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

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (as amended, the "2025 Form 10-K"). Unless the context requires otherwise, as used in this Form 10-Q, the terms "we", "us", "our", "the Company", "our Company", and similar references refer to Heritage Insurance Holdings, Inc., a Delaware corporation, and its subsidiaries.

Strategic Profitability Initiatives

The Company's core strategic initiatives remain in place:

The Company continues to focus on the following profitability initiatives:

Trends

Inflation, Underwriting and Pricing

We address reinsurance and loss cost trends in the property insurance sector through rates and inflation guard factors. Over the last several years, we have filed and been approved by state regulators for rate increases to achieve rate adequacy. Our rates are now adequate in nearly all of our territories which are currently open for new business. We experienced intentional growth of our commercial residential business during 2025, with in-force premium in that line of business decreasing in 2026, driven primarily by competitive market conditions. To the extent that reinsurance and loss cost trends change, our rates may be adjusted in the future to reflect those changes. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned and impact our financial statements.

We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained consistent with most states in the upper 80s to low 90s. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on prudent growth in 2026 and in the future, while managing exposure and ensuring rate adequacy throughout our book of business, as well as providing high levels of customer service to our agents and policyholders.

We may experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, inflation is increasing at a lower rate than what we have experienced in the last several years. We adjust for changes in inflation by increasing or decreasing the inflation factor used in our pricing. Florida personal lines claim costs associated with litigated claims have decreased over the last several years due to favorable legislation aimed to curtail claims abuse and stabilize the Florida property insurance market. This has had the intended impact and has resulted in better margins for the Company and better rates for Florida policyholders. Accordingly, we have a positive outlook for Florida and the other rate adequate states.

We have a solid, consistent panel of reinsurance partners that provide reinsurance capacity at competitive pricing and sufficient levels to support our growth objectives. Additionally, we may leverage our captive reinsurer to assume risks from our insurance company affiliates.

We successfully completed the placement of our catastrophe excess of loss reinsurance program with higher coverage levels than the prior-year while achieving a lower total and risk-adjusted cost. As operating and reinsurance costs improve, we expect policyholders to benefit through more competitive pricing while we continue to maintain appropriate underwriting margins. This should also favorably impact the ceded premium through the remainder of the treaty year ending May 31, 2027.

Premiums-in-force were $1.40 billion, down 2.8% from $1.44 billion in the third quarter of 2025, primarily due to lower commercial residential premiums-in-force, which decreased 16.1% due to competitive pricing pressure in the Florida market. The decline was rate-driven rather than exposure-driven, as commercial residential policies-in-force increased 5.7% and total insured value increased 7.5% over the same period. A reduction in Florida personal lines premiums-in-force was more than offset by personal lines growth in other states. We expect competitive pricing in the Florida commercial residential market to continue, and rate reductions on business already written have not yet fully earned in. As a result, we expect this trend to continue to adversely affect commercial residential premiums-in-force and net premiums earned. We expect this to be partially offset by commercial growth in other states.

Gross premiums earned

Gross premiums earned of $352.8 million were down 2.5% from $362.0 million in the prior-year quarter, reflecting a reduction in commercial residential business driven by competitive pressures as described above.

Ceded premiums

Ceded premiums were $147.2 million in the third quarter of 2026, a decrease of $19.6 million, or 11.8%, from $166.8 million in the prior-year quarter. The reduction in ceded premiums reflected a full quarter of savings driven by the improved pricing of the Company's June 2026 catastrophe excess of loss program as well as the decrease in the northeast net quota share program, which was effective December 31, 2025. The catastrophe excess of loss reinsurance placement generated treaty-year expense savings of $63.2 million which will be recognized over the contract period which incepted June 1, 2026. The decrease was partially offset by a one-time facultative and catastrophe excess of loss reinstatement premium adjustment recorded in the third quarter of 2026.

Net premiums earned

Net premiums earned increased $10.5 million, or 5.4%, to $205.6 million in the third quarter of 2026 from $195.1 million in the prior-year quarter, driven by lower ceded premiums more than offsetting the decrease in gross earned premiums.

Net investment income

Net investment income increased $1.7 million, or 17.3%, to $11.4 million in the third quarter of 2026 from $9.7 million in the prior-year quarter. The increase was primarily driven by higher average cash and invested asset balances and the reinvestment of maturing securities at higher yields, partially offset by lower yields on money market funds and bank sweep accounts due to the current interest rate environment.

Total operating expenses

Total operating expenses increased $7.7 million, or 5.4%, to $150.0 million in the third quarter of 2026 from $142.3 million in the prior-year quarter, primarily due to higher losses and LAE and general and administrative expenses, with relatively flat policy acquisition costs.

Policy acquisition costs

Policy acquisition costs, net of ceding commission income, were $45.1 million for the three months ended September 30, 2026, essentially unchanged from $45.2 million for the comparable period in 2025. Lower gross acquisition costs of $1.1 million, reflecting lower premium volume, were offset by a $1.2 million decrease in ceding commission income resulting from lower ceding commission associated with the decrease in quota share program from 46% to 40% effective December 31, 2025.

General and administrative expenses

General and administrative expenses increased $1.2 million, or 5.2%, to $23.5 million for the three months ended September 30, 2026, from $22.3 million for the comparable period in 2025. The increase was primarily due to higher employee-related costs, temporary labor, and lower ceding commission, partially offset by a $1.2 million decrease in corporate insurance expense due to a non-recurring premium refund.

Net income

Net income increased $0.7 million, or 1.4%, to $51.1 million in the third quarter of 2026, compared to $50.4 million in the prior-year quarter, driven by higher total revenue lower income tax expense and favorable prior-year loss development, each of which as described above.

Interest expense, net

Interest expense, net was $1.5 million in the third quarter of 2026, lower than $1.9 million for the prior-year quarter, primarily due to lower debt balances outstanding.

Income tax expense

Income tax expense was $16.6 million in the third quarter of 2026, compared to $17.9 million in the prior-year quarter. The effective tax rate was 24.5%, compared to 26.2% in the prior-year quarter, a decrease of 1.7 percentage points. The decrease was driven by previously estimated annualized pre-tax income and the related impact of permanent items. The Company calculates its interim income tax provision using an estimated annual effective tax rate, which may fluctuate throughout the year as income levels change and estimates are updated.

Ratios

Net combined ratio

The net combined ratio was relatively flat at 73.0% compared with 72.9% in the prior-year quarter, with a decrease in the expense ratio nearly offsetting the increase in the net loss ratio.

Ceded premium ratio

The ceded premium ratio decreased 4.4 points to 41.7% for the three months ended September 30, 2026, from 46.1% in the prior-year quarter, primarily attributable to lower ceded premiums associated with the Company's catastrophe excess of loss program, partially offset by a one-time facultative and catastrophe excess of loss reinstatement premium adjustment recorded in the third quarter of 2026.

Net loss and LAE ratio

The net loss and LAE ratio increased 1.3 points to 39.6% for the three months ended September 30, 2026, from 38.3% in the prior-year quarter, primarily attributable to higher losses and LAE which was partially offset by favorable net loss development as described above, partially offset by higher net premiums earned.

Net expense ratio

The net expense ratio improved 1.2 points to 33.4%, from 34.6% in the prior-year quarter. Policy acquisition costs were relatively flat compared to the prior year quarter. General and administrative expenses increased 5.2%, reflecting higher employee compensation and related costs offset by a decrease in corporate insurance expense, primarily from a non-recurring premium refund.

Comparison of the nine months ended September 30, 2026 and 2025

Total Revenue

Total revenue increased 2.2% to $646.1 million for the nine months ended September 30, 2026, from $632.0 million in the prior-year period, primarily attributable to higher net premiums earned and net investment income, partially offset by lower realized gains and other revenue. The decrease in net realized gains resulted from the sale of real estate during the prior-year period. Other revenue decreased $2.6 million, primarily from fee income which was elevated in the prior-year period. Net investment income increased 16.6% to $31.8 million from $27.3 million in the prior-year period, primarily attributable to growth in invested assets. The investment portfolio remained conservatively positioned, with an emphasis on high-quality fixed-income securities and asset durations closely matched to the Company's liability profile.

Gross premiums written

Gross premiums written decreased $42.2 million, or 3.8%, to $1.06 billion for the nine months ended September 30, 2026, from $1.10 billion in the prior-year period. The decrease is driven primarily by lower written premium for Florida commercial residential business due to the competitive environment previously discussed.

Premiums-in-force were $1.40 billion at September 30, 2026, a decrease of 2.8% compared to $1.44 billion prior-year period, driven by the reduction in commercial residential business described above.

Gross premiums earned

Gross premiums earned decreased $11.9 million, or 1.1%, to $1.06 billion for the nine months ended September 30, 2026, compared to $1.07 billion in the prior-year period, reflecting lower gross premiums written over the last twelve months which is driven primarily by lower premium associated with the commercial residential business.

Ceded premiums

Ceded premiums decreased $26.8 million, or 5.6%, to $451.1 million for the nine months ended September 30, 2026, compared to $477.9 million in the prior-year period, primarily due to the reduction associated with improved pricing on the June 2026 catastrophe excess-of-loss program and the reduction in the net quota share cession from 46% to 40% effective December 31, 2025. The ceded premium ratio improved to 42.7% from 44.7%.

Net premiums earned

Net premiums earned increased $14.9 million, or 2.5%, to $606.4 million for the nine months ended September 30, 2026, compared to $591.5 million in the prior-year period, as the $26.8 million decrease in ceded premiums more than offset the $11.9 million decrease in gross premiums earned.

Net investment income

Net investment income increased $4.5 million, or 16.6%, to $31.8 million for the nine months ended September 30, 2026, as compared to $27.3 million in the prior-year period, primarily due to a larger fixed maturity portfolio, as the Company redeployed $168.6 million of cash into higher-yielding, longer-duration securities.

Total operating expenses

Total operating expenses were $442.2 million for the nine month period ended September 30, 2026, down 2.7% compared to $454.5 million in the prior-year period. As described below, losses and LAE declined significantly, which was partly offset by higher policy acquisition costs and general and administrative expenses.

Losses and loss adjustment expenses

Losses and loss adjustment expenses decreased $15.7 million, or 6.3%, to $234.0 million for the nine months ended September 30, 2026, compared to $249.8 million in the prior-year period, driven primarily by favorable net prior-year loss development, partially offset by higher weather losses. The net loss ratio improved 3.6 points to 38.6% from 42.2%. Weather losses for the nine months ended September 30, 2026 were $81.9 million compared to weather losses for the prior-year period of $69.8 million. Catastrophe weather losses amounted to $40.2 million and $31.8 million for the nine months ended September 30, 2026 and 2025, respectively. Net favorable prior year loss development was $45.5 million, compared with $15.1 million in the prior-year period.

Policy acquisition costs

Policy acquisition costs, net of ceding commission income, increased $1.8 million, or 1.4%, to $136.0 million for the nine months ended September 30, 2026, compared to $134.1 million in the prior-year period, primarily due to lower ceding commission income from the reduced quota share cession, partially offset by lower commission expense on lower premiums written.

General and administrative expenses

General and administrative expenses were $72.2 million for the nine months ended September 30, 2026, compared to $70.6 million in the prior-year period, an increase of $1.6 million, or 2.3%. The increase was primarily due to higher employee

compensation and related costs, and lower ceding commission income allocated to general and administrative expenses, partially offset by lower insurance expense, which included a nonrecurring premium refund.

Net income

Net income for the nine months ended September 30, 2026 was $149.3 million, or $4.94 per diluted share, compared to net income of $128.9 million, or $4.17 per diluted share, for the corresponding period in 2025. The increase was primarily driven by higher net premiums earned and higher net investment income and lower net losses incurred, partially offset by lower realized gains and other income and higher policy acquisition costs and general and administrative expenses as described above. Net premiums earned increased 2.5%, and net losses and LAE decreased 6.3%, as discussed above. Policy acquisition costs increased 1.4%, primarily due to lower ceding commission income. General and administrative expenses increased 2.3% as described above.

Interest expense, net

Interest expense, net was $5.0 million for the nine month period ended September 30, 2026, a decrease of 19.1% compared to $6.2 million for the prior-year period. The decrease was attributed to the favorable impact from the reduction of debt obligations.

Income tax expense

Income tax expense increased $7.2 million, or 17.0%, to $49.6 million for the nine months ended September 30, 2026, compared to $42.4 million for the prior-year period, primarily due to higher pre-tax income. For the nine months ended September 30, 2026 and 2025, the effective tax rate was 24.9% and 24.7%, respectively. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.

Ratios

Net combined ratio

The net combined ratio was 72.9% for the nine months ended September 30, 2026, compared to 76.8% for the comparable period in 2025, an improvement of 3.9 points. The improvement primarily reflects a 3.6 point decrease in the net loss and LAE ratio to 38.6%, driven primarily by favorable net prior-year loss development, and a 0.3 point decrease in the net expense ratio to 34.3%, as described below.

Ceded premium ratio

The ceded premium ratio was 42.7% for the nine months ended September 30, 2026, compared to 44.7% for the comparable period in 2025. The 2.0 point improvement was primarily attributable to lower ceded premiums resulting from

improved pricing on the June 2026 catastrophe excess-of-loss program and the reduction of the northeast net quota share cession from 46% to 40% effective December 31, 2025.

Net loss and LAE ratio

The net loss and LAE ratio was 38.6% for the nine months ended September 30, 2026, a 3.6 point improvement from 42.2% in the prior-year period, reflecting a 6.3% decrease in net losses and LAE, driven primarily by favorable net prior-year loss development, and a 2.5% increase in net premiums earned, as described above.

Net expense ratio

The net expense ratio improved 0.3 points to 34.3% for the nine months ended September 30, 2026, from 34.6% in the prior-year period, as the 2.5% increase in net premiums earned outpaced increases of 1.4% in policy acquisition costs and 2.3% in general and administrative expenses.

Reinsurance Payable

At September 30, 2026, reinsurance payable increased $106.3 million to $339.1 million from $232.8 million at December 31, 2025. The increase was primarily driven by the inception of the Company's annual catastrophe excess of loss reinsurance program, which renewed June 1, 2026. Reinstatement premiums and a one-time facultative and catastrophe excess of loss reinstatement premium adjustment recorded in the third quarter of 2026 also contributed to the increase.

Total Stockholders' Equity

Total stockholders' equity increased $93.9 million to $599.1 million at September 30, 2026 from $505.3 million at December 31, 2025, primarily reflecting net income of $149.3 million for the nine months. This increase was partially offset by repurchases of 1,101,508 shares of common stock for $27.9 million, a $22.7 million increase in accumulated other comprehensive loss due to higher unrealized losses on fixed maturity securities, and a $4.8 million decrease in additional paid-in capital, as shares surrendered for tax withholding on vested restricted stock exceeded stock-based compensation expense.

proceeds, as well as additional cash invested in longer-duration fixed income securities to extend duration and capture higher yields, partially offset by the collection of the $11.0 million promissory note received in connection with the 2025 sale of real estate.

1-to-1 to greater than 1.5-to-1. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for base rate loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. As of September 30, 2026, the borrowings under the Term Loan Facility were accruing interest at a rate of 6.186% per annum.

In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by our consolidated leverage ratio. For the nine months ended September 30, 2026, the Company paid in commitment fees in aggregate of $275,382 as it relates to the unused portion of the Revolving Credit Facility.

The Company may prepay the loans under the Credit Facilities in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts and reimbursement of certain costs in the case of prepayments of SOFR loans. In addition, we are required to prepay the loan under the Term Loan Facility with the proceeds from certain financing transactions, involuntary dispositions or asset sales (subject, in the case of asset sales, to reinvestment rights).

All obligations under the Credit Facilities are or will be guaranteed by each existing and future direct and indirect wholly owned domestic subsidiary of the Company, other than all of the Company's current and future regulated insurance subsidiaries (collectively, the "Guarantors").

The Company and the Guarantors are party to a Pledge and Security Agreement, (as amended from time to time the "Security Agreement"), in favor of a collateral agent. Pursuant to the Security Agreement, amounts borrowed under the Credit Facilities are secured on a first priority basis by a perfected security interest in substantially all of the present and future assets of the Company and each Guarantor (subject to certain exceptions), including all of the capital stock of the Company's domestic subsidiaries, other than its regulated insurance subsidiaries.

The Amended and Restated Credit Agreement contains, among other things, covenants, representations and warranties and events of default customary for facilities of this type. The Amended and Restated Credit Agreement requires the Company to maintain, as of each fiscal quarter (1) a maximum consolidated leverage ratio of 2.00 to 1.00, (2) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and (3) a minimum consolidated tangible net worth for the Company and its subsidiaries, which is required to be not less than the sum of 75% of consolidated tangible net worth measured as of the fiscal quarter ended September 30, 2025 plus 25% of positive consolidated net income (including its subsidiaries and regulated subsidiaries) plus the net cash proceeds of any equity transactions. Events of default include, among other events, (i) nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe certain covenants set forth in the Amended and Restated Credit Agreement; (iii) breach of any representation or warranty; (iv) cross-default to other indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults and material nonmonetary judgment defaults; (vii) customary ERISA defaults; (viii) a change of control of the Company; and (ix) failure to maintain specified catastrophe retentions in each of the Company's regulated insurance subsidiaries or observe specified reinsurer concentration limits.

Convertible Notes

On August 10, 2017, the Company and Heritage MGA, LLC (the "Notes Guarantor") entered into a purchase agreement (the "Purchase Agreement") with the initial purchaser party thereto (the "Initial Purchaser"), pursuant to which the Company agreed to issue and sell, and the Initial Purchaser agreed to purchase, $136.8 million aggregate principal amount of the Company's 5.875% Convertible Senior Notes due 2037 (the "Convertible Notes") in a private placement transaction pursuant to Rule 144A under the Securities Act, as amended (the "Securities Act"). The net proceeds from the offering of the Convertible Notes, after deducting discounts and commissions and estimated offering expenses payable by the Company, were approximately $120.5 million. The offering of the Convertible Notes was completed on August 16, 2017.

The Company issued the Convertible Notes under an Indenture (the "Convertible Note Indenture"), dated August 16, 2017, by and among the Company, as issuer, the Notes Guarantor, as guarantor, and the trustee party thereto (the "Trustee").

The Convertible Notes bear interest at a rate of 5.875% per year. Interest is payable semi-annually in arrears, on February 1 and August 1 of each year. The Convertible Notes are senior unsecured obligations of the Company that rank senior in right of payment to the Company's future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in

right of payment to the Company's unsecured indebtedness that is not so subordinated; effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness or other liabilities incurred by the Company's subsidiaries other than the Notes Guarantor, which fully and unconditionally guarantee the Convertible Notes on a senior unsecured basis.

The Convertible Notes mature on August 1, 2037, unless earlier repurchased, redeemed or converted.

Holders may convert their Convertible Notes at any time prior to the close of business on the business day immediately preceding February 1, 2037, under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2017, if the closing sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price of the Convertible Notes in effect on each applicable trading day; (2) during the ten consecutive business-day period following any five consecutive trading-day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the closing sale price of the Company's common stock on such date multiplied by the then-current conversion rate; (3) if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the third business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. Based on the closing sale price of the Company's common stock during the 20 trading days leading up to September 30, 2026, the Convertible Notes are convertible for the calendar quarter commencing October 1, 2026 and ending on December 31, 2026.

On or after February 1, 2037 until the close of business on the second business day immediately preceding August 1, 2037, holders may surrender their Convertible Notes for conversion at any time, regardless of the foregoing circumstances.

Upon the occurrence of a fundamental change (as defined in the Convertible Note Indenture) (but not, at the Company's election, a public acquirer change of control (as defined in the Convertible Note Indenture)), holders of the Convertible Notes may require the Company to repurchase for cash all or a portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

At any time prior to February 1, 2037, the Company may redeem for cash all or any portion of the Convertible Notes, at the Company's option, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes, which means that the Company is not required to redeem or retire the Convertible Notes periodically. Holders of the Convertible Notes are able to cause the Company to repurchase their Convertible Notes for cash on any of August 1, 2022, August 1, 2027 and August 1, 2032, in each case at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the relevant repurchase date.

The Convertible Note Indenture contains customary terms and covenants and events of default. If an Event of Default (as defined in the Convertible Note Indenture) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding by notice to the Company and the Trustee, may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Convertible Notes to be immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization (as set forth in the Convertible Note Indenture) with respect to the Company, 100% of the principal of, and accrued and unpaid interest, if any, on, the Convertible Notes automatically become immediately due and payable.

As of September 30, 2026 and December 31, 2025, there was $855,000 and $885,000, respectively, in principal amount of outstanding Convertible Notes, net of $21.1 million of Convertible Notes held by an insurance company subsidiary.

FHLB Loan Agreements

In December 2018, a subsidiary of the Company received a 3.094% fixed interest rate cash loan of $19.2 million from the Federal Home Loan Bank Atlanta ("FHLB-ATL"). On September 29, 2023, the Company restructured the December 2018 agreement to extend the maturity date to March 28, 2025, with a 5.109% fixed interest rate payable quarterly commencing on December 28, 2023. Membership in the FHLB-ATL required an investment in FHLB-ATL's common stock which was purchased in December 2018 and valued at $1.4 million. In March 2025, the FHLB-ATL agreement was repaid and the securities were released from pledged

collateral. As of September 30, 2026, the subsidiary continues to be a member in FHLB-ATL with its common stock valued at $561,416.

In December 2018, a subsidiary of the Company became a member of the FHLB Des Moines ("FHLB-DM"). Membership in the FHLB-DM required an investment in FHLB-DM's common stock which was purchased in December 2018 and valued at $133,200. In January 2024, the insurance subsidiary of the Company received a 4.23% fixed interest rate cash loan of $5.5 million from the FHLB-DM. Additionally, the transaction required the acquired FHLB-DM common stock and certain other investments to be pledged as collateral. In June 2026, the Company repaid the loan and released the investments from pledged collateral. As of September 30, 2026, the equity investment in FHLB-DM common stock was $77,200.