Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Part I, Item 8 in this Annual Report on Form 10-K for the year ended December 31, 2025. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. All of such forward-looking statements are expressly qualified by reference to the cautionary statements provided under the caption "Cautionary Note Regarding Forward-Looking Statements" included Part I of this Annual Report on Form 10-K. Furthermore, a number of known and unknown factors may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. Therefore, you are encouraged to read in its entirety the information provided under the caption "Item IA, Part I — Risk Factors" included in this report for a discussion of risk factors that may negatively impact our expected results, performance, or achievements discussed below.
Non-GAAP Financial Measures
In addition to financial measures presented in accordance with U.S. GAAP, this document contains non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.
Tax Equivalent Presentation
Interest income, yields, and ratios on an FTE basis are considered non-GAAP financial measures. Management believes net interest income on an FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a blended federal and state effective marginal tax rate of 23.84% for all periods. We encourage readers to consider the Consolidated Financial Statements and other financial information contained in this Annual Report on Form 10-K in their entirety, and not to rely on any single financial measure.
Overview
We are a bank holding company headquartered in Jefferson City, Missouri. Through our full-service community banking subsidiary, The Central Trust Bank, we provide a comprehensive suite of consumer, commercial and wealth management products and services to our communities primarily in Missouri, Kansas, Oklahoma and Colorado. As of December 31, 2025, we operate 155 full-service branch locations.
We are a community bank organized around our 11 Primary Markets, serving 79 communities. Our business is predominantly located in Missouri, a state known for its business-friendly environment, diversified and stable markets, favorable tax regime and convenient location in the central U.S., making it a hub for industries such as transportation, logistics and trade.
We have a highly diversified loan and lease portfolio that has demonstrated steady growth through multiple economic cycles. In addition, we provide a full range of deposit products to individuals, businesses, governments and community organizations, serving as a primary funding source for the Bank.
We operate our business through three operating segments: Consumer Banking, Commercial Banking and Wealth Management. Consumer Banking serves the holistic financial service needs of individuals, providing a full set of deposit products, state-of-the-art digital banking solutions, a range of consumer lending solutions, including home equity lines of credit, and a credit card portfolio. Commercial Banking provides full-service relationship banking solutions to businesses, agencies and community organizations. Wealth Management provides a full range of “fee-only” wealth management solutions, including investment management, fiduciary services, financial, estate, and tax planning services to individuals, businesses, and foundations.
Recent Developments
Reclassification and Initial Public Offering
On April 28, 2025, our amended Articles became effective, pursuant to which we (i) increased the number of authorized shares of our capital stock to 600,000,000, consisting of 500,000,000 shares of Class A common stock, 50,000,000 shares of Class B common stock, and 50,000,000 shares of preferred stock, (ii) decreased the par value of each class of our capital stock to $0.01 per share and (iii) automatically reclassified and converted each share of Class B common stock then outstanding (excluding treasury stock) into one share of Class A common stock. The effect of the Reclassification on outstanding shares and per share figures has been retroactively applied to all periods presented. See “Note 20, Capital Structure, Share Reclassification, Stock Split Effective in the Form of a Stock Dividend,” to our audited consolidated financial statements in this Annual Report on Form 10-K.
On October 9, 2025, the Company declared a 50-for-1 stock split of the Company’s common stock in the form of a stock dividend, entitling each shareholder of record to receive 49 additional shares of common stock for every one share owned. The record date for the stock dividend is October 20, 2025, with a distribution date for the new shares of October 24, 2025. The par value per share of our common stock remains $0.01 per share. The effect of the stock split on outstanding shares and per share figures has been retroactively applied to all periods presented. See “Note 20, Capital Structure, Share Reclassification, Stock Split Effective in the Form of a Stock Dividend,” to our audited consolidated financial statements in this Annual Report on Form 10-K.
On November 19, 2025, in connection with its IPO, the Company completed an offering of 17,778,000 shares of Class A common stock at a public offering price of $21.00 per share. On December 3, 2025, the underwriters exercised their option to purchase an additional 2,666,700 shares of Class A common stock at the same offering price. The Company received total net proceeds of approximately $403.1 million, after deducting underwriting discounts, commissions, and estimated offering expenses. The Company’s common stock is currently listed on the Nasdaq Stock Market under the ticker symbol “CBC.”
Results of Operations
The following table presents selected financials from our income statement and the performance ratios discussed below.
For the year ended December 31,
Income Statement Data:
(dollars in thousands, except per common share data and other information)
Net interest income
Net interest income (FTE) 1, 2
Provision for credit losses
Noninterest income
Adjusted noninterest income 1
Noninterest expense
Income tax expense
Net income
Adjusted net income 1
Earnings per Common Share
Earnings per share - diluted
Adjusted earnings per share - diluted 1
Performance Ratios:
Net interest margin
Net interest margin (FTE) 1, 2
Return on average total assets
Adjusted return on average total assets 1
Return on average common equity 1
Adjusted return on average common equity 1
Return on average tangible common equity 1
Adjusted return on average tangible common equity 1
Fee income ratio
Adjusted fee income ratio 1
Efficiency ratio
Efficiency ratio (FTE) 1
Effective tax rate
1 These are non-GAAP financial measures. For more information on these financial measures, including a reconciliation of the most directly comparable GAAP financial measures, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures Reconciliations" in this Annual Report on Form 10-K..
2 Fully-tax equivalent basis.
• GAAP net income of $390.9 million, or $1.75 per fully diluted share, compared to $305.8 million and $1.39 in the prior year.
• Adjusted net income 1 of $402.6 million , or $1.81 per fully diluted share, compared to $333.7 million and $1.51 per fully diluted share in the prior year.
• End-of-period total deposits of $15.9 billion, an increase of $0.9 billion or 5.9% growth from the prior year.
• ROAA of 2.03% ; Adjusted ROAA 1 of 2.09% , compared to ROAA of 1.63% and Adjusted ROAA 1 of 1.78% in the prior year.
• Efficiency ratio 1 of 49.5% ; Adjusted efficiency ratio 1 of 47.9% , compared to 54.5% and 51.7% respectively in the prior year.
Net Interest Income and Net Interest Margin
The following table summarizes the distribution of average balances, average yields and costs (on an annualized basis for interim periods), and changes in net interest income on an FTE basis. Average balances are daily average balances and include nonaccrual loans. The table below includes the effect of deferred fees and expenses, discounts and premiums, as well as purchase accounting adjustments that are amortized or accreted to interest income or expense.
For the year ended December 31,
Average Balance
Interest (FTE) 1
Yield / Cost
Average Balance
Interest (FTE) 1
Yield / Cost
(dollars in thousands)
Assets
Interest-bearing cash and bank deposits
Investment securities
Gross loans 2, 3
Total interest-earning assets
Allowance for loan losses
Noninterest-earning assets
Total assets
Liabilities and Stockholders' Equity
Noninterest-bearing deposits
Savings & interest-bearing deposits
Time deposits
Total deposits
Federal funds purchased and customer repurchase agreements
Total customer funds
FHLB advances and other borrowings
Total interest-bearing liabilities
Total cost of funds
Noninterest-bearing liabilities
Stockholders' equity
Total liabilities and stockholders' equity
Net interest spread
Net interest income (FTE) 1 and net interest margin (FTE) 1
Less: Tax equivalent adjustment
Net interest income and net interest margin
1 These are non-GAAP financial measures. For more information on these financial measures, including a reconciliation of the most directly comparable GAAP financial measures, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures Reconciliations" in this Annual Report on Form 10-K.
² Loan balances include mortgage loans held for sale of $54.1 million and $34.3 million as of December 31, 2025 and 2024, respectively, and nonaccrual loans of $44.7 million and $36.0 million as of December 31, 2025 and 2024, respectively.
³ Loan interest income includes loan fees, net of deferred costs, of $10.2 million, $8.4 million for the years ended December 31, 2025 and 2024, respectively and interest resulting from the accretion of purchase accounting discount associated with acquired loans of $1.1 million and $1.7 million for the same periods, respectively.
Net interest income totaled $789.7 million in 2025, an increase of $102.3 million, or 14.9%, compared to $687.3 million in 2024. On an FTE basis, net interest income (FTE) (non-GAAP) increased to $795.9 million from $693.2 million, an increase of 14.8%. Our net interest margin increased 46 basis points to 4.30% during 2025 compared to 2024, as yields continued to improve on assets, including a change in mix reducing cash and increasing investments, paired with reduced costs on deposits. Our net interest margin (FTE) (non-GAAP) increased to 4.33% in 2025, compared to 3.88% for the same period in 2024.
Total interest income was $989.9 million in 2025, an increase of $85.0 million, or 9.4%, compared to $905.0 million for the same period in 2024. On an FTE basis, total interest income (FTE) (non-GAAP) was $996.2 million for 2025, an increase of $85.3 million, or 9.4%, compared to $910.8 million in the prior year. The increase was primarily due to the repositioning of the investment portfolio, from lower-yielding bonds to higher-yielding investments at higher market rates, contributing $85.9 million of the increase, along with an increase in loan interest income mainly due to the upward repricing of loans, partially offset by a reduction in interest income on cash, resulting from rate cuts by the Federal Reserve which began in the third quarter of 2024.
Interest expense decreased $17.4 million, or 8.0% for 2025, compared to 2024. The decrease was primarily driven by lower interest rates on savings and interest-bearing demand deposits, which contributed $10.2 million of the reduction. Interest expense also declined across time deposits and federal funds purchased and customer repurchase agreements as funding costs repriced downward following interest rate cuts implemented by the Federal Reserve beginning in 2024. Overall, the decrease reflects the impact of a lower interest rate environment on interest‑bearing liabilities. The decline was consistent with broader market repricing trends and reflects the sensitivity of interest‑bearing liabilities to changes in short‑term benchmark rates.
The table below identifies changes related to volumes (average balances) and rates on our net interest income during the period shown, with respect to (i) changes in volume (change in volume times old rate), (ii) changes in rates (change in rate times old volume) and (iii) changes in rate / volume (change in rate times the change in volume, including difference in the number of days). Any change in interest not due solely to volume or rate has been allocated in proportion to the respective absolute dollar amounts of the change in volume or rate.
For the year ended December 31,
Volume
Rate
Total
Increase (decrease) in interest income:
(dollars in thousands)
Cash and cash equivalents
Investment securities
Loans
Total increase (decrease)
Increase (decrease) in interest expense:
Savings & interest-bearing deposits
Time deposits
Federal funds purchased and customer repurchase agreements
FHLB advances and other borrowings
Total increase (decrease)
Increase (decrease) in net interest income (FTE)
Provision for Credit Losses
The provision for credit losses, including provision for off-balance sheet credit exposures, was $9.3 million for the year ended December 31, 2025, a decrease of $5.3 million, or 36.2% year over year. The decrease was primarily due to a $5.0 million release related to the sale of the consumer lease portfolio, along with a decline in loan balances in 2025 as compared to loan growth in the prior year. A decrease in the liability for unfunded lending commitments also contributed to the decline in provision for credit loss expense in 2025.
Noninterest Income
The following table presents noninterest income for the years ended December 31, 2025 and 2024.
For the year ended December 31,
Noninterest income:
(dollars in thousands)
Service charges and commissions
Payment services revenue
Brokerage services
Fees for fiduciary services
Mortgage banking revenue
Investment securities (losses), net
Other income
Total noninterest income
Less: Loss on sale of consumer lease portfolio
Less: Investment securities (losses)
Adjusted noninterest income 1
1 This is a non-GAAP financial measure. For more information on this financial measure, including a reconciliation of the most directly comparable GAAP financial measure, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures Reconciliations" in this Annual Report on Form 10-K.
Noninterest income was $231.7 million in fiscal year 2025, an increase of $21.3 million, or 10.1%, compared to $210.4 million fiscal year 2024. The increase was primarily due to a 12.6%, or $9.0 million, increase in total brokerage services and fees for fiduciary services driven by 18.0% growth in total assets under advice, along with a change in fee structure in the second half of 2024, and increased service charges and commissions.
Significant components of noninterest income are described in further detail below. See “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures Reconciliations,” in this Annual Report on Form 10-K.
Service charges and commissions. Service charges and commissions are primarily fees charged to deposit customers, including overdraft/non-sufficient funds fees, return fees, wire fees, commercial deposit account analysis fees, and other charges or commissions. Service charges and commissions increased $1.5 million, or 2.7%, to $57.6 million in 2025, compared to the same period in 2024. The increase was primarily driven by growth in treasury management commercial account analysis fee income, along with overdraft/non-sufficient funds fees.
Payment services revenue. Payment services revenue includes incentive and interchange revenue that merchants pay for processing electronic payment transactions and associated fees earned from the issuance of credit and debit card products, both consumer and business, along with health savings accounts, gift cards, and ATM service fees. Payment services revenue increased $0.1 million, or 0.1%, to $67.6 million in 2025, compared to the same period in 2024. The increase in 2025 compared to 2024 is the result of higher consumer credit and debit card fee income, partially offset by reduced commercial products fee income.
Brokerage services and fees for fiduciary services. Brokerage services and fees for fiduciary services relate to our wealth management services and comprise of fees earned for management of trust assets and investment services. Brokerage services increased $3.0 million, or 11.5%, to $28.7 million in 2025, compared to 2024. The increase is driven by 12.2% growth in assets under advice. Fees for fiduciary services increased 13.2%, or $6.1 million, to $52.0 million for the same period. The increase was primarily driven by a change in fee structure in the second half of 2024 along with 20.8% growth in assets under advice.
Mortgage banking revenue . Mortgage banking revenue includes both the net gain on mortgage loans sold to the secondary market and mortgage servicing income for mortgage loans sold with servicing retained by the Bank. The net gain on the sale of mortgage loans fluctuates with the volume of loans sold, the type of loans sold and market conditions, such as the current interest rate environment. The volume of loans that we sell depends upon conditions in the mortgage origination, loan securitization and secondary loan sale markets. Mortgage banking revenues, net decreased $2.5 million, or 6.0%, to $39.6 million in fiscal year 2025, compared to 2024. The decrease includes a reduction in mortgage servicing income of $0.6 million, or 4.8%, along with a decline in gain on the sale of mortgage loans of $1.9 million or 6.5%.
Other income. Other income includes bank owned life insurance income, check commission, gain on sale of assets, and other miscellaneous income items. Other income decreased $16.6 million, or 171.6%, to $6.9 million in 2025, compared to the same period in 2024. The decrease was driven by the loss on the sale of the consumer lease portfolio, along with a reduction in net gains on the sale of assets in 2025 compared to 2024.
Investment securities losses (gains), net. Net loss or gain on sale of securities represents the difference between gross sale proceeds and carrying value at amortized cost of investment securities sold during the period. We had a net loss of $6.8 million in fiscal year 2025 compared to a $36.7 million net loss in fiscal year 2024.
Noninterest Expense
The following table presents the major components of our noninterest expense for years ended December 31, 2025 and 2024:
For the year ended December 31,
Noninterest expense:
(dollars in thousands)
Salaries and employee benefits
Net occupancy and equipment
Computer software and maintenance
Marketing and business development
Legal and professional fees
Bankcard processing, rewards and related cost
Other expenses
Total noninterest expense
Total noninterest expense was $505.5 million for the year ended December 31, 2025, an increase of $16.1 million, or 3.3%, compared to $489.4 million in 2024. The increase was primarily due to increases in salaries and employee benefits, net occupancy and equipment, computer software and maintenance, and marketing and business development, partially offset by reductions in legal and professional fees, bankcard processing, rewards and related costs, and other expenses.
Salaries and Employee Benefits. Salaries and employee benefits is the largest component of noninterest expenses and includes the cost of bonus and incentive compensation, payroll taxes, benefit plans, and health insurance. These expenses were $298.1 million in 2025, an increase of $17.0 million, or 6.0%, compared to $281.1 million for the same period in 2024. The increase was primarily due to annual merit increases, increased staffing and commissions. Full-time equivalent employees totaled 2,905 at December 31, 2025, compared to 2,938 at December 31, 2024.
Net Occupancy and Equipment. Net occupancy and equipment expenses were $49.0 million for fiscal year 2025, an increase of $1.9 million, or 3.9%, compared to $47.1 million for the same period in 2024.
Computer Software and Maintenance. Computer software and maintenance includes payments to outside vendors who provide software, technology services, costs related to supporting and developing cloud-based activities and depreciation of bank-owned software and hardware. Computer software and maintenance increased $2.2 million, or 11.0%, in 2025, compared to the same period in 2024. The increase was driven by continued investment in technology to support both consumer and commercial products, along with a new core banking platform.
Marketing and Business Development. Marketing and business development expenses include marketing, advertising, public relations and business development related expenses. These expenses were $20.7 million for fiscal year 2025, an increase of $0.7 million, or 3.4%, compared to $20.0 million for the same period in 2024. The increase was primarily due to the launch of a new branding campaign, customer referrals, and at the end of 2024, we started to expense postage directly related to marketing efforts in marketing and business development expenses rather than other expenses.
Legal and Professional Fees. Legal and professional fees include legal fees, consultant fees, audit fees, and other outside services. Legal and professional fees were $22.4 million in 2025, a decrease of $3.9 million, or 14.8%, compared to $26.3 million for the same period in 2024. The decrease was primarily driven by professional outsourced services to support the initial phase of the conversion of our core banking platform.
Bankcard Processing, Rewards and Related Costs. Bankcard processing, rewards and related costs decreased $1.3 million, or 3.9% for the year ended 2025, compared to the same period in 2024. The decrease was driven by the conversion to a different debit card processor at the end of the first quarter in 2024, resulting in reduced expenses.
Other Expenses. Other expenses include various items such as amortization of originated mortgage servicing rights, amortization of intangible assets, FDIC insurance, bank exam fees, printing, telecommunications, postage, travel, meetings, dues, memberships, subscriptions, contributions, losses due to fraud, correspondent bank service charges, other insurance expenses, director fees, and other miscellaneous expenses. Other expenses decreased $0.5 million, or 0.9%, to $62.0 million in 2025, compared to the same period in 2024. The decrease includes reductions in consumer and commercial fraud, and amortization of intangible assets and OMSRs, along with printing, telecommunication and postage as a result of the postage expense directly related to marketing efforts reported in marketing and business development expenses rather than other expenses starting at the end of 2024.
Income Taxes
The provision for income taxes varies due to the amount of taxable income, the investments in tax-advantaged securities and loans, tax credits and the rates charged by federal and state authorities in which we do business. The income tax expense of $115.7 million in fiscal year 2025 represents an effective tax rate of 22.8%, compared with $87.9 million, or 22.3%, in fiscal year 2024. The increase in the effective tax rate was primarily due to a reduction in the amount of state tax credits received from tax credit partnerships and increases from certain costs that are no longer deductible as a result of being a public company.
Discussion and Analysis of Business Segments
The Company has strategically aligned its operations into the following three reportable segments: Consumer Banking, Commercial Banking and Wealth Management (collectively, the “Business Segments”). The Chief Executive Officer regularly evaluates Business Segment financial results produced by the Company’s internal reporting system in deciding how to allocate resources and assess performance for individual Business Segments. The management accounting system assigns balance sheet and income statement items to each Business Segment using methodologies that are refined on an ongoing basis. See "Note 1, Summary of Significant Accounting Policies,” and "Note 19, Business Segment Reporting," to our consolidated financial statements in this Annual Report on Form 10-K.
Segment Income Statement
Consumer
Commercial
Wealth Management
Segment Totals
Corp / Other
Total
Year Ending December 31, 2025
(dollars in thousands)
Net interest income
Provision for credit losses¹
Net interest income after provision for credit losses
Noninterest income¹
Noninterest expense
Income before income taxes 1
Income taxes
Net income 1
Year Ending December 31, 2024
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Increase (decrease) in net income - amount
Increase (decrease) in net income - percent
¹ Consumer includes a $13.6 million loss on the sale of the consumer lease portfolio recognized in other noninterest income and a $5.0 million release of provision. Net of taxes, at a tax rate of 23.84%, the total impact to net income was $6.6 million.
Consumer Banking Operating Results
The Consumer Banking operating segment is designed to serve the holistic financial service needs of individuals within our footprint through the Bank.
We provide a comprehensive suite of offerings, including a full set of deposit products, state-of-the-art digital banking solutions, a range of consumer lending solutions, including home equity lines of credit, and a credit card portfolio. Our leading mortgage operation delivers both standard mortgages with in-house servicing, typically sold to Freddie Mac, Fannie Mae, Ginnie Mae, or private investors.
The following table presents the selected financials of Consumer Banking as of, and for the years ended December 31, 2025 and 2024, respectively.
As of, and for the year ended December 31,
Consumer
(dollars in thousands)
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Fee income ratio
Cost of deposits
Average assets
Average loans
Average deposits
Average equity
¹ Consumer includes a $13.6 million loss on the sale of the consumer lease portfolio recognized in other noninterest income and a $5.0 million release of provision. Net of taxes, at a tax rate of 23.84%, the total impact to net income was $6.6 million.
For the year ended December 31, 2025, Consumer Banking net income increased $23.9 million, or 21.3%, to $136.0 million compared to the same period in 2024. The increase was primarily driven by a 14% rise in net interest income, reflecting higher funds transfer pricing on deposits as rates assigned to non-maturity deposits increased in 2025 compared to the same period in 2024, along with deposit growth, partially offset by losses in the consumer lease portfolio.
Commercial Banking Operating Results
The Commercial Banking operating segment is designed to provide full-service relationship banking solutions to businesses, agencies and community organizations within our footprint through the Bank.
Our long-tenured commercial lending teams originate loans to finance a wide range of our customers’ needs, including commercial, small business and government segments, while striving to maintain conservative underwriting standards. Our deposit and cash management solutions feature a full suite of digital-first tools, treasury management services, and innovative payment and card solutions to complement our comprehensive deposit offerings.
The following table presents the selected financials of Commercial Banking as of, and for the years ended December 31, 2025 and 2024, respectively.
As of, and for the year ended December 31,
Commercial
(dollars in thousands)
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Fee income ratio
Cost of deposits
Average assets
Average loans
Average deposits
Average equity
For the year ended December 31, 2025, Commercial Banking net income increased $16.5 million, or 7.3%, to $243,021 compared to the same period in 2024. The increase was primarily due to increased net interest income of 8% driven by an increase in the FTP paid on deposits, and deposit costs reduced 20 basis points to 1.38% in 2025, compared to 2024, partially offset by 7% growth in expenses.
Wealth Management Operating Results
The Wealth Management operating segment provides a full range of “fee-only” wealth management solutions, including investment management, fiduciary services, financial, estate, and tax planning services to individuals, businesses, and foundations. Services are provided through Central Trust Company and Central Investment Advisors, both divisions of the Bank.
Wealth management services tailored to individuals include trust and estate advisory services and financial planning. Business services include financial planning, business succession planning, and retirement plan services. Services for foundations include assistance with endowment management, grant applications and foundation management.
The following table presents the selected financials of Wealth Management as of, and for the years ended December 31, 2025, and 2024, respectively.
As of, and for the year ended December 31,
Wealth Management
(dollars in thousands)
Net interest (loss)
Provision for credit losses
Net interest (loss) after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Average assets
Average loans
Average equity
Assets under advice
For the year ended December 31, 2025, Wealth Management net income increased $2.3 million, or 13.6%, to $19.1 million compared to the same period in 2024. The increase was primarily driven by 12% growth in noninterest income as the result of growth in assets under advice along with fee increases in the second half of 2024, partially offset by 11% increase in expenses driven by increased staffing and commissions, net occupancy and equipment, and other expenses. End-of-period assets under advice grew 18.0%, or $2.4 billion, from December 31, 2024 to December 31, 2025. The increase includes growth in Central Investment Advisors’ assets under advice of $542 million, or 12%, and 21%, or $1,886 million in Central Trust Company’s assets under advice. The growth in Central Trust assets under advice includes approximately 16% growth from improvements in the market and 5% growth from net organic growth.
Corporate / Other Operating Results
The "Corporate / Other" includes activity not related to the segments, such as administrative functions, various support and overhead operating units of the Company. Corporate administrative functions such as Compliance, Finance, Credit Administration, Human Resources, and our Central Technology Services team expenses are allocated to the segments. These expenses will be reflected in "Corporate / Other" with the offset in allocated expenses. Expenses for the parent company, the administrative and support functions within the markets not specific to a segment, regulatory expenses, director and shareholder costs, community outreach, and other similar expenses are not allocated to the segments. In addition, "Corporate / Other" includes unallocated bank balances including the investment securities portfolio, cash held at the federal reserve, eliminations, and other items not allocated to the segments.
The following table presents the selected financials of Corporate / Other as of, and for the years ended December 31, 2025 and 2024, respectively.
As of, and for the year ended December 31,
Corporate / Other
(dollars in thousands)
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Average assets
Average loans
Average equity
For the year ended December 31, 2025, Corporate / Other net income increased $42.4 million, or 85.4%, to $7.3 million compared to the same period in 2024. The increase was driven by both net interest income and noninterest income. The increase in net interest income includes increased income on investment securities, as a result of both volume and rates, partially offset by increased FTP paid out on non-maturity deposits to the business segments as the longer-term component of the non-maturity deposit FTP continued to increase throughout 2025 compared to 2024. The increase in noninterest income is primarily driven by the investment securities losses in the prior year. See "Note 19, Business Segment Reporting," in the consolidated financial statements of this Annual Report on Form 10-K for further information.
Financial Condition and Risk Management
The following discussion provides an overview of the Company’s financial condition, asset quality, liquidity position, and regulatory capital as of December 31, 2025, with comparisons to the prior year-end where relevant. This analysis highlights the key drivers of balance sheet changes, evaluates trends in credit performance, and outlines the strength of the Company’s liquidity and capital resources. Together, these measures reflect management’s ongoing focus on prudent risk management, disciplined balance sheet strategy, and maintaining a strong financial foundation to support continued operations and future growth.
As of December 31, 2025:
• Total assets grew by $1,509 million, an increase of 7.8% from December 31, 2024.
• Total loans held for investment as of December 31, 2025 totaled $11.4 billion, a decrease of $189.5 million, or 1.6%, compared to $11.6 billion as of December 31, 2024. The decrease was primarily due to $144 million reduction related to the sale of the consumer lease portfolio, along with reductions in commercial, financial & agricultural, and non-owner-occupied commercial real estate, partially offset by net growth in all other real estate loans and consumer credit cards.
• Investment securities grew $766.0 million, an increase of 13.5% from December 31, 2024. As of December 31, 2025, approximately 98.9% of our investment portfolio consisted of securities guaranteed by the U.S. government, its agencies, or sponsored enterprises and available-for-sale securities represented 99.2% of our total portfolio.
• Total deposits grew by $876.8 million, an increase of 5.9% from December 31, 2024. The increase was primarily due to growth in noninterest-bearing deposits and savings and interest-bearing demand deposits partially offset by a decline in time deposits.
• Total stockholder's equity grew by $673.3 million, an increase of 21.6% from December 31, 2024.
Credit Risk Management
Credit Risk
Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We seek to mitigate credit risk in our loan and lease portfolio by following clearly defined underwriting criteria and account management standards set by management. Our loan policy outlines underwriting requirements, approval levels, exposure limits, and other necessary guidelines. We actively manage portfolio diversification at the borrower, industry, and product levels to reduce concentration risk. Additionally, our credit risk management process includes an independent loan review to ensure adherence to loan policies, compliance with documentation standards, accurate risk ratings, and the overall credit quality of the portfolio. See “Note 1, Summary of Significant Accounting Policies," and "Note 3, Loans and Allowance for Credit Losses," to our consolidated financial statements in this Annual Report on Form 10-K.
Loan and Lease Portfolio
We offer a broad range of lending products with a focus on commercial real estate, construction and development, commercial and industrial, multi-family and one-to-four-family residential loans in our Primary Markets in Missouri, Kansas, Oklahoma and Colorado. As of December 31, 2025 and 2024, 87.8% of our loans were to borrowers who resided or organized in our Primary Markets. We deliver these products through a local, relationship-based delivery model emphasizing market-level credit authority.
The following table presents our loan and lease portfolio by category as of December 31, 2025 and 2024:
December 31,
Amount
% of total
Amount
% of total
Loans held for investment:
(dollars in thousands)
Construction and development
Commercial, financial & agricultural
Non-owner-occupied commercial real estate 1
Owner-occupied commercial real estate
Commercial real estate
Total commercial loans
Residential mortgage loans 2
Home equity lines of credit
Consumer credit card
Other consumer loans
Total residential and consumer loans
Total unpaid principal balance
Add: Unearned income
Total loans held for investment
Loans held for sale
1 Non-owner-occupied commercial real estate loans restated to include multi-family loans
2 Residential mortgage loans restated to include residential construction and development
Credit quality across the loan portfolio remains strong, supported by consistent adherence to conservative underwriting standards. Portfolio‑level metrics across all loan classes continue to align with these established standards, underscoring the stability and resilience of the credit profile. Total loans held for investment decreased $189.5 million, or 1.6%, to $11.4 billion as of December 31, 2025, from $11.6 billion as of December 31, 2024. The decrease was driven primarily by a reduction in other consumer loans following the sale of the consumer lease portfolio and a de-emphasis of indirect lending, as well as declines in commercial, financial and agricultural lending and non‑owner‑occupied commercial real estate. These decreases were partially offset by net growth in residential mortgages, home equity lines of credit, construction and development lending, owner‑occupied commercial real estate, and consumer credit card balances.
Construction and development loans made up 5% of total loans held for investment as of December 31, 2025, increasing 3.3%, or $18.1 million, from December 31, 2024 to $571 million. Approximately $159 million in loans moved to permanent financing in 2025, with $126 million moving to non-owner occupied CRE.
Commercial, financial and agricultural loans made up 15% of total loans held for investment as of December 31, 2025, a decrease of 6.1%, or $113.6 million, from December 31, 2024 to $1,761 million. The decrease was primarily due to the payoff of a large equipment financing loan along with runoff in the rest of the portfolio.
Commercial real estate performance remains solid, with the 2025 CRE stress test showing portfolio‑level metrics of 1.39x debt service coverage and a 54% loan‑to‑value ratio. As of December 31, 2025, commercial real estate loans represented 41% of total loans and leases, decreasing 0.8%, or $40.2 million, from December 31, 2024 to $4.7 billion. This decrease was driven by a 1.5% decline, or $47.5 million, in non-owner occupied CRE loans, partially offset by 0.5% growth, or $7.3 million, in owner-occupied CRE loans.
The residential mortgage portfolio continues to demonstrate strong credit fundamentals, reflected in an average loan‑to‑value ratio of 59%, an average debt‑to‑income ratio of 38.9%, and an average FICO score of 727. As of December 31, 2025, residential mortgage loans balances totaled $3.3 billion, representing 29% of total loans held for investment and an increase of 6.9%, or $215.3 million, from December 31, 2024. The increase during the period was driven primarily by continued growth in adjustable-rate mortgages.
Home equity lines of credit continue to exhibit strong risk characteristics, supported by an average borrower FICO score of 755 and a combined loan‑to‑value ratio of 70%. The portfolio is primarily composed of second‑lien positions, with 74.4% of balances tied to loans where the Company also services the related first mortgage, and 0.2% in second‑lien loans where the first mortgage is not serviced by the Company. First‑lien home equity loans represented the remaining 25.5% of the portfolio. Home equity lines of credit accounted for 4% of total loans held for investment as of December 31, 2025, an increase of 17.7%, or $61.8 million from December 31, 2024 to $411 million.
Total consumer loans made up 6% of total loans held for investment as of December 31, 2025, a decrease of 34.9%, or $347.6 million, from December 31, 2024, driven by a de-emphasis of indirect lending. Consumer credit cards grew 5%, while all other consumer loans declined 39.0% or $352.1 million from December 31, 2024.
The following tables presents the maturity distribution of our loans held for investment and sensitivity to interest rate changes for the periods presented below. The maturity dates were determined based on the contractual maturity date of the loan. Adjustable-rate mortgages are reflected in the adjustable rate column, however the rate is generally fixed for the initial five (5) or seven (7) years depending on the loan terms:
As of December 31, 2025
Due in one year or less
Due in one year through five
years
Due after five years and
through fifteen years
Due after fifteen years
Fixed rate
Adjustable
rate
Fixed rate
Adjustable
rate
Fixed rate
Adjustable
rate
Fixed rate
Adjustable
rate
(dollars in thousands)
Construction and development
Commercial, financial & agricultural
Commercial real estate
Residential real estate
Consumer
Total unpaid principal balance
Asset Quality
The following table presents selected financials from our consolidated balance sheet and the asset quality ratios discussed below.
As of, and for the year ended December 31,
Asset Quality Ratios:
Nonperforming loans / loans held for investment
Allowance for loan losses / loans held for investment
Loan modifications / loans held for investment
Net charge-offs / average total loans
Our objective is to maintain a high degree of credit quality, support the customers and communities we serve, and achieve our objectives for profitability and liquidity. Maintaining strong credit quality is essential to the viability of our business model. Through our business activities we recognize and seek to mitigate three primary types of credit risk: default risk, concentration risk and systemic risk. Managing credit risk is a continuous, enterprise-wide initiative that starts with our local market bankers and leaders as our first line of defense. We leverage the strength of our bankers across markets to manage and limit risk taking complemented by our comprehensive credit policy and underwriting standards. To help ensure we balance market-level support while maintaining a diversified portfolio, we impose market-level approval limits and industry, asset and geographic limits.
To manage and enforce our portfolio metrics and diversification targets our credit committee, our second line of defense, meets periodically to evaluate credit risk migration, new business activities, stress-test activities and credit policy changes and approve or modify market lending authorities. Our internal loan review department, our third line of defense, serves as an independent function to evaluate effective underwriting and application of credit policy in both origination and portfolio management.
Loans are analyzed for risk rating updates as part of the annual credit review process. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenants or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated “Watch,” “Substandard” or “Nonaccrual” under our internal risk grading system (as described below) may be subject to more frequent review and monitoring processes. In addition to the regular monitoring performed by the market lending personnel and credit committees, loans are subject to review by our internal loan review department, which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.
Nonperforming Loans and Assets.
Our nonperforming assets consist of nonperforming loans and foreclosed real estate, if any. Our nonperforming loans consist of loans past due 90 days or more and still accruing and nonaccrual loans. We consider loans past due on the day following the contractual repayment date if the contractual repayment was not received by us as of the end of the business day. Loans for which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when, in management’s judgment, the interest is uncollectible in the normal course of business. Loans are placed on nonaccrual status when (i) deterioration in the financial condition of the borrower exists such that payment of full principal and interest is not expected, or (ii) principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed current income, and the loan is charged off to the extent . Principal and interest payments received on nonaccrual loans are generally applied to principal. Interest is included in income only after all previous loan charge-offs have been recovered and is recorded only as received. The loan is returned to accrual status only when the borrower has brought all past-due principal and interest payments current and, in the opinion of management, has demonstrated the ability to make future payments of principal and interest as scheduled.
The following table presents our nonperforming loans and assets for the dates indicated:
December 31,
(dollars in thousands)
Nonaccrual loans
Loans past due 90 days or more and still accruing
Total nonperforming loans
Foreclosed assets held for sale
Other repossessed assets
Total nonperforming assets
Allowance for credit losses to period end loans held for investment
Allowance for credit losses to period end nonperforming loans
Nonperforming loans to period end loans held for investment
Nonperforming assets to period end assets
Nonaccrual loans to period end loans held for investment
Allowance for credit losses to nonaccrual loans at period end
Nonaccrual loans totaled $44.7 million as of December 31, 2025, an increase of $8.7 million, or 24%, compared to $36.0 million as of December 31, 2024. The increase was primarily driven by an increase in nonaccrual loans in certain loan segments, particularly commercial, financial & agricultural, non-owner-occupied commercial real estate and residential mortgage loans categories, mostly related to two relationships migrating to nonaccrual in 2025.
The following table provides an aging analysis on the Company’s past due and accruing loans, in addition to the balances of loans on nonaccrual status, as of the dates indicated. Balances in the tables below represent total unpaid principal balances gross of unearned and unamortized loans fees and costs.
December 31, 2025
Current or less
than
30 days
past due
30 - 89 Days
past due
90 Days
past due
and still
accruing
Nonaccrual
Total
Loans held for investment
(dollars in thousands)
Construction and development
Commercial, financial & agricultural
Non-owner-occupied commercial real estate
Owner-occupied commercial real estate
Total commercial real estate
Total commercial loans
Residential mortgage loans
Home equity lines of credit
Consumer credit card
Other consumer loans
Total residential and consumer loans
Total loans held for investment
December 31, 2024
Current or less
than
30 days
past due
30 - 89 Days
past due
90 Days
past due
and still
accruing
Nonaccrual
Total
Loans held for investment
(dollars in thousands)
Construction and development
Commercial, financial & agricultural
Non-owner-occupied commercial real estate
Owner-occupied commercial real estate
Total commercial real estate
Total commercial loans
Residential mortgage loans
Home equity lines of credit
Consumer credit card
Other consumer loans
Total residential and consumer loans
Total loans held for investment
In addition to the past due and nonaccrual criteria, the Company evaluates loans according to its internal risk grading system. Loans are segregated between four main categories.
• Pass category loans consist of a range of loan grades that reflect low to moderate, though still acceptable, risk.
• Watch loans consist of loans when (i) one or more weaknesses which could jeopardize timely liquidation exist; or (ii) the margin or liquidity of an asset is sufficiently tenuous that adverse trends could result in a collection problem.
• Substandard loans consist of loans inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. These loans may have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected.
• Nonaccrual loans consist of loans (i) for which deterioration in the financial condition of the borrower exists such that payment of full principal and interest is not expected, or (ii) upon which principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection.
The following tables provide information about the credit quality of the loan portfolio using the Company’s internal rating system reflecting management’s risk assessment:
December 31, 2025
Term Loans Amortized Cost Basis by Origination Year
Prior
Revolving Loans Amortized Cost Basis
Total
(dollars in thousands)
Construction and development
Pass
Watch
Substandard
Non-accrual
Total construction and development
Gross write-offs for the year ended December 31, 2025
Commercial, financial & agricultural
Pass
Watch
Substandard
Non-accrual
Total commercial, financial & agricultural
Gross write-offs for the year ended December 31, 2025
Non-owner-occupied commercial real estate
Pass
Watch
Substandard
Non-accrual
Total non-owner-occupied commercial real estate
Gross write-offs for the year ended December 31, 2025
Owner-occupied commercial real estate
Pass
Watch
Substandard
Non-accrual
Total owner-occupied commercial real estate
Gross write-offs for the year ended December 31, 2025
Residential mortgage loans
Accrual
Non-accrual
Total residential mortgage loans
Gross write-offs for the year ended December 31, 2025
Home equity lines of credit
Accrual
Non-accrual
Total home equity lines of credit
Gross write-offs for the year ended December 31, 2025
Consumer credit card
Current
30-89 days
90+ days
Total consumer credit card
Gross write-offs for the year ended December 31, 2025
December 31, 2025
Term Loans Amortized Cost Basis by Origination Year
Prior
Revolving Loans Amortized Cost Basis
Total
Prior
Revolving Loans Amortized Cost Basis
Total
(dollars in thousands)
Other consumer loans
Current
30-89 days
90+ days
Non-accrual
Total other consumer loans
Gross write-offs for the year ended December 31, 2025
Total loans
Total gross write-offs for the year ended December 31, 2025
December 31, 2024
Term Loans Amortized Cost Basis by Origination Year
Prior
Revolving Loans
Amortized Cost
Basis
Total
(dollars in thousands)
Construction and development
Pass
Watch
Substandard
Non-accrual
Total construction and development
Gross write-offs for the year ended December 31, 2025
Commercial, financial & agricultural
Pass
Watch
Substandard
Non-accrual
Total commercial, financial & agricultural
Gross write-offs for the year ended December 31, 2025
Non-owner-occupied commercial real estate
Pass
Watch
Substandard
Non-accrual
Total non-owner-occupied commercial real estate
Gross write-offs for the year ended December 31, 2025
Owner-occupied commercial real estate
Pass
Watch
Substandard
Non-accrual
Total owner-occupied commercial real estate
Gross write-offs for the year ended December 31, 2025
December 31, 2024
Term Loans Amortized Cost Basis by Origination Year
Prior
Revolving Loans
Amortized Cost
Basis
Total
Prior
Revolving Loans
Amortized Cost
Basis
Total
Residential mortgage loans
Accrual
Non-accrual
Total residential mortgage loans
Gross write-offs for the year ended December 31, 2025
Home equity lines of credit
Accrual
Non-accrual
Total home equity lines of credit
Gross write-offs for the year ended December 31, 2025
Consumer credit card
Current
30-89 days
90+ days
Total consumer credit card
Gross write-offs for the year ended December 31, 2025
Other consumer loans
Current
30-89 days
90+ days
Non-accrual
Total other consumer loans
Gross write-offs for the year ended December 31, 2025
Total loans
Total gross write-offs for the year ended December 31, 2025
Modifications for Borrowers Experiencing Financial Difficulty
When borrowers are experiencing financial difficulty, we may agree to modify the contractual terms of a loan to a borrower to assist the borrower in repaying principal and interest owed to us. Such modification of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Modifications of commercial loans to borrowers experiencing financial difficulty are primarily modifications to loans that are substandard or nonaccrual, where the maturity date was extended. Modifications of personal real estate loans are primarily made to loans placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often made under debt counseling programs that can reduce the contractual rate, or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.
The following tables present the amortized cost of loans that were modified during the year ended December 31, 2025 and 2024:
December 31, 2025
Term
Extension
Payment
Delay
Interest Rate
Reduction
Interest/Fees
Forgiven
Other
Total
Total Loan
Category
(dollars in thousands)
Construction and development
Commercial, financial, & agricultural
Non-owner-occupied commercial real estate
Owner-occupied commercial real estate
Total commercial real estate
Residential mortgage loans
Home equity lines of credit
Total residential real estate
All other consumer
Total
December 31, 2024
Term
Extension
Payment
Delay
Interest Rate
Reduction
Interest/Fees
Forgiven
Other
Total
Total Loan
Category
(dollars in thousands)
Construction and development
Commercial, financial, & agricultural
Non-owner-occupied commercial real estate
Owner-occupied commercial real estate
Total commercial real estate
Residential mortgage loans
Home equity lines of credit
Total residential real estate
All other consumer
Total
Allowance for Credit Losses
Allowance for credit losses reflects management’s estimate of current expected loss within the loans held for investment portfolio. The computation of the allowance for credit losses includes elements of judgment and high levels of subjectivity. See “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Allowance for Credit Losses on Loans,” in this Annual Report on Form 10-K.
We measure the allowance for credit losses using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type and collateral type. Loans that do not share similar risk characteristics, primarily large loans on nonaccrual status are evaluated on an individual basis.
For loans evaluated for credit losses on a collective basis, an average historical loss rate is calculated for each pool using our historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual period.
Due to changes in portfolio composition, the Company’s own historical loss rates are not fully reflective of loss expectations and have been augmented by industry and peer data. Therefore, the historical loss rates are augmented by peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, unemployment rate, various interest rates, the Federal Housing Finance Agency House Price Index, and the Commercial Real Estate Price Index.
Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.
The following table presents an analysis of our allowance for credit losses, including provisions for credit losses, charge-offs and recoveries, for the periods indicated:
December 31, 2025
Commercial real estate
Residential real estate
Consumer
Total
Construction & development
Commercial, financial, & agricultural
Non-Owner occupied commercial real estate
Owner occupied commercial real estate
Residential mortgage loans
Home equity Lines of Credit
Consumer credit card
All other consumer credit
Allowance for credit losses on loans
(dollars in thousands)
Balance at beginning of year
Provision for credit losses on loans
Loans charged off
Recoveries on loans previously charged off
Balance at end of year
Liability for unfunded commitments
Balance at beginning of year
Provision for credit losses on unfunded lending commitments
Balance at end of year
Allowance for credit losses on loans and liability for unfunded lending commitments
December 31, 2024
Commercial real estate
Residential real estate
Consumer
Total
Construction & development
Commercial, financial, & agricultural
Non-Owner occupied commercial real estate
Owner occupied commercial real estate
Residential mortgage loans
Home equity Lines of Credit
Consumer credit card
All other consumer credit
Allowance for credit losses on loans
(dollars in thousands)
Balance at beginning of year
Provision for credit losses on loans
Loans charged off
Recoveries on loans previously charged off
Balance at end of year
Liability for unfunded commitments
Balance at beginning of year
Provision for credit losses on unfunded lending commitments
Balance at end of year
Allowance for credit losses on loans and liability for unfunded lending commitments
In 2025, we recorded net charge-offs of $14.1 million, compared to net charge-offs of $15.2 million in 2024, a decrease of $1.1 million, or 7.5%. Net charge-offs as a percentage of average total loans were 0.12% in 2025 compared to 0.13% in 2024.
At December 31, 2025, the allowance for credit losses was $149.7 million, or 1.31% of our total loans held for investment portfolio, compared with $154.3 million, or 1.33% of loans, at December 31, 2024. Our allowance for credit losses, both in total dollars and as a percentage of total loans held for investment, declined from the prior fiscal year.
The following tables present the allocation of the allowance for credit losses:
December 31, 2025
December 31, 2024
% of Loan
% of ACL
% of Loan
% of ACL
Allocated
Category
to Loan
Allocated
Category
to Loan
Reserves
to Loans
Category
Reserves
to Loans
Category
(dollars in thousands)
Construction & development
Commercial, financial & agricultural
Commercial real estate
Residential real estate
Consumer
Unearned income
Total
Management will continue to evaluate the loan portfolio and assess economic conditions in order to determine future allowance levels and the amount of credit loss provision. We review the appropriateness of our allowance for credit losses on a quarterly basis. While we use the best information available to make evaluations, future adjustments to the allowance may become necessary if conditions change substantially from the conditions that we used in previous evaluations.
Market Risk
Interest Rate Risk
Interest rate risk is one of the most significant risks faced by the Company as one of our primary sources of earnings is net interest income, the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowings.
Interest rate risk is the risk that changes in market interest rates will negatively affect the Company’s net interest income and therefore earnings. While interest rate risk can arise from various sources, there are four key types of interest rate risk to our consolidated balance sheets:
• Repricing Risk arises when a bank’s assets and liabilities reprice at different times or at different rates. When market interest rates change, the Bank may not be able to adjust its assets and liabilities simultaneously, leading to mismatched durations and impacts on net interest income.
• Yield Curve Risk arises from changes in the shape of the yield curve, which represents interest rates of bonds with different maturities. The Bank may face this risk when the yield curve flattens, steepens, or becomes inverted.
• Basis Risk is the risk that changes in underlying index rates used to price assets and liabilities do not change in a correlated manner, causing margins to narrow. For example, loans priced to the national prime rate might not change in the same manner as certificates of deposit priced off FHLB advance rates.
• Option Risk (Prepayment/Extension Risk) is related to the embedded options in certain financial products, such as the ability for a borrower to prepay a loan or a depositor to withdraw funds at will. For example, when interest rates fall, customers may refinance loans (prepayment risk), and when rates rise, depositors may withdraw funds to invest at higher rates. The Bank’s exposure to this risk depends on the volume and nature of the embedded options and how those products behave in response to rate changes.
The Company’s ALCO has been authorized by the Board to measure, monitor and manage the Company’s interest rate risk. Our strategic objective is to manage our balance sheet in a manner designed to ensure that changes in interest rates will not result in unacceptable levels of earnings volatility or threaten the adequacy of our capital and liquidity.
We utilize an asset/liability model to perform interest rate risk simulations on a wide range of potential interest rate scenarios to develop an interest rate risk profile that reveals the potential financial impact to both net interest income (shorter-term risk) and economic value of equity (longer-term risk) from changes in interest rates relative to a flat interest rate scenario. The economic value of equity (EVE) is defined as the estimated present value of our assets minus the estimated present value of our liabilities at a point in time. A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet. An increase in EVE indicates the opposite.
We monitor, test, and stress modeling assumptions to assess the magnitude of their impact on simulation results and evaluate changes in our interest rate risk profile to ensure we understand the key drivers of those changes.
The following table sets forth the estimated impact on our net interest income and economic value of equity from immediate parallel shifts in both short- and long-term interest rates at the specified levels (dollars in thousands). The Steepener scenario reflects an instantaneous yield curve twist, centered on the 2-year tenor, wherein the overnight rate is decreased 1.00% and the 30-year rate is increased 0.50%.
December 31, 2025
Estimated Increase (Decrease) in Net Interest Income
Estimated Increase (Decrease) in EVE
Year 1
Year 2
Change in Rates
Amount
Percent
Amount
Percent
Amount
Percent
Steepener
The values in the table above do not reflect any actions that we may undertake in response to changes in interest rates, such as changes in rates paid on certain deposit accounts or changes in earning assets mix, which could reduce the actual impact to net interest income and EVE, if any.
The outcomes of our simulation analyses are hypothetical, and various factors could lead to actual results differing significantly from what is shown. For instance, if the timing and extent of interest rate changes deviate from what was projected, our net interest income could differ substantially. Non-parallel shifts in the yield curve, such as a flattening or steepening, or changes in interest rate spreads, could also cause our net interest income to vary from the forecasted amount.
In an environment of rising interest rates, projected net interest income might decrease if deposits and other short-term liabilities reprice more quickly than anticipated, or if our assets reprice at a slower rate. Actual results may differ from projections if we experience asset and liability growth rates that are faster or slower than expected, if there is a net outflow of deposits, or if the composition of our assets and liabilities changes in other ways. For example, even though we maintain relatively high levels of readily accessible liquidity, a quicker-than-expected withdrawal of deposits could force us to seek higher-cost funding sources.
Actual results may also differ from projections if we experience prepayment speeds in our loan portfolio that significantly differ from the assumptions used in the simulation analyses. These simulation results do not account for all potential actions we might take in response to actual or anticipated changes in interest rates, such as adjustments to our loan, investment, deposit, funding, or hedging strategies.
We assume no growth or changes in the composition of our balance sheet over the modeling horizon and no additional changes in market interest rates or spreads after the initial immediate rate shocks. As a result, the information in the table above should be considered indicative of our sensitivity to changes in interest rates rather than indicative of our expected actual results.
Liquidity Risk Management
Bank Liquidity Management
The objective of our liquidity management strategy is to ensure the availability of cash sufficient to fund our operations and meet present and future financial obligations at a reasonable cost. We consider the effective and prudent management of liquidity to be fundamental to our health and strength.
The Company’s Asset/Liability Committee has been authorized by the Board to oversee our liquidity risk to confirm that our activities comply with our funds management policy, which specifies overall objectives, metrics, limits, guidelines, reporting requirements and our contingency funding plan, which includes requirements for liquidity stress testing. The ALCO receives regular comprehensive reporting that includes information describing current levels vs. guidelines and limits for a broad set of liquidity metrics, loan and deposit trends, readily available liquidity measures, explanatory commentary relating to changes in our liquidity position and emerging risk trends and, as appropriate, recommended remedial strategies.
Our objective is to maintain prudent levels of current and contingent liquidity from stable sources that can be accessed in a timely manner at a reasonable cost, without significant adverse consequences. We seek to accomplish this mission by funding loans primarily with stable deposits, controlling dependence on wholesale funding, and by maintaining ample readily available liquidity. While our primary source of long-term, stable, and lower-cost funding is deposits, additional sources of funding include, but are not limited to, customer repurchase agreements, federal funds purchased from correspondent banks, unencumbered investment securities, and wholesale funding sources such as FHLB borrowings, dealer repurchase agreements, and wholesale/brokered deposits.
As of December 31, 2025, we had approximately $6.7 billion in readily available liquidity. As of December 31, 2024, we had approximately $4.9 billion in readily available liquidity.
As of December 31,
Change
Readily available liquidity
(dollars in thousands)
Cash reserves at Federal Reserve
FHLB advance capacity (loan collateral)
Unencumbered securities lending value
Total readily available liquidity
The following table presents selected financials from our consolidated balance sheet and liquidity ratios discussed below.
As of, and for the year ended December 31,
Liquidity Ratios:
Loan to deposit ratio
Cash and securities / total assets
Available liquidity / total assets
Investment Securities
As part of our broader risk management framework, the investment portfolio serves as a key tool for balancing interest rate exposure, preserving capital, and ensuring adequate liquidity under a range of market conditions. Ongoing monitoring of portfolio composition, valuation trends, and duration sensitivity allows us to assess how shifts in the rate environment or market dynamics may influence both earnings and economic value. The following discussion outlines the portfolio’s performance and risk profile for the year ended December 31, 2025, including changes in yields, unrealized positions, and the results of our ongoing interest‑rate and credit‑risk evaluations.
As of December 31, 2025, the amortized cost of our AFS and HTM investment portfolios totaled $6.4 billion, an increase of $623.4 million, or 10.8% versus December 31, 2024. As of the same date, the fair value of our AFS and HTM investment portfolios totaled $6.4 billion, an increase of $767.2 million, or 13.7% versus December 31, 2024. The average tax-equivalent yield at December 31, 2025 was 4.04%, increase of 55 basis points versus December 31, 2024. Gross unrealized gains in our investment securities portfolio were $57.2 million and $7.4 million as of December 31, 2025 and December 31, 2024, respectively. Gross unrealized losses in our investment securities portfolio were $104.6 million and $198.6 million as of December 31, 2025 and December 31, 2024, respectively. The change in the yield was due to the combination of the reinvestment of lower-yielding principal cashflows, an increase in balances, and the repositioning of lower-yielding securities, all into a higher-yielding market. The changes in unrealized gains and losses in our investment securities portfolio were due primarily to a decrease in market interest rates in 2025.
As of December 31, 2025, 98.9% of our investment portfolio consisted of securities guaranteed by the U.S. government, its agencies, or sponsored enterprises and available-for-sale securities represented 99.2% of our total portfolio. As of the same date, the portfolio’s composition was 39% agency residential mortgage-backed securities, 41% agency commercial mortgage-backed securities, and 14% Treasuries, with the balance in agency debenture, Small Business Administration, municipal, corporate and other securities.
A primary risk of holding agency RMBS comes from the variability in principal cashflows that may occur as interest rates change. In general, when interest rates rise, the prepayment of principal slows down, extending the amount of time it takes to recover and reinvest that principal. In contrast, when interest rates fall, the prepayment of principal generally increases, shortening the amount it takes to recover and reinvest that principal. We evaluate this risk through pre-purchase modeling of potential cashflows as well as continuous modeling throughout the life of the securities.
As of December 31, 2025, our best estimate of the duration of our $2.5 billion residential mortgage-backed securities portfolio held in available-for-sale was 3.3 years. As of December 31, 2025, management estimates the effective duration extends by 0.7 years assuming an immediate 200 basis point upward shock and contracts by 0.8 years assuming an immediate 200 basis point downward shock. As of the same date, our best estimate of the duration of the total investment portfolio excluding equity securities was 2.8 years. Management estimates the effective duration extends by 0.3 years assuming an immediate 200 basis point upward shock and contracts by 0.3 years assuming an immediate 200 basis point downward shock.
All securities not issued or guaranteed by the U.S. government, its agencies, or sponsored enterprises are subject to a quarterly review to test for impairment. This process is intended to adequately test for a range of credit and loss assumptions and does not rely primarily on credit ratings. This review was performed as of December 31, 2025 and December 31, 2024 and revealed no matters that would warrant impairment and result in an allowance for credit losses. The Company determined that all unrealized losses are primarily attributable to changes in interest rates and current market conditions.
During December 31, 2025, $6.8 million in net losses were recorded on the sale of common and preferred stock. $36.7 million in net losses were recorded on common or preferred stock during December 31, 2024.
Deposits
Deposits are gathered primarily from our full-service branch locations, as well as online, mobile and ATM deposits. Central Bank offers a variety of deposit products including noninterest-bearing demand deposits, interest-bearing demand deposits, savings accounts, and certificates of deposit. The bank also utilizes the IntraFi network which allows our depositors to receive FDIC insurance on amounts greater than $250,000. Deposits larger than this threshold are broken into smaller amounts and placed in the network of other IntraFi institutions to ensure FDIC insurance covers the entire deposit.
The following tables sets forth the distribution of deposit balances as of December 31, 2025 and December 31, 2024:
As of December 31,
Ending
Balance
% of Total
Ending
Balance
% of Total
(dollars in thousands)
Noninterest-bearing demand deposits
Savings and interest-bearing demand deposits
Time deposits
Total deposits
Total deposit ending balances as of December 31, 2025 were $15.9 billion, an increase of $876.8 million, or 5.9%, compared to $15.0 billion as of December 31, 2024. The increase was driven by growth in noninterest-bearing deposits and savings and interest-bearing demand deposits, partially offset by reductions in time deposits.
FDIC deposit insurance covers $250 thousand per depositor, per FDIC-insured bank, for each account ownership category. Our total estimated uninsured deposits were $6.9 billion and $5.4 billion as of December 31, 2025 and 2024, respectively.
Federal Funds Purchased and Customer Repurchase Agreements
Federal funds purchased and customer repurchase agreements totaled $1.0 billion and $1.0 billion at December 31, 2025 and December 31, 2024, respectively, which included customer repurchase agreements of $945.8 million and $906.8 million at December 31, 2025 and December 31, 2024, respectively. These are short-term borrowings that generally have a one-day maturity. The $39.0 million, or 4.3%, increase in customer purchase agreements in 2025 was due to the normal course of business. Federal funds purchased decreased $34.5 million, or 34.3%, in 2025.
Off-Balance Sheet Arrangements
In the normal course of business, in order to meet the needs of our customers, we are subject to off-balance sheet risk which could potentially impact our financial position. These off-balance sheet arrangements include commitments to fund loans and standby letters of credit.
The Company has outstanding commitments to provide loans to, and letters of credit on behalf of, our customers. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as is involved in extending loan facilities to customers.
In addition, the Company may enter into interest rate swap risk participation agreements when certain clients are engaged in interest rate hedging activities in a syndicated loan or a loan in which we are a participant. This is represented as credit derivatives in the table below and is the only credit derivative activity in which the Company currently participates. Under these agreements, we assume a portion of the counterparty credit risk associated with a client’s interest rate swap transaction with a third-party financial institution, for which we receive a fee. If the client fails to meet its payment obligations under the swap, we may be required to fulfill those obligations up to our participation level.
The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Company upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties. Our loan portfolio is primarily concentrated in our Primary Markets, where 87.8% of our total loans are located.
Such commitments and conditional obligations were as follows as of the dates presented.
Contractual amount as of December 31,
Off-balance sheet commitments
(dollars in thousands)
Loan commitments
Standby letters of credit
Commercial letters of credit
Credit derivatives
Contractual Obligations
The following tables summarize the maturity of our contractual obligations to make future payments at December 31, 2025:
As of December 31, 2025
1 Year or Less
2 - 3 Years
4 - 5 Years
After 5 Years
Total
(dollars in thousands)
Time deposits
Customer repurchase agreements
Undiscounted operating leases
Postretirement benefit contributions
Total contractual obligations
Holding Company Liquidity Management
The Company is an independent entity distinct from the Bank and is therefore responsible for managing its own liquidity. Its primary source of funding comes from dividends paid by the Bank. However, there are statutory and regulatory restrictions that limit the Bank’s ability to distribute dividends to the Company.
Under applicable Federal Reserve regulations, dividends paid by the Bank to the Company are generally limited to the Bank’s net income for the current year plus retained net income for the prior two years, without the need for prior regulatory approval. In addition, dividends paid by the Bank to the Company would be prohibited if they would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the year ended December 31, 2025, the Bank paid $320.0 million in dividends to the Company. During the year ended December 31, 2024, the Bank paid $245.0 million in dividends to the Company. As of December 31, 2025, the Bank had approximately $58.1 million of retained earnings that could be upstreamed to the Company through dividends without prior approval from the Federal Reserve. These earnings remain at the Bank level and are included in regulatory capital.
The liquidity needs of the Company on an unconsolidated basis consist primarily of operating expenses, taxes, and dividends to stockholders. As of December 31, 2025, the Company's liquidity consisted primarily of $896.6 million in cash and cash equivalents and $0.7 million of investment securities. The Company also held a $1.0 billion unsecured intercompany loan receivable from the Bank.
The Company’s operating expenses totaled $13.0 million for the year ended December 31, 2025. Dividends paid to stockholders totaled $246.5 million during the year ended December 31, 2025, which included a one‑time special dividend of $176.6 million. The Company had no repurchases of common stock during 2025.
Operational Risk
Operational risk refers to the risk arising from inadequate or failed internal processes or systems, the misconduct or errors of people or adverse external events. We seek to mitigate operational risks by expanding and maintaining an experienced operations team to meet customer and company demands; providing employees with relevant job-specific training; working with our vendors to use antifraud protections; establishing security procedures for our clients; employing business continuity planning and testing designed to ensure the continued operation of core functions in the event of a business disruption; and engaging in periodic independent audits of our operations and operating controls. We also seek to mitigate operational risks related to misconduct by employees or contractors by implementing internal controls, including dual authorization for monetary transactions, conducting background and credit checks for new hires, screening contractors and third parties providing critical services using a vendor management process, and offering whistleblower protections to our employees to encourage the reporting of misconduct.
Capital
Our capital management strategy is designed to ensure that we have sufficient capital to support balance sheet growth while also maintaining sufficient reserves to absorb unexpected losses or write-downs that are risks inherent to the business of banking. We aim to strike a balance between maintaining higher capital levels to address unforeseen risks and achieving a reasonable return on the capital invested by our shareholders.
The Bank is required to meet regulatory capital standards set by federal banking authorities. If the Bank fails to meet the minimum capital requirements, it could trigger mandatory actions, and possibly additional discretionary measures, by the state and federal regulators, which may have a significant impact on the Bank’s financial position. The Bank must comply with specific capital guidelines under the capital adequacy rules and the prompt corrective action framework, which involve quantitative measures based on the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting rules. Additionally, regulators assess the Bank’s capital levels and classifications based on qualitative factors such as risk weightings, the components of capital, and other items.
The PCA framework is a regulatory tool used to monitor and manage the capital levels of banks. It is designed to maintain the stability and soundness of financial institutions, particularly banks, by requiring regulatory intervention when a bank’s capital falls below certain thresholds. The primary goal of PCA is to address financial distress early, before it results in more severe consequences. These regulations, enforced by federal banking agencies, classify banks based on their capital adequacy and impose escalating supervisory actions as a bank’s capital position deteriorates.
Banks are categorized into five groups based on their capital ratios:
• Well-Capitalized : Banks that meet or exceed all capital adequacy standards. These banks face minimal regulatory restrictions and are generally free to operate as usual.
• Adequately Capitalized : Banks that meet minimum capital requirements. Banks in this category can still operate normally but may face restrictions on activities like accepting brokered deposits.
• Undercapitalized : Banks that fail to meet the minimum capital requirements. Banks must submit a plan to restore capital and are subject to more severe restrictions, such as limits on asset growth and capital distributions (e.g., dividends or share buybacks).
• Significantly Undercapitalized : Banks with very low capital, well below regulatory thresholds. These banks face the most stringent interventions, including the possibility of forced mergers, asset sales, or closure. They must also submit a detailed plan for capital restoration, which may require regulatory approval.
• Critically Undercapitalized : Banks with the lowest capital levels, requiring immediate action.
PCA regulations mandate that federal regulators take action when a bank’s capital falls below the required thresholds. This can involve measures such as restrictions on paying dividends or bonuses, restrictions on asset growth or expansion, enhanced monitoring and reporting requirements, required capital restoration plans, possible forced mergers or liquidation in extreme cases.
At December 31, 2025 and December 31, 2024, the Company’s capital ratios exceeded the regulatory requirements and the Bank’s capital ratios exceeded the threshold for “well capitalized” status. We maintain excess capital, in part, to provide ourselves with flexibility when considering potential acquisition opportunities. Actual and required capital ratios were:
As of December 31, 2025:
Actual
Minimum capital adequacy
requirement
Well-capitalized
requirement
Amount
Ratio
Amount
Ratio
Amount
Ratio
(dollars in thousands)
Total risk-based capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 common equity capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 capital (to average assets):
Company
Central Trust Bank
As of December 31, 2024:
Actual
Minimum capital adequacy
requirement
Well-capitalized
requirement
Amount
Ratio
Amount
Ratio
Amount
Ratio
(dollars in thousands)
Total risk-based capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 common equity capital (to risk-weighted assets):
Company
Central Trust Bank
Tier 1 capital (to average assets):
Company
Central Trust Bank
As of December 31, 2025, we were not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material impact on our liquidity. As of December 31, 2025, we had no material commitments for capital expenditures.
Critical Accounting Policies and Estimates
Our consolidated financial statements were prepared in accordance with GAAP and follow general practices within the industry in which we operate. Application of GAAP requires management to make certain estimates and judgments which affect the amounts reported in the consolidated financial statements. Critical accounting policies are those we believe are most important to the portrayal of our consolidated financial statements and require management to make estimates and judgments which are inherently complex, difficult, uncertain and can be subject to significant change over time. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, adjustments to accounting estimates may be required.
We have identified the following accounting policies and estimates which, due to their subjectivity and complexity, are critical to the understanding of the financial statements. Discussion below should be read in conjunction with "Note 1, Summary of Significant Accounting Policies,” to our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K.
Allowance for Credit Losses on Loans
The allowance for credit losses on loans is a valuation amount that is deducted from the amortized cost basis of loans not held at fair value to present the net amount expected to be collected over the contractual term of the loans. The allowance for credit losses on loans is measured using relevant information about past events, including historical credit loss experience on loans with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flow over the contractual term of the loans. An allowance is recognized upon origination or acquisition of a loan and is updated at subsequent reporting dates. The methodology is applied consistently for each reporting period and reflects management’s current expectations of credit losses. Changes to the allowance for credit losses on loans resulting from periodic evaluations are recorded through increases or decreases to the credit loss expense for loans, which is recorded in provision for credit losses on the consolidated statements of income. Loans that are deemed to be uncollectible are charged off the related allowance for credit on loans. The Company maintains a policy to reverse accrued and interest when a loan is placed on non-accrual. Therefore, an allowance is not recorded for accrued interest.
The allowance for credit losses on loans is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type, and expected credit loss patterns. The allowance for credit losses includes significant assumptions that are uncertain and reasonably likely to have a material impact, the most significant of which are loan loss rates and prepayment speeds. Assumptions are updated based on actual performance on an annual basis. We utilize a consensus macroeconomic forecast which relies on underlying statistical models to incorporate the economic impact into each loan portfolio. Management performs a qualitative analysis considering necessary adjustments based on the potential risks inherent in the macroeconomic forecast and impacts from loan portfolio changes, including concentrations, staffing, asset quality, and policy changes. Model validations are performed to provide an independent assessment of the framework and the model’s use in producing reasonable and supportable estimates. See "Note 3, Loans and Allowance for Credit Losses,” to our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K.
Non-GAAP Financial Measures Reconciliations
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations or outlook.
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP.
We disclose net interest income and related ratios and analysis on a FTE basis, which may be considered non-GAAP financial measures. We believe this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis. We report interest income, net interest income and net interest margin on an FTE basis using a blended federal and state effective marginal tax rate of 23.84% for the periods presented. The tax equivalent basis gives effect to the tax-exempt interest income, net of the disallowance of interest income, for federal income tax purposes related to certain tax-free assets. We believe these measures enhance comparability of net interest income arising from taxable and tax-exempt sources.
We evaluate our profitability and performance based on adjusted net income, adjusted total revenue, adjusted noninterest income, adjusted fee income and adjusted return on average total assets. We adjust each of these measures to exclude the loss on the expected sale of the consumer loan portfolio in one of our markets and adjustments that resulted from certain investment portfolio repositioning activities during the periods presented that we consider to be outside of the ordinary course of business. We believe this allows investors to assess our net income, total revenue and noninterest income exclusive of the impact of changes outside the ordinary course of business. Similarly, we evaluate our operational efficiency based on tangible noninterest expense and our adjusted efficiency ratio, which excludes the effect of amortization of intangibles (a non-cash expense item) as well as the exclusions mentioned previously in this paragraph, and includes the tax benefit associated with our tax-advantaged loans.
We evaluate our financial condition based on the ratios of our tangible common equity to our tangible assets, tangible book value per share, return and adjusted return on average common equity, and return and adjusted return on average tangible common equity. Our calculation of these ratios allows readers to assess our stockholder’s equity, exclusive of the effect of our goodwill and other intangible assets.
Reconciliations for each of these non-GAAP financial measures to the closest GAAP financial measures are included in the tables below. Each of the non-GAAP financial measures presented should be considered in context with our GAAP financial results included in this filing.
At and for year ended December 31,
(dollars in thousands, except share and per share data)
Interest income (FTE), net interest income (FTE) and net interest margin (FTE)
Interest income
Add: Tax-equivalent adjustment ¹
Interest income (FTE) (non-GAAP)
Net interest income
Add: Tax-equivalent adjustment ¹
Net interest income (FTE) (non-GAAP)
Average interest-earning assets
Net interest margin
Net interest margin (FTE) (non-GAAP)
¹ Effective marginal tax rate of 23.84% used for all periods.
Adjusted noninterest income, adjusted total revenue and adjusted fee income ratio
Noninterest income
Less: Loss on expected sale of consumer lease portfolio
Less: Investment securities
Adjusted noninterest income (non-GAAP)
Net interest income
Noninterest income
Total revenue
Less: Loss on expected sale of consumer lease portfolio
Less: Investment securities
Adjusted total revenue (non-GAAP)
Fee income ratio
Adjusted fee income ratio (non-GAAP)
At and for year ended December 31,
(dollars in thousands, except share and per share data)
Tangible noninterest expense, adjusted total revenue (FTE) and efficiency ratio (FTE)
Net interest income
Noninterest income
Total revenue
Less: Loss on expected sale of consumer lease portfolio
Less: Investment securities
Add: Tax equivalent adjustment ¹
Adjusted total revenue (FTE) (non-GAAP)
Noninterest expense
Less: Amortization of intangible assets
Tangible noninterest expense (non-GAAP)
Efficiency ratio
Efficiency ratio (FTE) (non-GAAP)
¹ Effective marginal tax rate of 23.84% used for all periods.
Adjusted net income and adjusted return on average total assets
Net income
Add: Loss on expected sale of consumer lease portfolio, net of provision and taxes ¹ ²
Add: Investment securities loss, net of taxes ¹
Adjusted net income (non-GAAP)
Average total assets
Return on average total assets
Adjusted return on average total assets (non-GAAP)
¹ Effective marginal tax rate of 23.84% used for all periods.
² The second quarter of FY25 includes a $13.6 million loss on the sale of the consumer lease portfolio recognized in other noninterest income and a $5.0 million release of provision, which resulted in a net pre-tax loss of $8.6 million. Net of taxes, at a tax rate of 23.84%, the total impact to net income was $6.6 million.
Adjusted net income (earnings) per share
Net income
Less: Dividends declared on forfeitable non-vested restricted stock
Net income allocated to common stock
Net income
Add: Loss on expected sale of consumer lease portfolio, net of provision and taxes ¹ ²
Add: Investment securities loss, net of taxes ¹
Adjusted net income (non-GAAP)
Less: Dividends declared on forfeitable non-vested restricted stock
Adjusted net income allocated to common stock (non-GAAP)
Weighted average fully diluted shares
Net income per share - diluted
Adjusted net income per share - diluted (non-GAAP)
¹ Effective marginal tax rate of 23.84% used for all periods.
² The second quarter of FY25 includes a $13.6 million loss on the sale of the consumer lease portfolio recognized in other noninterest income and a $5.0 million release of provision, which resulted in a net pre-tax loss of $8.6 million. Net of taxes, at a tax rate of 23.84%, the total impact to net income was $6.6 million.
At and for year ended December 31,
(dollars in thousands, except share and per share data)
Tangible common equity, tangible book value per share and tangible common equity to tangible assets
Total stockholders' equity
Less: Goodwill and other intangible assets
Tangible common equity (non-GAAP)
Total shares of Class A common stock outstanding
Book value per share
Tangible book value per share (non-GAAP)
Total assets
Less: Goodwill and other intangible assets
Tangible assets (non-GAAP)
Total stockholders' equity to total assets
Tangible common equity to tangible assets (non-GAAP)
Tangible net income, adjusted tangible net income, average tangible common equity, adjusted return on average common equity, return on average tangible common equity and adjusted return on average tangible common equity
Net income
Add: Amortization of intangible assets, net of taxes ¹
Tangible net income (non-GAAP)
Add: Loss on expected sale of consumer lease portfolio, net of provision and taxes ¹ ²
Add: Investment securities loss, net of taxes ¹
Adjusted tangible net income (non-GAAP)
Average common equity
Less: Average goodwill and other intangible assets
Average tangible common equity (non-GAAP)
Return on average common equity
Adjusted return on average common equity (non-GAAP)
Return on average tangible common equity (non-GAAP)
Adjusted return on average tangible common equity (non-GAAP)
¹ Effective marginal tax rate of 23.84% used for all periods.
² The second quarter of FY25 includes a $13.6 million loss on the sale of the consumer lease portfolio recognized in other noninterest income and a $5.0 million release of provision, which resulted in a net pre-tax loss of $8.6 million. Net of taxes, at a tax rate of 23.84%, the total impact to net income was $6.6 million.
