The Company is exposed only to U.S. dollar interest rate changes, and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading. 58 The Company also has forward contracts and IRLCs to economically hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of $3.3 million and $3.4 million at June 30, 2026 and December 31, 2025, respectively, and a liability of $483,000 and $2.8 million at June 30, 2026 and December 31, 2025, respectively. The Company also enters into interest rate derivative agreements to facilitate the risk management strategies of certain clients. The Company mitigates this risk by entering into equal and offsetting interest rate derivative agreements with highly rated third-party financial institutions. The fair value of these instruments amounted to an asset of $7.3 million and $7.4 million at June 30, 2026 and December 31, 2025, respectively, and a liability of $7.4 million and $7.6 million at June 30, 2026 and December 31, 2025, respectively. The Company has no exposure to foreign currency exchange rate risk, commodity price risk and other market risks. Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as “interest rate risk.” The repricing of interest-earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of the Company’s asset/liability management program, the timing of repriced assets and liabilities is referred to as “gap management.” The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. The analysis of the impact on net interest income over a 12-month and 24-month period is subjected to gradual and parallel shocks of the various increases and decreases in market rates shown in the table below, and is monitored on a quarterly basis. The following table presents the earnings simulation model’s projected impact of a change in interest rates on the projected baseline net interest income for the 12- and 24-month periods commencing July 1, 2026. This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve. Earnings Simulation Model Results Change in % Change in Projected Baseline Interest Rates Net Interest Income (in bps) 12 Months 24 Months 400 5.1% 16.8% 300 4.0% 13.0% 200 2.8% 8.9% 100 1.4% 4.6% (100) (1.1)% (4.9)% (200) (1.6)% (9.9)% (300) (1.1)% (14.8)% Additional information required by Item 305 of Regulation S-K is set forth under Part I, Item 2 of this report.