Central Bancompany, Inc. (CBC) Business

Item 1. Business

We are a bank holding company headquartered in Jefferson City, Missouri. As of December 31, 2025, we had total consolidated balance sheet assets of $20.75 billion and wealth assets under advice of $16.0 billion. Through our full-service community banking subsidiary, The Central Trust Bank, we provide a comprehensive suite of consumer, commercial and wealth management products and services to our communities, which are primarily located in Missouri, Kansas, Oklahoma and Colorado. As of December 31, 2025, we operated 155 full-service branch locations, with a consolidated weighted average deposit market share of approximately 24%. Our business model is designed to serve the holistic financial services needs of businesses, individuals, agencies and community organizations within our footprint. Our goal is simple: to provide legendary service to our customers and to be an integral part in the success of our customers and the communities we serve. Our success is driven by our long-term commitment to the markets we serve and our culture of customer service excellence.

Our Company was founded in January 1902 under the leadership of the great grandfather of our current Executive Chairman, S. Bryan Cook. During the Great Depression, we made a loan to the State of Missouri to assist it with making payroll and paying other expenses and we currently have an extensive relationship with the state. From 2008 to 2012, while in the depths of the Great Recession, we earned an annual return on average assets of at least 1.00%.

We believe the continuity of our ownership over our 124-year history of operating has fostered an enduring culture that has consistently proven successful in the marketplace and will position us well for future growth. This culture has allowed us to attract and retain great talent. Our employees are experienced (average 8-year tenure as of December 31, 2025), engaged (81% completed our most recent survey) and committed (86% would recommend working at the bank and 88% would recommend our products, each based on our most recent survey). Combined with our investments in products, services and technologies, we believe our culture has appealed to our customers and enabled us to increase market share. The core tenets of our culture, which we seek to quantify and hold ourselves accountable to, require us to be:

•Customer Centric: We focus on customer satisfaction and attracting and retaining customers for the long-term. Our latest Net Promoter Score was 74, based on our most recent customer survey, which we believe is as much as two times the average for U.S. retail banks. We have been able to grow the number of households we serve by an average of 3% per year since 2016, and believe we have the ability to continue to do so at a greater rate than our peers. Additionally, our deposit customers had an average tenure of 13 years as of December 31, 2025, and we were named Newsweek’s Best Customer Service Bank in 2023 (the only year this ranking was published).

•Community Aligned: We emphasize giving back to the communities we serve. We track our community services hours, which totaled over 29,000 in 2025, or approximately 10 hours per employee.

•Committed to the Long Term: As we have grown, our capital ratios and balance sheet liquidity metrics have exceeded the regulatory requirements and threshold for "well capitalized" status. We continuously reinvest in our business and are currently undertaking a banking core modernization project that is intended to provide us with real-time, API-based capabilities. As a testament to our success, we were ranked the #9 Best Bank by Forbes in 2026 and are one of only two banks to have been in the Top 50 in every year since Forbes began its rankings in 2009.

•Collaborative to Succeed: We maintain a community banking model led by experienced leaders in each of our markets that are empowered to make local decisions, which requires accountability and collaboration with our senior leaders and business line managers. Our collaborative contract is embodied in the “Central Code,” which we renew periodically.

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Notes:

1Source: S&P Global Market Intelligence, as of June 30, 2025. The peer median references the 50 banks included in the KBW Nasdaq Regional Banking Index.

2Net Promoter Score represents Central Bancompany’s 2025 figure based on our most recent customer survey for Consumer, Commercial and Wealth businesses weighted by number of responses.

Our Business

Our vision is to become the leading financial services provider in each community we serve. To accomplish this vision, we strive to offer service levels better than other community banks and products, services and technologies consistent with the largest banks in the industry. We capture this ambition in our slogan, “Strong Roots, Endless Possibilities,” and manage our Company around these dual objectives.

The “Strong Roots” portion of our slogan is representative of our 11 “Primary Markets” and the 79 communities that we serve, as well as the executives that lead them, many of whom are long term residents of the communities in which they are employed. The following table lists our “Primary Markets”:

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Note: MSAs and µSAs as defined by the United States Office of Management and Budget (OMB). Primary Markets do not include the Naples-Marco Island, FL MSA (our “Naples Market”), where the Company operates one full-service branch.

We are well recognized within our markets for our relationship-based banking model that provides for local, efficient decision-making. Our experienced leaders are fully responsible for providing “legendary” customer service, growing their markets and hiring the necessary talent to achieve those goals. These leaders are empowered to make key local decisions, driving changes they believe are necessary to ensure success in their communities in collaboration with our senior leaders, but in exchange they are held accountable for performance. We believe each of our designated markets is attractive and high performing from a financial and franchise perspective.

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Source: Central Bancompany and S&P Global Market Intelligence

Notes:

1Consolidated deposit market share represents the weighted average value of our deposit market share across each of our Primary Markets and our Naples Market, weighted by the volume of our deposits in those markets. All market share data is sourced from S&P Global Market Intelligence as of June 30, 2025 (most recent publicly available information). Deposit market share figures for each of our Primary Markets that include multiple MSAs or counties represent blended figures for all MSAs or counties included in the definition of each such Primary Market.

2Discrepancies between consolidated deposits and loans and the sum of the 11 Primary Market areas due to deposits and loans in our non-Primary Markets.

3Represents estimated retail deposit market share based on an illustrative $250 million per branch deposit cap (excluding from the market any deposits at a single branch in excess of $250 million).

4NPS figures are based on most recent annual customer survey and weighted by number of responses for Consumer, Commercial and Wealth lines of business (in the case of Commercial, figure is based on responses from customers who consider the Bank to be their primary financial services provider).

5Employee satisfaction figures represent share of employees who would recommend working at the bank based on most recent annual employee survey.

6Includes the impact of the loss on the sale of the consumer lease portfolio, which had an after-tax impact of $6.6 million on the return of average assets for the St. Louis market. This negatively impacted the market's ROAA by 30 basis points and the consolidated ROAA by 6 basis points.

To serve these communities well, we aim to deliver “Endless Possibilities,” including best-in-class products, services and technologies delivered through our consumer, commercial and wealth management business lines and supported by our technology division to drive customer satisfaction and focus on innovation. Our in-house technology division and innovation teams, together employing approximately 65 programmers and designers, support these business lines and their customer experience objectives. These collective investments have positioned us well, with an average mobile app rating of 4.9/5 on iOS with over 53,000 customer ratings (as of March 1, 2026), as a result of 310 mobile functionalities (similar to those offered by the largest banks in the U.S., including at least 98% of the features offered by large money center banks, according to FinTech Insights).

Our Markets

We are a community bank organized around our 11 Primary Markets, serving 79 communities. Our business is predominantly located in Missouri, a state known for its business-friendly environment, diversified and stable markets, favorable tax regime and convenient location in the central U.S., making it a hub for industries such as transportation, logistics and trade. In addition, we are growing our presence in banking markets located throughout the states of Kansas, Oklahoma, Colorado and Florida. As of December 31, 2025, we operate a network of 155 full-service branches across 17 MSAs and µSAs.

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Central Bank began its legacy in 1902 in Jefferson City, Missouri where we maintain the leading market share. Over our history, we believe our customer-centric approach and commitment to local leadership have bolstered our presence in legacy markets and allowed us to expand our reach into urban, suburban and midsized markets, enabling us to serve a diverse customer base. Our strategic expansion into higher-growth metropolitan areas, like Kansas City, St. Louis, Denver, Tulsa and Oklahoma City, provides access to a broad range of commercial, consumer and government banking opportunities, while enabling us to attract experienced bankers and deepen client relationships. We believe our operations in smaller, stable markets contribute a strong, loyal customer base that provides stable, low cost deposits. We continue to nurture our long-standing relationships with individuals, businesses, agencies and community organizations in our footprint, which strengthens our ability to fund growth and deepen client engagement, while winning market share over time in both new and legacy markets. Since June 30, 2010, our consolidated weighted average deposit market share has increased by approximately 3 percentage points despite dislocations from the 2008 financial crisis and the COVID-19 pandemic.

The following chart shows the location of our 155 full-service branches:

Our Business Lines

Our business model is designed to serve the holistic financial services needs of businesses, individuals, agencies and community organizations within our footprint. Our goal is simple: to provide legendary service to our customers and to be an integral part in the success of our customers and the communities we serve. Our relationship management teams are organized in focused business lines: Consumer Banking, Commercial Banking and Wealth Management.

Consumer Banking

Consumer Banking serves approximately 257,000 households through our network of 155 full-service branches and approximately 1,400 full-time employees as of December 31, 2025, including our mortgage team. We provide a comprehensive suite of offerings, including a full set of deposit products, state-of-the-art digital banking solutions, a range of consumer lending solutions, including home equity lines of credit, and a wholly owned credit card portfolio. Our leading mortgage operation offers both standard mortgages with in-house servicing, typically sold to Freddie Mac, Fannie Mae or private investors, and a wide range of sophisticated balance sheet options. As of December 31, 2025, our median consumer deposit size was approximately $1,387; our median consumer noninterest bearing deposit was approximately $1,051; our median installment loan was approximately $9,000; and our median mortgage loan was approximately $49,000.

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Commercial Banking

Through our network of commercial bankers across our footprint, Commercial Banking provides full-service relationship banking solutions to approximately 69,000 small, middle-market and commercial business entities within our markets as of December 31, 2025. Our long-tenured commercial lending teams originate loans to finance a wide range of our customers’ needs, including commercial, small business and government segments, while striving to maintain conservative underwriting standards. Our deposit and cash management solutions feature a full suite of digital-first tools, treasury management services, and innovative payment and card solutions to complement our comprehensive deposit offerings. As of December 31, 2025, our median commercial deposit size was approximately $4,174; our median commercial noninterest bearing deposit was approximately $3,414; and our median commercial loan was approximately $92,000.

Commercial Banking includes our government business, which held approximately $2.6 billion of public funds across approximately 450 relationships as of December 31, 2025. These relationships are longstanding, with an average tenure of 16 years, and consist of clients across the spectrum of local government, including state-level entities and agencies, public schools, and municipal and county governments, among others.

Our comprehensive treasury management solutions are designed to scale from the smallest business banking clients to our largest commercial and government clients. We offer a full suite of products and services assisting clients with their cash flow and liquidity management, payment and card, reconciliation and fraud management needs. Payable solutions include ACH, wire transfer, commercial cards, business cards, prepaid cards, payroll cards, bill pay, account reconciliation, integrated payables, check issuance and ePayroll. Our payables solutions give our business customers options on how to best deliver their payments depending on speed, choice and efficiency. Receivable solutions include merchant services, ACH, RTP, wire transfers, remote deposit capture, automated invoicing, lockbox, integrated receivables, and coin and currency. These receivable tools help reduce days sales outstanding for our customers and allow for quicker receipt of payment. These solutions are paired with our Treasury Management platform that provides detailed information reporting, mobile capabilities, alerting, self-service and ERP integrations to popular accounting systems allowing for simpler account reconciliation.

We are a recognized leader in payments: among other distinctions, for 2024, we were recognized as the 19th largest corporate card issuer, the 33rd largest purchasing and fleet card issuer, the 46th largest commercial card issuer, and 17th largest commercial prepaid card issuer according to a Nilson Report published in May 2025. We seek to maintain our leadership through continued investment in emerging technologies, including enabling instant payments through RTP, further strengthening our robust capabilities. Additionally, we are differentiated from similarly sized banks by offering dedicated treasury management solutions tailored for governments, municipalities and associations, much of which we have built with our own technology. We have been consistently recognized as providing one of the best HSA programs in the country and are the 18th largest HSA provider as of December 31, 2024, according to a report from Devenir published in April 2025.

Wealth Management

Our Wealth Management line of business consists of two platforms: Central Trust Company and Central Investment Advisors, supported by a team of more than 150 seasoned, highly credentialed professionals, including CFPs, CFTAs, J.D.s, CFAs and CPAs, as of December 31, 2025. Collectively, our Wealth Management businesses managed $16.0 billion in assets under advice as of December 31, 2025, offering diverse services and delivering tailored investment solutions. Central Trust Company manages approximately $11.0 billion in assets under advice across a network of nine locations and provides comprehensive wealth management solutions, including: investment management, fiduciary services, retirement planning / employee benefits solutions, financial, estate and tax planning services. Central Investment Advisors, in partnership with LPL Financial, offers traditional brokerage and managed investment solutions, financial and retirement planning, wealth transfer, insurance planning and employee benefits solutions to individuals, families and businesses through a network of 104 locations. We expect that recent private banking hires and a planned private banking product expansion will further enhance our ability to deliver customized financial solutions, driving deeper product penetration for high-net-worth and ultra-high-net-worth clients. Our Wealth Management business generates high net margins, providing stability and enhancing the resiliency of our franchise.

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Our Products and Services

As a relationship-focused bank, we combine a broad suite of financial products with advanced technology, delivering a banking experience that we believe rivals the largest institutions while maintaining the personal service of a community bank. Our highly rated mobile app is designed to provide seamless access for our customers to a broad array of financial services, including loans, deposit accounts, wealth management and treasury management solutions. Whether serving businesses, consumers or government organizations, our mission is to offer the tools and expertise to help clients manage their financial goals with ease.

Loans and Leases

As a community bank, we endeavor to support economic growth in each of the communities in which we operate. This focus aligns our lending activity and growth. We have a highly diversified loan and lease portfolio that has grown steadily through multiple economic cycles. Much of this growth was organic as a result of our strategic focus on local businesses in our core communities, supplemented by several acquisitions. While growing our loan and lease portfolio, we have maintained a conservative approach to underwriting and stringent risk management standards designed to promote pristine asset quality.

We offer a broad range of lending products with a focus on CRE, C&D, commercial, financial & agricultural (mainly referred to as “C&I”), multi-family and one-to-four-family residential loans in our Primary Markets in Missouri, Kansas, Oklahoma and Colorado. As of December 31, 2025, 87.8% of our loans were to borrowers who resided or organized in our Primary Markets. We deliver these products through a local, relationship-based delivery model emphasizing market-level credit authority.

Commercial Real Estate (CRE)

Our commercial real estate business leverages our commitment to relationship lending to support multi-family, non-owner occupied, and owner occupied commercial real estate lending opportunities with properties or sponsors located in our markets. We focus on maintaining a diverse portfolio of commercial real estate property types and locations. Consistent with our conservative underwriting approach and risk management standards, our policy is to limit transaction exposure and require modest leverage profiles and sufficient sponsor recourse across all commercial real estate classes, and we have elevated approval as exposure increases to manage portfolio risk.

As of December 31, 2025, we reported $4,731 million in total commercial real estate loans, consisting of $3,150 million in non-owner occupied CRE, which includes $866 million in multi-family CRE, and $1,580 million in owner occupied CRE, which includes $318 million of loans secured by farmland. Our commercial real estate portfolio is well diversified across both transaction sizes and property types.

Construction and Development (C&D)

We maintain an active lending business in commercial construction and development loans. Our commercial C&D loan portfolio includes multi-family, hospitality, office, industrial and commercial construction loans. Our C&D loan balance totaled $571 million at December 31, 2025.

As of December 31, 2025, total CRE and C&D loan balances were $5,301 million, comprised of $571 million in C&D loans, $3,150 million in non-owner occupied CRE and $1,580 million in owner-occupied CRE loans.

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We finance a wide variety of CRE and C&D property types which include multi-family, industrial, retail, hotels, office and self-storage. We monitor our concentrations on these property types against internal limits. The following table shows the composition of our CRE and C&D portfolio by property type and the state in which the real estate resides as of December 31, 2025.

Commercial, Financial & Agricultural (C&I)

Through our relationship model we seek to cultivate commercial, financial and agricultural relationships within our markets. We focus on developing comprehensive relationships, including cash management and treasury management services in addition to working capital, equipment, expansion, acquisition and financing needs. Our underwriting focuses on cash flow as our primary source of loan repayment, supplemented by collateral and sponsor support. We manage our exposure levels to any specific industries or individual entity. Our commercial, financial and agricultural loans totaled $1.8 billion in loan balances at December 31, 2025. The following table shows the composition of our commercial, financial & agricultural portfolio by industry type and the state in which the customer resides as of December 31, 2025.

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Residential Real Estate Lending

We originate and service residential lending products for customers across our markets. Our loan portfolio includes loans secured by residential real estate for both owner-occupied and non-owner occupied 1-4 family properties, along with 1-4 family construction and development lending including both pre-sold and speculative properties. Depending on the type and characteristics of each residential real estate loan, we sell residential real estate loans to Freddie Mac, Fannie Mae or private investors. Our mortgage loan officers originate both held for sale and portfolio mortgage products. In 2025, we originated $1,527 million in residential real estate loans, retaining $452 million on our consolidated balance sheet.

At December 31, 2025, our 1-4 family residential real estate portfolio totaled $3,732 million in outstanding balances, which includes $411 million in home equity line of credit products and $327 million in 1-4 family C&D loans.

Consumer Lending

We support our markets by providing a variety of loans and leasing products to individuals, including direct and indirect consumer loans and leases and consumer credit cards. Consumer loans are underwritten based on the individual borrower’s income, current debt level, credit score and the underlying collateral, if applicable. We provide risk-based loan terms which consider the product type, tenor collateral and size using standard pricing sheets. Our Consumer loan portfolio totaled $650 million as of December 31, 2025, which includes $498 million in consumer installment loans, $98 million in consumer credit card loans, and $53 million in other consumer loans, such as revolving loans and overdrafts.

Diversified Loan Portfolio

We believe a key component of maintaining strong asset quality includes maintaining and monitoring a well-balanced loan portfolio across our customer segments, our markets and asset classes. Our loan portfolio remains highly diversified across our key operating markets. As a community focused bank, we seek to maintain a loan portfolio that is balanced between our Consumer and Commercial lines of business. At December 31, 2025, our loan exposure to Consumer and Commercial customers was 38% and 62%, respectively. Further, our Commercial portfolio is diversified across customers and asset classes.

Deposits

We provide a full range of deposit products to individuals, businesses, governments and community organizations, serving as a primary funding source for the Bank. Our deposit composition is balanced between Consumer (50.0%) and Commercial (50.0%, including public funds) as of December 31, 2025. Our product offerings include checking, savings, money market accounts and certificates of deposit, all supported by convenient digital and payment solutions such as debit cards, direct deposit, person-to-person and ACH payments as well as extensive online and mobile banking capabilities. For commercial and government clients, we also offer treasury and cash management solutions to support their liquidity and operational needs.

As of December 31, 2025, we had total deposits of $15.9 billion, comprised of 35.4% noninterest-bearing accounts, 54.3% savings and interest-bearing demand deposit accounts, and 10.3% time deposits. Despite our track record of strong growth, our deposit accounts remain low in cost and small in size. As of December 31, 2025, our average deposits account size was approximately $25,000, our non-time deposits represented 89.7% of our total deposits, and for the year, our total deposit cost was 1.18%.

Acquisition Strategy for Deposits

Our approach to attracting deposits includes conventional marketing initiatives, digital and omni-channel campaigns, and targeted outreach efforts. We actively engage in community events, public relations initiatives and sponsorships to strengthen our presence and generate new account opportunities. Additionally, we execute a structured year-around strategy tailored to both consumer and business deposits, intended to promote sustained growth and long-term deposit stability. Through these efforts, we remain focused on expanding our deposit base while enhancing customer relationships and market reach.

Deposit Composition and Trends Over Time

A key aspect of our business is the growth and stability of deposits, which serve as a key source of funding for our loans and securities. Our long-term strategy of focusing on increasing noninterest bearing deposits has led to us being able to maintain a lower cost of funds compared to peers.

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At December 31, 2025, $5.6 billion, or 35.4%, of our total deposits were noninterest bearing. Our time deposits were $1.6 billion or 10.3%, of which 95% have a maturity of one year or less. As of the same date, 50% of our deposits are consumer, and 33% are commercial and the remaining 17% of deposits are public funds. Due to our strategic location in Missouri’s capital city, we operate a sizable government business within our Commercial Banking business line. The government business had $2.6 billion of public funds outstanding at December 31, 2025. Although these funds are contractual in nature, with periodic competitive renewals, our relationship-based banking model has produced long-term relationships (with the largest relationship dating back to at least 1934).

The following charts show our deposit composition as of December 31, 2025, by product type and by line of business, respectively:

Deposit Composition by Product Type and Line of Business as of December 31, 2025

The following chart shows the composition of our deposits by product type for the years ended December 31, 2021 to 2025.

Period End Deposit Composition Over Time

($Bn)

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As of December 31, 2025, our consumer deposits had an average cost of 0.96%, commercial deposits had an average cost of 0.92%, and public funds had an average cost of 2.60%.

Our Strategic Growth Plans

We believe our competitive strengths supported by our strong culture and consistent strategic execution have driven the success of our franchise to date. Our superior profitability is supported by our strong market position, our granular and low-cost deposit customer base, our diversified revenue and fee income profile with an attractive wealth business, and our strong balance sheet and demonstrated risk management capabilities that provide flexibility to leverage significant excess capital and liquidity.

We are currently executing our latest strategic plan, which we call “The Road Ahead,” initiated in 2022. This plan aims to maintain our historic track record of profitable growth by focusing on our existing core competencies to drive customer growth, deepening our customer relationships and associated fee income, and deploying our capital into larger strategic acquisitions. We have made substantial progress against these goals and continue to invest in new capabilities across our business lines to ensure we remain on track.

•Customer growth and operational efficiency: Over the past three years, we have built six new branches in our efforts to expand our footprint in Oklahoma, Colorado and Florida and grow our customer base. To maximize our operational efficiency, we closed three branches in well-served markets. Over the next few years, we intend to expand our coverage in attractive metro opportunities with eight new branches planned for the St. Louis, Kansas City Metro and Denver markets.

•Deepen customer relationships: We believe that our reputation, expertise and customer-centric banking model enable us to further penetrate our existing customer base. We look to leverage our relationships with existing customers by cross-selling existing and new capabilities. We have made recent hires in both private banking and treasury management to facilitate these efforts. We have identified approximately $40 billion of wealth assets of our existing high-net-worth customers with a banking relationship that they hold with other advisors, based on USA Data and the Company’s internal analysis as of December 31, 2024, and our primary markets show significant opportunity for increased treasury management activities. We intend to continue to capitalize on opportunities to capture more business from existing customers throughout our banking network.

•Acquisitions: Over the last few years, we have developed relationships with a wide array of potential partners and have passed on several opportunities that did not meet our deal parameters. We believe we are well positioned to move quickly when suitable opportunities arise. Our balance sheet position with excess capital and liquidity provides us with flexibility when considering potential acquisition opportunities.

Our targeted potential acquisition partners are generally high-quality banks with demonstrated track records of operational and financial performance, have strong management teams, and are generally located in faster-growing states, including Texas, Colorado and Oklahoma. Our key M&A financial parameters include earnings per share accretive transactions with a return on invested capital that exceeds 10%.

Competition

We face competitive pressures from other local regional banks, large national banks, credit unions and digital-only banks. In addition, we compete against mortgage and consumer finance companies, trust companies and brokerage firms, and emerging fintechs.

We believe our advantage is strong local relationships and personalized services, commitment to technological innovation and brand recognition within the communities we serve. We intend to continue to strengthen our product offerings to address the evolving financial landscape and broaden our services through branch and ATM expansion.

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Employees

As of December 31, 2025, our headcount was approximately 3,036 employees, comprised of 2,765 full-time employees and 271 part-time employees. None of our employees are parties to a collective bargaining agreement. We maintain a positive and collaborative relationship with our employees, which has helped us avoid any interruptions due to labor disagreements.

We strive to attract and retain strong talent by providing a variety of benefits and services as well as cultivating an inclusive, safe and healthy workplace. We provide a competitive compensation and benefits program to help meet the needs of all our employees, recognizing their varying needs. In addition to salaries, these programs include annual bonus opportunities, a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, flexible spending accounts, paid time off including family leave and an employee assistance program. We also invest in the growth and development of our employees by providing a multi-dimensional approach to learning designed to empower, intellectually grow, and professionally develop our colleagues. In particular, we not only provide a number of in-house learning opportunities but also facilitate the educational and professional development of our employees through support to attend conferences and obtain degrees, licenses and certifications.

Our employees consistently strive to make a positive difference in the communities we serve. Our employees have taken an active interest in sharing talents in their communities through volunteer activities in financial education, economic development, human and health services, and community reinvestment. Recently, we implemented a program to better track, recognize and reward all community hours served in other areas to celebrate the broad reach our employees have on our communities. In 2025 alone, our employees logged over 29,000 hours serving every community in which we reside.

Supervision and Regulation

The Company and the Bank are subject to extensive regulation under federal and state law. The following information describes certain aspects of that regulation applicable to the Company and the Bank and does not purport to be complete. The costs of compliance with the regulatory regime and supervisory framework applicable to the Company and the Bank are significant. The level of regulation and oversight over financial services activities, including the regulatory enforcement environment applicable to banks and bank holding companies, has in the past increased and may in the future increase. The laws, regulations and supervisory guidance applicable to the Company and the Bank are subject to frequent and ongoing change. A change in applicable laws, regulations or policies, or a change in the way such laws, regulations, or policies are interpreted or enforced by regulatory agencies or courts, may have a material impact on the business, operations, and earnings of the Company and the Bank. The likelihood and timing of any future changes, and the effect of such changes on the Company and the Bank, are not determinable at this time with any degree of certainty.

Central Bancompany, Inc.

The Company is a bank holding company organized under the laws of Missouri within the meaning of the BHC Act and is registered as such with the Federal Reserve. As a bank holding company, the Company is subject to supervision, regulation, and examination by the Federal Reserve and the Missouri Division of Finance and is required to file various reports with the Federal Reserve. The Federal Reserve possesses extensive authority to take formal or informal corrective or enforcement actions against the Company if it were to take the position that we have violated any law or regulations or have engaged in any unsafe or unsound practice.

Under the BHC Act, a bank holding company may elect to become a financial holding company and thereby engage in a broader range of financial and other activities than are permissible for traditional bank holding companies. The Company has not elected to become a financial holding company.

The Central Trust Bank

The Bank is a Missouri-chartered trust company with banking powers and a Federal Reserve state member bank. Accordingly, the Bank is subject to supervision, regulation and oversight by the Federal Reserve and the Missouri Division of Finance. Because the Bank accepts insured deposits from the public, it is also subject to additional regulatory oversight by the FDIC.

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Depository institutions, including the Bank, are subject to extensive federal and state regulations that significantly affect their businesses and activities. Regulatory bodies have broad authority to implement standards and initiate proceedings designed to prohibit depository institutions from engaging in unsafe and unsound banking practices. The standards relate generally to capital adequacy, asset quality, management capacity, earnings, liquidity, sensitivity to market risk and various other factors. The bank regulatory agencies are authorized to take action against institutions that fail to meet such standards. In states where the Bank accepts government deposits, we may also be subject to additional oversight by the applicable state bank regulatory agency.

The Bank is authorized to perform a range of fiduciary services, including the management and administration of trusts, settlement of estates and wealth management. The Bank’s fiduciary activities are currently performed through its Central Trust Company division. Some states have physical presence requirements for trust services, and the interplay between federal and state regulations in this area continues to evolve.

In addition, the Bank maintains a partnership agreement with LPL Financial LLC (“LPL”), which offers securities and advisory services to the Bank’s clients through its Central Investment Advisors division. Insurance products are also offered through LPL or its licensed affiliates. LPL is not affiliated with us. Neither Central Trust Company nor Central Investment Advisors is an investment adviser or a broker-dealer registered with the SEC or subject to its regulation.

Further, the Bank directly provides certain investment advisory services to a limited group of institutional clients. In connection with such investment advisory services, the Bank is a registered investment adviser subject to regulation and periodic examination by the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisers Act imposes numerous obligations on registered investment advisers, including compliance with the anti-fraud provisions of the Advisers Act and fiduciary duties arising out of those provisions.

Deposit Insurance

The deposits of the Bank are insured by the FDIC to the extent provided by law. Accordingly, the Bank is also subject to regulation by the FDIC. The Bank is subject to deposit insurance assessments to maintain the DIF of the FDIC. The FDIC utilizes a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank’s capital level and supervisory rating and certain financial measures to assess an institution’s ability to withstand asset-related stress and funding-related stress. The risk matrix utilizes four risk categories which are distinguished by capital levels and supervisory ratings. In addition, the FDIC must recover, by special assessment, losses to the DIF as a result of the FDIC’s use of the systemic risk exception to the least cost resolution test under the Federal Deposit Insurance Act.

In October 2022, the FDIC adopted a final rule to increase base deposit insurance assessment rate schedules uniformly by two basis points beginning in the first quarterly assessment period of 2023. The increase was instituted to account for extraordinary growth in insured deposits during the first and second quarters of 2020, which caused a substantial decrease in the “designated reserve ratio” of the DIF to total industry deposits. The FDIC has indicated that the new assessment rate schedules will remain in effect until the DIF reserve ratio meets or exceeds 2%. For the years ended December 31, 2025 and 2024, the Company recorded expense of $4.3 million and $4.6 million, respectively, for FDIC insurance premiums.

In November 2023, the FDIC adopted a rule to recover, by special assessment, losses to the FDIC deposit insurance fund as a result of the FDIC’s use, in March 2023, of the systemic risk exception to the least-cost resolution test under the FDIA in connection with the receiverships of certain regional banks. Under the rule, the assessment base is the estimated uninsured deposits that an insured depository institution reported as of December 31, 2022, excluding the first $5 billion in estimated uninsured deposits. The special assessments will be collected at an annual rate of approximately 13.4 basis points per year (3.36 basis points per quarter) over eight quarters in 2024 and 2025, with the first assessment period beginning January 1, 2024. Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis. In June 2024, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.

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Capital Requirements

The Company and the Bank are each required to comply with applicable capital adequacy standards established by the Federal Reserve. The Basel III Capital Rules require the Company and the Bank to maintain the following:

•a minimum ratio of total capital to risk-weighted assets of at least 8.0%;

•a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%;

•a minimum ratio of CET1 capital to risk-weighted assets of at least 4.5%; and

•a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

In addition to these minimum regulatory capital ratios, the Basel III Capital Rules establish a capital conservation buffer with respect to the first three ratios listed above. Specifically, banking institutions must hold CET1 capital in excess of their minimum risk-based capital ratios by at least 2.5% of risk-weighted assets in order to avoid constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation. The severity of the constraints depends on the amount of the shortfall and the institution’s “eligible retained income” (that is, the greater of (i) net income for the preceding four quarters, net of distributions and associated tax effects not reflected in net income and (ii) the average net income over the preceding four quarters).

Failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for a financial institution could subject us to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits and other restrictions on its business. As described below, significant additional restrictions can be imposed on the Bank if it were to fail to meet applicable capital requirements.

As of December 31, 2025, our total risk-based capital ratio is 29.3%, our Tier 1 capital ratio is 28.1%, our CET1 capital ratio is 28.1%, and our leverage ratio is 15.7%. As of December 31, 2025, the Bank’s total risk-based capital ratio is 13.8%, its Tier 1 risk-based ratio is 12.6%, its CET1 capital ratio is 12.6%, and its leverage ratio is 8.3%.

Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a regulatory scheme, which ties the level of supervisory intervention by bank regulatory authorities primarily to a depository institution’s capital category. Among other things, FDICIA authorizes regulatory authorities to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

The current prompt corrective action requirements for an institution to be “well-capitalized” is a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a CET1 ratio of 6.5% or greater and a Tier 1 leverage ratio of 5% or greater. The Bank exceeded the thresholds to be considered well capitalized as of December 31, 2025. Well-capitalized institutions are permitted to engage in a wider range of banking activities, including among other things, the accepting of “brokered deposits,” and the offering of interest rates on deposits higher than the prevailing rate in their respective markets.

If an institution is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized, it is required to submit a capital restoration plan to its appropriate federal bank regulatory agency. For such capital restoration plan to be accepted by the appropriate federal bank regulatory agency, a bank holding company must guarantee that a subsidiary depository institution will comply with its capital restoration plan, subject to certain limitations and must provide assurances of performance. The obligation of a controlling bank holding company under the FDIA to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiary’s assets or the amount required to meet regulatory capital requirements. If a depository institution fails to submit an acceptable capital restoration plan or fails to implement an approved plan, it is treated as if it is significantly undercapitalized. FDICIA imposes restrictions and prohibitions on institutions that are undercapitalized, significantly undercapitalized or critically undercapitalized with respect to, among other things, asset size, acquisitions, establishing branches, engaging in new activities, capital distributions and transactions with affiliates.

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Resolution and Related Matters

If an insured depository institution such as the Bank were to become insolvent or if other specified events were to occur relating to its financial condition or the propriety of its actions, the FDIC may be appointed as conservator or receiver for the institution. In that capacity, the FDIC would have the power to (i) transfer assets and liabilities of the institution to another person or entity without the approval of the institution’s creditors, (ii) require that its claims process be followed and to enforce statutory or other limits on damages claimed by the institution’s creditors, (iii) enforce the institution’s contracts or leases according to their terms, (iv) repudiate or disaffirm the institution’s contracts or leases, (v) seek to reclaim, recover, or recharacterize transfers of the institution’s assets or to exercise control over assets in which the institution may claim an interest, (vi) enforce statutory or other injunctions, and (vii) exercise a wide range of other rights, powers, and authorities, including those that could impair the rights and interests of all or some of the institution’s creditors. In addition, the administrative expenses of the conservator or receiver could be afforded priority over all or some of the claims of the institution’s creditors, and under the FDIA, the claims of depositors (including the FDIC on behalf of depositors) would enjoy priority over the claims of the institution’s unsecured creditors.

Dividends

The principal source of our liquidity is dividends from the Bank. The prior approval of the Federal Reserve is required if the total of all dividends declared by a state-chartered member bank in any calendar year would exceed the sum of the bank’s net profits for that year and its retained net profits for the preceding two calendar years, less any required transfers to surplus or to fund the retirement of preferred stock. Federal law also prohibits a state-chartered member bank from paying dividends that would be greater than the bank’s undivided profits.

We and the Bank are also subject to limitations under Missouri law regarding the level of dividends that may be paid. The GBCL provides that a Missouri corporation, such as the Company, may pay dividends or repurchase its shares only if the net assets of the corporation are no less than its stated capital and the payment or repurchase will not reduce the net assets of the corporation below its stated capital. In addition, under Missouri law, the Bank may only pay dividends from certain undivided profits and may not pay dividends if its capital is impaired. Limitations on our ability to receive dividends from the Bank could have a material adverse effect on our liquidity and ability to pay dividends on its common stock or interest and principal on its debt, and ability to fund purchases of its common stock.

In addition, we and the Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal regulatory authority is authorized to determine under certain circumstances relating to the financial condition of a bank holding company or a bank that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The appropriate federal regulatory authorities have stated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.

Permitted Activities

As a bank holding company, the Company is limited generally to managing or controlling banks, furnishing services to or performing services for its subsidiaries, and engaging in other activities that the Federal Reserve determines by regulation or order to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Other than its ownership and management of the Bank, the Company does not engage in any other material business.

Subject to any applicable federal requirements, the Bank is authorized to engage in activities permissible for Missouri-chartered trust companies with banking powers. Under Missouri banking laws, the Bank may generally engage in a broad range of enumerated banking activities and exercise all powers necessary, proper or convenient to those activities and any powers incidental to the business of banking. Permitted activities include, among other things, accepting deposits; lending money on personal and real estate security; issuing letters of credit; buying, selling and negotiating bonds, commercial papers and other forms of indebtedness; buying and selling investment securities; receiving money in trust; accepting and executing trusts; and acting as trustee, personal representative, conservator or any other like fiduciary capacity. Subject to certain conditions, Missouri law also permits Missouri-chartered trust companies with banking powers, such as the Bank, to engage in additional activities if those activities are permissible for a national bank operating in Missouri.

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Banking Acquisitions; Changes in Bank Control

The BHC Act requires, among other things, the prior approval of the Federal Reserve in any case where a bank holding company proposes to (i) acquire direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank or bank holding company (unless it already owns a majority of such voting shares), (ii) acquire all or substantially all of the assets of another bank or bank holding company, or (iii) merge or consolidate with any other bank holding company. In determining whether to approve a proposed bank acquisition, the Federal Reserve will consider, among other factors, the effect of the acquisition on competition, the effect of the transaction on the convenience and needs of the community to be served, and the projected capital ratios and levels on a post-acquisition basis, as well as the acquiring institution’s performance under the CRA and its compliance with fair housing and other consumer protection laws.

In addition, Section 18(c) of the FDIA, commonly known as the “Bank Merger Act,” requires the prior written approval of the Federal Reserve before any state member bank may (i) merge or consolidate with, (ii) purchase or otherwise acquire the assets of or (iii) assume the deposit liabilities of another bank if the resulting institution is to be a state member bank. In determining whether to approve a proposed merger transaction, the Federal Reserve must consider the effect on competition, the financial and managerial resources and future prospects of the existing and resulting institutions, the convenience and needs of the communities to be served, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities. In addition, the Bank Merger Act applies to (i) mergers or consolidations with, (ii) the assumption of deposit or similar liabilities of or (iii) transfer of assets to any non-insured institutions.

In acting on any application by a banking organization to make an investment or acquisition subject to its approval, federal bank regulatory agencies have substantial discretion in whether or not to grant any approval or non-objection. If the Company or the Bank were to fail to meet certain regulatory criteria or expectations, it could have a material negative effect on the Company’s or the Bank’s ability to obtain the approvals and non-objections necessary to engage in investments or acquisitions.

Subject to certain exceptions, the BHC Act and the Change in Bank Control Act, together with their applicable regulations, require Federal Reserve approval (or, depending on the circumstances, no notice of disapproval) prior to any person or company acquiring “control” of a bank or bank holding company. Control exists if an individual or company acquires the power, directly or indirectly (including, in the case of the Bank, through us), to direct the management or policies of an insured depository institution or to vote twenty-five percent (25%) or more of any class of voting securities (including, in the case of the Company, our Class A common stock) of any insured depository institution. A rebuttable presumption of control exists if a person or company acquires ten percent (10%) or more but less than twenty-five percent (25%) of any class of voting securities (including, in the case of the Company, our Class A common stock) of an insured depository institution and either the institution has registered its securities with the SEC under Section 12 of the Exchange Act, or no other person will own a greater percentage of that class of voting securities immediately after the acquisition.

Missouri law also generally prohibits any bank holding company from acquiring ownership or control of any depository financial institution that has Missouri deposits, such as the Bank, if the qualifying deposits in Missouri controlled by such bank holding company after the acquisition would exceed 13% of all qualifying Missouri deposits in total.

Source of Strength

Federal Reserve policy has historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement. Under this requirement, the Company is expected to commit resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

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Safety and Soundness Standards

The FDIA requires the federal banking agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits, and such other operational and managerial standards as the agencies deem appropriate. Federal banking agencies have adopted the Interagency Guidelines for Establishing Standards for Safety and Soundness, which establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits. In general, these guidelines require, among other things, appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines. These guidelines also prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.

The federal bank regulatory agencies have released a statement entitled “Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending” (the “CRE Guidance”). In the CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease commercial real estate underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks and (iii) indicated that they will continue to pay special attention to commercial real estate lending activities and concentrations going forward. The bank regulatory agencies also previously issued guidance, entitled “Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (i) total commercial real estate loans, excluding owner-occupied commercial real estate, represent 300% or more of its total capital and (ii) the outstanding balance of such institution’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months. As of December 31, 2025, total commercial real estate loans, excluding owner-occupied commercial real estate, and including both residential and commercial construction and development loans represents 119% of our total capital and the outstanding balance of our commercial real estate loan portfolio has not increased by 50% or more during the prior 36 months.

In addition, the federal bank regulatory agencies have adopted regulations that authorize, but do not require, an agency to order an institution that has been given notice by an agency that it is not satisfying any of such safety and soundness standards to submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA. If an institution fails to comply with such an order, the banking regulator may seek to enforce such order in judicial proceedings and to impose civil money penalties.

Transactions with Affiliates

Sections 23A and 23B of the Federal Reserve Act and Regulation W establish certain quantitative limits and other requirements for loans, purchases of assets, and certain other transactions between the Bank and its “affiliates,” including the Company. Among other requirements, loans or extensions of credit to, or other covered transactions with, an affiliate, to the extent permitted, must be on terms and conditions that are substantially the same, or at least as favorable to the Bank, as those prevailing for comparable nonaffiliated transactions.

Loans to executive officers, directors, or any person who, directly or indirectly, or acting through or in concert with one or more persons, owns, controls or has the power to vote more than 10% of any class of voting securities of a bank and their related interests, are subject to Sections 22(g) and 22(h) of the Federal Reserve Act and their corresponding regulation (Regulation O). Among other things, these loans must be made on terms (including interest rates charged and collateral required) substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment. In addition, the amount of loans a bank may make to these persons is subject to both quantitative limits and procedural requirements. Missouri law generally incorporates the requirements of Regulation O for purposes of state law limitations on lending to officers and directors.

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Consumer Financial Protection

The Bank is also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks. Among the more prominent of such laws and regulations are the Truth in Lending Act, the Home Mortgage Disclosure Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act and the Fair Housing Act. Our consumer-oriented activities are also subject to various state and local consumer protection laws. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits or making loans to such customers. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.

The Dodd-Frank Act centralized responsibility for consumer financial protection by creating the CFPB and giving it responsibility for implementing, examining and enforcing compliance with federal consumer protection laws. The CFPB has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans, and credit cards. The CFPB’s functions include investigating consumer complaints, rulemaking, supervising and examining banks’ consumer transactions, and enforcing rules related to consumer financial products and services. Banks with more than $10 billion in assets, such as the Bank, are subject to supervision by the CFPB with respect to these federal consumer financial laws. However, state and local authorities are responsible for implementing, examining and enforcing compliance with state and local consumer protection laws, which may be stricter than federal laws, including CFPB rules. In addition, the Dodd-Frank Act allows state attorney generals to enforce compliance with federal consumer laws and regulations in certain circumstances.

Regulation Z, the implementing regulation of the Truth in Lending Act, requires mortgage lenders to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a residential mortgage loan has a reasonable ability to repay the loan according to its terms. These rules prohibit creditors, such as the Bank, from extending residential mortgage loans without regard for the consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and servicing practices. In addition, these rules restrict the imposition of prepayment penalties and restrict compensation practices relating to residential mortgage loan origination.

In March 2023, the CFPB issued a final rule amending Regulation B, the implementing regulation of the Equal Credit Opportunity Act. Covered financial institutions are required to collect and report to the CFPB data on applications for credit for small businesses, including those that are owned by women or minorities. The rule also addresses the CFPB’s approach to privacy interests and the publication of data, shielding certain demographic data from underwriters and other persons, record-keeping requirements and enforcement provisions. A court has stayed the rule pending resolution of a lawsuit challenging the rule for the plaintiffs and intervenors in that lawsuit, including the Bank.

Under the Dodd-Frank Act, the Federal Reserve adopted rules applicable to banks with $10 billion or more in assets, such as the Bank, that establish standards for debit card interchange fees and prohibit network exclusivity and routing restrictions. These rules establish a maximum permissible interchange fee for many types of debit card transactions. In October 2023, the Federal Reserve proposed amendments to these rules that would reduce this maximum permissible interchange fee and establish automatic updates to the maximum permissible interchange fee every other year based on a survey of debit card issuers. The amendments have not been finalized and we will continue to monitor proposed changes to these rules.

Community Reinvestment Act

The CRA requires the appropriate federal bank regulatory agency, in connection with its examination of a bank, to assess the bank’s record in meeting the credit needs of the communities served by the bank, including low- and moderate-income neighborhoods. Furthermore, such assessment is also required of banks that have applied, among other things, to merge or consolidate with or acquire the assets or assume the liabilities of an insured depository institution, or to open or relocate a branch. In the case of a bank holding company applying for approval to acquire a bank or bank holding company, the record of each subsidiary bank of the applicant bank holding company is subject to assessment in considering the application. Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The Bank was rated “satisfactory” in its most recent CRA evaluation.

In October 2023, the federal bank regulatory agencies issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data-reporting requirements taking effect January 1, 2027. The final rule is currently enjoined while a federal court considers a lawsuit challenging the rule, and on July 16, 2025, the agencies proposed to rescind the rule and reinstate the prior framework.

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Anti-Money Laundering Legislation

The Company is subject to several federal laws that are designed to combat money laundering, terrorist financing, and transactions with persons, companies or foreign governments designated by U.S. authorities (the “AML laws”). This category of laws includes the BSA, USA PATRIOT Act, AMLA and Money Laundering Control Act of 1986. The Financial Crimes Enforcement Network, a bureau of the U.S. Department of Treasury, has issued the priorities for anti-money laundering and countering the financing of terrorism, as required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking organization activity, human trafficking and proliferation financing.

The AML laws and their implementing regulations require insured depository institutions, broker-dealers, and certain other financial institutions to have policies, procedures, and controls to detect, prevent, and report potential money laundering and terrorist financing. The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants.

In June 2024, FinCEN proposed to amend the anti-money laundering/countering the financing of terrorism (“AML/CFT”) program requirements for all financial institutions subject to the BSA that have AML/CFT program obligations, including us. The proposal would, among other things, require a financial institution’s risk assessment process to identify, evaluate and document the financial institution’s money laundering, terrorist financing and other illicit activity risks, and update such risk assessments on a periodic basis. In July 2024, the U.S. federal bank regulatory agencies proposed amendments to their respective BSA program rules to align those rules with the FinCEN proposal.

Office of Foreign Assets Control

The U.S. Treasury Department’s Office of Foreign Assets Control is responsible for administering and enforcing economic and trade sanctions against specified foreign parties, including countries and regimes, foreign individuals, and other foreign organizations and entities. OFAC publishes lists of prohibited parties that are regularly consulted by the Company in the conduct of its business in order to assure its compliance. The Company is responsible for, among other things, blocking the accounts of, and transactions with, prohibited parties identified by OFAC, avoiding unlicensed trade and financial transactions with such parties, and reporting blocked transactions after their occurrence. Failure to comply with OFAC requirements could have serious legal, financial, and reputational consequences for the Company.

Privacy

Several laws, including the Right to Financial Privacy Act of 1978, and related regulations issued by the federal bank regulatory agencies also provide protections against the transfer and use of customer information by financial institutions. A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers’ personal information. Each institution must conduct an internal risk assessment of its ability to protect customer information. These privacy provisions generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated parties without prior notice to and approval from the customer.

In October 2024, the CFPB adopted a final rule requiring providers of payment accounts or products, such as the Bank, to make data available to consumers upon request regarding the products or services they obtain from the provider, and to third parties, with the consumer’s express authorization, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer. Data required to be made available under the rule includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. For banks with at least $10 billion and less than $250 billion in total assets, such as the Bank, compliance with the rule is required by April 1, 2027.

Additionally, the Gramm-Leach-Bliley Act of 1999 includes privacy requirements for financial institutions, including obligations to protect and safeguard consumers’ nonpublic personal information and records, and limitations on the re-disclosure and re-use of such information. The GLBA requires administrative, technical, and physical safeguards to ensure the security, confidentiality, integrity, and the proper disposal of nonpublic personal information. It limits a financial institution’s disclosure of nonpublic personal information to unaffiliated third parties unless certain notice requirements are met and the consumer does not elect to prevent or “opt out” of the disclosure and requires that financial institutions provide privacy notices to their customers.

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Incentive Compensation

The federal bank regulatory agencies have issued final Interagency Guidance on Sound Incentive Compensation Policies intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such institutions by encouraging excessive risk-taking. The Interagency Guidance on Sound Incentive Compensation Policies is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors.

The Federal Reserve reviews, as part of the regular risk-focused examination process, the incentive compensation arrangements of financial institutions, such as the Company, that are not “large complex banking organizations.” These reviews are tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives are included in reports of examination. Deficiencies are incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions. Enforcement actions may be taken against a financial institution if its incentive compensation arrangements, or related risk management control or governance processes, pose a risk to the institution’s safety and soundness and the financial institution is not taking prompt and effective measures to correct the deficiencies.

In accordance with an SEC rule, securities exchanges have adopted rules mandating, in the case of a restatement, the recovery or “clawback” of excess incentive-based compensation paid to current or former executive officers and requiring listed issuers to disclose any recovery analysis where recovery is triggered by a restatement.

Cybersecurity

The federal bank regulatory agencies have issued guidance and standards regarding cybersecurity intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.

Banking organizations are required to notify their primary bank regulatory agency within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.

Certain state regulators have also implemented privacy and cybersecurity standards and regulations. For example, several states have recently adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states have also recently implemented or modified their data breach notification, information security and data privacy requirements.

Future Legislation and Regulation

Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states. Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted, although the enactment of proposed legislation could impact the regulatory structure under which the Company and the Bank operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to business strategy, and limit the ability to pursue business opportunities in an efficient manner. A change in statutes, regulations or regulatory policies applicable to the Company or the Bank could have a material adverse effect on the business, financial condition, and results of operations of the Company and the Bank.