Beacon Financial Corporation

11/09/2026 | Press release | Distributed by Public on 11/09/2026 11:46

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

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. These statements include, among others, statements regarding the Company's intent, belief or expectations with respect to economic conditions, trends affecting the Company's financial condition or results of operations, and the Company's exposure to market, liquidity, interest-rate and credit risk.
Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company's forward-looking statements are reasonable, the Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other important factors, changes in interest rates; general economic conditions (including the impact of ongoing armed conflicts, tariffs, inflation, and concerns about liquidity) on a national basis or in the local markets in which the Company operates; turbulence in the capital and debt markets; competitive pressures from other financial institutions; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company's investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; the diversion of management's attention from ongoing business operations and opportunities; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; and changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other filings submitted to the SEC. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
Introduction
Beacon Financial Corporation, a Delaware corporation, is the holding company for Beacon Bank & Trust and its subsidiaries including, as of July 1, 2026, Clarendon Private.
The Company offers a wide range of commercial, business and retail banking services, including a full complement of cash management products, foreign exchange services, on-line and mobile banking services, consumer and residential loans and investment advisory services. Clarendon Private is a registered investment advisor with the SEC. Through Clarendon Private, the Company offers a wide range of wealth management services to individuals, families, endowments and foundations to help these clients meet their long-term financial goals.
As a full-service financial institution with 145 banking offices throughout New England and New York, the Bank and its subsidiaries focus their efforts on developing and deepening long-term banking relationships with qualified customers through a full complement of products, excellent customer service, and strong risk management.
The competition for loans and leases and deposits remains strong, with growth and pricing influenced by the Federal Reserve's interest rate-setting actions. Management's scenario analysis of deposit sensitivity to the current competitive rate environment suggests further deposit mix migration and increased sensitivity to interest rates.
As the interest rate environment resets to a more normal, upward-sloping yield curve with shorter-term interest rates lower than longer term interest rates, management expects the net interest margin to increase modestly. This is due to loan yields repricing higher more quickly than deposit funding costs, as well as the accretions from the purchase accounting marks. If both short- and long-term interest rates increase, net interest income models, using a projected flat balance sheet with stable deposit balances, forecast that a parallel increase in rates will have a positive impact on the Company's net interest income, net interest spread, and net interest margin. While the Company's current deposit sensitivity rate is approximately 45%, an asset sensitive balance sheet could have additional pressure on interest margins in a falling rate environment.
As discussed above, changes in interest rates could also precipitate a change in the mix and volume of the Company's deposits and loans. The future operating results of the Company will depend on its ability to maintain or increase the current net interest income, manage credit risk, increase sources of non-interest income, while managing non-interest expenses.
The Company and the Bank are supervised, examined and regulated by the FRB. As a Massachusetts-chartered trust company, Beacon Bank & Trust is subject to supervision, examination and regulation by the Massachusetts Division of Banks. The FDIC insures the Bank's deposits up to $250,000 per depositor.
The Company's common stock is traded on the New York Stock Exchange under the symbol "BBT."
Executive Overview
Balance Sheet
Total assets decreased $1.3 billion, or 7.7% on an annualized basis, to $21.9 billion as of September 30, 2026 from $23.2 billion as of December 31, 2025. The decrease was primarily driven by a decline in payroll deposits.
Cash and cash equivalents decreased $1.3 billion, or 83.0% on an annualized basis, to $0.8 billion as of September 30, 2026 from $2.0 billion as of December 31, 2025. The decrease was primarily due to a decline in payroll deposits.
Total investment securities increased $267.8 million, or 21.1% on an annualized basis, to $2.0 billion as of September 30, 2026 from $1.7 billion as of December 31, 2025.
Cash, cash equivalents and available for sale investment securities decreased $1.0 billion, or 35.8% on an annualized basis, to $2.7 billion as of September 30, 2026 from $3.7 billion as of December 31, 2025. This decreased the Company's on balance sheet liquidity from 16.1% of total assets as of December 31, 2025 to 12.5% of total assets as of September 30, 2026.
Total loans and leases decreased $377.1 million, or 2.8% on an annualized basis, to $17.7 billion as of September 30, 2026 from $18.0 billion as of December 31, 2025. The Company's commercial loan portfolios, which are composed of commercial real estate loans and commercial loans and leases, represented 78.0% of total loans and leases as of September 30, 2026 and represented 77.4% of total loans and leases as of December 31, 2025.
Total deposits decreased $1.3 billion, or 9.1% on an annualized basis, to $18.2 billion as of September 30, 2026 from $19.5 billion as of December 31, 2025, consisting of a $993.3 million decrease in payroll deposits, a $303.2 million decrease in customer deposits, and a $35.6 million decrease in brokered deposits. Core deposits, which include demand checking, NOW, non-payroll money market and savings accounts, totaled $12.9 billion, or 70.7% of total deposits, as of September 30, 2026, a decrease of $215.3 million from $13.1 billion, or 67.0% of total deposits, as of December 31, 2025. Payroll deposits totaled $0.9 billion, or 4.9% of total deposits as of September 30, 2026, a decrease of $993.3 million, or 70.5% on an annualized basis, from $1.9 billion, or 9.6% of total deposits as of December 31, 2025. Certificate of deposit balances totaled $4.1 billion, or 22.4% of total deposits as of September 30, 2026, a decrease of $87.9 million, or 2.8% on an annualized basis, from $4.2 billion, or 21.3% of total deposits as of December 31, 2025. Brokered deposits totaled $374.7 million, or 2.1% of total deposits as of September 30, 2026, a decrease of $35.6 million, or 11.6% on an annualized basis, from $410.4 million, or 2.1% of total deposits as of December 31, 2025.
Total borrowed funds decreased $12.9 million, or 2.2% on an annualized basis, to $775.5 million as of September 30, 2026 from $788.4 million as of December 31, 2025.
Asset Quality
Nonperforming assets as of September 30, 2026 totaled $163.1 million, or 0.75% of total assets, compared to $116.7 million, or 0.50% of total assets, as of December 31, 2025. Net charge-offs for the three months ended September 30, 2026 were $13.5 million, or 0.30% of average loans and leases on an annualized basis, compared to $15.9 million, or 0.51% of average loans and leases on an annualized basis, for the three months ended September 30, 2025.
The ratio of the allowance for loan and lease losses to total loans and leases was 1.32% as of September 30, 2026, compared to 1.40% as of December 31, 2025.
The ratio of the allowance for loan and lease losses to nonaccrual loans and leases was 145.24% as of September 30, 2026, compared to 221.49% as of December 31, 2025.
Capital Strength
The Company is a "well-capitalized" bank holding company as defined in the FRB's Regulation Y. The Company's common equity Tier 1 capital ratio was 11.86% as of September 30, 2026, compared to 10.95% as of December 31, 2025. The Company's Tier 1 leverage ratio was 9.99% as of September 30, 2026, compared to 9.25% as of December 31, 2025. As of September 30, 2026, the Company's Tier 1 risk-based capital ratio was 12.03%, compared to 11.12% as of December 31, 2025. The Company's Total risk-based capital ratio was 14.64% as of September 30, 2026, compared to 13.01% as of December 31, 2025.
The Company's ratio of stockholders' equity to total assets was 11.52% and 10.75% as of September 30, 2026 and December 31, 2025, respectively. The Company's ratio of tangible stockholders' equity to tangible assets (non-GAAP) was 9.35% and 8.62% as of September 30, 2026 and December 31, 2025, respectively.
Net Income (Loss)
For the three months ended September 30, 2026, the Company reported net income of $61.2 million, or $0.73 per basic and diluted share, an increase of $65.4 million, from a net loss of $(4.2) million, or $(0.05) per basic and diluted share, for the three months ended September 30, 2025. This increase in net income is primarily the result of an increase in net interest income of $68.3 million, an increase in non-interest income of $13.7 million, and a decrease in provision for credit losses on loans of $11.4 million, partially offset by an increase in the provision for income taxes of $24.5 million and an increase of $3.4 million in non-interest expense. The net loss for three months ended September 30, 2025 was driven by one-time costs of $54.3 million, pre-tax, due to the Merger. Refer to "Non-GAAP Financial Measures and Reconciliation to GAAP" for operating earnings measures. Refer to"Results of Operations" below for further discussion.
For the nine months ended September 30, 2026, the Company reported net income of $171.8 million, or $2.05 per basic and diluted share, an increase of $134.9 million, from $36.9 million, or $0.42 per basic share and $0.41 per diluted share for the nine months ended September 30, 2025. This increase in net income is primarily the result of an increase in net interest income of $277.8 million and an increase in non-interest income of $52.0 million, and a decrease in provision for credit losses of 11.5 million, partially offset by an increase in non-interest expense of $153.4 million and an increase in the provision for income taxes of $52.9 million. Refer to "Non-GAAP Financial Measures and Reconciliation to GAAP" for operating earnings measures. Refer to "Results of Operations" below for further discussion.
The annualized return on average assets was 1.11% for the three months ended September 30, 2026, compared to (0.11)% for the three months ended September 30, 2025. The annualized return on average stockholders' equity was 9.55% for the three months ended September 30, 2026, compared to (1.01)% for the three months ended September 30, 2025.
The net interest margin was 3.85% for the three months ended September 30, 2026, up from 3.62% for the three months ended September 30, 2025. The increase in the net interest margin was a result of a decrease of 42 basis points in the Company's cost of interest-bearing liabilities to 2.64% for the three months ended September 30, 2026 from 3.06% for the three months ended September 30, 2025, partially offset by a decrease in the yield on interest-earning assets of 13 basis points to 5.87% for the three months ended September 30, 2026 from 6.00% for the three months ended September 30, 2025.
The net interest margin was 3.82% for the nine months ended September 30, 2026, up from 3.41% for the nine months ended September 30, 2025. The increase in the net interest margin is a result of a decrease of 51 basis points in the Company's cost of interest bearing liabilities to 2.65% for the nine months ended September 30, 2026 from 3.16% for the nine months ended September 30, 2025, partially offset by a decrease in the yield on interest-earning assets of 3 basis points to 5.78% for the nine months ended September 30, 2026 from 5.81% for the nine months ended September 30, 2025.
The Company's net interest margin and net interest income are sensitive to the structure and level of interest rates as well as competitive pricing in all loan and deposit categories.
Critical Accounting Policies and Estimates
The SEC defines "critical accounting policies" as those involving significant judgments and difficult or complex assumptions by management, often as a result of the need to make estimates about matters that are inherently uncertain or variable, which have, or could have, a material impact on the carrying value of certain assets or net income. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. As discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, management has identified the determination of the ACL and business combinations as the Company's most critical accounting policies.
Recent Accounting Developments
In November 2025, the FASB issued ASU 2025-08, "Financial Instruments - Credit Losses (Topic 326): Purchased Loans" ("ASU 2025-08"). This ASU aligns the initial recognition of the allowance for loan losses on purchased loans between PCD and non-PCD assets by applying the gross-up approach previously required only for PCD loans. The Company elected to adopt this ASU effective January 1, 2025, and applied it to the Transaction completed in the third quarter of 2025, as permitted under the guidance.
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (subtopic 220-40): Disaggregation of Income Statement Expense". This ASU updates the disclosure and presentation requirements for certain expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The adoption is not expected to have a material impact on the Company's consolidated financial statements.
Non-GAAP Financial Measures and Reconciliation to GAAP
In addition to evaluating the Company's results of operations in accordance with GAAP, management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures, such as operating earnings metrics, the return on average tangible assets, return on average tangible equity, the tangible stockholders' equity to tangible assets ratio, tangible book value per share, and dividend payout ratio. Management believes that these non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operating performance and trends, and facilitates comparisons with the performance assessment of financial performance, including non-interest expense control, while the tangible equity ratio and tangible book value per share are used to analyze the relative strength of the Company's capital position.
The following table reconciles the Company's operating earnings, operating return on average assets and operating return on average stockholders' equity for the periods indicated:
At and for the Three Months Ended
September 30, 		At and for the Nine Months Ended September 30,
2026 2025 2026 2025
(Dollars in Thousands)
Reported Pretax Income $ 81,530 $ (8,401) $ 234,500 $ 46,675
Less:
Gain/(loss) - other (1)
542 - 542 -
Add:
Merger Day 1 CECL provision - 8,415 - 8,415
Merger and restructuring expense (2)
5,101 45,863 18,126 47,273
Operating Pretax Income 86,089 45,877 252,084 102,363
Effective tax rate 24.9 % 25.9 % 25.5 % 25.9 %
Provision for income taxes 21,436 11,864 64,281 26,471
Operating earnings after tax $ 64,653 $ 34,013 $ 187,803 $ 75,892
Operating earnings per common share:
Basic $ 0.77 $ 0.39 $ 2.24 $ 0.86
Diluted $ 0.77 $ 0.39 2.24 0.85
_______________________________________________________________________________
(1) Driven by the sale of three buildings.
(2) For the three months and nine months ended September 30, 2026 and 2025, merger and restructuring expense was related to the Transaction.
The following tables reconcile the Company's return on average tangible assets and return on average tangible stockholders' equity for the periods indicated:
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Operating earnings $ 64,653 $ 64,426 $ 58,388 $ 66,402 $ 34,013
Average total assets $ 22,044,858 $ 22,040,684 $ 22,135,857 $ 22,644,481 $ 15,210,080
Less: Average goodwill and average identified intangible assets, net 526,015 532,255 536,900 546,276 353,189
Average tangible assets $ 21,518,843 $ 21,508,429 $ 21,598,957 $ 22,098,205 $ 14,856,891
Return on average assets* 1.11% 1.17% 0.84% 0.94% (0.11)%
Less:
Gain/(Loss) - Other (after-tax)* 0.01% -% -% -% -%
Add:
Merger Day 1 CECL provision (after-tax)* -% -% -% -% 0.16%
Merger and restructuring expense (after-tax)* 0.07% -% 0.17% 0.19% 0.89%
Operating return on average assets* 1.17% 1.17% 1.01% 1.13% 0.94%
Return on average tangible assets* 1.14% 1.20% 0.86% 0.97% (0.11)%
Less:
Gain/(Loss) - Other (after-tax)* 0.01% -% -% -% -%
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Add:
Merger Day 1 CECL provision (after-tax)* - % -% -% -% 0.17%
Merger and restructuring expense (after-tax)* 0.07% -% 0.18% 0.19% 0.92%
Operating return on average tangible assets* 1.20% 1.20% 1.04% 1.16% 0.98%
Average total stockholders' equity $ 2,561,804 $ 2,539,603 $ 2,523,986 $ 2,453,480 $ 1,678,208
Less: Average goodwill and average identified intangible assets, net 526,015 532,255 536,900 546,276 353,189
Average tangible stockholders' equity $ 2,035,789 $ 2,007,348 $ 1,987,086 $ 1,907,204 $ 1,325,019
Return on average stockholders' equity* 9.55% 10.15% 7.32% 8.70% (1.01)%
Less:
Gain/(Loss) - Other (after-tax)* 0.06% -% -% -% -%
Add:
Merger Day 1 CECL provision (after-tax)* -% -% -% -% 1.49%
Merger and restructuring expense (after-tax)* 0.60% -% 1.53% 1.74% 8.10%
Operating return on average stockholders' equity* 10.09% 10.15% 8.85% 10.44% 8.58%
Return on average tangible stockholders' equity* 12.02% 12.84% 9.30% 11.19% (1.27)%
Less:
Gain/(Loss) - Other (after-tax)* 0.08% -% -% -% -%
Add:
Merger Day 1 CECL provision (after-tax)* -% -% -% -% 1.88%
Merger and restructuring expense (after-tax)* 0.75% -% 1.94% 2.24% 10.26%
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Operating return on average tangible stockholders' equity* 12.69% 12.84% 11.24% 13.44% 10.87%
*Ratios at and for the three months ended are annualized.
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Net (loss) income, as reported $ 61,182 $ 64,426 $ 46,217 $ 53,366 $ (4,221)
Average total assets $ 22,044,858 $ 22,040,684 $ 22,135,857 $ 22,644,481 $ 15,210,080
Less: Average goodwill and average identified intangible assets, net 526,015 532,255 536,900 546,276 353,189
Average tangible assets $ 21,518,843 $ 21,508,429 $ 21,598,957 $ 22,098,205 $ 14,856,891
Return on average tangible assets (annualized) 1.14% 1.20% 0.86% 0.97% (0.11)%
Average total stockholders' equity $ 2,561,804 $ 2,539,603 $ 2,523,986 $ 2,453,480 $ 1,678,208
Less: Average goodwill and average identified intangible assets, net 526,015 532,255 536,900 546,276 353,189
Average tangible stockholders' equity $ 2,035,789 $ 2,007,348 $ 1,987,086 $ 1,907,204 $ 1,325,019
Return on average tangible stockholders' equity (annualized) 12.02% 12.84% 9.30% 11.19% (1.27)%
The following table reconciles the Company's tangible equity ratio for the periods indicated:
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Total stockholders' equity $ 2,519,589 $ 2,539,796 $ 2,504,781 $ 2,496,061 $ 2,461,015
Less: Goodwill and identified intangible assets, net 522,138 530,264 536,503 541,175 551,810
Tangible stockholders' equity $ 1,997,451 $ 2,009,532 $ 1,968,278 $ 1,954,886 $ 1,909,205
Total assets $ 21,875,584 $ 22,250,964 $ 22,227,616 $ 23,220,372 $ 22,867,458
Less: Goodwill and identified intangible assets, net 522,138 530,264 536,503 541,175 551,810
Tangible assets $ 21,353,446 $ 21,720,700 $ 21,691,113 $ 22,679,197 $ 22,315,648
Tangible stockholders' equity to tangible assets 9.35% 9.25% 9.07% 8.62% 8.56%
The following table reconciles the Company's tangible book value per share for the periods indicated:
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Tangible stockholders' equity $ 1,997,451 $ 2,009,532 $ 1,968,278 $ 1,954,886 $ 1,909,205
Common shares issued 89,576,403 89,576,403 89,576,403 89,576,403 89,576,403
Less:
Treasury shares 5,254,101 5,211,670 5,548,772 5,545,511 5,449,039
Unvested restricted stock 439,292 548,647 211,545 214,806 218,503
Common shares outstanding 83,883,010 83,816,086 83,816,086 83,816,086 83,908,861
Tangible book value per share $ 23.81 $ 23.98 $ 23.48 $ 23.32 $ 22.75
The following table reconciles the Company's dividend payout ratio for the periods indicated:
Three Months Ended
September 30,
2026 		June 30,
2026 		March 31,
2026 		December 31,
2025 		September 30,
2025
(Dollars in Thousands)
Dividends paid $ 27,031 $ 27,031 $ 27,034 $ 27,031 $ 12,029
Net income, as reported $ 61,182 $ 64,426 $ 46,217 $ 53,366 $ (4,221)
Dividend payout ratio 44.18% 41.96% 58.49% 50.65% (284.98)%
Financial Condition
Loans and Leases
The following table summarizes the Company's portfolio of loan and lease receivables as of the dates indicated:
At September 30, 2026 At December 31, 2025
Balance Percent
of Total 		Balance Percent
of Total
(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate $ 7,099,618 40.2 % $ 7,235,397 40.1 %
Multi-family mortgage 2,189,063 12.4 % 2,155,980 12.0 %
Construction 421,527 2.4 % 620,717 3.4 %
Total commercial real estate loans 9,710,208 55.0 % 10,012,094 55.5 %
Commercial loans and leases:
Commercial 3,049,984 17.3 % 2,784,152 15.4 %
Equipment financing 1,000,805 5.7 % 1,163,211 6.5 %
Total commercial loans and leases 4,050,789 23.0 % 3,947,363 21.9 %
Consumer loans:
Residential mortgage 3,097,142 17.5 % 3,233,425 17.9 %
Home equity 668,241 3.8 % 695,307 3.9 %
Other consumer 126,036 0.7 % 141,363 0.8 %
Total consumer loans 3,891,419 22.0 % 4,070,095 22.6 %
Total loans and leases 17,652,416 100.0 % 18,029,552 100.0 %
Allowance for loan and lease losses (233,188) (252,839)
Net loans and leases $ 17,419,228 $ 17,776,713
The following table sets forth the growth in the Company's loan and lease portfolios during the nine months ended September 30, 2026:
At September 30,
2026 		At December 31,
2025 		Dollar Change Percent Change
(Annualized)
(Dollars in Thousands)
Commercial real estate $ 9,710,208 $ 10,012,094 $ (301,886) (4.0) %
Commercial 4,050,789 3,947,363 103,426 3.5 %
Consumer 3,891,419 4,070,095 (178,676) (5.9) %
Total loans and leases $ 17,652,416 $ 18,029,552 $ (377,136) (4.2) %
The Company's loan portfolio consists primarily of first mortgage loans secured by commercial, multi-family and residential real estate properties located in the Company's primary lending area, loans to business entities, including commercial lines of credit, loans to condominium associations and loans and leases used to finance equipment used by small businesses. The Company also provides financing for construction and development projects, home equity and other consumer loans.
The Company employs seasoned commercial lenders and retail bankers who rely on community and business contacts as well as referrals from customers, attorneys and other professionals to generate loans and deposits. Existing borrowers are also an important source of business since many of them have more than one loan outstanding with the Company. The Company's ability to originate loans depends on the strength of the economy, trends in interest rates, and levels of customer demand and market competition.
The Company's current policy is that a total credit exposure to one obligor relationship may not exceed $90.0 million unless approved by the Company's Credit Committee. As of September 30, 2026, there was one borrower with loans and commitments over $90.0 million. The total of those loans and commitments was $95.0 million, or 0.54% of total loans and commitments, as of September 30, 2026. As of December 31, 2025, there was one borrower with loans and commitments over
$90.0 million. The total of those loans and commitments was $94.9 million, or 0.8% of total loans and commitments, as of December 31, 2025.
The Company has written underwriting policies to control the inherent risks in loan origination. The policies address approval limits, loan-to-value ratios, appraisal requirements, debt service coverage ratios, loan concentration limits and other matters relevant to loan underwriting.
Commercial Real Estate Loans
The commercial real estate portfolio is composed of commercial real estate loans, multi-family mortgage loans, and construction loans and is the largest component of the Company's overall loan portfolio, representing 55.0% of total loans and leases outstanding as of September 30, 2026.
Typically, commercial real estate loans are larger in size and involve a greater degree of risk than owner-occupied residential mortgage loans. Loan repayment is usually dependent on the successful operation and management of the properties and the value of the properties securing the loans. Economic conditions can greatly affect cash flows and property values.
A number of factors are considered in originating commercial real estate and multi-family mortgage loans. The qualifications and financial condition of the borrower (including credit history), as well as the potential income generation and the value and condition of the underlying property, are evaluated. When evaluating the qualifications of the borrower, the Company considers the financial resources of the borrower, the borrower's experience in owning or managing similar property and the borrower's payment history with the Company and other financial institutions. Factors considered in evaluating the underlying property include the net operating income of the mortgaged premises before debt service and depreciation, the debt service coverage ratio (the ratio of cash flow before debt service to debt service), the use of conservative capitalization rates, and the ratio of the loan amount to the appraised value. Generally, personal guarantees are obtained from commercial real estate loan borrowers.
Commercial real estate and multi-family mortgage loans are typically originated for terms of five to fifteen years with amortization periods of 20 to 30 years. Many of the loans are priced at inception on a fixed-rate basis generally for periods ranging from two to five years with repricing periods for longer-term loans. When possible, prepayment penalties are included in loan covenants on these loans. For commercial customers who are interested in loans with terms longer than five years, the Company offers loan level derivatives to accommodate customer need.
The Company's urban and suburban market area is characterized by a large number of apartment buildings, condominiums and office buildings. As a result, commercial real estate and multi-family mortgage lending has been a significant part of the Company's activities for many years. These types of loans typically generate higher yields, but also involve greater credit risk. Many of the Company's borrowers have more than one multi-family or commercial real estate loan outstanding with the Company.
The Company's commercial real estate portfolio is composed primarily of loans secured by multi-family buildings ($2.7 billion), retail stores ($1.9 billion), industrial properties ($1.7 billion), office buildings ($1.1 billion), and lodging services ($586.6 million) as of September 30, 2026.
The following table presents the percentage of the Company's commercial real estate loan portfolio by borrower type that is owner and non-owner occupied as of September 30, 2026.
At September 30, 2026
Owner Occupied Non-Owner Occupied Total
Borrower type:
Multi-family buildings - % 27.9 % 27.9 %
Retail stores 5.0 % 15.1 % 20.1 %
Industrial properties 5.4 % 11.8 % 17.2 %
Office buildings 1.1 % 10.5 % 11.6 %
Lodging services 0.5 % 5.6 % 6.1 %
Other 5.3 % 11.8 % 17.1 %
Total 17.3 % 82.7 % 100.0 %
The following table presents the percentage of the Company's commercial real estate loan portfolio by geographic concentration that is owner and non-owner occupied as of September 30, 2026.
At September 30, 2026
Owner Occupied Non-Owner Occupied Total
Geographic concentration:
New England 9.7 % 49.0 % 58.7 %
New York 2.7 % 12.0 % 14.7 %
Other 4.9 % 21.7 % 26.6 %
Total 17.3 % 82.7 % 100.0 %
Construction and development financing is generally considered to involve a higher degree of risk than long-term financing on improved, occupied real estate and thus has lower concentration limits than do other commercial credit classes. Risk of loss on a construction loan is largely dependent upon the accuracy of the initial estimate of construction costs, the estimated time to sell or rent the completed property at an adequate price or rate of occupancy, and market conditions. If the estimates and projections prove to be inaccurate, the Company may be confronted with a project which, upon completion, has a value that is insufficient to assure full loan repayment.
Criteria applied in underwriting construction loans for which the primary source of repayment is the sale of the property are different from the criteria applied in underwriting construction loans for which the primary source of repayment is the stabilized cash flow from the completed project. For those loans where the primary source of repayment is from resale of the property, in addition to the normal credit analysis performed for other loans, the Company also analyzes project costs, the attractiveness of the property in relation to the market in which it is located and demand within the market area. For those construction loans where the source of repayment is the stabilized cash flow from the completed project, the Company analyzes not only project costs but also how long it might take to achieve satisfactory occupancy and the reasonableness of projected rental rates in relation to market rental rates.
Commercial Loans
The Company's commercial loan and lease portfolio is composed of commercial loans & equipment financing loans and leases, which represented 23.0% of total loans outstanding as of September 30, 2026.
The Company's commercial loan and lease portfolio is composed primarily of loans and leases to small to medium sized businesses ($1.4 billion), food services ($509.1 million), rental and leasing services ($402.2 million), manufacturing ($326.0 million), retail ($217.2 million), transportation services ($142.3 million), and recreation services ($124.8 million) as of September 30, 2026.
The following table presents the percentage of the Company's commercial loan portfolio by geographic concentration as of September 30, 2026.
At September 30, 2026
Total
Geographic concentration:
New England 51.7 %
New York 14.3 %
Other 34.0 %
Total 100.0 %
The Company provides commercial banking services to companies in its market areas. Product offerings include lines of credit, term loans, letters of credit, deposit services and cash management. These types of credit facilities have as their primary source of repayment cash flows from the operations of businesses. Interest rates offered are available on a floating basis tied to the prime rate or a similar index or on a fixed-rate basis referenced on the FHLB indices.
Credit extensions are made to established businesses on the basis of loan purpose and assessment of capacity to repay as determined by an analysis of their financial statements, the nature of collateral to secure the credit extension and, in most instances, the personal guarantee of the owner of the business as well as industry and general economic conditions.
The Company's equipment financing divisions focus on market niches in which its lenders have deep experience and industry contacts, and on making loans to customers with business experience. An important part of the Company's equipment financing loan origination volume comes from equipment manufacturers, distributors, and owner-operated start-ups as well as existing customers that are expanding their operations. The equipment financing portfolio is composed primarily of loans to
finance vended-laundry, and to a lesser degree larger industrial laundries, tow trucks, fitness, and convenience/grocery stores. Typically, the loans are priced at a fixed rate of interest and require monthly payments over their 5- to 10-year life. The yields earned on equipment financing loans are higher than those earned on the commercial loans made by the Bank because they involve a higher degree of credit risk. Equipment financing customers are typically small-business owners who operate with limited financial resources and who face greater risks when the economy weakens or unforeseen adverse events arise. Because of these characteristics, personal guarantees of borrowers are usually obtained along with liens on available assets. The size of loan is determined by an analysis of cash flow and other characteristics pertaining to the business and the equipment to be financed, based on detailed revenue and profitability data of similar operations.
Consumer Loans
The consumer loan portfolio, which is composed of residential mortgage loans, home equity loans and lines of credit, and other consumer loans, represented 22.0% of total loans outstanding as of September 30, 2026. The Company focuses its mortgage and home equity lending on existing and new customers within its branch networks.
The Company originates adjustable- and fixed-rate residential mortgage loans secured by one- to four-family residences. Each residential mortgage loan granted is subject to a satisfactorily completed application, employment verification, credit history and a demonstrated ability to repay the debt. Generally, loans are not made when the loan-to-value ratio exceeds 80% unless private mortgage insurance is obtained and/or there is a financially strong guarantor. Appraisals are performed by outside independent fee appraisers.
Underwriting guidelines for home equity loans and lines of credit are similar to those for residential mortgage loans. Home equity loans and lines of credit are limited to no more than 80% of the appraised value of the property securing the loan including the amount of any existing first mortgage liens.
Other consumer loans have historically been a modest part of the Company's loan originations. As of September 30, 2026, other consumer loans equaled $126.0 million, or 0.7% of total loans outstanding.
Asset Quality
Criticized and Classified Assets
The Company's management rates certain loans and leases as OAEM, "substandard" or "doubtful" based on criteria established under banking regulations. These loans and leases are collectively referred to as "criticized" assets. Loans and leases rated OAEM have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects of the loan or lease at some future date. Loans and leases rated as substandard are inadequately protected by the payment capacity of the obligor or of the collateral pledged, if any. Substandard loans and leases have a well-defined weakness or weaknesses that jeopardize the liquidation of debt and are characterized by the distinct possibility that the Company will sustain some loss if existing deficiencies are not corrected. Loans and leases rated as doubtful have well-defined weaknesses that jeopardize the orderly liquidation of debt and partial loss of principal is likely. As of September 30, 2026, the Company had $762.8 million of total assets that were designated as criticized. This compares to $683.7 million of assets designated as criticized as of December 31, 2025. The increase of $79.1 million in criticized assets was primarily driven by downgrades in four loans in our commercial real estate portfolio.
Nonperforming Assets
"Nonperforming assets" consist of nonaccrual loans and leases, OREO and other repossessed assets. Under certain circumstances, the Company may restructure the terms of a loan or lease as a concession to a borrower, except for acquired loans and leases which are individually evaluated against expected performance on the date of acquisition. These restructured loans and leases are generally considered "nonperforming loans and leases" until a history of collection of at least six months on the restructured terms of the loan or lease has been established. OREO consists of real estate acquired through foreclosure proceedings and real estate acquired through acceptance of a deed in lieu of foreclosure. Other repossessed assets consist of assets that have been acquired through foreclosure that are not real estate and are included in other assets on the Company's unaudited consolidated balance sheets.
Accrual of interest on loans generally is discontinued when contractual payment of principal or interest becomes past due 90 days or, if in management's judgment, reasonable doubt exists as to the full timely collection of interest. When a loan is placed on nonaccrual status, interest accruals cease and all previously accrued and uncollected interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least six months of performance has been achieved.
In cases where a borrower experiences financial difficulties and the Company makes or reasonably expects to make certain concessionary modifications to contractual terms, the loan is classified as a modified loan. In determining whether a debtor is experiencing financial difficulties, the Company considers, among other factors, if the debtor is in payment default or is likely to be in payment default in the foreseeable future without the modification, the debtor declared or is in the process of declaring bankruptcy, there is substantial doubt that the debtor will continue as a going concern, the debtor's entity-specific projected cash flows will not be sufficient to service its debt, or the debtor cannot obtain funds from sources other than the existing creditors at market terms for debt with similar risk characteristics.
As of September 30, 2026, the Company had nonperforming assets of $163.1 million, representing 0.75% of total assets, compared to nonperforming assets of $116.7 million, or 0.50% of total assets as of December 31, 2025. The increase of $46.3 million in nonperforming assets during the nine months ended September 30, 2026 was primarily driven by increases in nonperforming commercial real estate, multi-family and commercial loans.
The Company evaluates the underlying collateral of each nonaccrual loan and lease and continues to pursue the collection of interest and principal. Management believes that the current level of nonperforming assets remains manageable relative to the size of the Company's loan and lease portfolio. If economic conditions were to worsen or if the marketplace were to experience prolonged economic stress, it is likely that the level of nonperforming assets would increase, as would the level of charged-off loans.
Past Due and Accruing
As of September 30, 2026, the Company had $27.8 million loans and leases greater than 90 days past due and accruing, compared to $37.8 million loans as of December 31, 2025.
The following table sets forth information regarding nonperforming assets for the periods indicated:
At September 30, 2026 At December 31, 2025
(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate $ 77,443 $ 41,246
Multi-family mortgage 8,673 4,065
Total commercial real estate loans 86,116 45,311
Commercial 20,396 16,716
Equipment financing 44,862 42,718
Total commercial loans and leases 65,258 59,434
Residential mortgage 5,876 6,465
Home equity 2,954 2,811
Other consumer 350 135
Total consumer loans 9,180 9,411
Total nonaccrual loans and leases 160,554 114,156
Other real estate owned 70 -
Other repossessed assets 2,435 2,591
Total nonperforming assets $ 163,059 $ 116,747
Loans and leases past due greater than 90 days and accruing $ 27,849 $ 37,823
Total delinquent loans and leases 61-90 days past due 21,785 20,244
Total nonperforming loans and leases as a percentage of total loans and leases 0.91 % 0.63 %
Total nonperforming assets as a percentage of total assets 0.75 % 0.50 %
Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases 0.12 % 0.11 %
Allowance for Credit Losses
The ACL consists of general and specific allowances and reflects management's estimate of expected loan and lease losses over the life of the loan or lease. Management uses a consistent and systematic process and methodology to evaluate the adequacy of the ACL on a quarterly basis. Management continuously evaluates and challenges inputs and assumptions in the ACL.
While management evaluates currently available information in establishing the ACL, future adjustments to the allowance for loan and lease losses may be necessary if conditions differ substantially from the assumptions used in making the evaluations. Management performs a comprehensive review of the ACL on a quarterly basis. In addition, various regulatory agencies, as an integral part of their examination process, periodically review a financial institution's ACL and carrying amounts of OREO. Such agencies may require the financial institution to recognize additions or reductions to the allowance based on their judgments about information available to them at the time of their examination.
The Company's allowance methodology provides a quantification of estimated losses in the portfolio. Under the current methodology, management estimates losses over the life of the loan using reasonable and supportable forecasts. Forecasts, loan data, and model documentation are extensively analyzed and reviewed throughout the quarter to ensure estimated losses are appropriate at quarter end. Qualitative adjustments are applied to account for risk factors not captured by the model. These adjustments are thoroughly reviewed and documented to provide clarity and a reasonable basis for any deviations from the
model. For September 30, 2026, qualitative adjustments were applied to the commercial real estate, commercial, and consumer portfolios resulting in a net addition in total reserves compared to modeled calculations.
The following tables present the changes in the allowance for loan and lease losses by portfolio category for the three and nine months ended September 30, 2026 and 2025.
At and for the Three Months Ended September 30, 2026
Commercial
Real Estate 		Commercial Consumer Total
(In Thousands)
Balance at June 30, 2026 $ 147,085 $ 81,821 $ 9,283 $ 238,189
Charge-offs (3,725) (10,874) (115) (14,714)
Recoveries 294 786 164 1,244
Provision (credit) for loan and lease losses excluding unfunded commitments 13,235 (4,862) 96 8,469
Balance at September 30, 2026 $ 156,889 $ 66,871 $ 9,428 $ 233,188
Total loans and leases $ 9,710,208 $ 4,050,789 $ 3,891,419 $ 17,652,416
Total allowance for loan and lease losses as a percentage of total loans and leases 1.62 % 1.65 % 0.24 % 1.32 %
At and for the Three Months Ended September 30, 2025
Commercial
Real Estate 		Commercial Consumer Total
(In Thousands)
Balance at June 30, 2025 $ 73,115 $ 46,469 $ 7,141 $ 126,725
Charge-offs (926) (15,694) (42) (16,662)
Recoveries 107 578 120 805
Merger Day 1 allowance on non-PCD loans 31,820 17,891 17,518 67,229
Merger Day 1 allowance on PCD loans 38,744 24,294 1,473 64,511
Provision (credit) for loan and lease losses 5,040 6,637 (550) 11,127
Balance at September 30, 2025 $ 147,900 $ 80,175 $ 25,660 $ 253,735
Total loans and leases $ 10,247,090 $ 3,950,693 $ 4,107,596 $ 18,305,379
Total allowance for loan and lease losses as a percentage of total loans and leases 1.44 % 2.03 % 0.62 % 1.39 %
At and for the Nine Months Ended September 30, 2026
Commercial
Real Estate 		Commercial Consumer Total
(In Thousands)
Balance at December 31, 2025 $ 142,391 $ 86,490 $ 23,958 $ 252,839
Charge-offs (18,630) (26,866) (451) (45,947)
Recoveries 786 3,270 590 4,646
Provision (credit) for loan and lease losses excluding unfunded commitments 32,342 3,977 (14,669) 21,650
Balance at September 30, 2026 $ 156,889 $ 66,871 $ 9,428 $ 233,188
Total loans and leases $ 9,710,208 $ 4,050,789 $ 3,891,419 $ 17,652,416
Total allowance for loan and lease losses as a percentage of total loans and leases 1.62 % 1.65 % 0.24 % 1.32 %
At and for the Nine Months Ended September 30, 2025
Commercial
Real Estate 		Commercial Consumer Total
(In Thousands)
Balance at December 31, 2024 $ 74,171 $ 44,169 $ 6,743 $ 125,083
Charge-offs (4,449) (26,830) (55) (31,334)
Recoveries 107 2,427 220 2,754
Merger Day 1 allowance on non-PCD loans 31,820 17,891 17,518 67,229
Merger Day 1 allowance on PCD loans 38,744 24,294 1,473 64,511
Provision (credit) for loan and lease losses 7,507 18,224 (239) 25,492
Balance at September 30, 2025 $ 147,900 $ 80,175 $ 25,660 $ 253,735
Total loans and leases $ 10,247,090 $ 3,950,693 $ 4,107,596 $ 18,305,379
Total allowance for loan and lease losses as a percentage of total loans and leases 1.44 % 2.03 % 0.62 % 1.39 %
At September 30, 2026, the allowance for loan and lease losses decreased to $233.2 million, or 1.32% of total loans and leases outstanding. This compared to an allowance for loan and lease losses of $252.8 million, or 1.40% of total loans and leases outstanding, as of December 31, 2025.
Net charge-offs on loans and leases for the three months ended September 30, 2026 and 2025 were $13.5 million and $15.9 million, respectively. As a percentage of average loans and leases, annualized net charge-offs for the three months ended September 30, 2026 and 2025 were 0.30% and 0.51%, respectively. The year over year decrease in net charge-offs was primarily due to decreases in net charge-offs of $5.0 million in commercial loans, offset by increases in net charge-offs of $2.6 million in commercial real estate loans.
As of September 30, 2026, the Company had $268.3 million loans and leases delinquent more than 30 days, compared to $176.2 million loans as of December 31, 2025. The increase of $92.1 million was primary driven by higher delinquencies in commercial real estate mortgage and commercial loans and leases.
The following table sets forth the Company's percent of allowance for loan and lease losses to the total allowance for loan and lease losses, and the percent of loans to total loans for each of the categories listed at the dates indicated.
At September 30, 2026 At December 31, 2025
Amount Percent of
Allowance in Each Category
to Total
Allowance 		Percent of
Loans
in Each
Category to
Total
Loans 		Amount Percent of
Allowance in Each Category
to Total Allowance 		Percent of
Loans
in Each
Category to
Total
Loans
(Dollars in Thousands)
Commercial real estate $ 125,391 53.8 % 40.2 % $ 109,525 43.3 % 40.1 %
Multi-family mortgage 22,002 9.4 % 12.4 % 22,168 8.8 % 12.0 %
Construction 9,496 4.1 % 2.4 % 10,698 4.2 % 3.4 %
Total commercial real estate loans 156,889 67.3 % 55.0 % 142,391 56.3 % 55.5 %
Commercial 30,643 13.1 % 17.3 % 53,651 21.2 % 15.4 %
Equipment financing 36,228 15.5 % 5.7 % 32,839 13.0 % 6.5 %
Total commercial loans 66,871 28.6 % 23.0 % 86,490 34.2 % 21.9 %
Residential mortgage 5,445 2.4 % 17.5 % 16,558 6.5 % 17.9 %
Home equity 3,319 1.4 % 3.8 % 4,980 2.0 % 3.9 %
Other consumer 664 0.3 % 0.7 % 2,420 1.0 % 0.8 %
Total consumer loans 9,428 4.1 % 22.0 % 23,958 9.5 % 22.6 %
Total $ 233,188 100.0 % 100.0 % $ 252,839 100.0 % 100.0 %
Management believes that the allowance for loan and lease losses as of September 30, 2026 is appropriate.
Investment Securities
The investment portfolio exists primarily for liquidity purposes, and secondarily as a source of interest and dividend income, interest-rate risk management and tax planning as a counterbalance to loan and deposit flows. Investment securities are utilized as part of the Company's asset/liability management and may be sold in response to, or in anticipation of, factors such as changes in market conditions and interest rates, security prepayment rates, deposit outflows, liquidity concentrations and regulatory capital requirements.
The investment policy of the Company, which is reviewed and approved by the Board of Directors on an annual basis, specifies the types of investments that are acceptable, required investment ratings by at least one nationally recognized rating agency, concentration limits and duration guidelines. Compliance with the investment policy is monitored on a regular basis. In general, the Company seeks to maintain a high degree of liquidity and targets cash, cash equivalents and investment securities available-for-sale balances between 10% and 14% of total assets.
Cash, cash equivalents, and investment securities decreased $1.0 billion to $2.7 billion as of September 30, 2026, from $3.7 billion as of December 31, 2025. Cash, cash equivalents, and investment securities were 12.5% of total assets as of September 30, 2026, compared to 16.1% of total assets at December 31, 2025.
The following table sets forth certain information regarding the amortized cost and market value of the Company's investment securities at the dates indicated:
At September 30, 2026 At December 31, 2025
Amortized
Cost 		Fair Value Amortized
Cost 		Fair Value
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 329,431 $ 309,133 $ 185,449 $ 173,677
GSE CMOs 715,061 673,629 500,446 496,570
GSE MBSs 326,274 300,461 334,476 325,745
Municipal obligations 211,087 197,590 231,924 240,216
Corporate debt obligations 19,981 20,359 39,209 40,023
U.S. Treasury bonds 477,249 454,857 424,214 412,037
Foreign government obligations 500 500 500 500
Total investment securities available-for-sale $ 2,079,583 $ 1,956,529 $ 1,716,218 $ 1,688,768
The fair value of investment securities is based principally on market prices and dealer quotes received from third-party, nationally-recognized pricing services for identical investment securities such as U.S. Treasury and agency securities. The Company's marketable equity securities are priced this way and are included in Level 1 of the fair value hierarchy in accordance with the "Fair Value Measurements and Disclosures" Topic of the FASB, or ASC 820. These prices are validated by comparing the primary pricing source with an alternative pricing source when available. When quoted market prices for identical securities are unavailable, the Company uses market prices provided by independent pricing services based on recent trading activity and other observable information, including but not limited to market interest-rate curves, referenced credit spreads and estimated prepayment speeds where applicable. These investments include certain U.S. and government agency debt securities, municipal and corporate debt securities, GSE residential MBSs and CMOs, all of which are included in Level 2. Certain fair values are estimated using pricing models and are included in Level 3.
Additionally, management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with their expectation of the market. Changes in the prices obtained from the pricing service are analyzed from month to month, taking into consideration changes in market conditions including changes in mortgage spreads, changes in U.S. Treasury security yields and changes in generic pricing of 15-year and 30-year securities. Additional analysis may include a review of prices provided by other independent parties, a yield analysis, a review of average life changes using Bloomberg analytics and a review of historical pricing for the particular security.
Maturities, calls and principal repayments for investment securities available-for-sale totaled $267.7 million for the nine months ended September 30, 2026 compared to $98.9 million for the same period in 2025. For the nine months ended September 30, 2026, the Company did not sell any investment securities available-for-sale. For the nine months ended September 30, 2025, the Company sold investment securities available-for-sale resulting in proceeds of $176.3 million. For the
nine months ended September 30, 2026, the Company purchased $615.9 million of investment securities available-for-sale, compared to $11.7 million for the same period in 2025.
As of September 30, 2026, the fair value of all investment securities available-for-sale was $2.0 billion with $123.1 million of net unrealized losses, compared to a fair value of $1.7 billion and net unrealized losses of $27.5 million as of December 31, 2025. As of September 30, 2026, $1.9 billion, or 95.4%, of the portfolio, had gross unrealized losses of $123.9 million. This compares to $552.9 million, or 32.7%, of the portfolio with gross unrealized losses of $44.7 million as of December 31, 2025. The Company's unrealized loss position increased in 2026 primarily due to an increase in current market rates.
Restricted Equity Securities
FHLB of Boston and FHLB of New York Stock-The Company invests in the stock of the FHLB of Boston and FHLB of New York as a requirement to borrow funds from the FHLB. As of September 30, 2026, the Company owned stock in the FHLBs with a carrying value of $21.6 million, a decrease of $7.8 million from $29.4 million as of December 31, 2025.
Federal Reserve Bank Stock-The Company invests in the stock of the Federal Reserve Bank of Boston and the Federal Reserve Bank of New York as a condition of the Bank's membership in the Federal Reserve System. As of September 30, 2026 the Company owned stock in the Federal Reserve Banks with a carrying value of $57.3 million, a decrease of $0.1 million from $57.4 million as of December 31, 2025.
Other Stock-The Company invests in a small number of other restricted equity securities. As of September 30, 2026, the Company owned stock in other restricted equity securities with a carrying value of $0.6 million, unchanged from December 31, 2025.
Deposits
The following table presents the Company's deposit mix at the dates indicated.
At September 30, 2026 At December 31, 2025
Amount Percent
of Total 		Weighted
Average
Rate 		Amount Percent
of Total 		Weighted
Average
Rate
(Dollars in Thousands)
Non-interest-bearing deposits:
Demand checking accounts $ 3,886,512 21.4 % - % $ 4,032,529 20.7 % - %
Interest-bearing deposits:
NOW accounts 1,570,468 8.6 % 0.88 % 1,445,894 7.4 % 0.88 %
Savings accounts 3,045,425 16.7 % 1.88 % 2,954,029 15.1 % 1.82 %
Money market accounts 4,351,324 23.9 % 2.45 % 4,636,548 23.8 % 2.62 %
Payroll deposit accounts 885,465 4.9 % 3.16 % 1,878,758 9.6 % 3.42 %
Certificate of deposit accounts 4,068,649 22.4 % 3.36 % 4,156,540 21.3 % 3.59 %
Brokered deposit accounts 374,717 2.1 % 4.00 % 410,359 2.1 % 4.13 %
Total interest-bearing deposits 14,296,048 78.6 % 2.50 % 15,482,128 79.3 % 2.60 %
Total deposits $ 18,182,560 100.0 % 1.97 % $ 19,514,657 100.0 % 2.06 %
Total deposits decreased $1.3 billion to $18.2 billion as of September 30, 2026, compared to $19.5 billion as of December 31, 2025. Deposits as a percentage of total assets was 83.1% and 84.0% as of September 30, 2026 and December 31, 2025, respectively.
During the nine months ended September 30, 2026, Core deposits decreased $0.2 billion. The ratio of core deposits to total deposits increased to 70.7% as of September 30, 2026 from 67.0% as of December 31, 2025.
Payroll deposits totaled $0.9 billion as of September 30, 2026, compared to $1.9 billion as of December 31, 2025.
Certificate of deposit accounts were $4.1 billion as of September 30, 2026, compared to $4.2 billion as of December 31, 2025. Certificate of deposit accounts increased as a percentage of total deposits to 22.4% as of September 30, 2026 from 21.3% as of December 31, 2025.
Brokered deposits decreased $35.6 million to $374.7 million as of September 30, 2026, compared to $410.4 million as of December 31, 2025. Brokered deposits as a percentage of total deposits was 2.1% as of September 30, 2026 and December 31, 2025. Brokered deposits allow the Company to seek additional funding by attracting deposits from outside the Company's core market. The Company's investment policy limits the total amount of brokered deposits the Company may hold to 15% of total assets.
The following table sets forth the distribution of the average balances of the Company's deposit accounts for the periods indicated and the weighted average interest rates on each category of deposits presented. Averages for the periods presented are based on daily balances.
Three Months Ended September 30,
2026 2025
Average
Balance 		Percent
of Total
Average
Deposits 		Weighted
Average
Rate 		Average
Balance 		Percent
of Total
Average
Deposits 		Weighted
Average
Rate
(Dollars in Thousands)
Core deposits:
Non-interest-bearing demand checking accounts $ 3,829,078 20.9 % - % $ 2,414,119 19.6 % - %
NOW accounts 1,588,380 8.7 % 0.88 % 917,794 7.5 % 0.77 %
Savings accounts 3,044,938 16.6 % 1.87 % 2,201,808 17.9 % 2.32 %
Money market accounts 4,470,968 24.4 % 2.42 % 3,024,926 24.6 % 3.82 %
Total core deposits 12,933,364 70.6 % 1.40 % 8,558,647 69.6 % 1.35 %
Certificate of deposit accounts 4,075,397 22.2 % 3.45 % 2,607,493 21.2 % 3.80 %
Brokered deposit accounts 317,741 1.7 % 4.05 % 823,059 6.7 % 4.42 %
Payroll deposits 1,000,373 5.5 % 3.06 % 299,327 2.5 % 4.03 %
Total deposits $ 18,326,875 100.0 % 2.00 % $ 12,288,526 100.0 % 2.35 %
Nine Months Ended September 30,
2026 2025
Average
Balance 		Percent
of Total
Average
Deposits 		Weighted
Average
Rate 		Average
Balance 		Percent
of Total
Average
Deposits 		Weighted
Average
Rate
(Dollars in Thousands)
Core deposits:
Non-interest-bearing demand checking accounts $ 3,836,271 20.9 % - % $ 1,919,100 19.1 % - %
NOW accounts 1,539,776 8.4 % 0.93 % 729,035 7.3 % 0.70 %
Savings accounts 3,045,217 16.6 % 1.84 % 1,910,457 19.0 % 2.36 %
Money market accounts 4,458,404 24.2 % 2.41 % 2,471,457 24.5 % 4.68 %
Total core deposits 12,879,668 70.1 % 1.38 % 7,030,049 69.9 % 1.16 %
Certificate of deposit accounts 4,087,458 22.3 % 3.50 % 2,127,184 21.2 % 3.96 %
Brokered deposit accounts 266,394 1.6 % 3.98 % 779,717 7.9 % 4.60 %
Payroll deposits 1,108,962 6.0 % 3.05 % 99,776 1.0 % 3.02 %
Total deposits $ 18,342,482 100.0 % 1.99 % $ 10,036,726 100.0 % 2.37 %
As of September 30, 2026 and December 31, 2025, the Company had outstanding certificates of deposit of $250,000 or more, maturing as follows:
At September 30, 2026 At December 31, 2025
Amount Weighted
Average Rate 		Amount Weighted
Average Rate
(Dollars in Thousands)
Maturity period:
Six months or less $ 757,616 3.45 % $ 1,041,742 3.80 %
Over six months through 12 months 530,318 3.77 % 274,408 3.73 %
Over 12 months 101,551 3.71 % 82,779 3.49 %
Total certificates of deposit of $250,000 or more $ 1,389,485 3.59 % $ 1,398,929 3.77 %
In accordance with the FDIC's Call Report instructions, the Company reported uninsured deposits of $7.0 billion as of September 30, 2026 which includes approximately $698.8 million of internal operating deposit accounts. The Company participates in the IntraFi Network. This allows customers to seek increased FDIC insurance protection above the federally insured limit of $250,000. The Company had total IntraFi Network deposits as of September 30, 2026 of $1.1 billion which are excluded from our uninsured deposit total.
Borrowed Funds
The following table sets forth certain information regarding advances from the FHLB, subordinated debentures and notes and other borrowed funds for the periods indicated:
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2026 2025 2026 2025
(Dollars in Thousands)
Borrowed funds:
Average balance outstanding $ 797,192 $ 956,284 $ 832,324 $ 1,050,730
Maximum amount outstanding at any month-end during the period 868,559 1,080,516 1,072,503 1,192,874
Balance outstanding at end of period 775,473 1,080,516 775,473 1,080,516
Weighted average interest rate for the period 5.01 % 4.77 % 4.79 % 4.87 %
Weighted average interest rate at end of period 4.83 % 4.75 % 4.83 % 4.75 %
Advances from the FHLB
The Company uses FHLB borrowings and other wholesale borrowings as part of the Company's overall strategy to fund loan growth and manage interest rate risk and liquidity. The advances are secured by a blanket security agreement which requires the Bank to maintain certain qualifying assets as collateral, principally mortgage loans and securities in an aggregate amount at least equal to outstanding advances. The maximum amount that the FHLB will advance to member institutions, including the Company, fluctuates from time to time in accordance with the policies of the FHLB.
FHLB borrowings decreased $197.6 million to $358.2 million as of September 30, 2026 with a total capacity of $4.5 billion. As of December 31, 2025, FHLB borrowings stood at $555.8 million.
Subordinated Debentures and Notes
In August 2026, the Company sold $175.0 million of 6.25 fixed-to-floating rate subordinated notes due September 1, 2036. The Company is obligated to pay 6.25% interest semiannually between September 2026 and September 2031. Subsequently, the Company is obligated to pay 3-month CME term SOFR plus 2.15% quarterly until the notes mature in September 2036.
In September 2014, the Company sold $75.0 million of 6.0 fixed-to-floating rate subordinated notes due September 15, 2029. The Company is obligated to pay 3-month CME term SOFR plus spread adjustment of 0.26% plus 3.32% quarterly until the notes mature in September 2029. The notes were redeemed during September 2026.
In connection with the Transaction, the Company assumed ten year subordinated notes in the amount of $100.0 million. The interest rate is fixed at 5.50% until June 30, 2027, after which the notes become callable and will bear interest at a floating rate per annum equal to a benchmark rate (which is expected to be Three-Month Term SOFR), plus 249 basis points.
The Company has two $5.0 million subordinated debentures due on June 26, 2033 and March 17, 2034, respectively. The Company is obligated to pay 3-month CME term SOFR plus spread adjustment of 0.26% plus 3.10% and 3-month CME term SOFR plus spread adjustment of 0.26% plus 2.79%, respectively, on a quarterly basis until the debentures mature.
The Company holds 100% of the common stock of Berkshire Hills Capital Trust I ("Trust I") which is included in other assets with a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company's junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to 3-month CME Term SOFR plus 1.85%. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value on each quarterly payment date. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company's financial statements.
The Company holds 100% of the common stock of SI Capital Trust II ("Trust II") which is included in other assets with a cost of $0.2 million. The sole asset of Trust II is $8.2 million of the Company's junior subordinated debentures due in 2036. These debentures bear interest at a variable rate equal to 3-month CME Term SOFR plus 1.70%. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust II is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust II is not consolidated into the Company's financial statements.
The following table summarizes the Company's subordinated debentures and notes at the dates indicated.
Carrying Amount
Issue Date Rate Maturity Date Next Call Date September 30,
2026 		December 31, 2025
(Dollars in Thousands)
June 26, 2003 Variable;
3-month CME term SOFR + spread adjustment of 0.26% + 3.10% 		June 26, 2033 December 28, 2026 $ 5,011 $ 4,935
March 17, 2004 Variable;
3-month CME term SOFR + spread adjustment of 0.26% + 2.79% 		March 17, 2034 December 17, 2026 4,849 4,902
June 30, 2005 Variable;
3-month CME term SOFR + spread adjustment of 0.26% + 1.85% 		August 23, 2035 November 24, 2026 14,061 13,943
September 21, 2006 Variable;
3-month CME term SOFR + spread adjustment of 0.26% + 1.70% 		December 15, 2036 December 15, 2026 7,301 7,232
September 15, 2014 Variable;
3-month CME term SOFR + spread adjustment of 0.26% + 3.32% 		September 15, 2029 December 15, 2026 - 72,528
June 30, 2022 5.5% Fixed-to-Variable;
3-month CME term SOFR + 2.49% 		July 1, 2032 June 30, 2027 98,379 95,032
August 20, 2026 6.25% Fixed-to-Variable;
3-month CME term SOFR + 2.15% 		September 1, 2036 September 1, 2031 171,869 -
Total $ 301,470 $ 198,572
Other Borrowed Funds
In addition to advances from the FHLB and subordinated debentures and notes, the Company utilizes other funding sources as part of the overall liquidity strategy. Those funding sources include repurchase agreements, and committed and uncommitted lines of credit with several financial institutions.
As of September 30, 2026, the Bank also has access to funding through certain uncommitted lines via AFX as well as other large financial institution specific lines. As of September 30, 2026 and December 31, 2025, the Company did not have borrowings on outstanding uncommitted lines of credit.
As of September 30, 2026, the Company had $115.0 million in interest-bearing cash received on collateral from dealer counterparties. This compares to $33.1 million outstanding as of December 31, 2025. This cash collateralizes the fair value of the dealer side of derivative transactions.
Derivative Financial Instruments
The Company has entered into loan level derivatives, risk participation agreements, and foreign exchange contracts with certain of its commercial customers and concurrently enters into offsetting swaps with third-party financial institutions. The Company may also, from time to time, enter into risk participation agreements. The Company uses interest rate futures that are designated and qualify as cash flow hedging instruments.
The following table summarizes certain information concerning the Company's loan level derivatives, interest rate derivatives, risk participation agreements, and foreign exchange contracts at September 30, 2026 and December 31, 2025:
At September 30, 2026 At December 31, 2025
(Dollars in Thousands)
Interest rate derivatives (Notional amounts): $ 48,397 $ 192,468
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable $ 3,473,567 $ 3,505,840
Pay fixed, receive variable 3,473,567 3,505,840
Risk participation-out agreements 697,186 670,834
Risk participation-in agreements 144,887 153,185
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency $ 11,468 $ 2,785
Sells foreign currency, buys U.S. currency 11,414 2,800
Fixed weighted average interest rate from the Company to counterparty 3.99 % 4.03 %
Floating weighted average interest rate from counterparty to the Company 4.65 % 4.75 %
Weighted average remaining term to maturity (in months) 54 56
Fair value:
Recognized as an asset:
Interest rate derivatives $ 5 $ 185
Loan level derivatives 156,052 102,237
Risk participation-out agreements 210 532
Foreign exchange contracts 569 274
Recognized as a liability:
Interest rate derivatives $ 37 $ 179
Loan level derivatives 177,329 115,937
Risk participation-in agreements 42 139
Foreign exchange contracts 98 258
Stockholders' Equity and Dividends
The Company's total stockholders' equity was $2.5 billion as of September 30, 2026 representing a $23.5 million increase compared to $2.5 billion at December 31, 2025. The increase for the nine months ended September 30, 2026 was primarily driven by net income of $171.8 million, offset by dividends paid by the Company of $81.1 million, and unrealized loss on securities available for sale of $71.4 million.
Stockholders' equity represented 11.52% of total assets as of September 30, 2026 and 10.75% of total assets as of December 31, 2025. Tangible stockholders' equity (total stockholders' equity less goodwill and identified intangible assets, net) represented 9.35% of tangible assets (total assets less goodwill and identified intangible assets, net) as of September 30, 2026 and 8.62% as of December 31, 2025.
The dividend payout ratio was 44.18% for the three months ended September 30, 2026, compared to (284.98%) for the same period in 2025.
Results of Operations
The primary drivers of the Company's net income are net interest income, which is strongly affected by the net yield on and growth of interest-earning assets and liabilities, the quality of the Company's assets, its levels of non-interest income and non-interest expense, and its tax provision.
The Company's net interest income represents the difference between interest income earned on its investments, loans and leases, and its cost of funds. Interest income is dependent on the amount of interest-earning assets outstanding during the period and the yield earned thereon. Cost of funds is a function of the average amount of deposits and borrowed money outstanding during the year and the interest rates paid thereon. The net interest margin is calculated by dividing net interest income by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The increases or decreases, as applicable, in the components of interest income and interest expense, expressed in terms of fluctuation in average volume and rate, are summarized under "Rate/Volume Analysis" below. Information as to the components of interest income, interest expense and average rates is provided under "Average Balances, Net Interest Income, Interest-Rate Spread and Net Interest Margin" below.
Because the Company's assets and liabilities are not identical in duration and in repricing dates, the differential between the two is vulnerable to changes in market interest rates as well as the overall shape of the yield curve. These vulnerabilities are inherent to the business of banking and are commonly referred to as "interest-rate risk." How interest-rate risk is measured and, once measured, how much interest-rate risk is taken on, are based on numerous assumptions and other subjective judgments. See the discussion in "Item 3. Quantitative and Qualitative Disclosures about Market Risk" below.
The quality of the Company's assets also influences its earnings. Loans and leases that are not paid on a timely basis and exhibit other weaknesses can result in the loss of principal and/or interest income. Additionally, the Company must make timely provisions to the allowance for loan and lease losses based on estimates of probable losses inherent in the loan and lease portfolio. These additions, which are charged against earnings, are necessarily greater when greater probable losses are expected. Further, the Company incurs expenses as a result of resolving troubled assets. These variables reflect the "credit risk" that the Company takes on in the ordinary course of business and are further discussed under "Financial Condition-Asset Quality" above.
Net Interest Income
Net interest income increased $68.3 million to $197.2 million for the three months ended September 30, 2026 from $128.9 million for the three months ended September 30, 2025. This increase reflects a $75.8 million increase in interest income on loans and leases, along with a $10.7 million increase in interest income in investment securities, partially offset by a $18.2 million increase in interest expense on deposits and borrowings. The increases year over year are primarily a result of the Transaction. Refer to "Results of Operations - Comparison of the Three-Month Period Ended September 30, 2026 and September 30, 2025 - Interest Income" and "Results of Operations - Comparison of the Three-Month Period Ended September 30, 2026 and September 30, 2025 - Interest Expense - Deposit and Borrowed Funds" below for more details.
Net interest income increased $277.8 million to $581.1 million for the nine months ended September 30, 2026 from $303.4 million for the nine months ended September 30, 2025. This increase reflects a $321.1 million increase in interest income on loans and leases, along with a $43.7 million increase in interest income in investment securities, partially offset by a $87.0 million increase in interest expense on deposits and borrowings. The increases year over year are primarily a result of the Transaction. Refer to "Results of Operations - Comparison of the Nine-Month Period Ended September 30, 2026 and September 30, 2025 - Interest Income" and "Results of Operations - Comparison of the Nine-Month Period Ended September 30, 2026 and September 30, 2025 - Interest Expense - Deposit and Borrowed Funds" below for more details.
Net interest margin increased 23 basis points to 3.85% for the three months ended September 30, 2026 from 3.62% for the three months ended September 30, 2025. The Company's weighted average interest rate on loans decreased to 6.13% for the three months ended September 30, 2026 from 6.22% for the three months ended September 30, 2025.
Net interest margin increased 41 basis points to 3.82% for the nine months ended September 30, 2026 from 3.41% for the nine months ended September 30, 2025. The Company's weighted average interest rate on loans decreased to 6.03% for the nine months ended September 30, 2026 from 6.06% for the nine months ended September 30, 2025.
The yield on interest-earning assets decreased to 5.87% for the three months ended September 30, 2026 from 6.00% for the three months ended September 30, 2025. During the three months ended September 30, 2026, the Company recorded $0.4 million in prepayment penalties and late charges, which contributed one basis point to yields on interest-earning assets, compared to $0.9 million, or three basis points, for the three months ended September 30, 2025.
The yield on interest-earning assets decreased to 5.78% for the nine months ended September 30, 2026 from 5.81% for the nine months ended September 30, 2025. During the nine months ended September 30, 2026, the Company recorded $1.5 million in prepayment penalties and late charges, which contributed one basis point to yields on interest-earning assets, compared to $2.4 million, or three basis points, for the nine months ended September 30, 2025.
The cost of interest-bearing liabilities decreased 42 basis points to 2.64% for the three months ended September 30, 2026 from 3.06% for the three months ended September 30, 2025. The cost of interest-bearing liabilities decreased 51 basis points to 2.65% for the nine months ended September 30, 2026 from 3.16% for the nine months ended September 30, 2025. Refer to "Financial Condition - Borrowed Funds" above for more details.
Management aims to position the balance sheet to be neutral to changes in interest rates. With the market's expectation for one additional FRB rate hike in 2026 and with the Treasury yield curve becoming steeper since the prior quarter end, management anticipates that the net interest margin will be stable in the near term.
Average Balances, Net Interest Income, Interest-Rate Spread and Net Interest Margin
The following table sets forth information about the Company's average balances, interest income and interest rates earned on average interest-earning assets, interest expense and interest rates paid on average interest-bearing liabilities, interest-rate spread and net interest margin for the three and nine months ended September 30, 2026 and September 30, 2025. Average balances are derived from daily average balances and yields include fees, costs and purchase-accounting-related premiums and discounts which are considered adjustments to coupon yields in accordance with GAAP.
Three Months Ended
September 30, 2026 September 30, 2025
Average
Balance 		Interest (1) Average
Yield/
Cost 		Average
Balance 		Interest (1) Average
Yield/
Cost
(Dollars in Thousands)
Assets:
Interest-earning assets:
Debt securities $ 1,866,739 $ 20,403 4.37 % $ 1,165,022 $ 11,273 3.87 %
Restricted equity securities 83,794 1,110 5.30 % 73,853 1,467 7.95 %
Short-term investments 820,295 7,780 3.79 % 448,044 5,438 4.85 %
Total investments 2,770,828 29,293 4.23 % 1,686,919 18,178 4.31 %
Commercial real estate loans (2)
9,786,763 144,375 5.77 % 7,013,916 105,287 5.87 %
Commercial loans (2)
2,996,699 48,836 6.38 % 1,818,012 30,115 6.48 %
Equipment financing (2)
1,015,449 20,138 7.93 % 1,209,797 24,692 8.16 %
Consumer loans (2)
3,916,588 57,959 5.91 % 2,505,760 35,103 5.59 %
Total loans and leases 17,715,499 271,308 6.13 % 12,547,485 195,197 6.22 %
Total interest-earning assets 20,486,327 300,601 5.87 % 14,234,404 213,375 6.00 %
Allowance for loan and lease losses (238,424) (166,924)
Non-interest-earning assets 1,796,955 1,142,600
Total assets $ 22,044,858 $ 15,210,080
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 1,588,380 3,536 0.88 % $ 917,794 1,786 0.77 %
Savings accounts 3,044,938 14,342 1.87 % 2,201,808 12,867 2.32 %
Money market accounts 5,471,341 35,041 2.54 % 3,324,253 23,131 2.76 %
Certificate of deposit accounts 4,075,397 35,397 3.45 % 2,607,493 24,956 3.80 %
Brokered deposit accounts 317,741 3,243 4.05 % 823,059 9,161 4.42 %
Total interest-bearing deposits (3)
14,497,797 91,559 2.51 % 9,874,407 71,901 2.89 %
Advances from the FHLB 461,293 4,451 3.78 % 792,455 8,709 4.30 %
Subordinated debentures and notes 258,936 5,042 7.79 % 121,526 2,394 7.88 %
Other borrowed funds 76,963 708 3.65 % 42,303 551 5.16 %
Total borrowed funds 797,192 10,201 5.01 % 956,284 11,654 4.77 %
Total interest-bearing liabilities 15,294,989 101,760 2.64 % 10,830,691 83,555 3.06 %
Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts (3)
3,829,078 2,414,119
Other non-interest-bearing liabilities 358,987 287,062
Total liabilities 19,483,054 13,531,872
Total stockholders' equity 2,561,804 1,678,208
Total liabilities and stockholders' equity $ 22,044,858 $ 15,210,080
Net interest income (tax-equivalent basis) / Interest-rate spread (4)
198,841 3.23 % 129,820 2.94 %
Less adjustment of tax-exempt income 1,688 970
Net interest income $ 197,153 $ 128,850
Net interest margin (5)
3.85 % 3.62 %
_________________________________________________________________________
(1) Tax-exempt income on debt securities, equity securities and industrial revenue bonds are included in commercial loans on a tax-equivalent basis.
(2) Loans on nonaccrual status are included in the average balances.
(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was 1.98% and 2.32% in the three months ended September 30, 2026 and September 30, 2025, respectively.
(4) Interest-rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.
Nine Months Ended
September 30, 2026 September 30, 2025
Average
Balance 		Interest (1) Average
Yield/
Cost 		Average
Balance 		Interest (1) Average
Yield/
Cost
(Dollars in Thousands)
Assets:
Interest-earning assets:
Debt securities $ 1,767,860 $ 56,569 4.27 % $ 977,060 $ 24,839 3.39 %
Marketable and restricted equity securities 87,970 3,462 5.25 % 69,802 3,733 7.13 %
Short-term investments 835,739 24,038 3.84 % 304,870 10,275 4.49 %
Total investments 2,691,569 84,069 4.16 % 1,351,732 38,847 3.83 %
Commercial real estate loans (2)
9,874,879 429,887 5.74 % 6,071,163 259,666 5.64 %
Commercial loans (2)
2,942,577 139,520 6.25 % 1,449,490 70,600 6.42 %
Equipment financing (2)
1,061,285 65,358 8.21 % 1,243,492 75,696 8.12 %
Consumer loans (2)
3,952,764 171,022 5.77 % 1,873,834 77,401 5.51 %
Total loans and leases 17,831,505 805,787 6.03 % 10,637,979 483,363 6.06 %
Total interest-earning assets 20,523,074 889,856 5.78 % 11,989,711 522,210 5.81 %
Allowance for loan and lease losses (246,359) (138,731)
Non-interest-earning assets 1,796,751 881,233
Total assets $ 22,073,466 $ 12,732,213
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 1,539,776 10,688 0.93 % $ 729,035 3,825 0.70 %
Savings accounts 3,045,217 41,999 1.84 % 1,910,457 33,732 2.36 %
Money market accounts 5,567,366 105,821 2.54 % 2,571,233 50,708 2.64 %
Certificate of deposit accounts 4,087,458 107,129 3.50 % 2,127,184 62,986 3.96 %
Brokered deposit accounts 266,394 7,937 3.98 % 779,717 26,810 4.60 %
Total interest-bearing deposits (3)
14,506,211 273,574 2.52 % 8,117,626 178,061 2.93 %
Advances from the FHLBB 560,108 16,298 3.84 % 900,666 30,978 4.54 %
Subordinated debentures and notes 219,199 12,323 7.50 % 96,887 5,813 8.00 %
Other borrowed funds 53,017 1,602 4.04 % 53,177 1,988 5.00 %
Total borrowed funds 832,324 30,223 4.79 % 1,050,730 38,779 4.87 %
Total interest-bearing liabilities 15,338,535 303,797 2.65 % 9,168,356 216,840 3.16 %
Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts (3)
3,836,271 1,919,100
Other non-interest-bearing liabilities 356,724 254,646
Total liabilities 19,531,530 11,342,102
Total stockholders' equity 2,541,936 1,390,111
Total liabilities and stockholders' equity $ 22,073,466 $ 12,732,213
Net interest income (tax-equivalent basis) / Interest-rate spread (4)
586,059 3.13 % 305,370 2.65 %
Less adjustment of tax-exempt income 4,925 2,005
Net interest income $ 581,134 $ 303,365
Net interest margin (5)
3.82 % 3.41 %
_________________________________________________________________________
(1) Tax-exempt income on debt securities, equity securities and industrial revenue bonds are included in commercial loans on a tax-equivalent basis.
(2) Loans on nonaccrual status are included in the average balances.
(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was 1.99% and 2.37% in the nine months ended September 30, 2026 and September 30, 2025, respectively.
(4) Interest-rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.
Rate/Volume Analysis
The following table presents, on a tax-equivalent basis, the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
Three Months Ended September 30, 2026 as Compared to the Three Months Ended September 30, 2025 Nine Months Ended September 30, 2026 as Compared to the Nine Months Ended September 30, 2025
Increase
(Decrease) Due To 		Increase
(Decrease) Due To
Volume Rate Net Change Volume Rate Net Change
(In Thousands)
Interest and dividend income:
Investments:
Debt securities $ 7,517 $ 1,613 $ 9,130 $ 24,025 $ 7,705 $ 31,730
Marketable and restricted equity securities 181 (538) (357) 841 (1,112) (271)
Short-term investments 3,750 (1,408) 2,342 15,443 (1,680) 13,763
Total investments 11,448 (333) 11,115 40,309 4,913 45,222
Loans and leases:
Commercial real estate loans 40,863 (1,775) 39,088 165,536 4,685 170,221
Commercial loans and leases 19,181 (460) 18,721 70,786 (1,866) 68,920
Equipment financing (3,874) (680) (4,554) (11,167) 829 (10,338)
Consumer loans 20,589 2,267 22,856 89,038 4,583 93,621
Total loans 76,759 (648) 76,111 314,193 8,231 322,424
Total change in interest and dividend income 88,207 (981) 87,226 354,502 13,144 367,646
Interest expense:
Deposits:
NOW accounts 1,464 286 1,750 5,298 1,565 6,863
Savings accounts 4,294 (2,819) 1,475 16,870 (8,603) 8,267
Money market accounts 13,883 (1,973) 11,910 57,103 (1,990) 55,113
Certificate of deposit accounts 12,927 (2,486) 10,441 52,200 (8,057) 44,143
Brokered deposit accounts (5,208) (710) (5,918) (15,666) (3,207) (18,873)
Total deposits 27,360 (7,702) 19,658 115,805 (20,292) 95,513
Borrowed funds:
Advances from the FHLB (3,302) (956) (4,258) (10,428) (4,252) (14,680)
Subordinated debentures and notes 2,676 (28) 2,648 6,893 (383) 6,510
Other borrowed funds 353 (196) 157 (6) (380) (386)
Total borrowed funds (273) (1,180) (1,453) (3,541) (5,015) (8,556)
Total change in interest expense 27,087 (8,882) 18,205 112,264 (25,307) 86,957
Change in tax-exempt income 718 - 718 2,920 - 2,920
Change in net interest income $ 60,402 $ 7,901 $ 68,303 $ 239,318 $ 38,451 $ 277,769
Interest Income
Loans and Leases
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Interest income-loans and leases:
Commercial real estate loans $ 143,731 $ 104,979 $ 38,752 36.9 % $ 427,955 $ 259,150 $ 168,805 65.1 %
Commercial loans 48,451 29,744 18,707 62.9 % 138,475 69,512 68,963 99.2 %
Equipment financing 20,138 24,692 (4,554) (18.4) % 65,358 75,696 (10,338) (13.7) %
Residential mortgage loans 45,618 25,057 20,561 82.1 % 134,084 52,248 81,836 156.6 %
Other consumer loans 12,340 10,045 2,295 22.8 % 36,937 25,153 11,784 46.8 %
Total interest income-loans and leases (1)
$ 270,278 $ 194,517 $ 75,761 38.9 % $ 802,809 $ 481,759 $ 321,050 66.6 %
_________________________________________________________________________
(1) Change in tax-exempt income of $350 thousand and $1.4 million is excluded from the three and nine months ended tables above.
Total interest income from loans and leases was $270.3 million for the three months ended September 30, 2026, and represented a yield on total loans of 6.13%. This compares to $194.5 million of interest on loans and a yield of 6.22% for the three months ended September 30, 2025. The $75.8 million increase in interest income from loans and leases was primarily due to an increase of $76.8 million in the portfolio composition in origination volume, partially offset by a $0.6 million decrease in changes to interest rates and a decrease of $0.4 million in the change of tax-exempt income.
Total interest income from loans and leases was $802.8 million for the nine months ended September 30, 2026, and represented a yield on total loans of 6.03%. This compares to $481.8 million of interest on loans and a yield of 6.06% for the nine months ended September 30, 2025. The $321.1 million increase in interest income from loans and leases was primarily attributable to an increase of $314.2 million in the portfolio composition in origination volume and an $8.2 million increase in changes to interest rates, partially offset by a decrease of $1.4 million in the change of tax-exempt income.
Investments
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Interest income-investments:
Debt securities $ 19,748 $ 10,984 $ 8,764 79.8 % $ 54,628 $ 24,440 $ 30,188 123.5 %
Restricted equity securities 1,107 1,466 (359) (24.5) % 3,456 3,731 (275) (7.4) %
Short-term investments 7,780 5,438 2,342 43.1 % 24,038 10,275 13,763 133.9 %
Total interest income-investments (1)
$ 28,635 $ 17,888 $ 10,747 60.1 % $ 82,122 $ 38,446 $ 43,676 113.6 %
_________________________________________________________________________
(1) Change in tax-exempt income of $368 thousand and $1.5 million is excluded from the three and nine months ended table above.
Total interest income from investments was $28.6 million for the three months ended September 30, 2026, compared to $17.9 million for the three months ended September 30, 2025. For the three months ended September 30, 2026 and 2025, the yield on total investments was 4.2% and 4.3%, respectively. The year over year increase in interest income on investments of $10.7 million, or 60.1%, was primarily driven by a $11.0 million increase due to volume and a $0.3 million decrease due to rates.
Total investment income was $82.1 million and $38.4 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. For the nine months ended September 30, 2026 and 2025, the yield on total investments was 4.2% and 3.8%, respectively. The year over year increase in interest income on investments of $43.7 million, or 113.6%, was primarily driven by a $38.8 million increase due to volume a $4.9 million increase due to rates.
Interest Expense-Deposits and Borrowed Funds
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended
September 30, 		Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Interest expense:
Deposits:
NOW accounts $ 3,536 $ 1,786 $ 1,750 98.0 % $ 10,688 $ 3,825 $ 6,863 179.4 %
Savings accounts 14,342 12,867 1,475 11.5 % 41,999 33,732 8,267 24.5 %
Money market accounts 35,041 23,131 11,910 51.5 % 105,821 50,708 55,113 108.7 %
Certificate of deposit accounts 35,397 24,956 10,441 41.8 % 107,129 62,986 44,143 70.1 %
Brokered deposit accounts 3,243 9,161 (5,918) (64.6) % 7,937 26,810 (18,873) (70.4) %
Total interest expense - deposits 91,559 71,901 19,658 27.3 % 273,574 178,061 95,513 53.6 %
Borrowed funds:
Advances from the FHLB 4,451 8,709 (4,258) (48.9) % 16,298 30,978 (14,680) (47.4) %
Subordinated debentures and notes 5,042 2,394 2,648 110.6 % 12,323 5,813 6,510 112.0 %
Other borrowed funds 708 551 157 28.5 % 1,602 1,988 (386) (19.4) %
Total interest expense - borrowed funds 10,201 11,654 (1,453) (12.5) % 30,223 38,779 (8,556) (22.1) %
Total interest expense $ 101,760 $ 83,555 $ 18,205 21.8 % $ 303,797 $ 216,840 $ 86,957 40.1 %
Deposits
For the three months ended September 30, 2026, interest expense on deposits increased $19.7 million, or 27.3%, compared to the same period in 2025. The increase in interest expense on deposits was driven by an increase of $27.4 million primarily driven by the growth in volume of average customer deposits partially offset by a decline in average brokered deposits, offset by a decrease of $7.7 million due to lower interest rates. For the three months ended September 30, 2026, the purchase accounting amortization on acquired deposits was $469.0 thousand and one basis point, compared to $602.0 thousand and two basis points for the same period in 2025.
Interest expense on deposits increased $95.5 million, or 53.6%, to $273.6 million for the nine months ended September 30, 2026 from $178.1 million for the nine months ended September 30, 2025. The increase in interest expense on deposits was driven by an increase of $115.8 million primarily driven by the volume of average customer deposits partially offset by a decline in average brokered deposits, offset by a $20.3 million decrease due to lower interest rates. Purchase accounting amortization on acquired deposits for the nine months ended September 30, 2026 was $1.8 million and one basis point, compared to $826.0 thousand and one basis point for the same period in 2025.
Borrowed Funds
For the three months ended September 30, 2026, interest expense on borrowed funds decreased $1.5 million, or 12.5% year over year. The cost of borrowed funds increased to 5.01% for the three months ended September 30, 2026 from 4.77% for the three months ended September 30, 2025. The decrease in interest expense on borrowed funds was primarily driven by a decrease of $1.2 million due to borrowing rates and a decrease of $0.3 million due to volume. For the three months ended September 30, 2026, the purchase accounting amortization on acquired borrowed funds was $68 thousand, compared to $122 thousand for the same period in 2025.
During the nine months ended September 30, 2026, interest expense on borrowed funds decreased $8.6 million, or 22.1% year over year. The cost of borrowed funds decreased to 4.79% for the nine months ended September 30, 2026 from 4.87% for the nine months ended September 30, 2025. The decrease in interest expense on borrowed funds was primarily driven by a decrease of $5.0 million due to borrowing rates and a decrease of $3.5 million due to volume. For the nine months ended
September 30, 2026, purchase accounting amortization was $231 thousand on acquired borrowed funds, compared to amortization of $140 thousand for the nine months ended September 30, 2025.
Provision for Credit Losses
The provisions for credit losses are set forth below:
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Provision (credit) for loan and lease losses:
Commercial real estate $ 13,235 $ 5,040 $ 8,195 163 % $ 32,342 $ 7,507 $ 24,835 330.8 %
Commercial (4,862) 6,637 (11,499) (173) % 3,977 18,224 (14,247) (78.2) %
Consumer 96 (550) 646 (117) % (14,669) (239) (14,430) 6,037.7 %
Total provision (credit) for loan and lease losses 8,469 11,127 (2,658) (24) % 21,650 25,492 (3,842) (15.1) %
Provision (credit) for unfunded commitments (1)
406 9,141 (8,735) (96) % 131 7,747 (7,616) (98) %
Provision for investment securities available-for-sale 53 32 21 66 % 15 47 (32) (68.1) %
Total provision (credit) for credit losses $ 8,928 $ 20,300 $ (11,372) (56) % $ 21,796 $ 33,286 $ (11,490) (34.5) %
(1) Includes Merger Day 1 unfunded credit commitment totaling $8.4 million for the three and nine months ended September 30, 2025.
For the three months ended September 30, 2026, the provision for credit losses decreased $11.4 million to $8.9 million, compared to a provision for credit losses of $20.3 million for the three months ended September 30, 2025. The decrease in the provision for credit losses for the three months ended September 30, 2026 is primarily driven by a release in the provision for unfunded commitments.
For the nine months ended September 30, 2026 and September 30, 2025, the provision for credit and investment losses was $21.8 million and $33.3 million, respectively.
See management's discussion of "Financial Condition - Allowance for Loan and Lease Losses" and Note 5, "Allowance for Credit Losses," to the unaudited consolidated financial statements for a description of how management determined the allowance for loan and lease losses for each portfolio and class of loans.
Non-Interest Income
The following table sets forth the components of non-interest income:
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Deposit fees $ 8,594 $ 5,005 $ 3,589 71.7 % $ 25,451 $ 9,838 $ 15,613 158.7 %
Loan fees 2,606 1,004 1,602 159.6 % 7,591 1,869 5,722 306.2 %
Loan level derivative income, net 1,094 635 459 72.3 % 3,260 701 2,559 365.0 %
Gain on sales of loans and leases held-for-sale 3,669 1,175 2,494 212.3 % 10,227 1,463 8,764 599.0 %
Wealth management fees 4,739 2,466 2,273 92.2 % 14,063 5,378 8,685 161.5 %
Other 5,297 2,060 3,237 157.1 % 15,342 4,726 10,616 224.6 %
Total non-interest income $ 25,999 $ 12,345 $ 13,654 110.6 % $ 75,934 $ 23,975 $ 51,959 216.7 %
Deposit fees increased $3.6 million, or 71.7%, to $8.6 million for the three months ended September 30, 2026, compared to $5.0 million for the same period in 2025, and increased $15.6 million, or 158.7%, to $25.5 million for the nine months ended
September 30, 2026, compared to $9.8 million for the same period in 2025, primarily driven by activity as a result of the Transaction.
Other income increased $3.2 million, or 157.1%, to $5.3 million for the three months ended September 30, 2026, compared to $2.1 million for the same period in 2025, and increased $10.6 million to $15.3 million for the nine months ended September 30, 2026 from $4.7 million for the same period in 2025, primarily driven by activity as a result of the Transaction.
Non-Interest Expense
The following table sets forth the components of non-interest expense:
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Compensation and employee benefits $ 69,439 $ 49,999 $ 19,440 38.9 % $ 209,369 $ 120,999 $ 88,370 73.0 %
Occupancy 12,380 6,921 5,459 78.9 % 37,268 17,991 19,277 107.1 %
Equipment and data processing 16,999 11,110 5,889 53.0 % 55,426 24,963 30,463 122.0 %
Professional services 2,659 2,114 545 25.8 % 7,890 5,311 2,579 48.6 %
FDIC insurance 2,841 1,971 870 44.1 % 10,493 5,888 4,605 78.2 %
Advertising and marketing 1,722 1,583 139 8.8 % 4,553 3,822 731 19.1 %
Amortization of identified intangible assets 8,126 3,587 4,539 126.5 % 24,782 6,448 18,334 284.3 %
Merger and restructuring expense 5,101 45,863 (40,762) (88.9) % 18,126 47,273 (29,147) (61.7) %
Other 13,427 6,148 7,279 118.4 % 32,865 14,684 18,181 123.8 %
Total non-interest expense $ 132,694 $ 129,296 $ 3,398 2.6 % $ 400,772 $ 247,379 $ 153,393 62.0 %
Merger and restructuring expense decreased $40.8 million, to $5.1 million for the three months ended September 30, 2026, compared to $45.9 million for the same period in 2025, and decreased $29.1 million, to $18.1 million for the nine months ended September 30, 2026, compared to $47.3 million for the same period in 2025. Excluding merger and restructuring expense, non-interest expense increased $44.2 million to $127.6 million for the three months ended September 30, 2026, compared to $83.4 million for the same period in 2025, and increased $182.5 million to $382.6 million for the nine months ended September 30, 2026, compared to $200.1 million for the same period in 2025, primarily driven by activity due to the Transaction.
Compensation and employee benefits expense increased $19.4 million, or 38.9%, to $69.4 million for the three months ended September 30, 2026, compared to $50.0 million for the same period in 2025, and increased $88.4 million, or 73.0%, to $209.4 million for the nine months ended September 30, 2026 from $121.0 million for the same period in 2025, primarily driven by activity due to the Transaction.
Equipment and data processing expense increased $5.9 million, or 53.0%, to $17.0 million for the three months ended September 30, 2026, compared to $11.1 million for the same period in 2025, and increased $30.5 million, or 122.0%, to $55.4 million for the nine months ended September 30, 2026 from $25.0 million for the same period in 2025, primarily driven by activity due to the Transaction.
Provision for Income Taxes
Three Months Ended September 30, Dollar
Change 		Percent
Change 		Nine Months Ended September 30, Dollar
Change 		Percent
Change
2026 2025 2026 2025
(Dollars in Thousands)
Income (loss) before provision for income taxes $ 81,530 $ (8,401) $ 89,931 (1,070.5) % $ 234,500 $ 46,675 $ 187,825 402.4 %
(Benefit) provision for income taxes 20,348 (4,180) 24,528 (586.8) % 62,675 9,770 52,905 541.5 %
Net income (loss) $ 61,182 $ (4,221) $ 65,403 (1,549.5) % $ 171,825 $ 36,905 $ 134,920 365.6 %
Effective tax rate 25.0 % 49.8 % N/A (49.8) % 26.7 % 20.9 % N/A 27.8 %
The Company recorded an income tax expense of $20.3 million for the three months ended September 30, 2026, compared to an income tax benefit of $4.2 million for the three months ended September 30, 2025, representing effective tax rates of 25.0% and 49.8%, respectively. The decrease in the effective tax rate for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily driven by income tax benefits having a proportionally smaller impact relative to the level of pre-tax income in 2026 as compared to the level of pre-tax loss in 2025.
The Company recorded an income tax expense of $62.7 million for the nine months ended September 30, 2026, compared to an income tax expense of $9.8 million for the nine months ended September 30, 2025, representing effective tax rates of 26.7% and 20.9%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily driven by higher pre-tax income and Transaction related items, including the discrete tax impact of nondeductible expenses.
Liquidity and Capital Resources
Liquidity
Liquidity is defined as the ability to meet current and future financial obligations of a short-term nature. The Company further defines liquidity as the ability to respond to the needs of depositors and borrowers, as well as to earnings enhancement opportunities, in a changing marketplace. Liquidity management is monitored by the Company's ALCO, consisting of members of management, which is responsible for establishing and monitoring liquidity targets as well as strategies and tactics to meet these targets. The primary source of funds for the payment of dividends and expenses by the Company is dividends paid to it by the Bank. The primary sources of liquidity for the Bank consists of deposit inflows, loan repayments, borrowed funds, and maturing investment securities.
In the third quarter, the Company operated with decreased liquidity. Due to the Transaction, the Company shifted its balance sheet asset mix to include additional cash and available for sale securities. Management will continue to monitor the economic markets and evaluate changes to the Company's liquidity position.
The Company held lower levels of on balance sheet liquidity in the form of cash and available for sale securities in the third quarter. Cash and equivalents at the end of the quarter were $771.4 million, or 3.5% of the balance sheet, compared to $2.0 billion, or 8.8% of the balance sheet, as of December 31, 2025. In general, in a normal operating environment, the Company seeks to maintain liquidity levels of cash, cash equivalents and investment securities available-for-sale of between 10% and 14% of total assets. As of September 30, 2026, cash, cash equivalents and investment securities available-for-sale totaled $2.7 billion, or 12.5% of total assets. This compares to $3.7 billion, or 16.1% of total assets, as of December 31, 2025.
Deposits, which are considered the most stable source of liquidity, totaled $18.2 billion as of September 30, 2026 and represented 95.9% of total funding (the sum of total deposits and total borrowings), compared to deposits of $19.5 billion, or 96.1% of total funding, as of December 31, 2025. Core deposits totaled $12.9 billion as of September 30, 2026 and represented 70.7% of total deposits, compared to Core deposits of $13.1 billion, or 67.0% of total deposits, as of December 31, 2025. Additionally, the Company had $374.7 million of brokered deposits as of September 30, 2026, which represented 2.1% of total deposits, compared to $410.4 million or 2.1% of total deposits, as of December 31, 2025. The Company offers attractive interest rates based on market conditions to increase deposits balances, while managing the cost of funds.
Borrowings are used to diversify the Company's funding mix and to support asset growth. When profitable lending and investment opportunities exist, access to borrowings provides a means to grow the balance sheet. Borrowings totaled $775.5 million as of September 30, 2026, representing 4.1% of total funding, compared to $788.4 million, or 3.9% of total funding, as of December 31, 2025. The growth in the balance sheet is driven by the Transaction, management will continue to monitor economic conditions and make adjustments to the balance sheet mix as appropriate.
As members of the FHLB, the Bank has access to both short- and long-term borrowings. As of September 30, 2026, the Company's total borrowing limit from the FHLB for advances and repurchase agreements was $4.5 billion, compared to $4.6 billion as of December 31, 2025.
As of September 30, 2026, the Bank also has access to funding through certain uncommitted lines via AFX as well as other large financial institution specific lines. As of September 30, 2026 and December 31, 2025, the Company had no borrowings on outstanding uncommitted lines of credit.
The Company has access to the Federal Reserve Discount Window to supplement its liquidity. The Company had $630.1 million of borrowing capacity at the FRB as of September 30, 2026. As of September 30, 2026, the Company did not have any outstanding borrowings with the FRB.
Additionally, the Bank has access to liquidity through repurchase agreements and additional untapped brokered deposits.
While management believes the Company has adequate liquidity to meet its commitments and to fund the Bank's lending and investment activities, the availabilities of these funding sources are subject to broad economic conditions and could be restricted in the future. Such restrictions would impact the Company's immediate liquidity and/or additional liquidity needs.
Off-Balance-Sheet Financial Instruments
The Company is party to off-balance-sheet financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby and commercial letters of credit and interest-rate swaps. According to GAAP, these financial instruments are not recorded in the financial statements until they are funded or related fees are incurred or received. See Note 12, "Commitments and Contingencies", to the unaudited consolidated financial statements for a description of off-balance-sheet financial instruments.
Capital Resources
As of September 30, 2026, the Company and the Bank are under the primary regulation of, and must comply with, the capital requirements of the FRB. Under these rules, the Company and the Bank are required to maintain a minimum common equity Tier 1 capital ratio of 4.5%, a minimum Tier 1 capital leverage ratio of 6.0%, a minimum total risk based capital ratio of 8% and a minimum Tier 1 leverage ratio of 4%. Additionally, the Company and the Bank are required to establish a capital conservation buffer of common equity Tier 1 capital in an amount above the minimum risk-based capital requirements for "adequately capitalized" institutions equal to 2.5% of total risk weighted assets, or face restrictions on the ability to pay dividends, pay discretionary bonuses, and to engage in share repurchases. As of September 30, 2026, the Company and the Bank exceeded all regulatory capital requirements, and the Bank was considered "well-capitalized" under prompt corrective action regulations.
The following table presents actual and required capital amounts and capital ratios as of September 30, 2026 for the Company and the Bank.
Actual Minimum Required for Capital Adequacy Purposes Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer
Minimum Required to be Considered "Well-Capitalized" Under Prompt Corrective Action Provisions
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
(Dollars in Thousands)
At September 30, 2026:
Beacon Financial Corporation
Common equity Tier 1 capital ratio (1)
$ 2,135,960 11.86 % $ 810,440 4.50 % $ 1,260,685 7.00 % N/A N/A
Tier 1 leverage capital ratio (2)
2,166,541 9.99 % 867,484 4.00 % 867,484 4.00 % N/A N/A
Tier 1 risk-based capital ratio (3)
2,166,541 12.03 % 1,080,569 6.00 % 1,530,806 8.50 % N/A N/A
Total risk-based capital ratio (4)
2,636,786 14.64 % 1,440,867 8.00 % 1,891,138 10.50 % N/A N/A
Beacon Bank & Trust
Common equity Tier 1 capital ratio (1)
$ 2,164,867 12.03 % $ 809,801 4.50 % $ 1,259,690 7.00 % $ 1,169,712 6.50 %
Tier 1 leverage capital ratio (2)
2,164,867 9.98 % 867,682 4.00 % 867,682 4.00 % 1,084,603 5.00 %
Tier 1 risk-based capital ratio (3)
2,164,867 12.03 % 1,079,734 6.00 % 1,529,623 8.50 % 1,439,646 8.00 %
Total risk-based capital ratio (4)
2,364,864 13.14 % 1,439,795 8.00 % 1,889,732 10.50 % 1,799,744 10.00 %
_______________________________________________________________________________
(1) Common equity Tier 1 capital ratio is calculated by dividing common equity Tier 1 capital by risk-weighted assets.
(2) Tier 1 leverage capital ratio is calculated by dividing Tier 1 capital by average assets.
(3) Tier 1 risk-based capital ratio is calculated by dividing Tier 1 capital by risk-weighted assets.
(4) Total risk-based capital ratio is calculated by dividing total capital by risk-weighted assets.
The following table presents actual and required capital amounts and capital ratios as of December 31, 2025 for the Company and the Bank.
Actual Minimum Required for Capital Adequacy Purposes Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer
Minimum Required To
Be Considered
"Well-Capitalized" Under Prompt Corrective Action Provisions
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
(Dollars in Thousands)
At December 31, 2025:
Beacon Financial Corporation
Common equity Tier 1 capital ratio (1)
$ 2,021,589 10.95 % $ 830,790 4.50 % $ 1,292,340 7.00 % N/A N/A
Tier 1 leverage capital ratio (2)
2,051,965 9.25 % 887,336 4.00 % 887,336 4.00 % N/A N/A
Tier 1 risk-based capital ratio (3)
2,051,965 11.12 % 1,107,175 6.00 % 1,568,498 8.50 % N/A N/A
Total risk-based capital ratio (4)
2,400,786 13.01 % 1,476,271 8.00 % 1,937,606 10.50 % N/A N/A
Beacon Bank & Trust
Common equity Tier 1 capital ratio (1)
$ 2,069,767 11.22 % $ 830,120 4.50 % $ 1,291,298 7.00 % $ 1,199,063 6.50 %
Tier 1 leverage capital ratio (2)
2,069,767 9.39 % 881,690 4.00 % 881,690 4.00 % 1,102,112 5.00 %
Tier 1 risk-based capital ratio (3)
2,069,767 11.22 % 1,106,827 6.00 % 1,568,005 8.50 % 1,475,770 8.00 %
Total risk-based capital ratio (4)
2,280,038 12.36 % 1,475,753 8.00 % 1,936,925 10.50 % 1,844,691 10.00 %
_______________________________________________________________________________
(1) Common equity Tier 1 capital ratio is calculated by dividing common equity Tier 1 capital by risk-weighted assets.
(2) Tier 1 leverage capital ratio is calculated by dividing Tier 1 capital by average assets.
(3) Tier 1 risk-based capital ratio is calculated by dividing Tier 1 capital by risk-weighted assets.
(4) Total risk-based capital ratio is calculated by dividing total capital by risk-weighted assets.
Beacon Financial Corporation published this content on November 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 09, 2026 at 17:46 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]