UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-21344

FIRST KEYSTONE CORPORATION

(Exact name of registrant as specified in its charter)


Pennsylvania		23-2249083
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


111 West Front Street, Berwick, PA		18603
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (570) 752-3671

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange on which registered
None	N/A	N/A

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Common Stock, $2 Par Value, 6,~~218~~246,~~781~~157 shares as of ~~August~~November 126, 2025.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(Dollars in thousands, except share and per share data)	~~June~~September 30,		December 31,
	2025		2024
ASSETS
Cash and due from banks	$	1013,~~813~~016	$	9,933
Interest-bearing deposits in other banks		28134,~~240~~239		7,321
Total cash and cash equivalents		39147,~~053~~255		17,254
Debt securities available-for-sale, at fair value		~~368~~407,~~341~~770		390,288
Marketable equity securities, at fair value		1,~~606~~715		1,587
Restricted investment in bank stocks, at cost		8,944		8,984

Loans held for investment		~~959~~957,~~666~~630		947,714
Loans held for sale		~~104~~103		737
Allowance for credit losses		(78,~~762~~000)		(7,672)
Net loans		~~952~~949,~~008~~733		940,779
Premises and equipment, net		19,~~943~~693		20,272
Operating lease right-of-use assets		1,~~380~~353		1,400
Accrued interest receivable		45,~~954~~075		4,993
Cash surrender value of bank owned life insurance		26,~~017~~189		26,679
Investments in low-income housing partnerships		4,~~743~~538		5,152
Deferred income taxes		76,~~434~~545		7,725
Other assets		23,~~966~~567		3,470
TOTAL ASSETS	$	1,~~437~~582,~~389~~377	$	1,428,583

LIABILITIES
Deposits:
Non-interest bearing	$	~~202~~215,~~977~~166	$	203,583
Interest bearing		~~854~~977,~~301~~328		842,297
Total deposits		1,~~057~~192,~~278~~494		1,045,880
Short-term borrowings		~~129~~132,~~551~~856		134,426
Long-term borrowings		106,000		106,000
Subordinated debentures		25,000		25,000
Operating lease liabilities		1,~~908~~885		1,920
Accrued interest payable		23,~~319~~175		2,152
Other liabilities		78,~~786~~715		6,423
TOTAL LIABILITIES		1,~~329~~470,~~842~~125		1,321,801

STOCKHOLDERS’ EQUITY
Preferred stock, par value $2.00 per share; authorized 1,000,000 shares as of June 30, 2025 and December 31, 2024; issued 0 as of June 30, 2025 and December 31, 2024		—		—
Preferred stock, par value $2.00 per share; authorized 1,000,000 shares as of September 30, 2025 and December 31, 2024; issued 0 as of September 30, 2025 and December 31, 2024		—		—
Common stock, par value $2.00 per share; authorized 20,000,000 shares as of June 30, 2025 and December 31, 2024; issued 6,450,392 as of June 30, 2025 and 6,450,392 as of December 31, 2024; outstanding 6,218,781 as of June 30, 2025 and 6,218,781 as of December 31, 2024		12,901		12,901
Common stock, par value $2.00 per share; authorized 20,000,000 shares as of September 30, 2025 and December 31, 2024; issued 6,477,768 as of September 30, 2025 and 6,450,392 as of December 31, 2024; outstanding 6,246,157 as of September 30, 2025 and 6,218,781 as of December 31, 2024		12,955		12,901
Surplus		45,~~072~~484		45,072
Retained earnings		8081,~~633~~700		80,148
Accumulated other comprehensive loss		(2522,~~350~~178)		(25,630)
Treasury stock, at cost, 231,611 shares as of June 30, 2025 and December 31, 2024		(5,709)		(5,709)
Treasury stock, at cost, 231,611 shares as of September 30, 2025 and December 31, 2024		(5,709)		(5,709)

TOTAL STOCKHOLDERS’ EQUITY		~~107~~112,~~547~~252		106,782
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,~~437~~582,~~389~~377	$	1,428,583

See accompanying notes to consolidated financial statements (unaudited).

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

(Dollars in thousands, except per share data)

Three Months Ended

~~Six~~Nine Months Ended

~~June~~September 30,

2025

2024

2025

2024

INTEREST INCOME

Interest and fees on loans

14,~~359~~615

1213,~~371~~116

2842,~~128~~743

2437,~~391~~507

Interest and dividend income on securities:

Taxable

34,~~814~~069

4,~~666~~515

711,~~747~~816

913,~~007~~522

Tax-exempt

~~230~~238

279

~~474~~712

~~552~~831

Dividends

1824

1221

3054

2445

Dividend income on restricted investment in bank stocks

~~195~~216

~~243~~253

~~394~~610

~~478~~731

Interest on interest-bearing deposits in other banks

~~268~~598

2258

~~321~~919

87145

Total interest income

1819,~~884~~760

1718,~~593~~242

3756,~~094~~854

3452,~~539~~781

INTEREST EXPENSE

Interest on deposits

67,~~395~~249

6,~~019~~374

1220,~~781~~030

1118,~~973~~347

Interest on short-term borrowings

1,~~473~~482

2,~~021~~181

34,~~030~~512

36,~~987~~168

Interest on long-term borrowings

1,~~237~~252

1,~~278~~260

23,~~461~~713

23,~~556~~816

Interest on subordinated debt

~~274~~273

~~547~~820

Total interest expense

910,~~379~~256

910,~~592~~088

1829,~~819~~075

1929,~~063~~151

Net interest income

9,~~505~~504

8,~~001~~154

1827,~~275~~779

1523,~~476~~630

(Release of) provision for credit losses

(237)

510

514

774

Provision for credit losses

255

718

769

1,492

Net interest income after (release of) provision for credit losses

9,742

7,491

17,761

14,702

Net interest income after provision for credit losses

9,249

7,436

27,010

22,138

NON-INTEREST INCOME

Trust department

~~280~~259

~~254~~240

~~541~~800

~~498~~738

Service charges and fees

~~560~~650

~~568~~593

1,~~106~~756

1,~~093~~686

Increase in cash surrender value of life insurance

~~155~~172

~~164~~172

~~320~~492

~~326~~498

ATM fees and debit card income

~~576~~577

~~565~~574

1,~~119~~696

1,~~082~~656

Net gains on sales of mortgage loans

1859

1740

3897

2868

Net securities gains (losses)

~~105~~109

~~(10)~~146

19128

(~~194~~48)

Gains from life insurance proceeds

20—

—

255

—

Other

8480

6395

~~159~~239

~~132~~227

Total non-interest income

1,~~798~~906

1,~~621~~860

35,~~557~~463

24,~~965~~825

NON-INTEREST EXPENSE

Salaries and employee benefits

4,~~303~~073

4,~~153~~375

813,~~933~~006

813,~~707~~082

Occupancy, net

~~562~~560

536

1,~~172~~732

1,~~101~~637

Furniture and equipment expense

~~211~~218

~~150~~167

~~403~~621

~~302~~469

Computer expense

~~416~~425

~~340~~345

~~829~~1,254

~~709~~1,054

Professional services

~~374~~407

~~466~~346

~~752~~1,159

~~899~~1,245

Pennsylvania shares tax

~~267~~352

~~244~~314

~~488~~840

~~450~~764

FDIC insurance, net

~~304~~303

~~218~~271

~~613~~916

~~406~~677

ATM and debit card fees

~~306~~321

~~258~~245

~~553~~874

~~480~~725

Data processing fees

~~385~~366

~~235~~232

~~742~~1,108

~~524~~756

Advertising

~~138~~97

~~163~~155

~~243~~340

~~267~~422

Goodwill impairment

—

19,133

Other

~~995~~880

~~903~~834

23,~~182~~062

12,~~833~~667

Total non-interest expense

8,~~261~~002

7,~~666~~820

1624,~~910~~912

3442,~~811~~631

Income (loss) before income tax (benefit) expense

3,~~279~~153

1,~~446~~476

47,~~408~~561

(1715,~~144~~668)

Income tax (benefit) expense

365

441

(147)

Income tax expense (benefit)

345

(31)

786

(178)

NET INCOME (LOSS)

2,~~914~~808

1,~~380~~507

36,~~967~~775

(1615,~~997~~490)

PER SHARE DATA

Net income (loss) per share:

Basic

0.4745

0.2325

01.6409

(2.7752)

Diluted

0.4745

0.2325

01.6409

(2.7752)

Dividends per share

0.28

0.5684

See accompanying notes to consolidated financial statements (unaudited).

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


(Dollars in thousands)	Three Months Ended
	~~June~~September 30,
	2025		2024

Net income	$	2,~~914~~808	$	1,~~380~~507

Other comprehensive income:
Unrealized net holding gain (loss) on debt securities available-for-sale arising during the period, net of income taxes of $107 and $(875), respectively		403		(3,295)
Unrealized net holding gain on debt securities available-for-sale arising during the period, net of income taxes of $1,019 and $2,670, respectively		3,832		10,043

Fair value adjustment on derivatives, net of income taxes of $350 and $167, respectively		(513)		617
Fair value adjustment on derivatives, net of income taxes of $245 and $1,506, respectively		(660)		(3,568)

Total other comprehensive loss		(110)		(2,678)
Total other comprehensive income		3,172		6,475

Total comprehensive income (loss)	$	2,804	$	(1,298)
Total comprehensive income	$	5,980	$	7,982


(Dollars in thousands)	~~Six~~Nine Months Ended
	~~June~~September 30,
	2025		2024

Net income (loss)	$	36,~~967~~775	$	(1615,~~997~~490)

Other comprehensive income (loss):
Other comprehensive income:
Unrealized net holding gains (loss) on debt securities available-for-sale arising during the period, net of income taxes of $534 and $(1,053), respectively		2,010		(3,962)
Unrealized net holding gains on debt securities available-for-sale arising during the period, net of income taxes of $1,553 and $1,617, respectively		5,842		6,081

Fair value adjustment on derivatives, net of income taxes of $666 and $753, respectively		(1,730)		3,010
Fair value adjustment on derivatives, net of income taxes of $911 and $753, respectively		(2,390)		(558)

Total other comprehensive income (loss)		280		(952)
Total other comprehensive income		3,452		5,523

Total comprehensive income (loss)	$	410,~~247~~227	$	(179,~~949~~967)

_____________________________

See accompanying notes to consolidated financial statements (unaudited).

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2025 AND 2024

(Unaudited)


								Accumulated
(Dollars in thousands, except								Other				Total
per share data)	Common Stock					Retained		Comprehensive		Treasury		Stockholders’
	Shares Issued	Amount		Surplus		Earnings		Loss		Stock		Equity
Balance at January 1, 2025	6,450,392	$	12,901	$	45,072	$	80,148	$	(25,630)	$	(5,709)	$	106,782
Net income							1,053						1,053
Other comprehensive income, net of taxes									390				390
Issuance of common stock under dividend reinvestment plan	—		—		—								—
Dividends - $0.28 per share							(1,741)						(1,741)
Balance at March 31, 2025	6,450,392	$	12,901	$	45,072	$	79,460	$	(25,240)	$	(5,709)	$	106,484
Net income							2,914						2,914
Other comprehensive loss, net of taxes									(110)				(110)
Issuance of common stock under dividend reinvestment plan	—		—		—								—
Dividends - $0.28 per share							(1,741)						(1,741)
Balance at June 30, 2025	6,450,392		12,901		45,072		80,633		(25,350)		(5,709)	$	107,547
Net income							2,808						2,808
Other comprehensive income, net of taxes									3,172				3,172
Issuance of common stock under dividend reinvestment plan	27,376		54		412								466
Dividends - $0.28 per share							(1,741)						(1,741)
Balance at September 30, 2025	6,477,768	$	12,955	$	45,484	$	81,700	$	(22,178)	$	(5,709)	$	112,252


Balance at January 1, 2024	6,352,665	$	12,705	$	44,004	$	100,260	$	(29,645)	$	(5,709)	$	121,615
Net (loss)							(18,377)						(18,377)
Other comprehensive income, net of taxes									1,726				1,726
Issuance of common stock under dividend reinvestment plan	32,229		65		396								461
Dividends - $0.28 per share							(1,714)						(1,714)
Balance at March 31, 2024	6,384,894	$	12,770	$	44,400	$	80,169	$	(27,919)	$	(5,709)	$	103,711
Net income							1,380						1,380
Other comprehensive loss, net of taxes									(2,678)				(2,678)
Issuance of common stock under dividend reinvestment plan	32,112		64		340								404
Dividends - $0.28 per share							(1,723)						(1,723)
Balance at June 30, 2024	6,417,006		12,834		44,740		79,826		(30,597)		(5,709)	$	101,094
Net income							1,507						1,507
Other comprehensive loss, net of taxes									6,475				6,475
Issuance of common stock under dividend reinvestment plan	—		—		—								—
Dividends - $0.28 per share							(1,732)						(1,732)
Balance at September 30, 2024	6,417,006	$	12,834	$	44,740	$	79,601	$	(24,122)	$	(5,709)	$	107,344

See accompanying notes to consolidated financial statements (unaudited).

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2025 AND 2024

(Unaudited)


(Dollars in thousands)	2025		2024

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	36,~~967~~775	$	(1615,~~997~~490)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses on loans		~~514~~769		~~774~~1,492
(Release of) provision for credit losses on unfunded commitments		(612)		297
Goodwill impairment		—		19,133
Depreciation and amortization		~~609~~943		~~553~~726
Net premium amortization on securities		104		285
Net (discount accretion) premium amortization on securities		(5)		276
Deferred income tax (benefit)		210		(357)
Deferred income tax expense (benefit)		252		(42)
Net gains on sales of mortgage loans		(3897)		(2868)
Proceeds from sales of mortgage loans originated for sale		13,~~921~~792		12,~~599~~849
Originations of mortgage loans originated for sale		(13,~~258~~071)		(12,~~662~~995)
Net securities (gains) losses		(19128)		~~194~~48
Decrease (Increase) in accrued interest receivable		39		(127)
Increase in accrued interest receivable		(82)		(58)
Increase in cash surrender value of bank owned life insurance		(~~320~~492)		(~~326~~498)
Gain from bank-owned life insurance proceeds		(255)		—
Net losses on disposals of premises and equipment		212		2
Decrease in other assets		516		201
Increase in other assets		(94)		(277)
Amortization of investment in low-income housing partnerships		~~409~~614		~~409~~614
Increase in accrued interest payable		167		875
Increase (decrease) in accrued interest payable		1,023		(233)
(Decrease) increase in other liabilities		(~~833~~749)		~~122~~1,078
NET CASH PROVIDED BY OPERATING ACTIVITIES		59,~~729~~195		46,~~679~~564
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and redemptions of debt securities available-for-sale		2641,~~887~~836		4256,~~518~~749
Purchases of debt securities available-for-sale		(251,~~500~~918)		(5861,439)
Net change in restricted investment in bank stocks		40		~~(608)~~120
Net increase in loans		(1210,~~368~~347)		(1124,~~337~~067)
Proceeds from bank-owned life insurance		1,237		—
Purchase of premises and equipment		(~~267~~329)		(~~576~~1,424)
Purchase of investment in real estate venture		—		(10)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		13,029		(28,452)
NET CASH USED IN INVESTING ACTIVITIES		(19,481)		(30,071)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		11146,~~398~~614		339,~~770~~470
Net (decrease) increase in short-term borrowings		(41,~~875~~570)		2114,~~843~~007
Common stock issued		—		855
Repayment of long-term borrowings		—		(20,000)
Dividends paid		(3,482)		(3,437)
Dividends paid, net of reinvestment		(4,757)		(2,959)
NET CASH PROVIDED BY FINANCING ACTIVITIES		3140,~~041~~287		2330,~~031~~518

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		21,799		(742)
INCREASE IN CASH AND CASH EQUIVALENTS		130,001		7,011
CASH AND CASH EQUIVALENTS, BEGINNING		17,254		17,013
CASH AND CASH EQUIVALENTS, ENDING	$	39147,~~053~~255	$	1624,~~271~~024

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	1828,~~653~~052	$	1829,~~188~~384
Income taxes paid		~~210~~578		—11
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Common stock subscription receivable		—		10
Right-of-use assets obtained in exchange for lease liabilities		33		33

See accompanying notes to consolidated financial statements (unaudited).

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 ― BASIS OF PRESENTATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SUBSEQUENT EVENTS

The consolidated financial statements include the accounts of First Keystone Corporation (the “Corporation”) and its wholly owned subsidiary First Keystone Community Bank (the “Bank”) (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2025, are not necessarily indicative of the results for the year ending December 31, 2025. For further information, refer to the consolidated financial statements and notes thereto included in First Keystone Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of ~~June~~September 30, 2025 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

NOTE 2 ― RECENT ACCOUNTING STANDARDS UPDATES (“ASU”)

Adopted ASUs:

~~There~~In ~~were~~January noof ~~ASUs~~2025, the Company adopted ~~during~~ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure. ASU 2023-09 was issued to improve the ~~first~~transparency ~~half~~of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table, as well as income taxes paid disaggregated by jurisdiction. The amendments in this update were effective for public business entities for annual reporting periods beginning after December 15, 2024. The Company adopted the provisions of ASU 2023-09 effective January 1, 2025. This ASU did not have a material effect on the Company’s financial statements.

Pending ASUs:

In December of 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 was issued to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table, as well as income taxes paid disaggregated by jurisdiction. The amendments in this ASU should be applied prospectively with an option of retrospective application to prior periods presented. The amendments in this update are effective for public business entities for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the provisions of ASU 2023-09 and does not expect the adoption of the standard to have a material impact on the Company’s financial statements.

Pending ASUs:

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires disclosure of specified information about certain costs and expenses in the notes to the financial statements. The amendments in this update are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the new guidance will have on the Company’s financial statements.

NOTE 3 — SECURITIES

Debt Securities

The Company classifies its securities as either “Held-to-Maturity” or “Available-for-Sale” at the time of purchase. Securities are accounted for on a trade date basis. Debt securities are classified as Held-to-Maturity when the Company has the ability and positive intent to hold the securities to maturity. Securities classified as Held-to-Maturity are carried at cost adjusted for amortization of premium and accretion of discount to maturity. At ~~June~~September 30, 2025 and December 31, 2024, all debt securities held were classified as available-for-sale.

Debt securities not classified as Held-to-Maturity are included in the Available-for-Sale category and are carried at fair value. The amount of any unrealized gain or loss, net of the effect of deferred income taxes, is reported as accumulated other comprehensive loss in the consolidated balance sheets and consolidated statements of changes in stockholders’ equity. Management’s decision to sell Available-for-Sale securities is based on changes in economic conditions, controlling the sources and applications of funds, terms, availability of and yield of alternative investments, interest rate risk and the need for liquidity.

The cost of debt securities classified as Held-to-Maturity or Available-for-Sale is adjusted for amortization of premiums to the earliest call date and accretion of discounts to expected maturity. Such amortization and accretion, as well as interest and dividends, are included in interest and dividend income from securities. Realized gains and losses are included in net securities gains and losses. The cost of securities sold, redeemed or matured is based on the specific identification method.

The Company invests in various forms of agency debt including residential and commercial mortgage-backed securities and callable debt. The mortgage-backed agency securities are issued by Federal Home Loan Mortgage
Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Government National Mortgage
Association (“GNMA”) or Small Business Administration (“SBA”). The other mortgage-backed securities consist of private (non-agency) residential and commercial mortgage-backed securities. The municipal securities consist of general obligations and revenue bonds. Asset-backed securities consist of private (non-agency) student loan pools backed by the Federal Family Education Loan Program (“FFELP”) which carry a 97% federal government guarantee. Corporate debt securities consist of senior debt and subordinated debt holdings.

There was no allowance for credit losses for Available-For-Sale debt securities as of ~~June~~September 30, 2025; therefore, it is not present in the table below. The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as Available-For-Sale were as follows at ~~June~~September 30, 2025 and December 31, 2024:

Debt Securities Available-for-Sale

(Dollars in thousands)

Gross

Amortized

Unrealized

Fair

June 30, 2025:

Cost

Gains

Losses

Value

September 30, 2025:

Cost

Gains

Losses

Value

U.S. Treasury securities

7,~~926~~933

—

(~~531~~468)

7,~~395~~465

Obligations of U.S. Government Agencies and Sponsored Agencies:

Mortgage-backed

~~144~~189,~~693~~142

~~155~~990

(1211,~~300~~179)

~~132~~178,~~548~~953

Other

3,~~948~~555

5440

(22)

3,~~980~~573

Other mortgage backed securities

4139,~~629~~346

6962

(1,~~505~~235)

4038,~~193~~173

Obligations of state and political subdivisions

8884,~~955~~581

3631

(109,~~703~~093)

7875,~~288~~519

Asset-backed securities

6966,~~000~~159

~~108~~220

(~~625~~393)

6865,~~483~~986

Corporate debt securities

40,~~638~~651

~~214~~350

(32,~~398~~900)

3738,~~454~~101

Total

~~396~~431,~~789~~367

~~636~~1,693

(2925,~~084~~290)

~~368~~407,~~341~~770


	Debt Securities Available-for-Sale
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2024:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	7,911	$	—	$	(760)	$	7,151
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		150,999		170		(14,461)		136,708
Other		5,080		78		(36)		5,122
Other mortgage backed securities		48,336		65		(2,128)		46,273
Obligations of state and political subdivisions		93,809		19		(10,343)		83,485
Asset-backed securities		74,006		263		(402)		73,867
Corporate debt securities		41,139		204		(3,661)		37,682
Total	$	421,280	$	799	$	(31,791)	$	390,288

Debt securities Available-for-Sale with an aggregate fair value of $~~208~~258,~~462~~895,000 at ~~June~~September 30, 2025 and $251,961,000 at December 31, 2024, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $~~161~~219,~~683~~124,000 at ~~June~~September 30, 2025 and $192,671,000 at December 31, 2024.

The amortized cost and estimated fair value of debt securities, by contractual maturity, are shown below at ~~June~~September 30, 2025. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

~~June~~September 30, 2025

Debt Securities Available-For-Sale

(Dollars in thousands)

U.S. Government

Other

Obligations

Agency &

Mortgage

of State

Asset

Corporate

U.S. Treasury

Sponsored Agency

Backed Debt

& Political

Backed

Debt

Securities

Obligations1

Securities1

Subdivisions

Securities

Within 1 Year:

Amortized cost

—

75,~~205~~857

—

Fair value

—

75,~~183~~841

—

1 - 5 Years:

Amortized cost

7,~~926~~933

6,~~638~~479

4,~~521~~365

75,~~724~~395

—1,556

25,246

Fair value

7,~~395~~465

6,~~606~~448

4,~~504~~351

75,~~606~~258

—1,557

25,~~196~~201

5 - 10 Years:

Amortized cost

—

2,~~434~~931

~~924~~835

3334,~~073~~311

~~2,079~~—

3330,~~168~~181

Fair value

—

2,~~484~~964

~~937~~845

2930,~~104~~630

~~2,078~~—

3129,~~236~~034

After 10 Years:

Amortized cost

—

~~139~~183,~~569~~287

3634,~~184~~146

4039,~~953~~018

6664,~~921~~603

5,224

Fair value

—

~~127~~173,~~438~~114

3432,~~752~~977

3433,~~395~~790

6664,~~405~~429

43,~~022~~866

Total:

Amortized cost

7,~~926~~933

~~148~~192,~~641~~697

4139,~~629~~346

8884,~~955~~581

6966,~~000~~159

40,~~638~~651

Fair value

7,~~395~~465

~~136~~182,~~528~~526

4038,~~193~~173

7875,~~288~~519

6865,~~483~~986

3738,~~454~~101

¹	Mortgage-backed securities are allocated for maturity reporting at their original maturity date.

At ~~June~~September 30, 2025 and December 31, 2024, the Corporation had holdings of securities from the following issuers in excess of ten percent of consolidated stockholders’ equity (excluding holdings of the U.S. Government and U.S. Government Agencies and Corporations).


(Dollars in thousands)
	Fair
June 30, 2025:	Value
September 30, 2025:	Value
Issuer
Sallie Mae Bank	$	24,~~563~~044
Velocity Commercial Capital		2120,~~355~~249
Nelnet Student Loan Trust		13,~~985~~628


(Dollars in thousands)
	Fair
December 31, 2024:	Value
Issuer
Sallie Mae Bank	$	26,187
Velocity Commercial Capital		23,334
Nelnet Student Loan Trust		15,008
Navient Student Loan Trust		10,726

There were no proceeds from sales of Debt Securities Available-For-Sale for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024. Therefore, there were no gains or losses realized during these periods.

The summary below shows the gross unrealized losses and fair value of the Company’s debt securities. Totals are aggregated by investment category where individual securities have been in a continuous loss position for less than 12 months or 12 months or more as of ~~June~~September 30, 2025 and December 31, 2024:

~~June~~September 30, 2025

(Dollars in thousands)

Less Than 12 Months

12 Months or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Available-for-Sale:

Value

Loss

Value

Loss

Value

Loss

U.S. Treasury securities

—

7,~~395~~465

(~~531~~468)

7,~~395~~465

(~~531~~468)

Obligations of U.S. Government Agencies and Sponsored Agencies:

Mortgage-backed

3514,~~692~~815

(~~168~~20)

8382,~~973~~542

(1211,~~132~~159)

~~119~~97,~~665~~357

(1211,~~300~~179)

Other

—

1,~~479~~339

(22)

1,~~479~~339

(22)

Other mortgage-backed debt securities

6,~~592~~503

(2033)

2524,~~473~~451

(1,~~485~~202)

3230,~~065~~954

(1,~~505~~235)

Obligations of state and political subdivisions

—

7072,~~790~~202

(109,~~703~~093)

7072,~~790~~202

(109,~~703~~093)

Asset-backed securities

2820,~~974~~534

(~~251~~64)

1415,~~555~~475

(~~374~~329)

4336,~~529~~009

(~~625~~393)

Corporate debt securities

—

3028,~~044~~799

(32,~~398~~900)

3028,~~044~~799

(32,~~398~~900)

Total

7141,~~258~~852

(~~439~~117)

~~233~~232,~~709~~273

(2825,~~645~~173)

~~304~~274,~~967~~125

(2925,~~084~~290)

December 31, 2024


(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	—	$	—	$	7,151	$	(760)	$	7,151	$	(760)
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		20,726		(570)		81,217		(13,891)		101,943		(14,461)
Other		—		—		1,927		(36)		1,927		(36)
Other mortgage-backed debt securities		21,700		(560)		19,001		(1,568)		40,701		(2,128)
Obligations of state and political subdivisions		243		(7)		79,684		(10,336)		79,927		(10,343)
Asset-backed securities		7,791		(33)		16,280		(369)		24,071		(402)
Corporate debt securities		7,209		(1,178)		25,594		(2,483)		32,803		(3,661)
Total	$	57,669	$	(2,348)	$	230,854	$	(29,443)	$	288,523	$	(31,791)

There were ~~164~~154 individual debt securities in an unrealized loss position as of ~~June~~September 30, 2025, with a combined decline in value representing 75.1747% of the debt securities portfolio. There were 167 individual debt securities in an unrealized loss position as of December 31, 2024, with their combined decline in value representing 7.36% of the debt securities portfolio.

Available-for-sale debt securities are required to be individually evaluated for impairment in accordance with ASC 326, Financial Instruments – Credit Losses. Management evaluates debt securities for impairment where there has been a decline in fair value below the amortized cost basis of a debt security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the debt security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the Company’s intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the debt securities. All issues of U.S. Treasury and Agency-Backed debt securities have the full faith and credit backing of the United States Government or one of its agencies. All other debt securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value.

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of debt securities available for sale. Accrued interest receivable on debt securities available for sale is reported as a component of accrued interest receivable on the Company’s consolidated balance sheet and totaled $2,~~124~~157,000 as of ~~June~~September 30, 2025 as compared to $2,142,000 as of December 31, 2024. Accrued interest receivable on debt securities available for sale is excluded from the estimate of credit losses.

All debt securities available for sale in an unrealized loss position, as of ~~June~~September 30, 2025, continue to perform as scheduled and the Company does not believe that there is a credit loss or that a provision for credit losses is necessary. Also, as part of the Company’s evaluation of its intent and ability to hold debt securities for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategies, cash flow needs, liquidity position, capital adequacy and interest rate risk position. The Company does not currently intend to sell ~~the debt~~

the debt securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities.

Management continues to monitor all of the Company’s debt securities with a high degree of scrutiny. There can be no assurance that the Company will not conclude in future periods that conditions existing at that time indicate some or all of its debt securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

Equity Securities

In accordance with ASC 321-10, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in income. Equity securities without readily determinable fair values are recorded at cost, adjusted for observable price changes and impairments, if any.

At ~~June~~September 30, 2025 and December 31, 2024, the Company had $1,~~606~~715,000 and $1,587,000, respectively, in equity securities recorded at fair value. The following is a summary of realized gains and losses recognized in net income on equity securities during the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024:


(Dollars in thousands)	Three months ended		Three months ended
	~~June~~September 30, 2025		~~June~~September 30, 2024
Net gains (losses) from market value fluctuations recognized during the period on equity securities	$	~~105~~109	$	~~(10)~~146
Less: Net gains recognized during the period on equity securities sold during the period		—		—
Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	~~105~~109	$	~~(10)~~146


(Dollars in thousands)	~~Six~~Nine months ended		~~Six~~Nine months ended
	~~June~~September 30, 2025		~~June~~September 30, 2024
Net gains (losses) from market value fluctuations recognized during the period on equity securities	$	19128	$	(~~194~~48)
Less: Net gains recognized during the period on equity securities sold during the period		—		—
Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	19128	$	(~~194~~48)

Management evaluates equity securities for impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Equity securities without readily determinable fair values are generally evaluated for impairment under FASB ASC 321, Equity Securities. In determining impairment under the FASB ASC 321 model, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the equity security or more likely than not will be required to sell the equity security before its anticipated recovery. The assessment of whether an impairment exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. If an impairment loss on an equity security is considered to exist, a loss in the amount of the difference between the cost and fair value of the security is recognized. Once the impairment is recorded, this becomes the new cost basis of the equity security and cannot be adjusted upward if there is a subsequent recovery in the fair value of the security.

The Company monitors the equity securities portfolio monthly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months. Based on the factors described above, management did not consider any equity securities to be impaired at ~~June~~September 30, 2025 or December 31, 2024.

NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans

Net loans are stated at their outstanding recorded investment, net of deferred fees and costs, unearned income and the allowance for credit losses. Interest on loans is recognized as income over the term of each loan, generally, by the accrual method. Loan origination fees and certain direct loan origination costs have been deferred with the net amount amortized using the straight line method or the interest method over the contractual life of the related loans as an interest yield adjustment.

The loans held for investment portfolio is segmented into the following segments: Real Estate (including both commercial and residential loans), Agricultural, Commercial and Industrial, Consumer, and State and Political Subdivisions.

Real Estate Lending

The Company engages in real estate lending to commercial borrowers in its primary market area and surrounding areas. The commercial component of the Company’s Real Estate portfolio is secured primarily by commercial retail space, commercial office buildings, residential housing and hotels. Generally, these loans have terms that do not exceed twenty years, have loan-to-value ratios of up to eighty percent of the value of the collateral property, and are typically supported by personal guarantees of the borrowers.

In underwriting these loans, the Company performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. The value of the property is determined by either independent appraisers or internal evaluations performed by Bank officers.

Real estate loans secured by commercial properties generally present a higher level of risk than loans secured by residential real estate. Repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project and/or the effect of the general economic conditions on income producing properties.

The residential component of the Company’s Real Estate portfolio is comprised of one-to-four family residential mortgage loan originations, home equity term loans and home equity lines of credit. These loans are generated by the Company’s marketing efforts, its present customers, walk-in customers and referrals. These loans are originated primarily with customers from the Company’s market area.

The Company’s one-to-four family residential mortgage originations are secured principally by properties located in its primary market area and surrounding areas. The Company offers fixed-rate mortgage loans with terms up to a maximum of thirty years for both permanent structures and those under construction. Loans with terms of thirty years are normally held for sale and sold without recourse; most of the residential mortgages held in the Company’s residential real estate portfolio have maximum terms of twenty years. Generally, the majority of the Company’s residential mortgage loans originate with a loan-to-value of eighty percent or less, or those with private mortgage insurance at ninety-five percent or less. Home equity term loans are secured by the borrower’s primary residence and typically have a maximum loan-to-value of eighty percent and a maximum term of fifteen years. In general, home equity lines of credit are secured by the borrower’s primary residence with a maximum loan-to-value of eighty percent and a maximum term of twenty years.

In underwriting one-to-four family residential mortgage loans, the Company evaluates the borrower’s ability to make monthly payments, the borrower’s prior loan repayment history and the value of the property securing the loan. The ability and willingness to repay is assessed based upon the borrower’s employment history, current financial conditions and credit background. A majority of the properties securing residential real estate loans made by the

Company are appraised by independent appraisers. The Company generally requires mortgage loan borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance, including flood insurance, if applicable.

Residential mortgage loans, home equity term loans and home equity lines of credit generally present a lower level of risk than consumer loans because they are secured by the borrower’s primary residence. Risk is increased when the Company is in a subordinate position, especially to another lender, for the loan collateral.

Residential mortgage loans held for sale are carried at the lower of cost or market on an aggregate basis determined by independent pricing from appropriate federal or state agency investors. These loans are sold without recourse. Loans held for sale amounted to $~~104~~103,000 and $737,000 at ~~June~~September 30, 2025 and December 31, 2024, respectively.

Agricultural Lending

The Company originates agricultural loans to individuals in the farming industry for funding the production of crops or to purchase or refinance capital assets such as farmland, livestock, machinery, equipment, and farm real estate improvements. Agricultural loans are typically secured by collateral related to the farming activities. These loans originate from customers within the Company’s primary market area or the surrounding areas.

In underwriting agricultural loans, an analysis is performed regarding the borrower’s ability to repay the loan, the borrower’s capital and collateral, and the past, present, and future cash flows of the borrower, as well as the agricultural industry as a whole. In general, these loans would be secured by cropland, pastureland, orchardland, or timberland that is committed to ongoing management and agricultural production, with a maximum loan-to-value ratio of seventy percent and a maximum term of ten years.

Commercial and Industrial Lending

The Company originates commercial and industrial loans principally to businesses located in its primary market area and surrounding areas. These loans are used for various business purposes, which include short-term loans and lines of credit to finance machinery and equipment, inventory and accounts receivable. Generally, the maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment. Most business lines of credit are written on demand and are reviewed annually.

Commercial and industrial loans are generally secured with short-term assets; however, in many cases, additional collateral such as real estate is provided as additional security for the loan. Loan-to-value maximum thresholds have been established by the Company and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports, accounts receivable aging reports, business financial statements, collateral appraisals or internal evaluations, etc. Commercial and industrial loans are typically supported by personal guarantees of the borrower.

In underwriting commercial and industrial loans, an analysis is performed to evaluate the borrower’s character and capacity to repay the loan, the adequacy of the borrower’s capital and collateral, as well as the conditions affecting the borrower. Evaluation of the borrower’s past, present and future cash flows is also an important aspect of the Company’s analysis of the borrower’s ability to repay.

Commercial and industrial loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions. Commercial and industrial loans are typically made on the basis of the borrower’s ability to make repayment from cash flows from the borrower’s primary business activities. As a result, the availability of funds for the repayment of commercial and industrial loans is dependent on the success of the business itself, which in turn, is likely to be dependent upon the general economic environment.

As an addition to the commercial loans held for investment portfolio, the Company may purchase the guaranteed portion of loans secured by the U.S. Government. The originating bank retains the unguaranteed portion of the loan. The loans are sponsored by one of the various government agencies including the SBA, United States

Department of Agriculture (“USDA”), and the Farm Service Agency (“FSA”). Government Guaranteed Loans ("GGLs") carry no credit risk due to an unconditional and irrevocable guarantee (which is supported by the full faith and credit of the U.S. Government) on all principal and the balance of interest accruing through ninety days beyond the date that demand is made to the originating bank for repurchase of the loan. As of ~~June~~September 30, 2025, the Company's balance of GGLs was $3,~~974~~939,000, compared to $4,306,000 at December 31, 2024.

Consumer Lending

The Company offers a variety of secured and unsecured consumer loans, including vehicle loans, stock secured loans and loans secured by financial institution deposits. These loans originate primarily with customers from the Company’s market area.

Consumer loan terms vary according to the type and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis is performed regarding the borrower’s willingness and financial ability to repay the loan as agreed. The ability and willingness to repay is assessed based upon the borrower’s employment history, current financial condition and credit background.

Consumer loans may entail greater credit risk than residential real estate loans, particularly in the case of personal loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, repossessed collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on the borrower’s continuing financial stability and therefore, are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

State and Political Subdivisions Lending

The Company, from time to time, may originate loans to state and political subdivisions that are within the Company’s primary market area or surrounding areas. These loans may be either taxable or tax-free. These loans may be issued for the purpose of land improvement, infrastructure changes, bond refinances, or the purchase of equipment. State and political loans are typically secured by the taxing power of the borrowing entity. In some cases, the loans may also be secured by the property/item being purchased. Audited financial statements are required as part of the underwriting for all state and political loans and a full analysis of all components of the audited statements is performed. If the loan is to be classified as tax-free, a letter from the entity’s solicitor stating such is required, as well.

The risk associated with these types of loans is considerably less than commercial loan transactions. Repayment is based on the full faith, credit, and ability of the borrowing entity to tax and then collect the payments. Delinquency or loss on these types of loans is de minimus.

Delinquent Loans

Generally, a loan is considered to be past-due when scheduled loan payments are in arrears 10 days or more. Delinquent notices are generated automatically when a loan is 10 or 15 days past-due, depending on loan type. Collection efforts continue on past-due loans that have not been brought current, when it is believed that some chance exists for improvement in the status of the loan. Past-due loans are continually evaluated with the determination for charge-off being made when no reasonable chance remains that the status of the loan can be improved.

Commercial and industrial loans and real estate loans issued for commercial purpose are charged off in whole or in part when they become sufficiently delinquent based upon the terms of the underlying loan contract and when a collateral deficiency exists. Because all or part of the contractual cash flows are not expected to be collected, the loan is designated for individual evaluation to determine expected credit losses based on an analysis of the cash flows or collateral estimated at fair value less cost to sell. Should a GGL default, demand is made to the originating bank for repurchase of the loan. If the originating bank does not repurchase the loan, demand for repurchase is then made to the appropriate government agency which has provided the guarantee for the loan.

Real estate loans issued for residential purposes and consumer loans are charged off when they become sufficiently delinquent based upon the terms of the underlying loan contract and when the value of the underlying collateral is not sufficient to support the loan balance and a loss is expected. At that time, the amount of estimated collateral deficiency, if any, is charged off for loans secured by collateral, and all other loans are charged off in full. Loans with collateral are written down to the estimated fair value of the collateral less cost to sell.

Existing loans in which the borrower has declared bankruptcy are considered on a case by case basis to determine whether repayment is likely to occur (e.g. reaffirmation by the borrower with demonstrated repayment ability). Otherwise, loans are charged off in full or written down to the estimated fair value of collateral less cost to sell.

Generally, a loan is classified as non-accrual and the accrual of interest on such a loan is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest. A loan may remain on accrual status if it is well secured (or supported by a strong guarantee) and in the process of collection. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against interest income. Certain non-accrual loans may continue to perform; that is, payments are still being received. Generally, the payments are applied to principal. These loans remain under constant scrutiny, and if performance continues, interest income may be recorded on a cash basis based on management's judgment regarding the collectability of principal.

Allowance for Credit Losses - Loans

The allowance for credit losses (“ACL”) is an estimate of losses arising from borrowers’ inability to make loan payments as required, which is calculated via a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. All adjustments will be established through provisions for credit losses charged against income. Loans deemed to be uncollectible are charged against the ACL and subsequent recoveries, if any, are credited to the allowance.

The ACL is maintained at a level estimated by management to be adequate to absorb potential loan losses. Management’s periodic evaluation of the adequacy of the ACL is based on specific expectations for the future economic environment that are incorporated in the projection, with loss expectations to revert to the long-run historical mean after such time as management can make or obtain a reasonable and supportable forecast. Management also considers the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may impact the borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral (if the loan is collateral dependent), composition of the loan portfolio, and other relevant factors. This evaluation is inherently subjective as it requires material estimates based on management’s judgment regarding the projection of expected credit losses over the contractual lifetime of the loans.

Modeling of the ACL uses sophisticated statistical techniques to arrive at reasonable and supportable forecasts of expected losses. The Company has contracted with a third-party vendor to assist in developing models for the ACL related to the Company’s loan portfolio under ASC 326. The Company has opted to utilize the Weighted Average Remaining Maturity (“WARM”) method to calculate the ACL which uses an average annual charge-off rate. This average annual charge-off rate contains loss content over several vintages and is used as a foundation for estimating the credit loss content for loans by segmented pools at the balance sheet date and is used to determine a historical charge-off rate. When estimating expected credit losses, the Company considers forward-looking information that is reasonable, supportable, and relevant to assessing the collectability of cash flows. Reasonable and supportable forecasts may extend over the entire contractual term of a loan or a period shorter than the contractual term. Reasonable and supportable forecasts may vary by portfolio segment or individual forecast input. These forecasts may include data from internal sources, external sources, or a combination of both.

When the contractual term of a loan extends beyond the reasonable and supportable period, ASC Topic 326 requires reverting to historical loss information, or an appropriate proxy, for those periods beyond the reasonable and supportable forecast period (often referred to as the reversion period). The Company may revert to historical loss information for each individual forecast input or based on the entire estimate of loss. Reversion to historical loss

information may be immediate, occur on a straight-line basis, or use any systematic/rational method. Management may apply different reversion techniques depending on the economic environment or applicable loan portfolio.

The methodology used to determine the ACL also includes a qualitative component in which the Company adjusts expected credit loss estimates for information not already captured in the loss estimation process. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Changes in the level of the Company’s ACL may not always be directionally consistent with changes in the level of qualitative factor adjustments due to the incorporation of reasonable and supportable forecasts in estimating expected losses. Management considers qualitative factors that are relevant to the Company as of the reporting date, which may include but are not limited to: 1) changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere; 2) changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan portfolio, including the condition of various market segments; 3) changes in the nature and volume of the loan portfolio; 4) changes in the experience, ability, and depth of management and other relevant staff; 5) changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans; 6) changes in the quality of the Company’s loan review system; 7) changes in the value of underlying collateral for collateral dependent loans; 8) the existence and effect of any concentrations of credit and changes in the level of such concentrations; and 9) the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s existing loan portfolio.

The Company’s ACL is calculated by collectively evaluating and individually evaluating loans. The Company collectively evaluates applicable loans based on segments according to their homogeneous characteristics, aligned with the segmentation of the FDIC Bank Call Report. The Company collectively evaluates loans and determines applicable loss rates based on the following segments/classes:

Real Estate

◾

Construction, land development, and other land loans

◾

Residential construction (loans to build homes, both speculative and owner-occupied, and 1-4 family lot loans)

◾

Agribusiness, farmland, or secured by farmland

◾

Revolving, open-end, 1-4 family residential properties (and extended under lines of credit)

◾

Loans secured by first liens

◾

Loans secured by junior liens

◾

Secured by multifamily (5 or more) residential properties

◾

Loans secured by owner occupied, non-farm, non-residential properties

◾

Loans secured by other non-farm, non-residential properties

Agricultural

◾

Loans to finance agricultural production and other loans for farmers

Commercial and Industrial

◾

Commercial and industrial loans

Consumer

◾

Other revolving credit plans

◾

Automobile loans

◾

Other consumer loans

State and Political Subdivisions

◾

Obligations (other than securities or leases) of states and political subdivisions in the U.S.

In accordance with ASC 326-20-30-2, the Company will evaluate individual loans for expected credit losses when the loans do not share similar risk characteristics with loans evaluated using the collective method. Management may evaluate loans on an individual basis even when no specific expectation of collectability is in place. Loans for which individual evaluation has been deemed necessary are then analyzed to determine if a reserve is required for the loan. A loan would be individually evaluated under the following circumstances (a) if it is on non-accrual status, (b) if a distressed loan is determined to be collateral dependent, or (c) if the Company has other concerns regarding the viability of the loan. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Once identified as a loan requiring individual evaluation, the loan is analyzed based on the fair market value of the underlying collateral.

Loans that have been individually evaluated for expected credit losses may have a portion of the reserve allocated to cover the calculated collateral deficiency or the amount of the collateral deficiency may be charged off. Loans individually evaluated for expected credit losses may have zero specific allocation if the evaluation/analysis shows that no collateral deficiency exists for the loan and no loss is expected.

ASC 326-20, Loan Modifications Experiencing Financial Difficulty, eliminated the accounting guidance for Troubled Debt Restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. In accordance with the new guidance, the Company no longer evaluates loans with modifications made to borrowers experiencing financial difficulty individually for impairment, nor establishes a related specific reserve for such loans, but rather these loans are included in their respective portfolio segment and evaluated collectively for impairment to establish an allowance for credit losses. Any modifications of loans to borrowers experiencing financial difficulty that are classified as non-accrual or are otherwise designated as collateral dependent are individually evaluated for determination of expected credit losses.

The most common types of concessions granted upon modification of a loan to a borrower experiencing financial difficulties include: (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, and (d) a reduction in the contractual payment amount for either a short period or for the remaining term of the loan. A less common concession would be forgiveness of a portion of the loan’s principal. Loans so modified remain collectively evaluated for determination of expected credit losses, unless, during the process of evaluation, it is determined that the loan should be placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured or the loan is otherwise deemed to be collateral dependent.

There may be certain types of loans for which the expectation of credit loss is zero after evaluating historical loss information, making necessary adjustments for current conditions and reasonable and supportable forecasts, and considering any collateral or guarantee arrangements that are not free-standing contracts. Factors considered by management when evaluating whether expectations of zero credit loss are appropriate may include, but are not limited to: 1) a long history of zero credit loss; 2) full securitization by cash or cash equivalents; 3) high credit ratings from rating agencies with no expected future downgrade; 4) principal and interest payments that are guaranteed by the U.S. government; 5) the issuer, guarantor, or sponsor can print its own currency and the currency is held by other central banks as reserve currency; and 6) the interest rate on the security is recognized as a risk-free rate.

A loan that is fully secured by cash or cash equivalents, such as a certificate of deposit issued by the lending institution, would likely have zero credit loss expectations. Similarly, the guaranteed portion of an SBA loan purchased on the secondary market through the SBA’s fiscal and transfer agent would likely have zero credit loss expectations because these financial assets are unconditionally guaranteed by the U.S. government.

A reserve for unfunded lending commitments is provided for possible credit losses on off-balance sheet credit exposures. Off-balance sheet credit exposures primarily include undrawn portions of revolving lines of credit and standby letters of credit. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and, if necessary, is recorded in other liabilities on the consolidated balance sheets. As of ~~June~~September 30, 2025 and December 31, 2024, the amount of the reserve for unfunded lending commitments was $9790,000 and $102,000, respectively.

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of loans. Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $2,~~589~~638,000 as of ~~June~~September 30, 2025 compared to $2,575,000 at December 31, 2024. Accrued interest receivable on loans is excluded from the estimate of credit losses.

The Company is subject to periodic examination by its federal and state examiners, and may be required by such regulators to recognize additions to the ACL based on their assessment of credit information available to them at the time of their examinations.

The Company utilizes a risk grading matrix as a tool for managing credit risk in the loan portfolio and assigns an asset quality rating (risk grade) to all loans. An asset quality rating is assigned using the guidance provided in the Company’s loan policy. Primary responsibility for assigning the asset quality rating rests with the credit department. The asset quality rating is validated periodically by both an internal and external loan review process.

The commercial loan grading system focuses on a borrower’s financial strength and performance, experience and depth of management, primary and secondary sources of repayment, the nature of the business and the outlook for the particular industry. Primary emphasis is placed on financial condition and trends. The grade also reflects current economic and industry conditions; as well as other variables such as liquidity, cash flow, revenue/earnings trends, management strengths or weaknesses, quality of financial information, and credit history.

The loan grading system for residential real estate secured and consumer loans focuses on the borrower’s credit score and credit history, debt-to-income ratio and income sources, collateral position and loan-to-value ratio.

Risk grade characteristics are as follows:

Risk Grade 1 – MINIMAL RISK through Risk Grade 6 – MANAGEMENT ATTENTION (Pass Grade Categories)

Risk is evaluated via examination of several attributes including but not limited to financial trends, strengths and weaknesses, likelihood of repayment when considering both cash flow and collateral, sources of repayment, leverage position, management expertise, and repayment history.

At the low-risk end of the rating scale, a risk grade of 1 – Minimal Risk is the grade reserved for loans with exceptional credit fundamentals and virtually no risk of default or loss. Loan grades then progress through escalating ratings of 2 through 6 based upon risk. Risk Grade 2 – Modest Risk are loans with sufficient cash flows; Risk Grade 3 – Average Risk are loans with key balance sheet ratios slightly above the borrower’s peers; Risk Grade 4 – Acceptable Risk are loans with key balance sheet ratios usually near the borrower’s peers, but one or more ratios may be higher; and Risk Grade 5 – Marginally Acceptable are loans with strained cash flow, increasing leverage and/or weakening markets. Risk Grade 6 – Management Attention are loans with weaknesses resulting from declining performance trends and the borrower’s cash flows may be temporarily strained. Loans in this category are performing according to terms, but present some type of potential concern.

Risk Grade 7 − SPECIAL MENTION (Non-Pass Category)

Assets in this category are adequately collateralized but have potential weakness which may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. The loans may constitute increased credit risk, but not to the point of justifying a classification of substandard. No loss of principal or interest is envisioned, but risk is increasing beyond that at which the loan originally would have been granted. Historically, cash flows are inconsistent; financial trends show some deterioration. Liquidity and leverage are above industry averages. Financial information could be incomplete or inadequate. A Special Mention asset has potential weaknesses that deserve management’s close attention.

Risk Grade 8 − SUBSTANDARD (Non-Pass Category)

Generally, these assets are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have “well-defined” weaknesses that jeopardize the full liquidation of the debt.

These loans are characterized by the distinct possibility that the Company will sustain some loss if the aggregate amount of substandard assets is not fully covered by the liquidation of the collateral used as security. Substandard loans have a high probability of payment default and require more intensive supervision by Company management.

Risk Grade 9 − DOUBTFUL (Non-Pass Category)

Generally, loans graded doubtful have all the weaknesses inherent in a substandard loan with the added factor that the weaknesses are pronounced to a point whereby the basis of current information, conditions, and values, collection or liquidation in full is deemed to be highly improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to strengthen the asset, its classification is deferred until, for example, a proposed merger, acquisition, liquidation procedure, capital injection, perfection of liens on additional collateral and/or refinancing plan is completed. Loans are graded doubtful if they contain weaknesses so serious that collection or liquidation in full is questionable.

The following table presents outstanding loan balances by loan class prior to allocation of net deferred fees and costs, as well as the balance of total loans held for investment after allocation of net deferred fees and costs and net loans after allocation of the allowance for credit losses as of ~~June~~September 30, 2025 and December 31, 2024.


(Dollars in thousands)	~~June~~September 30,		December 31,
	2025		2024
Real Estate	$	~~864~~866,~~608~~145	$	850,656
Agricultural		1,~~108~~071		936
Commercial and Industrial		6463,~~908~~988		66,706
Consumer		65,~~295~~446		6,390
State and Political Subdivisions		2220,~~016~~362		22,138
Subtotal: Total Loans		~~958~~957,~~935~~012		946,826
Net Deferred Fees and Costs		~~731~~618		888
Subtotal: Total Loans Held for Investment		~~959~~957,~~666~~630		947,714
Loans Held for Sale		~~104~~103		737
Allowance for Credit Losses		(78,~~762~~000)		(7,672)
Net Loans	$	~~952~~949,~~008~~733	$	940,779

The following tables present the classes of the loan portfolio summarized by risk rating and year of origination and year-to-date gross charge-offs by loan portfolio summarized by year of origination as of ~~June~~September 30, 2025 and December 31, 2024.


June 30, 2025:
September 30, 2025:
(Dollars in thousands)

Real Estate:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	5582,~~826~~263		~~101~~100,~~839~~093		~~109~~104,~~427~~158		~~156~~152,~~716~~743		~~114~~109,~~665~~815		~~299~~285,~~225~~612	$	~~837~~834,~~698~~684
7 Special Mention		~~743~~825		—94		—2,129		62339		~~225~~1,045		1,~~201~~183		25,~~231~~615
8 Substandard		—		—		—		4,~~574~~566		~~548~~1,290		19,~~557~~990		2425,~~679~~846
9 Doubtful		—		—		—		—		—		—		—
Total Real Estate Loans	$	5683,~~569~~088	$	~~101~~100,~~839~~187	$	~~109~~106,~~427~~287	$	~~161~~157,~~352~~648	$	~~115~~112,~~438~~150	$	~~319~~306,~~983~~785	$	~~864~~866,~~608~~145

Agricultural:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	2826		~~231~~222		~~165~~158		3326		—		~~651~~639	$	1,~~108~~071
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		—		—		—		—		—		—
9 Doubtful		—		—		—		—		—		—		—
Total Agricultural Loans	$	2826	$	~~231~~222	$	~~165~~158	$	3326	$	—	$	~~651~~639	$	1,~~108~~071

Commercial and Industrial:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	38,~~981~~872		76,~~553~~292		1615,~~506~~561		75,~~087~~187		3,~~895~~544		2524,~~852~~214	$	6463,~~874~~670
7 Special Mention		—		—315		—		—		—		—		—315
8 Substandard		—		—		27—		—		—		73		343
9 Doubtful		—		—		—		—		—		—		—
Total Commercial andIndustrial Loans	$	38,~~981~~872	$	76,~~553~~607	$	1615,~~533~~561	$	75,~~087~~187	$	3,~~895~~544	$	2524,~~859~~217	$	6463,~~908~~988

Consumer:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	1,~~298~~400		21,~~361~~679		~~914~~779		~~507~~437		~~441~~382		~~764~~730	$	65,~~285~~407
7 Special Mention		—		—		—		—		—		—29		—29
8 Substandard		—		—		—		—		—		10		10
9 Doubtful		—		—		—		—		—		—		—
Total Consumer Loans	$	1,~~298~~400	$	21,~~361~~679	$	~~914~~779	$	~~507~~437	$	~~441~~382	$	~~774~~769	$	65,~~295~~446

State and Political Subdivisions:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	6764		—		1,~~201~~195		21,~~739~~374		13,~~338~~155		4,~~671~~574	$	2220,~~016~~362
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		—		—		—		—		—		—
9 Doubtful		—		—		—		—		—		—		—
Total State and Political Subdivision Loans	$	6764	$	—	$	1,~~201~~195	$	21,~~739~~374	$	13,~~338~~155	$	4,~~671~~574	$	2220,~~016~~362

Total Loans:		2025		2024		2023		2022		2021		Prior		Total
1-6 Pass	$	6192,~~200~~625	$	~~111~~108,~~984~~286	$	~~128~~121,~~213~~851	$	~~167~~159,~~082~~767	$	~~132~~126,~~339~~896	$	~~331~~315,~~163~~769	$	~~931~~925,~~981~~194
7 Special Mention		~~743~~825		—409		—2,129		62339		~~225~~1,045		1,~~201~~212		25,~~231~~959
8 Substandard		—		—		27—		4,~~574~~566		~~548~~1,290		1920,~~574~~003		2425,~~723~~859
9 Doubtful		—		—		—		—		—		—		—
Total Loans	$	6193,~~943~~450	$	~~111~~108,~~984~~695	$	~~128~~123,~~240~~980	$	~~171~~164,~~718~~672	$	~~133~~129,~~112~~231	$	~~351~~336,~~938~~984	$	~~958~~957,~~935~~012

		2025		2024		2023		2022		2021		Prior		Total
Gross Charge Offs:
Real Estate	$	—		—		10		—		—		7	$	17
Agricultural		—		—		—		—		—		—		—
Commercial and Industrial		—		—		~~406~~426		—		—		—		~~406~~426
Consumer		—		—8		7		—3		2		9		1829
State and Political Subdivisions		—		—		—		—		—		—		—
Total Gross Charge Offs	$	—	$	—8	$	~~423~~443	$	—3	$	2	$	16	$	~~441~~472


As of December 31, 2024:
(Dollars in thousands)

Real Estate:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	103,734		114,225		167,282		119,406		101,748		216,890	$	823,285
7 Special Mention		—		—		76		225		—		1,239		1,540
8 Substandard		—		—		4,529		568		4,093		16,641		25,831
9 Doubtful		—		—		—		—		—		—		—
Total Real Estate Loans	$	103,734	$	114,225	$	171,887	$	120,199	$	105,841	$	234,770	$	850,656

Agricultural:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	59		223		43		—		—		611	$	936
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		—		—		—		—		—		—
9 Doubtful		—		—		—		—		—		—		—
Total Agricultural Loans	$	59	$	223	$	43	$	—	$	—	$	611	$	936

Commercial and Industrial:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	8,481		16,252		8,888		4,544		3,086		24,998	$	66,249
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		420		—		—		12		25		457
9 Doubtful		—		—		—		—		—		—		—
Total Commercial and Industrial Loans	$	8,481	$	16,672	$	8,888	$	4,544	$	3,098	$	25,023	$	66,706

Consumer:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	2,962		1,292		718		577		71		764	$	6,384
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		—		—		—		—		6		6
9 Doubtful		—		—		—		—		—		—		—
Total Consumer Loans	$	2,962	$	1,292	$	718	$	577	$	71	$	770	$	6,390

State and Political Subdivisions:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	—		1,232		2,739		13,338		—		4,829	$	22,138
7 Special Mention		—		—		—		—		—		—		—
8 Substandard		—		—		—		—		—		—		—
9 Doubtful		—		—		—		—		—		—		—
Total State and Political Subdivision Loans	$	—	$	1,232	$	2,739	$	13,338	$	—	$	4,829	$	22,138

Total Loans:		2024		2023		2022		2021		2020		Prior		Total
1-6 Pass	$	115,236	$	133,224	$	179,670	$	137,865	$	104,905	$	248,092	$	918,992
7 Special Mention		—		—		76		225		—		1,239		1,540
8 Substandard		—		420		4,529		568		4,105		16,672		26,294
9 Doubtful		—		—		—		—		—		—		—
Total Loans	$	115,236	$	133,644	$	184,275	$	138,658	$	109,010	$	266,003	$	946,826

		2024		2023		2022		2021		2020		Prior		Total
Gross Charge Offs:
Real Estate	$	—		—		—		—		—		345	$	345
Agricultural		—		—		—		—		—		—		—
Commercial and Industrial		—		—		—		20		—		504		524
Consumer		—		15		29		11		8		6		69
State and Political Subdivisions		—		—		—		—		—		—		—
Total Gross Charge Offs	$	—	$	15	$	29	$	31	$	8	$	855	$	938

State and Political Subdivision Loans include loans categorized as tax-free in the amount of $2220,~~016~~362,000 at ~~June~~September 30, 2025 and $22,138,000 at December 31, 2024. Commercial and Industrial Loans include $3,~~974~~939,000 of GGLs as of ~~June~~September 30, 2025 and $4,306,000 of GGLs as of December 31, 2024.

The activity in the allowance for credit losses by loan class is summarized below for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 and the year ended December 31, 2024.


(Dollars in thousands)									State and
	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the three months ended June 30, 2025:
As of and for the three months ended September 30, 2025:
Allowance for Credit Losses:
Beginning balance	$	7,~~572~~293	$	23	$	~~341~~329	$	9484	$	5953	$	87,~~068~~762
Charge-offs		~~(17)~~—		—		(4520)		(811)		—		(7031)
Recoveries		—1		—		112		—1		—		114
(Release of) Provision for Credit Losses		~~(262)~~229		(1)		3224		~~(2)~~8		(65)		~~(237)~~255
Ending Balance	$	7,~~293~~523	$	32	$	~~329~~345	$	8482	$	5348	$	78,~~762~~000


(Dollars in thousands)									State and
	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the six months ended June 30, 2025:
As of and for the nine months ended September 30, 2025:
Allowance for Credit Losses:
Beginning balance January 1, 2025	$	7,215	$	2	$	313	$	98	$	44	$	7,672
Charge-offs		(17)		—		(~~406~~426)		(1829)		—		(~~441~~472)
Recoveries		—1		—		1628		12		—		1731
Provision for Credit Losses		95324		1—		~~406~~430		311		94		~~514~~769
Ending Balance	$	7,~~293~~523	$	32	$	~~329~~345	$	8482	$	5348	$	78,~~762~~000
Ending balance: individually
evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively
evaluated for impairment	$	7,~~293~~523	$	32	$	~~329~~345	$	8482	$	5348	$	78,~~762~~000

Reserve for Unfunded Lending Commitments	$	7563	$	—	$	2027	$	2—	$	—	$	9790

Loans Held for Investment:
Ending Balance	$	~~864~~866,~~608~~145	$	1,~~108~~071	$	6463,~~908~~988	$	65,~~295~~446	$	2220,~~016~~362	$	~~958~~957,~~935~~012
Ending balance: individually
evaluated for impairment	$	4,~~190~~165	$	309	$	28—	$	—	$	—	$	4,~~527~~474
Ending balance: collectively
evaluated for impairment	$	~~860~~861,~~418~~980	$	~~799~~762	$	6463,~~880~~988	$	65,~~295~~446	$	2220,~~016~~362	$	~~954~~952,~~408~~538


(Dollars in thousands)	Real				Commercial					Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the three months ended June 30, 2024:
As of and for the three months ended September 30, 2024:
Allowance for Loan Losses:
Beginning balance	$	67,~~725~~206	$	12	$	~~322~~325	$	8591	$	63	$	7,~~196~~687
Charge-offs		—(237)		—		—(504)		(219)		—		(21750)
Recoveries		1—		—		1—		—2		—		2
Provision for Credit Losses		480		1		2		27		—		510
Provision (release of provision) for Credit Losses		194		—		518		10		(4)		718
Ending Balance	$	7,~~206~~163	$	2	$	~~325~~339	$	9194	$	6359	$	7,~~687~~657


(Dollars in thousands)	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the six months ended June 30, 2024:
As of and for the nine months ended September 30, 2024:
Allowance for Credit Losses:
Beginning balance January 1, 2024		6,539		1		265		78		42		6,925
Charge-offs		—(237)		—		—(504)		(3342)		—		(33783)
Recoveries		19		—		1		13		—		2123
Provision for Credit Losses		~~648~~842		1		59577		4555		2117		~~774~~1,492
Ending Balance	$	7,~~206~~163	$	2	$	~~325~~339	$	9194	$	6359	$	7,~~687~~657
Ending balance: individually
evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively
evaluated for impairment	$	7,~~206~~163	$	2	$	~~325~~339	$	9194	$	6359	$	7,~~687~~657

Reserve for Unfunded Lending Commitments	$	~~159~~149	$	—	$	3623	$	—	$	1	$	~~196~~173

Loans Held for Investment:
Ending Balance	$	~~823~~836,~~344~~213	$	~~987~~1,008	$	6466,~~543~~804	$	6,~~181~~166	$	2624,~~069~~408	$	~~921~~934,~~124~~599
Ending balance: individually
evaluated for impairment	$	3,~~993~~452	$	309	$	~~611~~107	$	—	$	—	$	43,~~913~~868
Ending balance: collectively
evaluated for impairment	$	~~819~~832,~~351~~761	$	~~678~~699	$	6366,~~932~~697	$	6,~~181~~166	$	2624,~~069~~408	$	~~916~~930,~~211~~731


(Dollars in thousands)									State and
	Real				Commercial				Political
	Estate		Agricultural		and Industrial		Consumer		Subdivisions		Total
As of and for the year ended December 31, 2024:
Allowance for Credit Losses:
Beginning balance January 1, 2024		6,539		1		265		78		42		6,925
Charge-offs		(345)		—		(524)		(69)		—		(938)
Recoveries		21		—		19		5		—		45
Provision for Credit Losses		1,000		1		553		84		2		1,640
Ending Balance	$	7,215	$	2	$	313	$	98	$	44	$	7,672
Ending balance: individually
evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Ending balance: collectively
evaluated for impairment	$	7,215	$	2	$	313	$	98	$	44	$	7,672

Reserve for Unfunded Lending Commitments	$	85	$	—	$	17	$	—	$	—	$	102

Loans Held for Investment:
Ending Balance	$	850,656	$	936	$	66,706	$	6,390	$	22,138	$	946,826
Ending balance: individually
evaluated for impairment	$	4,214	$	309	$	—	$	—	$	—	$	4,523
Ending balance: collectively
evaluated for impairment	$	846,442	$	627	$	66,706	$	6,390	$	22,138	$	942,303

The Company's activity in the allowance for credit losses on unfunded commitments for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 was as follows:


(Dollars in thousands)
	2025		2024
Balance at January 1	$	102	$	166
(Release of) provision for credit losses on unfunded commitments		(512)		307
Balance at June 30	$	97	$	196
Balance at September 30	$	90	$	173

During the ~~six~~nine months ended ~~June~~September 30, 2025, there was one modification granted on a loan to a borrower experiencing financial difficulty which carried a post modification recorded investment of $107,000. The loan modification granted during the ~~six~~nine months ended ~~June~~September 30, 2025 was a payment modification that allowed a period of interest-only payments of eleven months. There ~~was~~were ~~one~~two loan modification granted on aloans ~~loan~~ to aborrowers ~~borrower~~ experiencing financial difficulty during the ~~six~~nine months ended ~~June~~September 30, 2024 which carried a post modification recorded investment of $9,575,000. One modification on a loan carrying a post modification recorded investment of $120,000 was ~~completed~~granted to ~~allow~~extend the maturity date of the loan by ten months and one modification was a payment modification granting a period of interest-only payments of six months ~~and~~on ~~carried~~a loan carrying a post modification recorded investment of $9,455,000.

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $107,000 at ~~June~~September 30, 2025 and $10,193,000 at December 31, 2024. There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of ~~June~~September 30, 2025 or December 31, 2024. At ~~June~~September 30, 2025, the modification of the loan to a borrower experiencing financial difficulty with an outstanding recorded investment of $107,000 was not in compliance with the terms of its restructure. At December 31, 2024, there were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of ~~there~~their restructure.

The following tables present the outstanding recorded investment and number of modifications of loans to borrowers experiencing financial difficulty at ~~June~~September 30, 2025 and December 31, 2024.


(Dollars in thousands)
	~~June~~September 30, 2025
Modifications of Loans to Borrowers Experiencing Financial Difficulty:				Recorded Investment
	Number of	Recorded		% of Loan
	Contracts	Investment		Segment
Real Estate:
Non-Accrual	—	$	—	0.00%
Accruing	1		107	0.01%
Subtotal - Real Estate:	1		107	0.01%

Total	1	$	107	0.01%

(Dollars in thousands)
	December 31, 2024
Modifications of Loans to Borrowers Experiencing Financial Difficulty:				Recorded Investment
	Number of	Recorded		% of Loan
	Contracts	Investment		Segment
Real Estate:
Non-Accrual	—	$	—	0.00%
Accruing	3		10,019	1.18%
Subtotal - Real Estate:	3		10,019	1.18%

Commercial and Industrial:
Non-Accrual	—	$	—	0.00%
Accruing	1		174	0.26%
Subtotal - Commercial and Industrial:	1		174	0.26%

Total	4	$	10,193	1.08%

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding ~~June~~September 30, 2025, ~~three~~two loans experienced payment defaults during the ~~six~~nine months ended ~~June~~September 30, 2025. One loan carrying a balance of $~~120~~421,000 experienced a payment default during the three and ~~six~~nine months ended ~~June~~September 30, 2025 and remained in past due status as of ~~June~~September 30, 2025. AOne loan carrying a balance of $~~421~~107,000 experienced a payment default during the three and ~~six~~nine months ended ~~June~~September 30, 2025 and remained in past due status as of ~~June~~September 30, 2025. ~~One loan carrying a balance of $107,000 experienced a payment default during the three months ended June 30, 2025 and remained in past due status as of June 30, 2025.~~ Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding ~~June~~September 30, 2024, one loan carrying a balance of $9,~~455~~427,000 experienced a payment default during the ~~six~~nine months ended ~~June~~September 30, 2024. ~~There~~but ~~were no payment defaults on~~ the ~~modification of a~~ loan ~~to a borrower experiencing financial difficulty during the three months ended June 30, 2024, and the loan~~ was paid current by the customer as of ~~June~~September 30, 2024.

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the three and six months ended June 30, 2025 and the six months ended June 30, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended June 30, 2024.


(Dollars in thousands)	For the Three Months Ended June 30, 2025
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	1	$	107	$	107	$	107
Total	1	$	107	$	107	$	107

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the nine months ended September 30, 2025 and the three and nine months ended September 30, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended September 30, 2025.


(Dollars in thousands)	For the Nine Months Ended September 30, 2025
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	1	$	107	$	107	$	107
Total	1	$	107	$	107	$	107


(Dollars in thousands)	For the ~~Six~~Three Months Ended ~~June~~September 30, ~~2025~~2024
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	1	$	~~107~~120	$	~~107~~120	$	~~107~~120
Total	1	$	~~107~~120	$	~~107~~120	$	~~107~~120

(Dollars in thousands)	For the Nine Months Ended September 30, 2024
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	2	$	9,575	$	9,575	$	9,547
Total	2	$	9,575	$	9,575	$	9,547


(Dollars in thousands)	For the Six Months Ended June 30, 2024
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded		Recorded
	Contracts	Investment		Investment		Investment
Real Estate	1	$	9,455	$	9,455	$	9,455
Total	1	$	9,455	$	9,455	$	9,455

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the nine months ended September 30, 2025 and the three and nine months ended Septmber 30, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended September 30, 2025.

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 and the six months ended June 30, 2024. There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended June 30, 2024.



	For the Nine Months Ended September 30, 2025
	Rate	Term	Payment	Release of	Number
	Modification	Modification	Modification	Collateral	Modified
Real Estate	—	—	1	—	1
Total	—	—	1	—	1


	For the Three Months Ended ~~June~~September 30, ~~2025~~2024
	Rate	Term	Payment	Release of	Number
	Modification	Modification	Modification	Collateral	Modified
Real Estate	—	—1	1—	—	1
Total	—	—1	1—	—	1



	For the Six Months Ended June 30, 2025
	Rate	Term	Payment	Release of	Number
	Modification	Modification	Modification	Collateral	Modified
Real Estate	—	—	1	—	1
Total	—	—	1	—	1


	For the ~~Six~~Nine Months Ended ~~June~~September 30, 2024
	Rate	Term	Payment	Release of	Number
	Modification	Modification	Modification	Collateral	Modified
Real Estate	—	—1	1	—	12
Total	—	—1	1	—	12

The recorded investment, unpaid principal balance, and the related allowance of the Company’s non-accrual loans are summarized below at ~~June~~September 30, 2025 and December 31, 2024:


(Dollars in thousands)	~~June~~September 30, 2025
	Recorded		Recorded				Unpaid		Unpaid
	Investment		Investment				Principal		Principal		Total
	With		With No		Total		Balance With		Balance With		Unpaid
	Related		Related		Recorded		Related		No Related		Principal		Related
	Allowance		Allowance		Investment		Allowance		Allowance		Balance		Allowance

Real Estate	$	—	$	4,~~190~~165	$	4,~~190~~165	$	—	$	6,~~180~~154	$	6,~~180~~154	$	—
Commercial and Industrial		—		28		28		—		189		189		—
Total	$	—	$	4,165	$	4,165	$	—	$	6,154	$	6,154	$	—
Total	$	—	$	4,218	$	4,218	$	—	$	6,369	$	6,369	$	—


(Dollars in thousands)		December 31, 2024
	Recorded		Recorded				Unpaid		Unpaid
	Investment		Investment				Principal		Principal		Total
	With		With No		Total		Balance With		Balance With		Unpaid
	Related		Related		Recorded		Related		No Related		Principal		Related
	Allowance		Allowance		Investment		Allowance		Allowance		Balance		Allowance

Real Estate	$	—	$	4,214	$	4,214	$	—	$	6,203	$	6,203	$	—
Total	$	—	$	4,214	$	4,214	$	—	$	6,203	$	6,203	$	—

The recorded investment represents the loan balance reflected on the consolidated balance sheets net of any charge-offs. The unpaid balance is equal to the gross amount due on the loan.

The following table presents the Company’s individually evaluated, collateral-dependent loans by segment as of ~~June~~September 30, 2025 and December 31, 2024.


(Dollars in thousands)
June 30, 2025
September 30, 2025
Loan Segment/Collateral Type	Real Estate		Other
Real Estate:
1-4 Family Real Estate	$	~~332~~330	$	—
Multifamily Real Estate		3,044		—
Owner Occupied, Non-Farm, Non-Residential Real Estate		~~814~~791		—
Subtotal - Real Estate:		4,~~190~~165		—

Agricultural:
Stock	$	—	$	309
Subtotal - Agricultural:		—		309

Commercial and Industrial:
Total	$	4,165	$	309
Business Assets	$	—	$	28
Subtotal - Commercial and Industrial:		—		28

Total	$	4,190	$	337

(Dollars in thousands)
December 31, 2024
Loan Segment/Collateral Type	Real Estate		Other
Real Estate:
1-4 Family Real Estate	$	247	$	—
Multifamily Real Estate		3,044		—
Owner Occupied, Non-Farm, Non-Residential Real Estate		923		—
Subtotal - Real Estate:		4,214		—

Agricultural:
Stock	$	—	$	309
Subtotal - Agricultural:		—		309

Total	$	4,214	$	309

At ~~June~~September 30, 2025 and December 31, 2024, there were no commitments to lend additional funds with respect to individually evaluated loans.

Total non-performing assets (which includes loans held for investment on non-accrual status, foreclosed assets held for resale and loans past-due 90 days or more and still accruing interest) as of ~~June~~September 30, 2025 and December 31, 2024 were as follows:


(Dollars in thousands)	~~June~~September 30,		December 31,
	2025		2024
Real Estate	$	4,~~190~~165	$	4,214
Agricultural		—		—
Commercial and Industrial		28—		—
Consumer		—		—
State and Political Subdivisions		—		—
Total non-accrual loans		4,~~218~~165		4,214
Foreclosed assets held for resale		—		—
Loans past-due 90 days or more and still accruing interest		~~621~~2,415		756
Total non-performing assets	$	46,~~839~~580	$	4,970

There were no foreclosed assets held for resale at ~~June~~September 30, 2025 or December 31, 2024. Consumer mortgage loans secured by residential real estate for which the Company has entered into formal foreclosure proceedings but for which physical possession has yet to be obtained amounted to $0 at ~~June~~September 30, 2025 and December 31, 2024. When applicable, consumer mortgage loans secured by residential real estate for which the Company has entered into formal foreclosure proceedings but for which physical possession has yet to be obtained are not included in foreclosed asset balances.

The following tables present the classes of the loan portfolio, including individually evaluated loans, summarized by past-due status at ~~June~~September 30, 2025 and December 31, 2024.

(Dollars in thousands)

90 Days

Or Greater

Past Due

90 Days

Current-

and Still

30-59 Days

60-89 Days

or Greater

Total

29 Days

Total

Accruing

Past Due

Loans

Interest

June 30, 2025:

September 30, 2025:

Real Estate

34,~~372~~428

17,~~219~~429

46,~~811~~580

918,~~402~~437

~~855~~847,~~206~~708

~~864~~866,~~608~~145

~~621~~2,415

Agricultural

—

1,~~108~~071

—

Commercial and Industrial

~~124~~98

~~130~~—

28—

~~282~~98

6463,~~626~~890

6463,~~908~~988

—

Consumer

116

—

116

65,~~284~~440

65,~~295~~446

—

State and Political Subdivisions

—

2220,~~016~~362

—

Total

34,~~507~~532

17,~~349~~429

46,~~839~~580

918,~~695~~541

~~949~~938,~~240~~471

~~958~~957,~~935~~012

~~621~~2,415


(Dollars in thousands)													90 Days
													Or Greater
													Past Due
					90 Days					Current-			and Still
	30-59 Days		60-89 Days		or Greater		Total			29 Days	Total		Accruing
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans		Interest
December 31, 2024:
Real Estate	$	4,247	$	221	$	4,970	$	9,438	$	841,218	$	850,656	$	756
Agricultural		—		—		—		—		936		936		—
Commercial and Industrial		378		—		—		378		66,328		66,706		—
Consumer		11		2		—		13		6,377		6,390		—
State and Political Subdivisions		—		—		—		—		22,138		22,138		—
Total	$	4,636	$	223	$	4,970	$	9,829	$	936,997	$	946,826	$	756

NOTE 5 — DEPOSITS

Major classifications of deposits at ~~June~~September 30, 2025 and December 31, 2024 consisted of:


(Dollars in thousands)	~~June~~September 30,		December 31,
	2025		2024
Non-interest bearing demand	$	~~202~~215,~~977~~166	$	203,583
Interest bearing demand		~~234~~275,~~583~~340		278,869
Savings		~~185~~186,~~293~~814		195,310
Time certificates of deposits less than $250,000		~~375~~444,~~600~~472		327,236
Time certificates of deposits $250,000 or greater		5769,~~368~~107		39,782
Other time		1,~~457~~595		1,100
Total deposits	$	1,~~057~~192,~~278~~494	$	1,045,880

The following table represents scheduled maturities of the Company’s time deposits, that are greater than or equal to $100K, by time remaining until maturity as of ~~June~~September 30, 2025.


(Dollars in thousands)	~~June~~September 30, 2025
3 months or less	$	7372,~~272~~757
3 - 6 months		72110,~~129~~860
6 - 12 months		2010,~~623~~073
Greater than 12 months		34,~~258~~688
Total time deposits equal to or greater than $100K	$	~~169~~198,~~282~~378

NOTE 6 — BORROWINGS

Short-Term Borrowings

Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, the Federal Discount Window, and Federal Home Loan Bank of Pittsburgh (“FHLB”) advances, which generally represent overnight or less than 30-day borrowings.

Short-term borrowings and weighted–average interest rates at ~~June~~September 30, 2025 and December 31, 2024 are as follows:


(Dollars in thousands)	~~June~~September 30, 2025				December 31, 2024
			Average				Average
	Amount		Rate		Amount		Rate
Federal funds purchased	$	—	—5.48	%	$	—	6.56	%
Securities sold under agreements to repurchase		2932,~~551~~856	3.8789	%		32,932	4.34	%
Federal Discount Window		—	4.50	%		—	5.46	%
Federal Home Loan Bank of Pittsburgh		100,000	4.7675	%		101,494	5.60	%
Total	$	~~129~~132,~~551~~856	4.5655	%	$	134,426	5.37	%

Securities Sold Under Agreements to Repurchase (“Repurchase Agreements”)

The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets.

As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability on the Company’s consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is not offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not enter into reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fails to make an interest payment to the counterparty). The collateral is held by a correspondent bank in the counterparty’s custodial account. The counterparty has the right to sell or repledge the investment securities.

The following table presents the repurchase agreements subject to enforceable master netting arrangements as of ~~June~~September 30, 2025 and December 31, 2024.

(Dollars in thousands)

Gross Amounts Not Offset in the Consolidated Balance Sheet

Gross

Net Amounts

Amounts

of Liabilities

Gross

Offset in the

Presented

Amounts of

Consolidated

in the

Cash

Recognized

Balance

Consolidated

Financial

Collateral

Net

Liabilities

Sheet

Balance Sheet

Instruments

Pledge

Amount

June 30, 2025

September 30, 2025

Repurchase agreements (a)

2932,~~551~~856

—

2932,~~551~~856

(2932,~~551~~856)

—

December 31, 2024

Repurchase agreements (a)

32,932

—

32,932

(32,932)

—

(a) As of ~~June~~September 30, 2025 and December 31, 2024, the fair value of securities pledged in connection with repurchase agreements was $34,~~847~~092,000 and $36,216,000, respectively.

The following table presents the remaining contractual maturity of the master netting arrangement or repurchase agreements as of ~~June~~September 30, 2025:


(Dollars in thousands)	Remaining Contractual Maturity of the Agreements
	Overnight				Greater		Greater
	and		Up to		30 -90		than
	Continuous		30 days		Days		90 Days		Total
June 30, 2025:
September 30, 2025:
Repurchase agreements and repurchase-to-maturity transactions:
U.S. Treasury and/or agency securities	$	2932,~~551~~856	$	—	$	—	$	—	$	2932,~~551~~856
Total	$	2932,~~551~~856	$	—	$	—	$	—	$	2932,~~551~~856

Long-Term Borrowings and Letters of Credit

Long-term borrowings are comprised of advances from the FHLB. The Company’s long-term borrowings consist of notes at fixed interest rates. Upon any default, under the terms of a master agreement, the FHLB may declare all indebtedness of the Company immediately due. In addition, the FHLB shall not be required to fund advances under any outstanding commitments. As of ~~June~~September 30, 2025 and December 31, 2024, the Company had $106,000,000 in long-term borrowings outstanding with the FHLB.

Irrevocable standby letters of credit may be issued to a customer/beneficiary by the FHLB on the Company’s behalf in order to secure public/municipal unit deposits, provide credit enhancement to certain transaction types, or to support payment obligations to third parties. These irrevocable standby letters of credit are supported by an irrevocable and independent guarantee by the FHLB for the Company’s pledging obligation to secure public/municipal unit deposits which eliminates the need for the Company to pledge collateral in the amount necessary to secure these funds. There were no irrevocable standby letters of credit which could be drawn on through the FHLB’s close of business on ~~June~~September 30, 2025 or December 31, 2024. Any irrevocable standby letters of credit are issued as necessary in an amount appropriate to secure specific public/municipal unit deposits.

Under terms of a blanket agreement, collateral for the FHLB loans and letters of credit consists of certain qualifying assets of the Bank. Principal qualifying assets are certain real estate mortgages and investment securities. As of ~~June~~September 30, 2025, loans of $~~778~~772,~~572~~448,000 were pledged to the FHLB which resulted in a FHLB maximum borrowing capacity of $~~543~~539,~~556~~461,000. As of ~~June~~September 30, 2025, no securities were pledged as collateral to the FHLB to secure FHLB loans and letters of credit.

NOTE 7 — SUBORDINATED DEBT

On December 10, 2020, the Corporation issued $25,000,000 aggregate principal amount of Subordinated Notes due 2030 (the “2020 Notes”) to accredited investors. The 2020 Notes are intended to be treated as Tier 2 capital for regulatory capital purposes. The Company utilized the net proceeds it received from the sale of the 2020 Notes to support organic growth and for general corporate purposes.

The 2020 Notes bear a fixed interest rate of 4.375% per year for the first five years and then float based on a benchmark rate (as defined). Interest is payable semi-annually in arrears on June 30 and December 31 of each year, which began on June 30, 2021, for the first five years after issuance and will be payable quarterly in arrears thereafter on March 31, June 30, September 30 and December 31. The 2020 Notes will mature on December 31, 2030 and are redeemable in whole or in part, without premium or penalty, at any time on or after December 31, 2025 and prior to December 31, 2030. Additionally, if all or any portion of the 2020 Notes cease to be deemed Tier 2 capital, the Corporation may redeem, in whole and not in part, at any time upon giving not less than ten days’ notice, an amount equal to one hundred percent (100%) of the principal amount outstanding plus accrued but unpaid interest to but excluding the date fixed for redemption.

Holders of the 2020 Notes may not accelerate the maturity of the 2020 Notes, except upon the bankruptcy, insolvency, liquidation, receivership or similar law of the Corporation or the Bank.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position or results of operations of the Company.

The Company currently leases two branch banking facilities and one parcel of land under operating leases. At ~~June~~September 30, 2025, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,~~380~~353,000 and $1,~~908~~885,000, respectively. At December 31, 2024, right-of-use assets and lease liabilities stood at $1,400,000 and $1,920,000, respectively, in the consolidated balance sheets.

The Company recognized total operating lease costs for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 of $97151,000 and $~~107~~142,000, respectively. Operating lease costs are included in occupancy, net in the accompanying statements of income. Cash payments totaled $89139,000 and $99132,000, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024.

The Company currently has one finance lease for equipment. At ~~June~~September 30, 2025, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $44,000 and $3735,000, respectively. At December 31, 2024, right-of-use assets and lease liabilities stood at $0. Amounts recognized as right-of-use assets and lease liabilities related to finance leases are included in premises and equipment, net and other liabilities, respectively, in the accompanying balance sheet.

Total finance lease costs that were recognized by the Company for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 were immaterial. Cash payments totaled $25,000 and $0 for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, respectively.

Options to extend or terminate a lease may be included in the Company’s lease agreements. When it is reasonably certain that the Company will exercise those options, the right-of-use asset and lease liability will reflect the renewal or termination option. No significant assumptions or judgements were made in determining whether a contract contained a lease or in the consideration of lease versus non-lease components. None of the leases contained an implicit rate; therefore, the Company’s incremental borrowing rate was used for each of the leases.

The following table displays the weighted-average term and discount rates for operating and finance leases outstanding as of ~~June~~September 30, 2025 and December 31, 2024.


	~~June~~September 30,	December 31,	~~June~~September 30,	December 31,
	2025	2024	2025	2024
	Operating	Operating	Finance	Finance
Weighted-average term (years)	18.6652	18.95	4.7550	-
Weighted-average discount rate	4.1817%	4.19%	4.31%	-%

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating or finance lease liability is as follows:


(Dollars in thousands)
	~~June~~September 30,		December 31,		~~June~~September 30,		December 31,
		2025		2024		2025		2024
Minimum Lease Payments due:	Operating		Operating		Finance		Finance
Within one year	$	~~158~~149	$	175	$	8	$	—
After one but within two years		~~147~~150		140		9		—
After two but within three years		~~156~~157		154		8		—
After three but within four years		157		157		9		—
After four but within five years		157		157		64		—
After five years		2,~~081~~042		2,160		—		—
Total undiscounted cash flows		2,~~856~~812		2,943		4038		—
Discount on cash flows		(~~948~~927)		(1,023)		(3)		—
Total lease liability	$	1,~~908~~885	$	1,920	$	3735	$	—

NOTE 9 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company uses various financial instruments, including derivatives, to manage its exposure to interest rate risk. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and cash payments principally related to specific assets and short-term wholesale funding positions. The Company ~~entered~~began ~~into~~utilizing ~~four~~ swap contracts ~~effective~~in ~~September~~the ~~20,~~third ~~2023~~quarter ~~and~~of ~~one additional swap contract effective September 4, 2024~~2023.

Net Fair Values of Derivative Instruments on the Statement of Financial Condition

The tables below present the net fair value of the Company’s derivative financial instruments as well as the classification on the Consolidated Balance Sheets as of ~~June~~September 30, 2025 and December 31, 2024:


(Dollars in thousands)	~~June~~September 30, 2025
	Derivative Assets			Derivative Liabilities
	Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Other Assets	$	—	Other Liabilities	$	34,~~617~~409
Total		$	—		$	34,~~617~~409


(Dollars in thousands)	December 31, 2024
	Derivative Assets			Derivative Liabilities
	Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Other Assets	$	—	Other Liabilities	$	1,463
Total		$	—		$	1,463

The following table presents the derivative liabilities subject to an enforceable master netting arrangement as of ~~June~~September 30, 2025 and December 31, 2024:


			Gross		Net Amounts			Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross		Amounts		of Liabilities
(Dollars in thousands)	Amounts of		Offset in the		Presented in the				Cash
	Recognized		Consolidated		Consolidated		Financial		Collateral		Net
	Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Amount
June 30, 2025
September 30, 2025
Derivatives	$	34,~~617~~409	$	—	$	34,~~617~~409	$	—	$	(34,~~617~~409)	$	—

December 31, 2024
Derivatives	$	1,463	$	—	$	1,463	$	—	$	(1,463)	$	—

The following table presents the remaining contractual maturity of the master netting arrangements as of ~~June~~September 30, 2025:


	Remaining Contractual Maturity of the Agreements
							Greater
(Dollars in thousands)	Up to		1 to 3		3 to 5		than
	1 Year		Years		Years		5 Years		Total
June 30, 2025:
September 30, 2025:
Derivative Assets	$	—	$	~~206~~280	$	—	$	—	$	~~206~~280
Derivative Liabilities		—		(23,~~457~~750)		~~(1,366)~~—		—(939)		(34,~~823~~689)
Total net derivatives	$	—	$	(23,~~251~~470)	$	~~(1,366)~~—	$	—(939)	$	(34,~~617~~409)

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rates. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives are used to hedge the changes in fair value of certain of its pools of fixed rate assets. As of ~~June~~September 30, 2025, the Company had a total of ~~two~~four interest rate swaps with a combined notional amount of $5097,~~000~~760,000 hedging fixed-rate available-for-sale debt securities and one interest rate swap with a notional amount of $75,000,000 hedging fixed-rate loans.

As of ~~June~~September 30, 2025 and December 31, 2024, the following amounts were recorded on the balance sheet related to the cumulative basis adjustment for fair value hedges:


(Dollars in thousands)		~~June~~September 30,		December 31,
		2025		2024
Carrying amount of hedged assets:		Closed Portfolio Amount		Closed Portfolio Amount
Fixed Rate Loans	$	~~128~~125,~~258~~226	$	134,878
Available-for-sale - Municipals		50,~~494~~415		50,653
Available-for-sale - MBS		3130,~~184~~268		32,821
Total	$	~~209~~205,~~936~~909	$	218,352

Interest rate swaps notional amount	$	~~125~~172,~~000~~760	$	125,000


(Dollars in thousands)		~~June~~September 30,		December 31,
		2025		2024
Cumulative amount of fair value hedging adjustment included in the carrying amount of assets:
Fixed Rate Loans	$	~~206~~280	$	823
Available-for-sale - Municipals		(1,~~069~~055)		(375)
Available-for-sale - MBS		(~~348~~1,295)		(122)
Total	$	(12,~~211~~070)	$	326

The table below presents the pre-tax effects of the Company’s derivative instruments designated as fair value hedges on the Consolidated Statements of Income for the year-to-date periods ended ~~June~~September 30, 2025 and 2024:


(Dollars in thousands)		~~June~~September 30,
		2025		2024
Amount of loss recognized in other comprehensive loss	$	(1,~~120~~856)	$	(~~233~~1,541)
Amount of gain, net of fair value re-measurements, included in interest income		~~347~~585		~~272~~526

Cash Flow Hedges of Interest Rate Risk

The Company uses derivatives to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate products are designated as cash flow hedges. As of ~~June~~September 30, 2025, the Company had a total of two interest rate swaps with a combined notional amount of $100,000,000 hedging specific short-term wholesale funding positions.

For derivatives designated as cash flow hedges, the gain or loss on the derivatives is recorded in other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. During the next twelve months, it is estimated that an additional $~~489~~712,000 will be reclassified as interest expense.

Interest rate swaps designated as cash flow hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. For cash flow hedges on the Company's short-term wholesale funding positions, amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s hedged variable rate short-term wholesale funding positions. During the year-to-date period ended ~~June~~September 30, 2025, the Company reclassified $1,000 as a reduction in interest expense.

The table below presents the pre-tax effects of the Company’s derivative instruments designated as cash flow hedges on the Consolidated Statements of Income for the year-to-date periods ended ~~June~~September 30, 2025 and 2024:


(Dollars in thousands)		~~June~~September 30,
		2025		2024
Amount of loss recognized in other comprehensive loss	$	(1,~~781~~702)	$	(~~366~~2,618)
Amount of gain reclassified from accumulated other comprehensive loss to interest expense		1		~~502~~757

Interest rate swaps notional amount	$	100,000	$	100,000

Credit Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the

counterparty. As of ~~June~~September 30, 2025 and December 31, 2024, the Company’s derivatives were in a net liability position resulting in the Company having collateral in the amount of $6,570,000 posted with the counterparty at ~~June~~September 30, 2025 and December 31, 2024.

NOTE 10 — FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company does not engage in trading activities with respect to any of its financial instruments with off-balance sheet risk.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

The Company may require collateral or other security to support financial instruments with off-balance sheet credit risk.

The contract or notional amounts at ~~June~~September 30, 2025 and December 31, 2024 were as follows:


(Dollars in thousands)
	~~June~~September 30, 2025		December 31, 2024
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	~~116~~118,~~254~~007	$	111,793
Financial standby letters of credit	$	2,465	$	2,665
Performance standby letters of credit	$	43,~~627~~916	$	5,530

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses that may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, owner-occupied income-producing commercial properties, and residential real estate.

Standby letters of credit are conditional commitments issued by the Company to guarantee payment to a third party when a customer either fails to repay an obligation or fails to perform some non-financial obligation. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company may hold collateral (similar to the items held as collateral for commitments to extend credit) to support standby letters of credit for which collateral is deemed necessary.

Financial Instruments with Concentrations of Credit Risk

The Company originates primarily commercial and residential real estate loans to customers predominately in the Company’s primary, Pennsylvania market area. The ability of the majority of the Company’s customers to honor their contractual loan obligations is dependent on the economy and real estate market in this area. At ~~June~~September 30, 2025, the Company had $~~864~~866,~~608~~145,000 in loans secured by real estate, which represented 90.25% of total loans. The real estate loan portfolio is largely secured by lessors of residential buildings and dwellings, lessors of non-residential buildings, and lessors of hotels/motels. As of ~~June~~September 30, 2025 and December 31, 2024, management is of the opinion that there were no concentrations exceeding 10% of total loans with regard to loans to borrowers who were engaged in similar activities that were similarly impacted by economic or other conditions.

As all financial instruments are subject to some level of credit risk, the Company requires collateral and/or guarantees for all loans. Collateral may include, but is not limited to property, plant, and equipment, commercial and/or residential real estate property, land, and pledge of securities. In the event of a borrower’s default, the collateral supporting the loan may be seized in order to recoup losses associated with the loan. The Company also establishes an allowance for credit losses that constitutes the amount available to absorb losses within the loan portfolio that may exist due to deficiencies in collateral values.

NOTE 11 — FAIR VALUE MEASUREMENTS

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. This guidance provides additional information on determining when the volume and level of activity for the asset or liability has significantly decreased. The guidance also includes information on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance.

This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The guidance provides a list of circumstances that may indicate that a transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own belief about the assumptions market participants would use in pricing the asset or liability based upon the best information available. Fair value measurement and disclosure guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 Inputs: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 Inputs: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth as follows.

Financial Assets Measured at Fair Value on a Recurring Basis

At ~~June~~September 30, 2025 and December 31, 2024, securities measured at fair value on a recurring basis and the valuation methods used are as follows:

(Dollars in thousands)

June 30, 2025

Level 1

Level 2

Level 3

Total

September 30, 2025

Level 1

Level 2

Level 3

Total

Debt Securities Available-for-Sale:

U.S. Treasury securities

7,~~395~~465

—

7,~~395~~465

Obligations of U.S. Government Agencies and Sponsored Agencies:

Mortgaged-backed

—

~~132~~178,~~548~~953

—

~~132~~178,~~548~~953

Other

—

3,~~980~~573

—

3,~~980~~573

Other mortgage backed debt securities

—

4038,~~193~~173

—

4038,~~193~~173

Obligations of state and political subdivisions

—

7875,~~288~~519

—

7875,~~288~~519

Asset-backed securities

—

6865,~~483~~986

—

6865,~~483~~986

Corporate debt securities

—

3738,~~454~~101

—

3738,~~454~~101

Total debt securities available-for-sale

7,~~395~~465

~~360~~400,~~946~~305

—

~~368~~407,~~341~~770

Marketable equity securities

1,~~606~~715

—

1,~~606~~715

Total recurring fair value measurements

9,~~001~~180

~~360~~400,~~946~~305

—

~~369~~409,~~947~~485


(Dollars in thousands)

December 31, 2024	Level 1		Level 2		Level 3		Total
Debt Securities Available-for-Sale:
U.S. Treasury securities	$	7,151	$	—	$	—	$	7,151
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgaged-backed		—		136,708		—		136,708
Other		—		5,122		—		5,122
Other mortgage backed debt securities		—		46,273		—		46,273
Obligations of state and political subdivisions		—		83,485		—		83,485
Asset-backed securities		—		73,867		—		73,867
Corporate debt securities		—		37,682		—		37,682
Total debt securities available-for-sale		7,151		383,137		—		390,288
Marketable equity securities		1,587		—		—		1,587
Total recurring fair value measurements	$	8,738	$	383,137	$	—	$	391,875

The estimated fair values of equity securities and US Treasury debt securities classified as Level 1 are derived from quoted market prices in active markets; the equity securities consist mainly of stocks held in other banks. The estimated fair values of all debt securities classified as Level 2 are obtained from nationally-recognized third-party pricing agencies. The estimated fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds. The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (observable inputs), and are therefore classified as Level 2 within the fair value hierarchy. The Company does not have any Level 3 inputs for securities. There were no transfers between Level 1 and Level 2 during 2025 or 2024.

Financial Assets Measured at Fair Value on a Nonrecurring Basis

Periodically, non-recurring adjustments may be applied to the carrying value of loans based on the fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain specific allocation amounts for individually evaluated collateral-dependent loans as calculated when establishing the allowance for credit losses. The Company’s valuation procedure for any individually evaluated loans greater than $250,000 requires an appraisal to be obtained and reviewed annually at year end unless the Board of Directors waives such requirement for a specific loan, in favor of obtaining a Certificate of Inspection instead, defined as an internal evaluation completed by the Company. A quarterly collateral evaluation is performed which may include a site visit, property pictures and discussions with realtors and other similar business professionals to ascertain current values. For individually evaluated loans less than $250,000 upon classification and annually at year end, the Company completes a Certificate of Inspection, which includes an onsite inspection, and considers value indicators such as insured values, tax assessed values, recent sales comparisons and a review of the previous evaluations. These assets are included as Level 3 fair values, based upon the lowest level that is significant to the fair value measurements. The fair value consists of the individually evaluated loan balances less the valuation allowance and/or charge-offs. There were no transfers between valuation levels in 2025 and 2024.

Individually evaluated loans measured at fair value on a nonrecurring basis as of ~~June~~September 30, 2025 and December 31, 2024 are as follows:


(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at June 30, 2025
Assets at September 30, 2025
Individually evaluated loans:
Real Estate	$	—	$	—	$	1,603	$	1,603
Commercial and Industrial		—		—		28		28
Total individually evaluated loans	$	—	$	—	$	1,603	$	1,603
Total individually evaluated loans	$	—	$	—	$	1,631	$	1,631


(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2024
Individually evaluated loans:
Real Estate	$	—	$	—	$	1,603	$	1,603
Total individually evaluated loans	$	—	$	—	$	1,603	$	1,603

Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis

There were no foreclosed assets held for resale measured at fair value on a nonrecurring basis at ~~June~~September 30, 2025 and December 31, 2024.

The Company’s foreclosed asset valuation procedure requires an appraisal or a Certificate of Inspection, which considers the sales prices of similar properties in the proximate vicinity, to be completed periodically with the exception of those cases in which the Bank has obtained a sales agreement. These assets are included as Level 3 fair values, based upon the lowest level that is significant to the fair value measurements. There were no transfers between valuation levels in 2025 and 2024.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine the fair value:


(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements

June 30, 2025	Estimate		Valuation Technique	Unobservable Input	Discount Range	Weighted Average Discount
September 30, 2025	Estimate		Valuation Technique	Unobservable Input	Discount Range	Weighted Average Discount
Individually evaluated loans - collateral dependent	$	1,~~631~~603	Appraisal of collateral1,3Certificate of Inspection1,3	Appraisal adjustments2Qualitative Adjustments4	(015%) – (15%)	(15%)

December 31, 2024
Individually evaluated loans - collateral dependent	$	1,603	Appraisal of collateral1,3Certificate of Inspection1,3	Appraisal adjustments2Qualitative Adjustments4	(5%) – (5%)	(5%)

1. Fair value is generally determined through independent appraisals or Certificates of Inspection of the underlying collateral, as defined by Bank regulators.

2. Appraisals may be adjusted downward/discounted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The typical range of appraisal adjustments are presented as a percent of the appraisal value.

3. Includes qualitative adjustments by management and estimated liquidation expenses.

4. Collateral values may be adjusted downward/discounted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

Fair Value of Financial Instruments ~~Measured on a Nonrecurring Basis~~

(Dollars in thousands)

Carrying

Fair Value Measurements at ~~June~~September 30, 2025

Amount

Level 1

Level 2

Level 3

Total

FINANCIAL ASSETS:

Cash and due from banks

1013,~~813~~016

—

1013,~~813~~016

Interest-bearing deposits in other banks

28134,~~240~~239

—

28134,~~240~~239

—

28134,~~240~~239

Restricted investment in bank stocks

8,944

—

8,944

—

8,944

Net loans

~~952~~949,~~008~~733

—

~~953~~955,~~159~~958

Mortgage servicing rights

~~201~~199

—

~~201~~199

Accrued interest receivable

45,~~954~~075

—

45,~~954~~075

—

45,~~954~~075

FINANCIAL LIABILITIES:

Demand, savings and other deposits

~~622~~677,~~853~~320

—

~~622~~677,~~853~~320

—

~~622~~677,~~853~~320

Time deposits

~~434~~515,~~425~~174

—

~~433~~514,~~346~~494

—

~~433~~514,~~346~~494

Short-term borrowings

~~129~~132,~~551~~856

—

~~130~~134,~~896~~139

—

~~130~~134,~~896~~139

Long-term borrowings

106,000

—

107,~~442~~367

—

107,~~442~~367

Subordinated debentures

25,000

—

21,~~470~~629

—

21,~~470~~629

Accrued interest payable

23,~~319~~175

—

23,~~319~~175

—

23,~~319~~175

Derivative liabilities

34,~~617~~409

—

34,~~617~~409

—

34,~~617~~409


(Dollars in thousands)	Carrying		Fair Value Measurements at December 31, 2024
	Amount		Level 1		Level 2		Level 3		Total
FINANCIAL ASSETS:
Cash and due from banks	$	9,933	$	9,933	$	—	$	—	$	9,933
Interest-bearing deposits in other banks		7,321		—		7,321		—		7,321
Restricted investment in bank stocks		8,984		—		8,984		—		8,984
Net loans		940,779		—		—		929,302		929,302
Mortgage servicing rights		218		—		—		218		218
Accrued interest receivable		4,993		—		4,993		—		4,993

FINANCIAL LIABILITIES:
Demand, savings and other deposits		677,762		—		677,762		—		677,762
Time deposits		368,118		—		366,772		—		366,772
Short-term borrowings		134,426		—		134,541		—		134,541
Long-term borrowings		106,000		—		107,728		—		107,728
Subordinated debentures		25,000		—		20,618		—		20,618
Accrued interest payable		2,152		—		2,152		—		2,152
Derivative liabilities		1,463		—		1,463

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