Univest Financial Corporation

11/03/2026 | Press release | Distributed by Public on 11/03/2026 13:47

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
(All dollar amounts presented in tables are in thousands, except per share data. "BP" equates to "basis points"; "N/M" equates to "not meaningful"; "-" equates to "zero" or "doesn't round to a reportable number"; and "N/A" equates to "not applicable." Certain prior period amounts have been reclassified to conform to the current-year presentation.)
Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used or incorporated by reference in disclosure documents, the words "may," "will," "could," "should," "would," "believe," "anticipate," "plan," "estimate," "expect," "project," "target," and "goal," the negative of these terms and other similar expressions are intended to identify forward-looking statements, but are not the exclusive way to identify such statements. These forward-looking statements may include but are not limited to: statements of goals, intentions and expectations; statements regarding business plans, prospects, growth, earnings and operating strategies; statements regarding the quality, growth and composition of loan, investment and deposit portfolios; statements regarding our financial performance, financial condition and liquidity; and estimates of our risks and future credit provision and noninterest expenses. These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions with respect to future business strategies and decisions that are subject to change, including but not limited to those set forth below:
•Operating, legal and regulatory risks;
•Economic, political and competitive forces;
•General economic conditions, either nationally or in our market areas, which are worse than expected, including as a result of unemployment levels and labor shortages, and the effect of a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;
•Legislative, regulatory and accounting changes, including increased assessments by the Federal Deposit Insurance Corporation and changes in income tax laws and regulations;
•Monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
•Demand for our financial products and services in our market area;
•Major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;
•Inflation or volatility in interest rates or changes in the shape of the yield curve that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make or the sale of loans or other assets and/or lead to higher operating costs and higher costs to retain or attract deposits;
•The imposition of tariffs or other domestic or international governmental policies, trade restrictions and any retaliatory measures impacting our borrowers and the broader economy;
•The impact of a potential federal government shutdown, debt ceiling impasses or fiscal uncertainty;
•Fluctuations in real estate values in our market area;
•A failure to maintain adequate levels of capital and liquidity to support our operations;
•The availability of capital;
•The composition and credit quality of our loan and investment portfolios;
•Changes in the level and direction of loan delinquencies, classified and criticized loans and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
•Changes in the economic assumptions or methodology utilized to calculate the allowance for credit losses;
•Our ability to access cost-effective funding;
•Changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
•Our ability to implement our business strategies;
•Our ability to manage market risk, credit risk, interest rate risk and operational risk and the effectiveness of our risk management processes and procedures;
•Timing and amount of revenue and expenditures;
•Adverse changes in the securities markets;
•The impact of any military conflict, terrorist act or other geopolitical acts;
•Our ability to enter new markets successfully and capitalize on growth opportunities;
•Competition for loans, deposits and employees;
•Risks associated with cybersecurity threats, data breaches, ransomware attacks, or other failures in our operational or security systems and infrastructure, including the risks arising from our dependence on third-party service providers and vendors;
•The failure to maintain current technologies and/or to successfully implement future information technology enhancements;
•Changes in investor sentiment or consumer spending, borrowing or savings behavior;
•Our ability to attract, develop and retain key employees;
•Other risks and uncertainties, including those occurring in the U.S. and international financial systems; and
•The risk that our analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. These and other risk factors are more fully described in this report and in the Univest Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2025 under the section entitled "Item 1A - Risk Factors," and from time to time in other filings made by the Corporation with the SEC.
These forward-looking statements speak only as of the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation's expectations with regard to any change in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.
Critical Accounting Policies
In order to prepare the Corporation's financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the amounts reported in the Corporation's financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial condition of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation's 2025 Annual Report on Form 10-K.
General
The Corporation is a Pennsylvania corporation, organized in 1973, and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock of Univest Bank and Trust Co. and is the sole member of 1876 Double Eagle, LLC. The condensed consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, the Bank and 1876 Double Eagle, LLC.
The Bank is engaged in domestic banking services for individuals, businesses, municipalities and non-profit organizations. Through its wholly owned subsidiaries, the Bank provides a variety of financial services throughout its markets of operation. The Bank is the parent company of Girard Investment Services, LLC, a full-service registered introducing broker-dealer and a licensed insurance agency, Girard Advisory Services, LLC, a registered investment advisory firm, and Girard Pension Services, LLC, a registered investment advisor, which provides investment consulting and management services to municipal entities. The Bank is also the parent company of Univest Insurance, LLC, an independent insurance agency, and Univest Capital, Inc., an equipment financing business.
The Corporation earns revenues primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking, treasury management and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk.
Executive Overview
The Corporation's consolidated net income, earnings per share and return on average assets and average equity were as follows:
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
(Dollars in thousands, except per share data) 2026 2025 Amount Percent 2026 2025 Amount Percent
Net income $ 21,568 $ 25,639 $ (4,071) (15.9) % $ 71,613 $ 68,012 $ 3,601 5.3 %
Net income per share:
Basic $ 0.78 $ 0.89 $ (0.11) (12.4) $ 2.58 $ 2.36 $ 0.22 9.3
Diluted 0.78 0.89 (0.11) (12.4) 2.56 2.34 0.22 9.4
Return on average assets 1.02 % 1.24 % (22 BP) (17.7) 1.16 % 1.13 % 3 BP 2.7
Return on average equity 8.92 % 11.02 % (210 BP) (19.1) 10.04 % 10.00 % 4 BP 0.4
The financial results for the nine months ended September 30, 2026 included a pre-tax charge of $5.2 million ($4.1 million after-tax), or $0.15 diluted earnings per share, related to a valuation adjustment on an other real estate owned (OREO) property. The adjustment was recorded based on an updated appraisal which reflects the property's estimated fair value less costs to sell. The property was initially transferred to OREO during the three months ended June 30, 2022 and was listed for sale during the quarter ended June 30, 2025. The financial results for the nine months ended September 30, 2026 also included tax-free bank owned life insurance (BOLI) death benefit proceeds of $1.1 million, which represented $0.04 diluted earnings per share. In addition, the financial results for the nine months ended September 30, 2026 included a $427 thousand restructuring charge ($337 thousand after-tax), or $0.01 diluted earnings per share, related to the planned closure of two underutilized facilities: a financial center and a limited purpose banking office.
The financial results for the three and nine months ended September 30, 2025 included tax-free BOLI death benefit proceeds of $967 thousand and $2.1 million, respectively, which represented $0.03 and $0.07 diluted earnings per share for the respective periods.
Results of Operations
Net Interest Income
Net interest income is the difference between interest earned primarily on loans, leases and investment securities and interest paid on deposits, borrowings, long-term debt and subordinated notes. Net interest income is the principal source of the Corporation's revenue. Table 1 presents the Corporation's average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the three and nine months ended September 30, 2026 and 2025. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders' equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.
Three and nine months ended September 30, 2026 versus 2025
Net interest income on a tax-equivalent basis for the three months ended September 30, 2026 was $68.3 million, an increase of $6.5 million, or 10.6%, compared to $61.7 million for the three months ended September 30, 2025. Net interest income on a tax-equivalent basis for the nine months ended September 30, 2026 was $198.9 million, an increase of $20.0 million, or 11.2%, compared to $178.9 million for the nine months ended September 30, 2025. The increase in tax-equivalent net interest income for the three and nine months ended September 30, 2026 compared to the comparable periods in the prior year was driven by higher average balances of interest-earning assets, and a reduction in our cost of funds, partially offset by higher average balances of interest-bearing liabilities.
The net interest margin, on a tax-equivalent basis, was 3.42% and 3.41% for the three and nine months ended September 30, 2026, respectively, compared to 3.17% and 3.15% for the three and nine months ended September 30, 2025, respectively. Excess liquidity reduced net interest margin by approximately 13 and ten basis points for the three and nine months ended
September 30, 2026, respectively, and approximately 16 and eight basis points for the three and nine months ended September 30, 2025, respectively.
Table 1-Average Balances and Interest Rates-Tax-Equivalent Basis
Three Months Ended September 30,
2026 2025
(Dollars in thousands) Average
Balance 		Income/
Expense 		Average
Rate 		Average
Balance 		Income/
Expense 		Average
Rate
Assets:
Interest-earning deposits with other banks $ 325,543 $ 3,085 3.76 % $ 395,944 $ 4,363 4.37 %
Other debt and equity securities 497,334 4,308 3.44 492,197 3,923 3.16
Federal Home Loan Bank, Federal Reserve Bank and other stock 34,132 670 7.79 37,159 736 7.86
Total interest-earning deposits, investments and other interest-earning assets 857,009 8,063 3.73 925,300 9,022 3.87
Commercial, financial and agricultural loans 1,009,614 16,360 6.43 949,676 17,223 7.20
Real estate-commercial and construction loans 3,938,430 59,935 6.04 3,705,154 55,469 5.94
Real estate-residential loans 1,694,808 22,131 5.18 1,719,844 21,846 5.04
Loans to individuals 12,375 255 8.18 13,497 308 9.05
Tax-exempt loans and leases 229,597 3,347 5.78 229,253 3,033 5.25
Lease financings 180,568 3,312 7.28 173,403 3,159 7.23
Gross loans and leases 7,065,392 105,340 5.92 6,790,827 101,038 5.90
Total interest-earning assets 7,922,401 113,403 5.68 7,716,127 110,060 5.66
Cash and due from banks 64,256 60,950
Allowance for credit losses, loans and leases (90,545) (88,202)
Premises and equipment, net 44,389 46,980
Operating lease right-of-use assets 24,795 26,901
Other assets 429,201 428,254
Total assets $ 8,394,497 $ 8,191,010
Liabilities:
Interest-bearing checking deposits $ 1,439,318 $ 9,465 2.61 % $ 1,293,781 $ 8,685 2.66 %
Money market savings 2,103,895 17,756 3.35 1,915,501 18,765 3.89
Regular savings 725,102 1,143 0.63 724,927 1,068 0.58
Time deposits 1,434,985 13,742 3.80 1,482,837 15,100 4.04
Total time and interest-bearing deposits 5,703,300 42,106 2.93 5,417,046 43,618 3.19
Short-term borrowings 10,539 1 0.04 10,639 1 0.04
Long-term debt 125,000 1,276 4.05 200,000 2,145 4.26
Subordinated notes 99,036 1,747 7.00 139,127 2,560 7.30
Total borrowings 234,575 3,024 5.11 349,766 4,706 5.34
Total interest-bearing liabilities 5,937,875 45,130 3.02 5,766,812 48,324 3.32
Noninterest-bearing deposits 1,419,642 1,418,997
Operating lease liabilities 27,352 29,702
Accrued expenses and other liabilities 50,058 52,045
Total liabilities 7,434,927 7,267,556
Total interest-bearing liabilities and noninterest-bearing deposits (Cost of Funds) 7,357,517 2.43 7,185,809 2.67
Shareholders' Equity:
Common stock 157,784 157,784
Additional paid-in capital 303,039 302,063
Retained earnings and other equity 498,747 463,607
Total shareholders' equity 959,570 923,454
Total liabilities and shareholders' equity $ 8,394,497 $ 8,191,010
Net interest income $ 68,273 $ 61,736
Net interest spread 2.66 2.34
Effect of net interest-free funding sources 0.76 0.83
Net interest margin 3.42 % 3.17 %
Ratio of average interest-earning assets to average interest-bearing liabilities 133.42 % 133.80 %
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $820 thousand and $687 thousand for the three months ended September 30, 2026 and 2025, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended September 30, 2026 and 2025 have been calculated using the Corporation's federal applicable rate of 21%.
Nine Months Ended September 30,
2026 2025
(Dollars in thousands) Average
Balance 		Income/
Expense 		Average
Rate 		Average
Balance 		Income/
Expense 		Average
Rate
Assets:
Interest-earning deposits with other banks $ 251,019 $ 7,013 3.74 % $ 216,788 $ 7,094 4.38 %
Obligations of states and political subdivisions* - - - 290 4 1.84
Other debt and equity securities 499,486 12,564 3.36 496,178 11,904 3.21
Federal Home Loan Bank, Federal Reserve Bank and other stock 34,973 1,999 7.64 37,142 2,094 7.54
Total interest-earning deposits, investments and other interest-earning assets 785,478 21,576 3.67 750,398 21,096 3.76
Commercial, financial and agricultural loans 986,595 47,984 6.50 981,956 51,929 7.07
Real estate-commercial and construction loans 3,897,778 173,320 5.95 3,700,553 162,310 5.86
Real estate-residential loans 1,705,363 65,659 5.15 1,725,423 65,160 5.05
Loans to individuals 12,427 798 8.59 16,148 1,038 8.59
Tax-exempt loans and leases 225,906 9,698 5.74 229,411 8,860 5.16
Lease financings 176,749 9,818 7.43 177,692 9,591 7.22
Gross loans and leases 7,004,818 307,277 5.86 6,831,183 298,888 5.85
Total interest-earning assets 7,790,296 328,853 5.64 7,581,581 319,984 5.64
Cash and due from banks 60,339 57,674
Allowance for credit losses, loans and leases (89,628) (88,052)
Premises and equipment, net 44,888 47,044
Operating lease right-of-use assets 24,948 27,200
Other assets 429,076 425,831
Total assets $ 8,259,919 $ 8,051,278
Liabilities:
Interest-bearing checking deposits $ 1,325,676 $ 24,790 2.50 % $ 1,244,497 $ 23,560 2.53 %
Money market savings 2,049,414 51,278 3.35 1,836,983 53,745 3.91
Regular savings 746,204 3,718 0.67 709,493 2,580 0.49
Time deposits 1,412,174 40,229 3.81 1,500,137 47,467 4.23
Total time and interest-bearing deposits 5,533,468 120,015 2.90 5,291,110 127,352 3.22
Short-term borrowings 23,130 34 0.20 7,614 16 0.28
Long-term debt 152,473 4,706 4.13 205,952 6,634 4.31
Subordinated notes 98,959 5,242 7.08 145,926 7,122 6.53
Total borrowings 274,562 9,982 4.86 359,492 13,772 5.12
Total interest-bearing liabilities 5,808,030 129,997 2.99 5,650,602 141,124 3.34
Noninterest-bearing deposits 1,420,237 1,405,339
Operating lease liabilities 27,577 30,056
Accrued expenses and other liabilities 50,390 55,583
Total liabilities 7,306,234 7,141,580
Total interest-bearing liabilities and noninterest-bearing deposits (Cost of Funds) 7,228,267 2.40 7,055,941 2.67
Shareholders' Equity:
Common stock 157,784 157,784
Additional paid-in capital 302,690 301,908
Retained earnings and other equity 493,211 450,006
Total shareholders' equity 953,685 909,698
Total liabilities and shareholders' equity $ 8,259,919 $ 8,051,278
Net interest income $ 198,856 $ 178,860
Net interest spread 2.65 2.30
Effect of net interest-free funding sources 0.76 0.85
Net interest margin 3.41 % 3.15 %
Ratio of average interest-earning assets to average interest-bearing liabilities 134.13 % 134.17 %
*Obligations of states and political subdivisions are tax-exempt earning assets.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Net interest income includes net deferred costs amortization of $2.4 million and $1.9 million for the nine months ended September 30, 2026 and 2025, respectively.
Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the nine months ended September 30, 2026 and 2025 have been calculated using the Corporation's federal applicable rate of 21%.
Table 2-Analysis of Changes in Net Interest Income
The rate-volume variance analysis set forth in the table below compares changes in tax-equivalent net interest income for the periods indicated by their rate and volume components. The change in interest income/expense due to both volume and rate has been allocated proportionately.
Three Months Ended Nine Months Ended
September 30, 2026 Versus 2025 September 30, 2026 Versus 2025
(Dollars in thousands) Volume
Change 		Rate
Change 		Total Volume
Change 		Rate
Change 		Total
Interest income:
Interest-earning deposits with other banks $ (716) $ (562) $ (1,278) $ 1,036 $ (1,117) $ (81)
Obligations of states and political subdivisions - - - (4) - (4)
Other debt and equity securities 41 344 385 82 578 660
Federal Home Loan Bank, Federal Reserve Bank and other stock (59) (7) (66) (123) 28 (95)
Interest on deposits, investments and other earning assets (734) (225) (959) 991 (511) 480
Commercial, financial and agricultural loans 1,048 (1,911) (863) 245 (4,190) (3,945)
Real estate-commercial and construction loans 3,524 942 4,466 8,547 2,463 11,010
Real estate-residential loans (319) 604 285 (771) 1,270 499
Loans to individuals (25) (28) (53) (240) - (240)
Tax-exempt loans and leases 5 309 314 (138) 976 838
Lease financings 131 22 153 (51) 278 227
Interest and fees on loans and leases 4,364 (62) 4,302 7,592 797 8,389
Total interest income 3,630 (287) 3,343 8,583 286 8,869
Interest expense:
Interest-bearing checking deposits 948 (168) 780 1,513 (283) 1,230
Money market savings 1,744 (2,753) (1,009) 5,772 (8,239) (2,467)
Regular savings - 75 75 141 997 1,138
Time deposits (478) (880) (1,358) (2,688) (4,550) (7,238)
Total time and interest-bearing deposits 2,214 (3,726) (1,512) 4,738 (12,075) (7,337)
Short-term borrowings - - - 24 (6) 18
Long-term debt (768) (101) (869) (1,661) (267) (1,928)
Subordinated notes (712) (101) (813) (2,441) 561 (1,880)
Interest on borrowings (1,480) (202) (1,682) (4,078) 288 (3,790)
Total interest expense 734 (3,928) (3,194) 660 (11,787) (11,127)
Net interest income $ 2,896 $ 3,641 $ 6,537 $ 7,923 $ 12,073 $ 19,996
Provision for Credit Losses
The provision for credit losses for the three months ended September 30, 2026 and 2025 was $9.0 million and $517 thousand, respectively. The provision for credit losses for the nine months ended September 30, 2026 and 2025 was $13.0 million and $8.5 million, respectively. During the third quarter, a nonaccrual commercial loan relationship totaling $28.3 million with a specific reserve of $9.8 million incurred charge-offs of $14.4 million. The remaining carrying value was supported by a letter of intent to sell the business. In addition, a separate $6.9 million commercial loan relationship incurred a $2.7 million charge-off and was subsequently paid in full. The following table details information pertaining to the Corporation's allowance for credit losses on loans and leases as a percentage of loans and leases held for investment at the dates indicated.
(Dollars in thousands) September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025
Allowance for credit losses, loans and leases $ 80,950 $ 89,967 $ 88,900 $ 88,165 $ 86,527
Loans and leases held for investment 7,014,437 7,041,957 6,940,212 6,914,804 6,785,482
Allowance for credit losses, loans and leases / loans and leases held for investment 1.15 % 1.28 % 1.28 % 1.28 % 1.28 %
Noninterest Income
The following table presents noninterest income for the three and nine months ended September 30, 2026 and 2025:
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
(Dollars in thousands) 2026 2025 Amount Percent 2026 2025 Amount Percent
Trust fee income $ 2,279 $ 2,230 $ 49 2.2 % $ 6,798 $ 6,537 $ 261 4.0 %
Service charges on deposit accounts 2,373 2,302 71 3.1 7,015 6,754 261 3.9
Investment advisory commission and fee income 6,433 5,671 762 13.4 18,630 16,744 1,886 11.3
Insurance commission and fee income 5,433 5,468 (35) (0.6) 18,207 17,618 589 3.3
Other service fee income 2,895 2,416 479 19.8 9,255 8,270 985 11.9
Bank owned life insurance income 988 1,908 (920) (48.2) 4,018 4,879 (861) (17.6)
Net gain on investment securities transactions - - - - 11 - 11 N/M
Net gain on mortgage banking activities 1,164 848 316 37.3 3,301 2,476 825 33.3
Net (loss) gain on sales and write-downs of other real estate owned - - - - (5,249) 4 (5,253) N/M
Other income 704 1,080 (376) (34.8) 2,477 2,557 (80) (3.1)
Total noninterest income $ 22,269 $ 21,923 $ 346 1.6 % $ 64,463 $ 65,839 $ (1,376) (2.1 %)
Three and nine months ended September 30, 2026 versus 2025
Noninterest income for the three months ended September 30, 2026 was $22.3 million, an increase of $346 thousand, or 1.6%, from the three months ended September 30, 2025. Noninterest income for the nine months ended September 30, 2026 was $64.5 million, a decrease of $1.4 million, or 2.1%, from the nine months ended September 30, 2025.
Investment advisory commission and fee income increased $762 thousand, or 13.4%, for the three months ended September 30, 2026 and $1.9 million, or 11.3%, for the nine months ended September 30, 2026 from the comparable periods in the prior year, driven by appreciation in assets under management and new customer relationships.
Other service fee income increased $479 thousand, or 19.8%, for the three months ended September 30, 2026 and $985 thousand, or 11.9%, for the nine months ended September 30, 2026 from the comparable periods in the prior year, primarily
due to increases of $393 thousand and $565 thousand in mortgage servicing fees in the respective periods. The three months ended September 30, 2026 included a $1 thousand reduction in valuation allowance recorded on mortgage servicing rights, compared to a $308 thousand increase in valuation allowance recorded in the third quarter of 2025. The nine months ended September 30, 2026 included a $285 thousand reduction in valuation allowance recorded on mortgage servicing rights, compared to a $308 thousand increase in valuation allowance recorded in the third quarter of 2025. The changes in the valuation allowance were driven by changes in interest rates during the periods and the impact this has on prepayment speed assumptions. Additionally, interchange fee income increased $59 thousand and $205 thousand for the three and nine months ended September 30, 2026.
BOLI decreased $920 thousand, or 48.2%, for the three months ended September 30, 2026 and $861 thousand, or 17.6%, for the nine months ended September 30, 2026 from the comparable periods in the prior year. The financial results for the three months ended September 30, 2025 included $967 thousand in BOLI death benefit proceeds. The financial results for the nine months ended September 30, 2026 included $1.1 million in BOLI death benefit proceeds compared to $2.1 million for the nine months ended September 30, 2025.
Net gain on mortgage banking activities increased $825 thousand, or 33.3%, for the nine months ended September 30, 2026 from the comparable period in the prior year, primarily due to increased salable volume and increased margins.
Insurance commission and fee income increased $589 thousand, or 3.3%, for the nine months ended September 30, 2026 from the comparable period in the prior year, primarily due to an increase of $383 thousand in commission on commercial policies. Additionally, contingent income increased $212 thousand for the nine months ended September 30, 2026, from $1.6 million for the nine months ended September 30, 2025 to $1.8 million for the nine months ended September 30, 2026. Contingent income is largely recognized in the first quarter of each year.
Net loss on the sale and write-down of OREO increased $5.3 million for the nine months ended September 30, 2026 from the comparable period in the prior year due to a valuation adjustment on an OREO property recorded during the second quarter of 2026. The adjustment was recorded based on an updated appraisal which reflects the property's estimated fair value less costs to sell.
Noninterest Expense
The following table presents noninterest expense for the three and nine months ended September 30, 2026 and 2025:
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
(Dollars in thousands) 2026 2025 Amount Percent 2026 2025 Amount Percent
Salaries, benefits and commissions $ 34,245 $ 31,652 $ 2,593 8.2 % $ 100,912 $ 94,014 $ 6,898 7.3 %
Net occupancy 2,817 2,675 142 5.3 8,753 8,267 486 5.9
Equipment 1,004 1,076 (72) (6.7) 3,205 3,241 (36) (1.1)
Data processing 4,603 4,263 340 8.0 13,710 13,035 675 5.2
Professional fees 1,793 1,876 (83) (4.4) 5,499 5,270 229 4.3
Marketing and advertising 786 323 463 143.3 2,408 1,174 1,234 105.1
Deposit insurance premiums 1,252 1,195 57 4.8 3,540 3,420 120 3.5
Intangible expenses 69 106 (37) (34.9) 254 367 (113) (30.8)
Restructuring charges - - - - 427 - 427 N/M
Other expense 7,433 7,503 (70) (0.9) 21,087 21,541 (454) (2.1)
Total noninterest expense $ 54,002 $ 50,669 $ 3,333 6.6 % $ 159,795 $ 150,329 $ 9,466 6.3 %
Three and nine months ended September 30, 2026 versus 2025
Noninterest expense for the three months ended September 30, 2026 was $54.0 million, an increase of $3.3 million, or 6.6%, from the three months ended September 30, 2025. Noninterest expense for the nine months ended September 30, 2026 was $159.8 million, an increase of $9.5 million, or 6.3%, from the nine months ended September 30, 2025.
Salaries, benefits and commissions increased $2.6 million, or 8.2%, for the three months ended September 30, 2026 and $6.9 million, or 7.3%, for the nine months ended September 30, 2026 from the comparable periods in the prior year. The increases were primarily driven by higher salary expense of $1.4 million and $4.0 million, respectively, due to annual merit increases and higher staffing levels, as well as increased medical claims expense of $390 thousand and $1.5 million, respectively. In addition, commission expense increased $258 thousand and $457 thousand for the three and nine months ended September 30, 2026, respectively.
Marketing and advertising expense increased $463 thousand, or 143.3%, for the three months ended September 30, 2026 and $1.2 million, or 105.1%, for the nine months ended September 30, 2026 from the comparable periods in the prior year. These increases were primarily driven by the inclusion of certain sponsorship activities that were historically reported in Other Expense and the Corporation's entry into a sponsorship agreement with a local university, enhancing community engagement and visibility.
Data processing increased $340 thousand, or 8.0%, for the three months ended September 30, 2026 and $675 thousand, or 5.2%, for the nine months ended September 30, 2026 from the comparable periods in the prior year primarily due to annual cost increases.
Restructuring charges increased $427 thousand for the nine months ended September 30, 2026 from the comparable period in the prior year related to the planned closure of two underutilized facilities: a financial center and a limited purpose banking office.
Tax Provision
The Corporation recognized a tax expense of $5.5 million and $6.4 million for the three months ended September 30, 2026 and 2025, respectively, resulting in effective tax rates of 20.2% and 20.0% for the respective periods. The Corporation recognized a tax expense of $17.5 million and $16.6 million for the nine months ended September 30, 2026 and 2025, respectively, resulting in an effective tax rate of 19.6% for both periods. The effective tax rates for the three and nine months ended September 30, 2026 and 2025 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective tax rates for the nine months ended September 30, 2026 and 2025 were favorably impacted by proceeds of BOLI death benefits and the impact of equity compensation awards.
Financial Condition
Assets
The following table presents assets at the dates indicated:
At September 30, 2026 At December 31, 2025 Change
(Dollars in thousands) Amount Percent
Cash, interest-earning deposits and federal funds sold $ 625,082 $ 553,712 $ 71,370 12.9 %
Investment securities 491,647 496,289 (4,642) (0.9)
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost 36,252 37,808 (1,556) (4.1)
Loans held for sale 11,540 15,288 (3,748) (24.5)
Loans and leases held for investment 7,014,437 6,914,804 99,633 1.4
Allowance for credit losses, loans and leases (80,950) (88,165) 7,215 (8.2)
Premises and equipment, net 44,244 45,554 (1,310) (2.9)
Operating lease right-of-use assets 24,588 25,795 (1,207) (4.7)
Goodwill and other intangibles, net 183,401 182,838 563 0.3
Bank owned life insurance 143,117 140,001 3,116 2.2
Accrued interest receivable and other assets 113,048 112,973 75 0.1
Total assets $ 8,606,406 $ 8,436,897 $ 169,509 2.0 %
Cash and Interest-Earning Deposits
Cash and interest-earning deposits increased $71.4 million, or 12.9%, from December 31, 2025, primarily due to an increase in interest-earning deposits at the Federal Reserve Bank of $74.7 million due to seasonal increases in public funds deposits.
Investment Securities
Total investment securities at September 30, 2026 decreased $4.6 million, or 0.9%, from December 31, 2025 as maturities and pay-downs of $56.6 million, sales of $7.7 million, decreases in the fair value of available-for-sale investment securities of $14.3 million, calls of $999 thousand, net amortization of purchased premiums and discounts of $635 thousand and a provision for credit losses of $70 thousand were offset by purchases of $75.7 million, which were primarily residential mortgage-backed securities.
Loans and Leases
Gross loans and leases held for investment increased $99.6 million, or 1.4%, from December 31, 2025. During the third quarter of 2026, a $35.3 million shared national credit relationship was paid-off and a $14.4 million charge-off was recorded against a $28.3 million commercial loan relationship. The increase in gross loans and leases held for investment from December 31, 2025 was primarily driven by growth in commercial construction and commercial real estate loans, after adjusting for the impact of the aforementioned payoff and charge-off. This growth was partially offset by a decrease in residential mortgage loans. For more information on the composition of the commercial loan portfolio, see "Table 4 - Loan Portfolio Overview."
Asset Quality
The Bank's strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans and leases. Performance of the loan and lease portfolio is monitored on a regular basis by Bank management and lending officers.
Nonaccrual loans and leases are loans or leases for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value, and the probability of collecting scheduled principal and interest payments when due.
At September 30, 2026, nonaccrual loans and leases were $31.2 million and had a related allowance for credit losses on loans and leases of $1.3 million. At December 31, 2025, nonaccrual loans and leases were $13.7 million and had a related allowance for credit losses on loans and leases of $3.0 million. During the first quarter of 2026, a $3.9 million commercial real estate loan was placed on nonaccrual status. Subsequent to its nonaccrual designation, the loan incurred a $195 thousand charge-off. During the second quarter of 2026, two nonaccrual commercial loans totaling $1.7 million were charged-off. These loans were fully reserved prior to charge-off. During the third quarter, a $28.3 million nonaccrual commercial loan relationship incurred charge-offs of $14.4 million. This relationship had a specific reserve of $9.8 million, and the remaining carrying value was supported by a letter of intent to sell the business. Individual reserves have been established based on current facts and management's judgments about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgments related to these credits.
Net loan and lease charge-offs for the three months ended September 30, 2026 were $17.6 million compared to $480 thousand for the same period in the prior year. Net loan and lease charge-offs for the nine months ended September 30, 2026 were $20.8 million compared to $10.0 million for the same period in the prior year. The three and nine months ended September 30, 2026 included a $14.4 million charge-off on a commercial loan relationship as previously discussed. Additionally, a separate $6.9 million commercial loan relationship incurred a $2.7 million charge-off and was subsequently paid in full within the quarter.
Other real estate owned (OREO) was $19.3 million at September 30, 2026, compared to $23.9 million at December 31, 2025. During the second quarter of 2026, a commercial real estate property incurred a $5.2 million valuation adjustment. The adjustment was recorded based on an updated appraisal which reflects the property's estimated fair value less costs to sell. Repossessed assets were $50 thousand and $65 thousand at September 30, 2026 and December 31, 2025, respectively. During the nine months ended September 30, 2026, repossessed assets totaling $138 thousand were acquired, repossessed assets totaling $19 thousand were written down and repossessed assets totaling $134 thousand were sold.
Table 3-Nonaccrual and Past Due Loans and Leases; Other Real Estate Owned; Repossessed Assets; and Related Ratios
The following table details information pertaining to the Corporation's nonperforming assets at the dates indicated.
(Dollars in thousands) At September 30, 2026 At December 31, 2025
Nonaccrual loans and leases held for investment $ 31,175 $ 13,743
Accruing loans and leases, 90 days or more past due 849 89
Total nonperforming loans and leases $ 32,024 $ 13,832
Other real estate owned 19,301 23,926
Repossessed assets 50 65
Total nonperforming assets $ 51,375 $ 37,823
Loans and leases held for investment $ 7,014,437 $ 6,914,804
Allowance for credit losses, loans and leases 80,950 88,165
Nonaccrual loans and leases with partial charge-offs 7,351 1,532
Reserves on individually analyzed loans 1,347 3,022
Allowance for credit losses, loans and leases / loans and leases held for investment 1.15 % 1.28 %
Nonaccrual loans and leases / loans and leases (held for investment) 0.44 % 0.20 %
Allowance for credit losses, loans and leases / nonaccrual loans and leases 259.66 % 641.53 %
Table 4-Loan Portfolio Overview
The following table provides summarized detail related to outstanding commercial loan balances segmented by industry description as of September 30, 2026:
(Dollars in thousands) At September 30, 2026
Industry Description Total Outstanding Balance % of Commercial Loan Portfolio
Animal Production $ 455,329 8.1 %
CRE - Retail 423,233 7.5
CRE - Multi-family 418,772 7.4
Hotels & Motels (Accommodation) 288,748 5.1
CRE - 1-4 Family Residential Investment 265,299 4.7
CRE - Office 251,633 4.5
Specialty Trade Contractors 246,422 4.4
CRE - Industrial / Warehouse 219,729 3.9
Nursing and Residential Care Facilities 178,694 3.2
Homebuilding (tract developers, remodelers) 160,851 2.8
Crop Production 148,545 2.6
Merchant Wholesalers, Durable Goods 129,070 2.3
CRE - Mixed-Use - Commercial 124,216 2.2
Repair and Maintenance 123,773 2.2
Motor Vehicle and Parts Dealers 116,703 2.1
CRE - Mixed-Use - Residential 110,303 2.0
Administrative and Support Services 105,154 1.9
Nondepository Credit Intermediation and Related Activities (except 5221) 102,468 1.8
Wood Product Manufacturing 101,088 1.8
Food Services and Drinking Places 95,014 1.7
Merchant Wholesalers, Nondurable Goods 90,023 1.6
Education 87,618 1.6
Amusement, Gambling, and Recreation Industries 86,918 1.5
Professional, Scientific, and Technical Services 80,968 1.4
Fabricated Metal Product Manufacturing 77,431 1.4
Food Manufacturing 71,518 1.3
Religious Organizations, Advocacy Groups 64,848 1.1
Personal and Laundry Services 64,679 1.1
Machinery Manufacturing 62,697 1.1
Nonresidential Building Contractors 55,532 1.0
Industries with >$50 million in outstandings $ 4,807,276 85.1 %
Industries with <$50 million in outstandings $ 842,887 14.9 %
Total Commercial Loans $ 5,650,163 100.0 %
Consumer Loans and Lease Financings Total Outstanding Balance
Real Estate-Residential Secured for Personal Purpose $ 901,823
Real Estate-Home Equity Secured for Personal Purpose 208,666
Loans to Individuals 12,239
Lease Financings 241,546
Total Consumer Loans and Lease Financings $ 1,364,274
Total $ 7,014,437
Goodwill and Other Intangible Assets
Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of core deposit and customer-related intangibles was $69 thousand and $106 thousand for the three months ended September 30, 2026 and 2025, respectively. The amortization of core deposit and customer-related intangibles was $254 thousand and $367 thousand for the nine months ended September 30, 2026 and 2025, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at September 30, 2026 and December 31, 2025.
The Corporation also has goodwill with a net carrying value of $175.5 million at September 30, 2026 and December 31, 2025, which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the nine months ended September 30, 2026 or 2025. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.
Liabilities
The following table presents liabilities at the dates indicated:
(Dollars in thousands) At September 30, 2026 At December 31, 2025 Change
Amount Percent
Deposits $ 7,354,520 $ 7,087,313 $ 267,207 3.8 %
Short-term borrowings 186 24,411 (24,225) (99.2)
Long-term debt 125,000 200,000 (75,000) (37.5)
Subordinated notes 99,084 98,867 217 0.2
Operating lease liabilities 27,106 28,531 (1,425) (5.0)
Accrued interest payable and other liabilities 51,352 54,457 (3,105) (5.7)
Total liabilities $ 7,657,248 $ 7,493,579 $ 163,669 2.2 %
Deposits
Total deposits increased $267.2 million, or 3.8%, from December 31, 2025 primarily due to seasonal increases in public funds deposits and increases in commercial deposits, partially offset by decreases in consumer and brokered deposits. At September 30, 2026, noninterest-bearing deposits totaled $1.4 billion, which represented 19.1% of total deposits compared to $1.4 billion, which represented 20.2% of total deposits at December 31, 2025. At September 30, 2026 and December 31, 2025, unprotected deposits, which exclude insured, internal, and collateralized deposit accounts, totaled $1.7 billion and $1.6 billion, respectively, which represented 23.2% and 23.2% of total deposits for the respective periods.
Borrowings
Total borrowings decreased $99.0 million, or 30.6%, from December 31, 2025, primarily due to maturities of long-term FHLB advances totaling $100.0 million, offset by a $25.0 million long-term FHLB advance, and a $24.2 million decrease in customer repurchase agreements.
Other Liabilities
Other liabilities decreased $3.1 million, or 5.7%, from December 31, 2025, primarily due to the payment of previously accrued annual incentive compensation.
Shareholders' Equity
The following table presents total shareholders' equity at the dates indicated:
(Dollars in thousands) At September 30, 2026 At December 31, 2025 Change
Amount Percent
Common stock $ 157,784 $ 157,784 $ - - %
Additional paid-in capital 303,852 304,021 (169) (0.1)
Retained earnings 643,560 591,202 52,358 8.9
Accumulated other comprehensive loss (36,155) (25,467) (10,688) 42.0
Treasury stock (119,883) (84,222) (35,661) 42.3
Total shareholders' equity $ 949,158 $ 943,318 $ 5,840 0.6 %
Total shareholders' equity increased $5.8 million, or 0.6%, from December 31, 2025. Retained earnings at September 30, 2026 increased by $52.4 million primarily due to net income of $71.6 million offset by $18.9 million in cash dividends paid
during the nine months ended September 30, 2026. Accumulated other comprehensive loss increased by $10.7 million, which was primarily attributable to decreases in the fair value of available-for-sale investment securities of $11.3 million, net of tax. Treasury stock increased $35.7 million from December 31, 2025, related to repurchases of 1,077,804 shares at a cost of $41.5 million, offset by $7.2 million of stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity.
Discussion of Segments
The Corporation has three operating segments: Banking, Wealth Management and Insurance. Detailed segment information appears in Note 13, "Segment Reporting" included in the Notes to the Condensed Unaudited Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q.
The Banking segment reported pre-tax income of $25.6 million and $32.5 million for the three months ended September 30, 2026 and 2025, respectively, and pre-tax income of $82.8 million and $85.2 million for the nine months ended September 30, 2026 and 2025, respectively. See the section of this Management's Discussion and Analysis under the headings "Results of Operations" and "Financial Condition" for a discussion of key items impacting the Banking Segment.
The Wealth Management segment reported pre-tax income of $2.7 million and $2.1 million for the three months ended September 30, 2026 and 2025, respectively, which included noninterest income of $8.8 million in 2026 and $8.0 million in 2025, and pre-tax income of $7.6 million and $5.9 million for the nine months ended September 30, 2026 and 2025, respectively, which included noninterest income of $25.7 million in 2026 and $23.5 million in 2025. The increase in pre-tax income and noninterest income for the three and nine months ended September 30, 2026 was driven by appreciation in assets under management compared to the previous year and new customer relationships. Assets under management and supervision were $6.2 billion as of September 30, 2026 and June 30, 2026, $5.8 billion as of September 30, 2025 and $5.4 billion as of June 30, 2025.
The Insurance segment reported pre-tax income of $995 thousand and $1.1 million for the three months ended September 30, 2026 and 2025, respectively, which included noninterest income of $5.4 million in 2026 and $5.5 million in 2025, and pre-tax income of $5.1 million and $4.5 million for the nine months ended September 30, 2026 and 2025, respectively, which included noninterest income of $18.2 million in 2026 and $17.7 million in 2025. The increase in pre-tax income and noninterest income for the nine months ended September 30, 2026 was primarily due to an increase of $383 thousand in commission on commercial policies. Additionally, contingent income increased $212 thousand for the nine months ended September 30, 2026, from $1.6 million for the nine months ended September 30, 2025 to $1.8 million for the nine months ended September 30, 2026. Contingent income is largely recognized in the first quarter of the year.
Capital Adequacy
Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum capital amounts and ratios as set forth in the following table. To comply with the regulatory definition of well capitalized, a depository institution must maintain minimum capital amounts and ratios as set forth in the following table.
Under current rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.50% of total risk-weighted assets. The Corporation's and Bank's intent is to maintain capital levels in excess of the capital conservation buffer, which requires Tier 1 Capital to Risk Weighted Assets to exceed 8.50% and Total Capital to Risk Weighted Assets to exceed 10.50%. The Corporation and the Bank were in compliance with these requirements at September 30, 2026.
Table 5-Regulatory Capital
The Corporation's and Bank's actual and required capital ratios as of September 30, 2026 and December 31, 2025 under regulatory capital rules were as follows.
Actual For Capital Adequacy
Purposes 		To Be Well-Capitalized
Under Prompt
Corrective Action
Provisions
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
At September 30, 2026
Total Capital (to Risk-Weighted Assets):
Corporation $ 998,044 13.79 % $ 579,074 8.00 % $ 723,842 10.00 %
Bank 864,494 12.00 576,111 8.00 720,138 10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation 814,373 11.25 434,305 6.00 579,074 8.00
Bank 779,907 10.83 432,083 6.00 576,111 8.00
Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation 814,373 11.25 325,729 4.50 470,497 6.50
Bank 779,907 10.83 324,062 4.50 468,090 6.50
Tier 1 Capital (to Average Assets):
Corporation 814,373 9.86 330,215 4.00 412,769 5.00
Bank 779,907 9.49 328,829 4.00 411,036 5.00
At December 31, 2025
Total Capital (to Risk-Weighted Assets):
Corporation $ 985,345 13.86 % $ 568,568 8.00 % $ 710,709 10.00 %
Bank 846,416 11.97 565,684 8.00 707,106 10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation 797,595 11.22 426,426 6.00 568,568 8.00
Bank 757,978 10.72 424,263 6.00 565,684 8.00
Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation 797,595 11.22 319,819 4.50 461,961 6.50
Bank 757,978 10.72 318,197 4.50 459,619 6.50
Tier 1 Capital (to Average Assets):
Corporation 797,595 9.51 335,451 4.00 419,314 5.00
Bank 757,978 9.07 334,260 4.00 417,825 5.00
At September 30, 2026 and December 31, 2025, the Corporation and the Bank continued to meet all capital adequacy requirements to which they are subject. At September 30, 2026, the Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Bank's category subsequent to September 30, 2026.
Asset/Liability Management
The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance of interest-earning assets and interest-bearing liabilities. Management's objective with regard to interest rate risk is to understand the Corporation's sensitivity to changes in interest rates and develop and implement strategies to minimize volatility while maximizing net interest income.
The Corporation uses gap analysis and earnings at risk simulation modeling to quantify exposure to interest rate risk. The Corporation uses the gap analysis to identify and monitor long-term rate exposure and uses a risk simulation model to measure short-term rate exposure. The Corporation runs various earnings simulation scenarios to quantify the impact of declining or rising interest rates on net interest income over a one- and two-year horizon. The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporate company-developed, market-based
assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
Liquidity
The Corporation, in its role as a financial intermediary, is exposed to certain liquidity risks. Liquidity refers to the Corporation's ability to ensure that sufficient cash flows and liquid assets are available to satisfy demand for loans, deposit withdrawals, repayment of borrowings, certificates of deposit at maturity, operating expenses and capital expenditures. The Corporation manages liquidity risk by measuring and monitoring liquidity sources and estimated funding needs on a daily basis. The Corporation has a contingency funding plan in place to address liquidity needs in the event of an institution-specific or a systemic financial crisis.
The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers. Our most liquid assets, unencumbered cash and cash equivalents, were $623.5 million and $549.2 million at September 30, 2026 and December 31, 2025, respectively. Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $30.8 million and $37.3 million at September 30, 2026 and December 31, 2025, respectively. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank, Federal Reserve Bank and a correspondent bank of $3.7 billion and $3.8 billion at September 30, 2026 and December 31, 2025, respectively, of which $2.0 billion and $2.3 billion was available as of September 30, 2026 and December 31, 2025, respectively. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $422.0 million and $457.0 million at September 30, 2026 and December 31, 2025, respectively. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Sources of Funds
Non-brokered deposits continue to be the largest funding source for the Corporation. These deposits are primarily generated from individuals, businesses, public funds and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.
As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and brokered deposits and other similar sources.
Cash Requirements
The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings. Certificates of deposit due within one year of September 30, 2026 totaled $915.9 million. If these deposits do not remain with the Bank, the Bank will be required to seek other sources of funds, which may be expensive to obtain. The Bank anticipates meeting these obligations by utilizing on-balance sheet liquidity and continuing to provide convenient depository and cash management services through its financial center network, thereby replacing these contractual obligations with similar funding sources at rates that are competitive in our market. The Bank may also use borrowings and brokered deposits to meet its obligations.
Commitments to extend credit are the Bank's most significant commitments in both the under and over one-year time periods. These commitments do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, refer to Note 1 to the Condensed Consolidated Financial Statements, "Summary of Significant Accounting Policies."
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