidated financial statements and accompanying notes. There are uncertainties inherent in making these estimates and assumptions, which could materially affect the Company’s results of operations and financial position.

The determination of fair values for acquired loans in a business combination is a significant aspect of our financial reporting process. The valuation of acquired loans relied on a discounted cash flow approach applied on a pooled basis, utilizing a forecast of principal and interest payments. This methodology segmented the acquired loan portfolio by loan type, term, interest rate, payment frequency and payment, and incorporated specific key valuation assumptions, encompassing prepayments,prepayment speeds, PD, LGD, and the discount rate to ascertain the fair value of these assets. Given the inherent subjectivity and reliance on future cash flows and market conditions, this process involves considerable judgment and estimation uncertainty.

SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with GAAP that involve a significant level level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. The Company follows financial accounting and reporting policies that are in accordance with GAAP. Management has reviewed the application of these estimates with the Audit Committee of NBT’s Board of Directors. The allowance for credit losses and the allowance for unfunded commitments policies are deemed to meet the SEC’s definition of a critical accounting estimate.

One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. As of December 31, 2024,2025, the quantitative model incorporated a baseline economic outlook along with an alternative upside scenario and two equally weighted downside scenarioscenarios, recessionary conditions and stagflation, sourced from a reputable third-party to accommodate other potential economic conditions in the model. At December 31, 2024,2025, the weightings were 80%65%, 5% and 20%30% for the baselinebaseline, upside and downside economic forecasts,forecast scenarios, respectively. The baseline outlook reflected aan Northeasteconomic environment where the northeast unemployment rate environmentincreases startingfrom at4.5% 4.1%in andthe increasingfirst slightly duringquarter of 2026 to 4.8% by the end of the forecast periodperiod, towith 4.2%.a Northeastpeak GDP’snortheast unemployment rate of 4.9% in the fourth quarter of 2026. National GDP annualized growth (on a quarterly basis) is expected to start the first quarter of 20252026 at approximately 3.8%2.55% beforeand decreasingdecrease to a low of 2.6% in the third quarter of 2025 and then increasing to 3.9%1.8% by the end of the forecast period. Key assumptions in the baseline economic outlook included the twoFederal Reserve cutting rates with one 25 basis point federalcut fundsat ratethe cutsDecember in 2025, quantitative tightening ending in early 2025, a post-election fiscal outlook with lower spending, lower taxes, and higher tariffs,meeting and the economy currentlyremaining being nearat full employment. The alternative upside scenario assumes improved economic conditions from the baseline outlook. Under this scenario, northeast unemployment falls from 4.4% in the fourth quarter of 2025 to 4.0% in the second quarter of 2026 and eventually settles at 4.1% by the end of the forecast period. The alternative downside scenario assumedwith recessionary conditions assumes deteriorated economic conditions from the baseline outlook. Under this scenario, Northeast northeast unemployment increasesrises from 4.4% in the fourth quarter of 2025 to a peak of 7.5%7.8% in the first quarter of 2026.2027. The alternative downside stagflation scenario assumes deteriorated economic conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 4.4% in the fourth quarter of 2025 to 6% by the end of the forecast period in the second quarter of 2027, with a peak northeast unemployment rate of 8.2% in the first quarter of 2028. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2024.2025. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools, considerationsreversion adjustments for inflationthe stagflation scenario and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of December 31, 2024,2025, the Company attributedchanged the changescenario in scenario weightings to the change in the allowance for credit losses,weightings, with a 10% decreaseincrease to the downside scenarioscenarios, equally weighted, and a 10% increasedecrease to the baseline scenario causing a 4% decreaseincrease in the overall estimated allowance for credit losses. If instead the upside scenario was increased 10% and the baseline scenario was decreased 10%, the overall estimated allowance for credit losses decreased 1%. To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of December 31, 2024, 2025, the Company increased the downside scenarioscenarios, equally weighted, to 100% which resulted in a 33%24% increase in the overall estimated allowance for credit losses.

The Company incurred acquisition expenses related to the Mergermerger with Evans of $19.5 million and $1.5 million for the yearyears ended December 31, 2024.2025 and 2024, respectively.

The Company incurred acquisition expenses related to the merger with Salisbury of $10.0 million and $1.0 million for the yearsyear ended December 31, 2023 and 2022, respectively.2023.

Net interest income for the year ended December 31, 20242025 was $400.1$501.5 million, up $21.9$101.4 million, or 5.8%,25.3%, from 2023.2024. The FTE NIM was 3.23%3.59% for the year ended December 31, 2025, 2024,an a decreaseincrease of 636 bps from 2023.2024. Interest income increased $88.9$99.3 million, or 17.0%,16.2%, as the yield on average interest-earning assets increased 3916 bps from 20232024 to 4.93%,5.09%. while averageAverage interest-earning assets of $12.45$14.03 billion increased $878.8 million$1.58 billion primarily due to the Salisburyaddition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic loanearning growth,asset partially offset by a decrease in securities.growth. Interest expense wasdecreased up $67.0$2.1 million, or 46.3%,1.0%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024 driven by interest-bearing deposit costs increasingdecreasing 8027 bpsbps, to 2.36% and a $1.22 billion increase in interest-bearing deposits as a result of the Salisbury acquisition, partly offset by a decrease of $346.4 million in thelower average balances of short-term borrowings and lower average balances of subordinated debt. The decrease in interest expense was partially offset by the 548addition bpsof rate$1.62 paidbillion onin thoseinterest-bearing borrowings.liabilities in May 2025 from the Evans acquisition and organic growth. Included in net interest income was $10.4$21.0 million and $4.3$10.4 million for the years ended December 31, 2024 2025 and 2023,2024, respectively, of acquisition-related net accretion.

The average balance of loans increased by approximately $1.01$1.24 billion, or 11.5%,12.6%, from 20232024 to 20242025 driven by the SalisburyEvans acquisitionacquisition. andExcluding organicthe loanloans growth,acquired withfrom Evans, the increases in C&I, CRE,I and indirect auto and residential mortgage portfolios being partiallywere offset by a reduction in the average balance of residential solar and other consumer loans. The yield on average loans increased from 5.26% in 2023 to 5.64% in 2024,2024 to 5.73% in 2025, as loans re-priced upward due to the interest rate environment in 2024.2025. FTE interest income from loans increased 19.5%,14.3%, from $463.3 million in 2023 to $553.8 million in 2024.2024 to $633.2 million in 2025. This increase was due to the increasesimprovement in asset yields and an increase in the average balance.balance of earning assets.

Total loans were $9.97$11.60 billion and $9.65$9.97 billion at December 31, 20242025 and 2023,2024, respectively. Period end loans increased by $1.63 billion from December 31, 2024 to December 31, 2025, which included $1.67 billion of loans acquired from Evans. Excluding the other consumer and residential solar portfoliosportfolios, thatwhich are in a planned run-off status, status and the loans acquired from Evans, period end loans increased $478.6$68.1 million, or 5.6%.0.7%, from December 31, 2024. From December 31, 2024 to December 31, 2025 C&I loans increased $72.2$245.5 million to $1.43$1.67 billion; CRE loans increased $249.8$922.3 million to $3.88$4.80 billion; and total consumer loans decreasedincreased $2.8$460.5 million to $4.67$5.13 billion. Total loans represent approximately 72.3%72.5% of assets as of December 31, 2024,2025, as compared to 72.5%72.3% as of December 31, 2023.2024.

Within the CRE portfolio, approximately 81%78% comprisesare comprised of Non-Owner Occupied CRE, with the remaining 19%22% being Owner-Occupied CRE. Non-Owner Occupied CRE includes diverse sectors across the Company’s markets such as residential rental properties (43%45%) and office spaces (18%13%), along with retail, manufacturing, mixed use, hotels and others. Notably, office CRE loans account for 6% of the total outstanding loans, predominantly serving suburban medical and professional tenants across suburban and small urban markets. These loans carry an average size of $1.9 million, with 9% maturing over the next two years. As of December 31, 20242025 and December 31, 2023,2024, the total CRE construction and development loans amounted to $314.8$405.3 million and $347.2$314.8 million, respectively.

Residential real estatemortgage loans consist primarily of loans secured by a first or second mortgage on primary residences. The Company originates both adjustable-rate and fixed-rate, one-to-four-family one-to-four-family residential loans for the construction or purchase of a residential property or refinancing of a mortgage. These loans are collateralized by properties located in the Company’s market area. The Company has never actively participated in subprime mortgage lending, which has historically been one of the riskiest sectors in the residential housing market. Given the absence of a universally accepted definition of what constitutes “subprime” lending, the Company follows guidance from the Office of Thrift Supervision and other federal bank regulators (the “Agencies”), as outlined in the “Expanded Guidance for Subprime Lending Programs,” or the Expanded Guidance, issued by the Agencies by press release dated January 31, 2001. As of December 31, 2024,2025, there were $40.5$34.1 million in residential construction and development loans included in total loans.

The Company offers a variety of consumer loan products including indirect auto, home equity and other consumer loans. Indirect auto loans include indirect installment loans to individuals, which are primarily secured by automobiles. Although automobile loans have generally been originated through dealers, all applications submitted through dealers are subject to the Company’s normal underwriting and loan approval procedures. Other consumer loans consist of direct installment loans to individuals most secured by automobiles and other personal property and unsecured consumer loans across a national footprint originated through our relationship with national technology-driven consumer lending companies that began over 10 years ago beginning with our investment in Springstone Financial LLC (“Springstone”) which was subsequently acquired by LendingClub in 2014. Springstone and LendingClub loans are in a planned run-off status. In addition to installment loans, the Company also offers personal lines of credit, overdraft protection, home equity lines of credit and second mortgage loans (loans secured by a lien position on one-to-four family family residential real estatemortgage) to finance home improvements, debt consolidation, education and other uses. For home equity loans, consumers are able to borrow up to 85% of the equity in their homes, and are generally tied to Prime with a ten year draw followed by a fifteen year amortization.

The average balance of taxable securities AFS and HTM decreasedincreased $91.9$181.3 million, or 3.9%,7.9%, from 20232024 to 2024.2025. The yield on average taxable securities was 1.99%2.43% for 20242025 compared to 1.90%1.99% in 2023.2024. The average balance of tax-exempt securities AFS and HTM increaseddecreased from $214.1 million in 2023 to $221.3 million in 2024.2024 to $208.1 million in 2025. The FTE yield on tax-exempt securities increased from 3.14% in 2023 to 3.52% in 2024.2024 to 3.56% in 2025.

The average balance of FRB and FHLB stock decreasedincreased to $40.1 million in 2025 from $37.8 million in 2024 from $48.6 million in 2023.2024. The yield on investments in FRB and FHLB stock increaseddecreased from 6.92% in 2023 to 7.07% in 2024 to 5.27% in 2024.2025.

The following tablestable setsets forth information with regard to contractual maturities of debt securities shown in amortized cost ($) and weighted average yield (%) at December 31, 2024.2025. Weighted-average yields are an arithmetic computation of income (not FTE adjusted) divided by amortized cost. Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

The Company utilizes traditional deposit products such as time, savings, NOW,interest-bearing checking, money market and demand deposits as its primary source for funding. Other sources, such as short-term FHLB advances, federal funds purchased, securities sold under agreements to repurchase, brokered time deposits and long-term FHLB borrowings are utilized as necessary to support the Company’s growth in assets and to achieve interest rate sensitivity objectives. The average balance of interest-bearing liabilities totaled $8.38$9.57 billion in 20242025 and increased $906.1$1.19 millionbillion from 2023.2024. The increase was primarily driven by the interest-bearing deposits acquired from Salisbury Evans partially offset by a decrease in short-term borrowings.borrowings and subordinated debt. The rate paid on interest-bearing liabilities increaseddecreased from 1.93% in 2023 to 2.52% in 2024.2024 to 2.19% in 2025. This increasedecrease in rates caused ana increasedecrease in interest expense of $67.0 $2.1 million, or 46.3%,1.0%, from $144.6 million in 2023 to $211.5 million in 2024.2024 to $209.4 million in 2025.

Average interest-bearing deposits increased $1.22$1.30 billion, or 18.2%,16.5%, from 20232024 to 2024.2025. Average money market deposits increased $890.0 $595.2 million, or 36.8%,18.0%, during 20242025 compared to 2023.2024. Average interest-bearing NOWchecking accountsdeposits increased $62.0$318.5 million, or 4.0%,19.7%, during 20242025 as compared to 2023.2024. The average balance of savings accounts decreasedincreased $135.2$243.4 million, or 7.9%,15.4%, during 20242025 compared to 2023. The average balance of time deposits increased $401.5 million, or 39.9%, from 2023 to 2024. The average balance of demand time deposits decreasedincreased $86.3$146.6 million, or 2.5%,10.4%, from 2024 to 2025. The average balance of demand deposits increased $303.8 million, or 9.0%, during 20242025 compared to 2023. The Company continues to experience some migration incremental from noninterest bearing and low interest checking and savings accounts into higher cost money market and time deposit instruments.2024. The increase in average balances was primarily due to the $1.31$1.86 billion in deposits acquired from SalisburyEvans in the thirdsecond quarter of 2023.2025. The Company’s composition of total deposits is diverse and granular with over 561,000613,000 accounts with an average per account balance of $20,574$22,014 as of December 31, 2024.2025.

The rate paid on average interest-bearing deposits was updown 8027 bps to 2.36%2.09% for 2024.2025. The rate paid for MMDA increaseddecreased 9659 bps to 3.54%2.95% from 20232024 to 2024.2025. The rate paid for NOWinterest-bearing checking deposit accountsdeposits increased from 0.53% in 2023 to 0.83% in 2024. 2024 to 1.02% in 2025. The rate paid for savings deposits increased from 0.04% in 2023 to 0.05% in 2024.2024 to 0.33% in 2025. The rate paid for time deposits increaseddecreased from 3.96% during 2024 to 3.30% during 2023 to 3.96% during 2024.2025.

Average federal funds purchased decreased to $13.0$4.1 million in 2024.2025. The rate paid on federal funds purchased was 5.54%4.50% in 2024.2025. Average repurchase agreements increased to $114.8 million in 2025 from $95.9 million in 2024 from $70.3 million in 2023.2024. The average rate paid on repurchase agreements increased from 1.06% in 2023 to 2.35% in 2024.2024 to 2.66% in 2025. Average short-term borrowings decreased to $8.7 million in 2025 from $104.0 million in 2024 from $450.4 million in 2023.2024. The average rate paid on short-term borrowings increaseddecreased from 5.24% in 2023 to 5.48% in 2024.2024 to 4.62% in 2025. Average long-term debt increased from $24.2 million in 2023 to $29.7 million in 2024.2024 to $36.9 million in 2025. The average balance of junior subordinated debt remainedincreased atfrom $101.2 million in 2024.2024 to $108.1 million in 2025. The average rate paid for junior subordinated debt in 20242025 was 7.44%,6.59%, updown from 7.23%7.44% in 2023.2024.

Total short-term borrowings consist of federal funds purchased, securities sold under repurchase agreements, which generally represent overnight borrowing transactions and other short-term borrowings, primarily FHLB advances, with original maturities of one year or less. The Company has unused lines of credit with the FHLB and access to brokered deposits available for short-term financing. Those sources totaled approximately $3.46$4.38 billion and $2.87$3.46 billion at December 31, 20242025 and 2023,2024, respectively. Securities collateralizing repurchase agreements are held in safekeeping by nonaffiliated financial institutions and are under the Company’s control. Long-term debt, which is comprised primarily of FHLB advances, are collateralized by the FHLB stock owned by the Company, certain of its mortgage-backed securities and a blanket lien on its residential real estate mortgage loans.

On June 23, 2020, the Company issued $100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030. The subordinated notes, which qualifyqualified as Tier 2 capital, bearbore interest at an annual annual rate of 5.00%, payable semi-annually in arrears commencing on January 1, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 4.85%, payable quarterly in arrears commencing on October 1, 2025. The subordinated subordinated debtnotes issuance costcosts of $2.2 million is beingwere amortized on a straight-line basis into interest expense over five years. The Company repurchased $2.0 million of the subordinated notes in 2022 at a discount of $0.1 million. On July 1, 2025, the Company redeemed these subordinated notes in full using existing liquidity sources.

SubordinatedThe subordinated notes assumed in connection with the Salisbury acquisition included $25.0 million of 3.50% fixed-to-floating rate subordinated notes due 2031. The subordinated notes, which qualifyqualified as Tier 2 capital, bearbore interest at an annual rate of 3.50%, payable quarterly in arrears commencing on June 30, 2021, and a floating rate of interest equivalent to the three-month SOFR plus a spread of 2.80%, payable quarterly in arrears commencing on June 30, 2026. As of the acquisition date, the fair value discount was $3.0 million, which will be amortized into interest expense over the expected call or maturity date.

Noninterest income for the year ended December 31, 20242025 was $176.8$195.5 million, up $34.6$18.7 million, or 24.4%,10.6%, from the year ended December 31, 2023.2024. Excluding net securities gains (losses), noninterest income for the year ended December 31, 20242025 was $174.0$195.3 million, up $22.5$21.3 million, or 14.9%,12.2%, from the year ended December 31, 2023.2024. The increase from the prior year was primarily due to an increase in retirement plan administration fees, wealth management fees and wealthbank managementowned fees.life insurance income. The increase in retirement plan administration fees was driven by higher market level,values of assets under administration, organic growth and the acquisition of Retirementa Direct,small LLCTPA andbusiness in PACO,the Inc.,fourth organicquarter growthof and higher activity-based fees.2024. The increase in wealth management fees was driven by market performance and growth in new customer accounts. Bank owned life insurance income increased due to $2.7 million in additional gains recognized in 2025. Service charges on deposit accounts, card services income and other noninterest income increased from 2024 primarily due to the additionEvans acquisition. Included in other noninterest income for the year ended December 31, 2025 was a $0.6 million gain related to the finalization of Salisburya revenues,third-party organiccontractual growth and market performance.arrangement.

Noninterest expense for the year ended December 31, 20242025 was $377.9$445.3 million, up $36.2$67.5 million, or 10.6%,17.9%, from the year ended December 31, 2023. 2024. Excluding acquisition expenses and the impairment of a minority interest equity investment,expenses, noninterest expense for the year ended December 31, 20242025 was $376.4$425.8 million, up $49.4$49.5 million, or 15.1%,13.1%, from the year ended December 31, 2023. 2024. The increase from the prior year was driven by higher salaries and employee benefits due to the SalisburyEvans acquisition, merit pay increases, higher levels of incentive compensation expenses and higher medical expenses and other benefit costs. In addition, theThe increase in occupancy expense, professional feestechnology and outsidedata services was driven by the Evans acquisition and amortizationongoing ofinvestment intangiblein assetsenterprise weretechnology initiatives. Occupancy expense was impacted by additional expenses from the SalisburyEvans acquisition, higher utilities and higher facilities costs related to new branch banking locations. Professional fees and outside services increased from the prior year primarily due to the Evans acquisition. In addition, the increase in amortization of intangible assets was due to the amortization of the core deposit intangible asset related to the Evans acquisition.

Income tax expense for the year ended December 31, 20242025 was $38.8$50.2 million, up $4.1$11.4 million, or 11.9%,29.3%, from the year ended December 31, 2023.2024. The effective tax rate was 22.9% in 2025 and was 21.6% in 2024 and was 22.6% in 2023.2024. The decrease increase in the effective tax rate from 20232024 was primarily due to athe higher level of tax-exemptpretax income asand athe percentageimpact of totalcertain taxablenondeductible income.acquisition expenses related to the Evans acquisition.

Management estimates the allowance balance for credit losses using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Company historical loss experience was supplemented with peer information when there was insufficient loss data for the the Company. Significant management judgment is required at each point in the measurement process.

The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist. The respective quantitative allowance for each segment is measured using an econometric, discounted PD and LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to multiple, probabilistically weighted external economic forecasts. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled cash flows and amortized cost basis. After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit loss is reflective of the estimate of lifetime losses that exist in the loan portfolio atas of the balance sheet date.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. UponConsistent adoptionwith ofCECL CECL,guidance, management revisedhas the manner in whichpooled loans were pooled forwith similar risk characteristics.characteristics Managementand developedidentified segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or subsegmented as needed to ensure loans of similar risk profiles are appropriately pooled.

Additional information about our Allowance for Credit Losses is included in Notes 1 and 6 to the consolidated financial statements as well as in the “Critical Accounting Estimates” section of the the ManagementManagement’s Discussion and Analysis.Analysis of Financial Condition and Results of Operations. The Company’s management considers the allowance for credit losses to be appropriate based on evaluation and analysis of the loan portfolio.

The allowance for credit losses totaled $138.0 million at December 31, 2025, compared to $116.0 million at December 31, 2024, compared to $114.4 million at December 31, 2023.2024. The allowance for credit losses as a percentage of loans was 1.16%1.19% at at December 31, 2024,2025, compared to 1.19%1.16% at December 31, 2023.2024. The increase in the allowance for credit losses from December 31, 20232024 to December 31, 20242025 was primarily due to providingthe recording of $20.7 million of allowance for organicacquired Evans loans as of the acquisition date, which included both $13.0 million of non-PCD allowance recognized through the provision for loan growth,losses and the slowing$7.7 million of prepaymentPCD speed assumptions,allowance includingreclassified thefrom changesloans. inIn prepayment model assumptions. These increases toaddition, the allowance for credit losses wereincreased due to deterioration in the economic forecast including the change in the forecast scenarios and weightings, partially offset by a change in forecast scenario weightings from 70% baseline and 30% downside to 80% baseline and 20% downside, and the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status.

The provision for loan losses was $32.3 million for the year ended December 31, 2025, compared to $19.6 million for the year ended December 31, 2024, compared to $25.3 million for the year ended December 31, 2023.2024. Provision expense decreasedincreased from the prior year year primarily due to the $8.8$13.0 million of acquisition-related provision for loan losses duefor tonon-PCD theloans Salisburyacquired acquisitionfrom recordedEvans and a deterioration in 2023,economic providing for current year loan growth, the slowing of prepayment speed assumptions in the current year, changes in model assumptions including the extension of the expected duration of the portfolio.forecasts. Net charge-offs totaled $18.0 million for 2024,2025 upand from $16.8 million in 2023.2024. Net charge-offs to average loans was 16 bps for 2025 compared to 18 bps for 2024 compared to 19 bps for 2023.2024.

Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, troubled loans modifications, OREO and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified commercial and CRE loans risk graded substandard or doubtful, and nonperforming loans individually specifically evaluated for individual credit loss is $1.0 million. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

Total nonperforming assets were $52.1 million at December 31, 2025, compared to $51.8 million at December 31, 2024,2024. comparedNonperforming to $37.9 millionloans at December 31, 2023. Nonperforming loans at December 31, 20242025 were $51.7 million or 0.45% of total loans, compared with $51.6 million or 0.52% of total loans,loans comparedat withDecember $37.931, 2024. The increase in nonperforming assets from the prior year was primarily attributable to the addition of nonperforming loans acquired from the Evans acquisition, an increase in loans 90 days or more past due and an increase in OREO, partially offset by a decrease in nonaccrual loans. Total nonaccrual loans were $44.6 million or 0.39%0.38% of total loans at December 31, 2023.2025, The increase in nonperforming assets from the same period in the prior year was attributablecompared to a CRE relationship that was placed into a nonaccrual status in the fourth quarter of 2024. The relationship is being actively managed and was written down to estimated fair value in the fourth quarter of 2024, and as such, no specific reserve has been established. Total nonaccrual loans were $45.8 million or 0.46% of total loans at December 31, 2024, compared to $34.2 million or 0.35% of total loans at December 31, 2023.2024. Past due loans as a percentage of total loans was 0.34%0.38% at December 31, 2024,2025, up from 0.32%0.34% of total loans at December 31, 2023.2024.

In addition to nonperforming loans discussed above, the Company has also identified approximately $116.1$271.8 million in potential problem loans at December 31, 20242025, as compared to $87.7$116.1 million at December 31, 2023.2024. Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected. Such loans may need to be disclosed as nonperforming at some time in the future. Potential problem loans are classified by the Company’s loan rating system as “substandard.” Potential problem loans have increased to more normalized levels and the increase primarily relates to a few CRE relationships reflecting changing conditions in certain CRE markets including construction delays, rising costs and delays in leasing up spaces. The increase in potential problem loans fromat December 31, 20232025, compared to December 31, 2024 is primarily due to the addition of $60.5 million in acquired commercial loans from Evans during the second quarter of 2025 and the net migration of $41.9commercial millionloan balances to substandard, partiallythe offsetmajority of which are adequately secured by anthe underlying real estate collateral. The increase in potential problem loans is due to a convergence of $10.0macroeconomic millionpressures, post-pandemic credit normalization, higher interest rate repricing, and structural shifts in nonaccrualkey commercial loan balances.industries. Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become over 90 days past due, be placed on nonaccrual, become troubled loans modifications or require increased allowance coverage and provision for loan losses. To mitigate this risk the Company maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.

The Company estimates expected credit losses over the contractual period in which the Company has exposure to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for losses on off-balance sheet credit exposures is adjusted as an expense in other noninterest expense. The estimate includes consideration of the likelihood that funding will occur and and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The allowance for credit losses on unfunded commitments totaled $4.4$5.8 million as of December 31, 2024,2025, compared to $5.1$4.4 million as of December 31, 2023.2024. December 31, 20232025 included $0.8$0.5 million of acquisition-related provision for unfunded loan commitments. The increase from prior year was primarily related to increases in pipeline exposure and the Evans acquisition.

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc. (“NBT”) and its wholly-owned subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”) and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). When references to “NBT,” “we,” “our,” “us,” and “the Company” are made in this report, we mean NBT Bancorp Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp Inc. When we refer to the “Bank” in this report, we mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries. This discussion will focus on results of operations and financial condition, including capital resources and asset/liability management. Reference should be made to the Company’s consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025 for an understanding of the following discussion and analysis. Operating results for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the results of the full year ending December 31, 2026 or any future period.

Certain statements in this filing and future filings by the Company with the SEC, in the Company’s press releases or other public or stockholder communications or in oral statements made with the approval of an authorized executive officer, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions, including actual or potential stress in the banking industry, and the impact they may have on the Company and its customers, and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”) and international trade disputes (including threatened or implemented tariffs imposed by the U.S. and threatened or implemented tariffs imposed by foreign countries in retaliation); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war, including international military conflicts, or terrorism; (8) the timely development and acceptance of new products and services and the perceived overall value of these products and services by users; (9) changes in consumer spending, borrowing and saving habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisition and integration of acquired businesses; (13) the ability to increase market share and control expenses; (14) changes in the competitive environment among financial holding companies; (15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, and the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018; (16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (17) changes in the Company’s organization, compensation and benefit plans; (18) the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews; (19) greater than expected costs or difficulties related to the integration of new products and lines of business; and (20) the Company’s success at managing the risks involved in the foregoing items.

One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. AsAt ofJune March 31,30, 2026, the weightings were 60%, 5%,5% and 35% for the baseline, upside and downside economic forecast scenarios, respectively. The baseline outlook reflected an economic environment where the northeast unemployment rate decreasesincreases from 4.6%4.46% in the second quarter of 2026 to 4.56%4.65% by the end of the forecast period, with a peak northeast unemployment rate of 4.6%4.69% in the thirdsecond quarter of 2026.2027. National GDP annualized growth (on a quarterly basis) is expected to start the secondthird quarter of 2026 at approximately 2.75%1.95% and decrease to 1.72%1.93% by the end of the forecast period. Key assumptions in the baseline economic outlook included the Federal Reserve cuttingkeeping ratestheir withpolicy tworate 25 basis point cuts atin the June andcurrent Septemberrange meetingsof 3.50%-3.75% and the economy remaining at full employment. The alternative upside scenario assumes improved economic conditions from the baseline outlook. Under this scenario, northeast unemployment falls from 4.6%4.46% in the firstsecond quarter of 2026 to 3.7%3.85% in the secondthird quarter of 2027 and eventually settles at 3.8%3.90% by the end of the forecast period. The alternative downside scenario with recessionary conditions assumes deteriorated economic conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 4.6%4.46% in the firstsecond quarter of 2026 to a peak of 7.8%7.81% in the secondthird quarter of 2027. The alternative downside stagflation scenario was removed in the first quarter of 2026 following a recalibration of the scenario’s narrative and model by the reputable third-party, which no longer provided a relevant stagflation scenario. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of MarchJune 31,30, 2026. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools and recent trends in asset value indices. Additional monitoring for industry concentrations, loan growth and policy exceptions was also conducted.pools.

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of MarchJune 31,30, 2026, the Company changed the scenario weightings, with a 10% increase to the downside scenario and a 10% decrease to the baseline scenario causing a 3.6% increase in the overall estimated allowance for credit losses. If instead the upside scenario was increased 10% and the baseline scenario was decreased 10%, the overall estimated allowance for credit losses decreased 0.8%. To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of MarchJune 31,30, 2026, the Company increased the downside scenario to 100% which resulted in a 24.1%23.8% increase in the overall estimated allowance for credit losses.

Operating net income(1), a non-GAAP measure, was $50.8$52.9 million, or $0.97$1.01 per diluted common share, for the three months ended MarchJune 31,30, 2026, compared to $1.05 per diluted common share for the fourth quarter of 2025 and $0.80$0.97 per diluted common share for the first quarter of 2026 and $0.88 per diluted common share for the second quarter of 2025. Operating net income(1) for the six months ended June 30, 2026 was $103.7 million, or $1.98 per diluted common share, up $20.3 million from $83.4 million, or $1.70 per diluted common share for the six months ended June 30, 2025.

The following information should be considered in connection with the Company’s results for the three and six months ended MarchJune 31,30, 2026:

Net interest income was $134.3$137.0 million for the firstsecond quarter of 2026, downup $1.1$2.6 million, or 0.8%,1.9%, from the previous quarter. The FTE NIM was 3.72%3.73% for the three months ended MarchJune 31,30, 2026, an increase of 71 bpsbp from the previous quarter. Interest income decreasedincreased $5.9$3.1 million, or 3.1%,1.7%, as average interest-earning assets of $14.80 billion increased $109.8 million from the prior quarter, while the yield on average interest-earning assets decreased 21 bpsbp from the prior quarter to 5.06%, while average interest-earning assets of $14.69 billion decreased $73.6 million from the prior quarter.5.05%. The decreaseincrease in interest income was primarily due to twoone feweradditional daysday in the firstsecond quarter of 2026 compared to the fourth quarter of 2025 and lowerorganic yieldsgrowth onin loansinterest-earning and short-term interest-bearing accounts due to the fourth quarter Federal Reserve interest rate cuts, partially offset by loans originating at higher rates than portfolio yields.assets. Interest expense decreasedincreased $4.8$0.5 million, or 9.1%,1.0%, as the cost of interest-bearing liabilities decreased 141 bpsbp to 1.95%1.94% for the three months ended MarchJune 31,30, 2026 as compared to the prior quarter, primarily due to a 143 bps decrease in interest-bearing deposit costs. Included in net interest income was $6.7 million of acquisition-related net accretion for the three months ended March 31, 2026, compared to $7.4$5.7 million of acquisition-related net accretion for the three months ended DecemberJune 30, 2026, compared to $6.7 million of acquisition-related net accretion for the three months ended March 31, 2025.2026.

Net interest income was $134.3$137.0 million for the firstsecond quarter of 2026, up $27.1$12.7 million, or 25.3%,10.3%, from the firstsecond quarter of 2025. The FTE NIM was 3.72%3.73% for the three months ended MarchJune 31,30, 2026, an increase of 2814 bps from the firstsecond quarter of 2025. Interest income increased $28.2$8.2 million, or 18.2%,4.6%, as the yield on average interest-earning assets increased 11$846.2 bpsmillion, or 6.1%, from the same period in 2025 to 5.06%, while average interest-earning assets increased $1.99 billion, or 15.7%, from the firstsecond quarter of 2025, primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth. InterestThe expenseyield increasedon $1.1 million,average orinterest-earning 2.4%,assets fordecreased 7 bps from the threesame monthsperiod endedin March2025 31,to 20265.05%, primarily due to the additionFederal ofReserve $1.62interest billionrates cuts in interest-bearing2025. liabilitiesInterest fromexpense decreased $4.6 million, or 8.5%, primarily due to the Evans acquisition, partially offset by a decrease in the cost of interest-bearing liabilities. liabilities and the redemption of $118 million of subordinated debt in the third quarter of 2025. Included in net interest income was $6.7$5.7 million of acquisition-related net accretion for the three months ended MarchJune 31,30, 20262026, andcompared $2.2to $5.0 million of acquisition-related net accretion for the three months ended MarchJune 31,30, 2025.

The following tabletables includesinclude the condensed consolidated average balance sheet, an analysis of interest income/expense and average yield/rate for each major category of earning assets and interest-bearing liabilities on a taxable equivalent basis.

The following tabletables presentspresent changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in rate multiplied by prior year volume) and the net change in net interest income. The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of change.

Noninterest income for the three months ended MarchJune 31,30, 2026 was $50.1$49.7 million, updown $0.4 million, or 0.9%,0.8%, from the prior quarter and up $2.7$2.8 million, or 5.7%,6.0%, from the firstsecond quarter of 2025. Excluding net securities gains (losses),gains, noninterest income for the three months ended MarchJune 31,30, 2026 was $49.7$49.6 million, updown $0.1 million, or 0.3%, from the prior quarter and up $2.1$2.7 million, or 4.5%,5.8%, from the firstsecond quarter of 2025.

The increase from the firstprior quarter ofwas 2025 wasprimarily driven by an increase in service charges on deposit accounts and card services income due to the Evans acquisition. In addition, noninterest income increased from the first quarter of 2025 due to an increase inand retirement plan administration feesfees. whichCard wereservices partiallyincome offsetincreased from the prior quarter driven by aseasonal decreaseincreased involumes. bank owned life insurance income. The increase in retirementRetirement plan administration fees increased from the first prior quarter ofdriven 2025 was due toby higher activity-based fees, increaseadditional infees from new customer relationships and increased market values of assets under administration and the additional revenue from new customer relationships. Bank owned life insurance income decreased from the first quarter of 2025 due to lower gains recognized.administration.

Noninterest expense for the three months ended MarchJune 31,30, 2026 was $112.2$111.4 million, updown $0.5$0.8 million, or 0.5%,0.7%, from the prior quarter and updown $12.3$11.2 million, or 12.3%,9.1%, from the firstsecond quarter of 2025. Excluding acquisition expenses, noninterest expense for the three months ended MarchJune 31,30, 2026 was $112.2$111.4 million, updown $13.6$0.8 million, or 13.7%,0.7%, from the firstprior quarter and up $6.0 million, or 5.7%, from the second quarter of 2025.

The increase from the firstsecond quarter of 2025 was driven by the Evans acquisition. Salaries and employee benefits increased from the firstsecond quarter of 2025 driven by the impact of the Evans acquisition, annual merit pay increases,increases and higher medical expenses and stock-based compensation expenses. Technology and data services increased from the firstsecond quarter of 2025 primarily due to the Evans acquisition, timing of planned activities and ongoing investment in enterprise technology initiatives. In addition, the increase in occupancy expense was impacted by additional expenses from the Evans acquisition, higher seasonal maintenance and utilities,acquisition and higher facilities costs related to new branch banking locations. Professional fees and outside services increased from the firstsecond quarter of 2025 primarily due to the Evans acquisition and the timing of various initiatives. AmortizationOther expense decreased from the second quarter of intangible2025 assets increasedprimarily due to the Company recording$1.7 amillion corereserve depositfor intangibleunfunded loan commitments for the three months ended June 30, 2025 including $0.5 million of $33.2acquisition-related millionprovision relatedfor unfunded loan commitments due to the Evans acquisition.

Income tax expense for the three months ended MarchJune 31,30, 2026 was $15.5$16.1 million, up $1.4$0.6 million from the prior quarter and up $5.1$7.9 million from the firstsecond quarter of 2025. The effective tax rate was 23.3% for the firstsecond quarter of 2026, comparedwhich towas 20.3%consistent forwith the prior quarter and 22.2%down from 26.7% for the firstsecond quarter of 2025. The increasedecrease in the effective tax rate from the prior quarter was primarily due to the assessment of the deductibility of merger-related expenses incurred in 2025 and the associated impact on the full year effective tax rate in the fourth quarter of 2025. The increase in the effective tax rate from the firstsecond quarter of 2025 was primarily due to the increasesecond inquarter fully taxableof pre-tax2025 estimated impact of nondeductible acquisition expenses related to the Evans acquisition and a lower level of tax-exempt income as a percentage of total pretax income.

Total securities increased $40.0$137.7 million, or 1.5%,5.1% from December 31, 2025 to MarchJune 31,30, 2026. The securities portfolio represented 16.8%17.3% of total assets as of MarchJune 31,30, 2026 as compared to 16.7% of total assets as of December 31, 2025.

(1) Loans are summarized by business line which does not align to how the Company assesses credit risk in the allowance for credit losses under CECL.

Total loans were $11.55$11.87 billion and $11.60 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively. Period end loans decreasedincreased by $50.9$276.0 million from December 31, 2025 to MarchJune 31,30, 2026, which included a $25.9$52.4 million decrease in the other consumer and residential solar portfolios, which are in a planned run-off status. From December 31, 2025 to June 30, 2026 C&I loans increased $83.1 million to $1.76 billion; CRE loans increased $94.6 million to $4.89 billion; and total consumer loans increased $98.2 million to $5.23 billion. Total loans represent approximately 71.3%73.2% of assets as of MarchJune 31,30, 2026, as compared to 72.5% as of December 31, 2025.

Within the CRE portfolio, approximately 78%79% are comprised of Non-Owner Occupied CRE, with the remaining 22%21% being Owner-Occupied CRE. Non-Owner Occupied CRE includes diverse sectors across the Company’s markets such as residential rental properties (44%45%) and office spaces (13%), along with retail, manufacturing, mixed use, hotels and others. As of MarchJune 31,30, 2026 and December 31, 2025, the total CRE construction and development loans amounted to $430.9$431.1 million and $405.3 million, respectively.

The allowance for credit losses totaled $138.6 million at March 31, 2026, compared to $138.0 million at December 31, 2025 and $117.0 million at March 31, 2025. The allowance for credit losses as a percentage of loans was 1.20% at March 31, 2026, compared to 1.19% at December 31, 2025 and 1.17% at March 31, 2025. The allowance for credit losses as of MarchJune 31,30, 2026 increased compared to the allowance estimates as of DecemberJune 31,30, 2025 2025, primarily due to providing for the second quarter of 2026 loan growth, change in forecast scenario weightings and the establishment of specific reserves for newly identified individually evaluated loans.loans in the first quarter of 2026. These increases to the allowance for credit losses were partiallylargely offset by improvements in the economic forecast, model adjustments, accelerated prepayment speeds and the changes in loan composition and balances,balances including reductions driven by other consumer and residential solar portfolios that are in a planned run-off status. First quarter 2026 model adjustments lowered the allowance, as updates from the annual model review and recalibration process incorporated recent delinquency and loss experience which reflected improved default estimates across most portfolio segments. The increase in the allowance for credit losses from March 31, 2025 to March 31, 2026 was primarily due to the recording of $20.7 million of allowance for acquired Evans loans as of the acquisition date, which included both the $13.0 million of non-PCD allowance recognized through the provision for loan losses and the $7.7 million of PCD allowance reclassified from loans. This increase was partially offset by the shift in loan composition driven by other consumer and residential solar portfolios that are in a planned run-off status.

The provision for loan losses was $5.6$6.1 million for the three months ended MarchJune 31,30, 2026, compared to $3.8$5.6 million in the prior quarter and $7.6$17.8 million for the same period in the prior year. Provision expense increased from the prior quarter primarily due to anproviding increasefor the second quarter of 2026 loan growth, which was partially offset by a decrease in net charge-offs duringin the quartercurrent andquarter. aProvision higherexpense leveldecreased from the same period in the prior year primarily due to $13.0 million of allowanceacquisition-related provision for loan losses.losses Thefor decreasenon-PCD loans acquired from Evans recorded in provisionthe expensesecond fromquarter Marchof 31, 2025, was driven largely due to lower net charge-offs.2025. Net charge-offs totaled $5.0$4.2 million during the three months ended MarchJune 31,30, 2026, compared to net charge-offs of $4.8$5.0 million during the fourth quarter of 2025 and $6.6 million in the first quarter of 2026 and $2.4 million in the second quarter of 2025. Net charge-offs to average loans were 1715 bps for the three months ended MarchJune 31,30, 2026, compared to 1617 bps for the fourthfirst quarter of 20252026 and 279 bps for the three months ended MarchJune 31,30, 2025.