OHIO VALLEY BANC CORP

Previous wording

Certain statements contained in this quarterly report on Form 10-Q (the “report”) and other publicly available documents incorporated herein by reference constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”), and as defined in the Private Securities Litigation Reform Act of 1995. Such statements are often, but not always, identified by the use of such words as “believes,” “anticipates,” “expects,” “intends,” “plan,” “goal,” “seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and other similar expressions. Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control, particularly with regard to developments related to the current economic and geopolitical landscape, and which could cause actual results to differ materially from those expressed in such forward looking-statements. However, it is difficult to predict the effect of known factors, and by Ohio Valley Banc Corp. (“Ohio Valley”) cannot anticipate all factors that could affect future results. Important factors that could cause actual results to differ materially from expectations expressed in or implied in forward looking statements include, but are not limited to: the effects of fluctuating interest rates on our customers’ operations and financial condition; changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, tariffs, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; the level of defaults and prepayment on loans made by Ohio Valley and its direct and indirect subsidiaries (collectively, the “Company”); unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes. Additional detailed information concerning such factors is available in the Company’s filings with the Securities and Exchange Commission, under the Exchange Act, including the disclosure under the heading “Item 1A. Risk Factors” of Part I of the 2024 Annual Report for the fiscal year ended December 31, 2024 and elsewhere in this document (including, without limitation, in conjunction with the forward looking statements themselves and under the heading “Critical Accounting Estimates”). All forward looking statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its other SEC filings and public communications. Readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. The Company undertakes no obligation and disclaims any duty to update or revise any forward looking statements, whether as a result of new information, unanticipated …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements contained in this quarterly report on Form 10-Q (the “report”) and other publicly available documents incorporated herein by reference constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as defined in the Private Securities Litigation Reform Act of 1995. Such statements are often, but not always, identified by the use of such words as “believes,” “anticipates,” “expects,” “intends,” “plan,” “goal,” “seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and other similar expressions. Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control, particularly with regard to developments related to the current economic and geopolitical landscape, and which could cause actual results to differ materially from those expressed in such forward looking statements. However, it is difficult to predict the effect of known factors, and Ohio Valley Banc Corp. (“Ohio Valley”) cannot anticipate all factors that could affect future results. Important factors that could cause actual results to differ materially from expectations expressed in or implied in forward looking statements include, but are not limited to: the effects of fluctuating interest rates on our customers’ operations and financial condition; changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, tariffs, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; the level of defaults and prepayment on loans made by Ohio Valley and its direct and indirect subsidiaries (collectively, the “Company”); unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes. Additional detailed information concerning such factors is available in the Company’s filings with the Securities and Exchange Commission, under the Exchange Act, including the disclosure under the heading “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and elsewhere in this document (including, without limitation, in conjunction with the forward looking statements themselves and under the heading “Critical Accounting Estimates”). All forward looking statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its other SEC filings and public communications. Readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. The Company undertakes no obligation and disclaims any duty to update or revise any forward looking statements, whether as a result of new inf…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

BUSINESS OVERVIEW: The following discussion on consolidated financial statements include the accounts of Ohio Valley and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company (“Loan Central”), and Ohio Valley Financial Services Agency, LLC, an insurance agency. The Bank has one active, wholly-owned subsidiary, Ohio Valley REO, LLC, an Ohio limited liability company.

Current wording

BUSINESS OVERVIEW: The following discussion on consolidated financial statements includes the accounts of Ohio Valley and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company (“Loan Central”), and Ohio Valley Financial Services Agency, LLC, an insurance agency. The Bank has one active, wholly-owned subsidiary, Ohio Valley REO, LLC, an Ohio limited liability company.

Previous wording

FINANCIAL RESULTS OVERVIEW: Net income totaled $3,030 during the third quarter of 2025, an increase of $311 from the same period of 2024. Earnings per share for the third quarter of 2025 finished at $.64 per share, compared to $.58 per share during the third quarter of 2024. Net income totaled $11,646 during the first nine months of 2025, an increase of $3,162 from the same period of 2024. Earnings per share during the first nine months of 2025 finished at $2.47 per share, compared to $1.79 per share during the first nine months of 2024. Higher net earnings also had a corresponding impact on the Company’s annualized net income to average asset ratio, or return on assets, which increased 22 basis points to 1.03% during the first nine months of 2025, compared to the same period in 2024. In addition, the Company’s net income to average equity ratio, or return on equity, increased 215 basis points to 9.95% during the first nine months of 2025, compared to the same period in 2024.

Current wording

FINANCIAL RESULTS OVERVIEW: Net income totaled $4,297 during the first quarter of 2026, a decrease of $109 from the same period in 2025. Earnings per share for the first quarter of 2026 finished at $.91 per share, compared to $.94 per share during the first quarter of 2025. Lower net earnings had a corresponding impact on the Company’s annualized net income to average asset ratio, or return on assets, which decreased 12 basis points to 1.08% during the first quarter of 2026, compared to the same period in 2025. In addition, the Company’s net income to average equity ratio, or return on equity, decreased 165 basis points to 10.17% during the first quarter of 2026, compared to the same period in 2025.

Previous wording

During the three months ended September 30, 2025, net interest income increased $2,016, or 16.0%, over the same period in 2024. During the nine months ended September 30, 2025, net interest income increased $6,538, or 18.3%, over the same period in 2024. Net interest income growth during both the quarterly and year-to-date periods was primarily the result of an increase in average earning assets, led by securities and loans. During the three months ended September 30, 2025, average securities increased $25,983 while average loans increased $76,514. During the nine months ended September 30, 2025, average securities increased $74,685 while average loans increased $65,448. The growth in average securities was in large part due to the increased pledging requirements on public fund deposits as part of the Ohio Homebuyer Plus program. The growth in average loans was related to the commercial and residential real estate lending segments. Earnings were further enhanced by a higher net interest margin, increasing 29 basis points during the three months ended September 30, 2025, and 32 basis points during the nine months ended September 30, 2025, compared to the same periods in 2024, respectively. Margin growth was related to an increase in the yield on earning assets, while the cost of funding sources decreased. The improvement to earning asset yields was directly related to the growth in higher-yielding securities and loans, and the accretion of an $817 market discount on purchased loans that was recognized in the second quarter of 2025. The cost of funding sources increased only slightly as the composition of funding sources shifted more to lower cost deposit sources, such as Negotiable Order of Withdrawal (“NOW”), savings, money market, and checking accounts.

Current wording

During the three months ended March 31, 2026, net interest income increased $1,748, or 13.3%, over the same period in 2025. This increase was primarily related to a $120,686 increase in average earning assets, led mostly by a 14.0% increase in average loans. The growth in average loans was related to the commercial and residential real estate lending segments. The emphasis on higher-yielding loan growth during the first quarter of 2026 contributed to lower average securities and interest-bearing deposits with banks, which decreased 5.5% and 14.3%, respectively, compared to the same period in 2025. The decrease in average securities was also impacted by a reduced need for securities to be pledged as collateral to secure public fund deposits. Earnings were further enhanced by a higher net interest margin, which finished at 4.01% at March 31, 2026 compared to 3.85% at March 31, 2025. Margin growth was related to an increase in the yield on earning assets, which outpaced the increase in average costs associated with the Company’s funding sources. The improvement to earning asset yields was directly related to the growth in higher-yielding loans and a 59 basis point improvement in the average yield on securities. The growth in average securities yield was largely impacted by several bond transactions that occurred in 2025 that replaced lower-yielding taxable securities with similar taxable securities at higher rates of return. The cost of funding sources increased primarily within the Company’s Negotiable Order of Withdrawal (“NOW”) and savings accounts, while the average cost on certificates of deposit (“CDs”) decreased.

Previous wording

The $138 and $1,011 increase in the Company’s provision for income taxes during the three and nine months ended September 30, 2025, compared to the same periods in 2024, was largely due to the increase in operating income affected by the factors mentioned above, as well as an increase in the effective tax rate.

Current wording

The $190 decrease in the Company’s provision for income taxes during the three months ended March 31, 2026, compared to the same period in 2025, was largely due to the decrease in operating income affected by the factors mentioned above, as well as a decrease in the effective tax rate.

Previous wording

At September 30, 2025, total liabilities were $1,405,626, up $52,542 from year-end 2024. Contributing most to this increase were higher interest-bearing deposit balances, up $56,844 from year-end 2024, consisting of higher balances from time deposits (+17.6%) and savings and money market balances (+5.3%), partially offset by a decrease in NOW accounts (-10.2%). At September 30, 2025, the Company’s noninterest-bearing demand deposits were relatively stable, increasing $465 from year-end 2024.

Current wording

At March 31, 2026, total liabilities were $1,506,222, up $93,825 from year-end 2025. Contributing most to this increase were higher interest-bearing deposit balances, up $75,378 from year-end 2025, consisting of higher balances from time deposits (+11.3%) and savings, NOW and money market balances (+3.8%), while noninterest-bearing demand deposits increased 5.9% from year-end 2025.

Previous wording

At September 30, 2025, total shareholders' equity was $164,417, up $14,089 from December 31, 2024. This increase came primarily from year-to-date net income and an after-tax increase in net unrealized gains on AFS securities, partially offset by year-to-date cash dividends paid. Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.

Current wording

At March 31, 2026, total shareholders' equity was $171,280, up $1,023 from December 31, 2025. This increase consisted of year-to-date net income being partially offset by an after-tax increase in net unrealized losses on AFS securities and year-to-date cash dividends paid. Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.

Previous wording

At September 30, 2025, cash and cash equivalents were $89,316, an increase of $6,209, or 7.5%, from December 31, 2024. The increase came primarily from interest-bearing deposits with banks, which were up $4,848, or 7.2%, from year-end 2024. The Company’s interest-bearing FRB clearing account contributed most to the increase in interest-bearing deposits with banks, representing 80% of cash and cash equivalents at September 30, 2025. The Company utilizes its interest-bearing FRB clearing account to manage excess funds, as well as to assist in funding earning asset growth. The increase in excess funds during the first nine months of 2025 resulted primarily from growth in total deposits, which were up 4.5% from year-end 2024. The interest rate paid on both the required and excess reserve balances of the FRB is based on the targeted federal funds rate established by the Federal Open Market Committee (“FOMC”). During the third quarter of 2025, the rate associated with the Company’s FRB clearing account decreased 25 basis points due to actions taken by the FOMC to reduce the targeted federal funds rate to a range of 4.00% to 4.25% at September 30, 2025. The FRB clearing account rate was reduced again by 25 basis points in October 2025 due to further actions taken by the FOMC that lowered the targeted federal funds rate to a current range of 3.75% to 4.00%. The interest-bearing deposit balances in the FRB are 100% secured by the U.S. Government.

Current wording

At March 31, 2026, cash and cash equivalents were $125,327, an increase of $79,430, or 173.1%, from December 31, 2025. The increase came primarily from interest-bearing deposits with banks, which were up $78,020, or 251.3%, from year-end 2025. The Company’s interest-bearing FRB clearing account contributed most to the increase in interest-bearing deposits with banks, representing 87% of cash and cash equivalents at March 31, 2026. The Company utilizes its interest-bearing FRB clearing account to manage excess funds, as well as to assist in funding earning asset growth. The increase in excess funds during the first three months of 2026 resulted primarily from growth in total deposits, which were up 7.1% from year-end 2025. The interest rate paid on both the required and excess reserve balances of the FRB is based on the targeted federal funds rate established by the Federal Open Market Committee (“FOMC”). During the first quarter of 2026, the FOMC took no action to reduce the targeted federal funds rate, which remains at a target range of 3.50% to 3.75%. The interest-bearing deposit balances in the FRB are 100% secured by the U.S. Government.

Previous wording

The balance of total securities decreased $7,930, or 2.9% from year-end 2024. As previously mentioned, the decrease in securities was impacted by the lower need for securities to pledge to the Treasurer for deposits related to the Homebuyers Plus program. The Company’s U.S. Government securities portfolio decreased $63,184 from $168,030 at year-end 2024 to $104,846 at September 30, 2025, impacted by $65,560 in maturities, net of purchases. The Company utilized its proceeds from net maturities of U.S. Government securities to help fund additional purchases in U.S. Government agency (“Agency”) mortgage-backed securities, which were up $55,677, or 59.1%, from year-end 2024. During the first nine months of 2025, purchases of Agency mortgage-backed securities totaled $78,284, while being partially offset by $17,333 in principal repayments. The monthly repayment of principal has been the primary advantage of Agency mortgage-backed securities as compared to other types of investment securities, which deliver proceeds upon maturity or call date. At September 30, 2025, the Company’s investment securities portfolio was comprised mostly of Agency mortgage-backed securities at 56.1% of total investments, while U.S. Government securities represented 39.2%.

Current wording

The balance of total securities decreased $2,484, or 1.0% from year-end 2025. The decrease came mostly from U.S. Government agency (“Agency”) mortgage-backed and U.S. Government securities, which were collectively down $2,441, or 1.0%, from year-end 2025. During the first three months of 2026, total purchases, net of maturities, for both Agency mortgage-backed and U.S. Government securities totaled $9,677. This was completely offset by $9,681 in principal repayments coming mostly from Agency mortgage-backed securities. The monthly repayment of principal has been the primary advantage of Agency mortgage-backed securities as compared to other types of investment securities, which deliver proceeds upon maturity or call date. At March 31, 2026, the Company’s investment securities portfolio was comprised mostly of Agency mortgage-backed securities at 62.3% of total investments, while U.S. Government securities represented 33.6%.

Previous wording

Included in the factors mentioned above were changes in net unrealized losses associated with AFS securities. During the first nine months of 2025, a decrease in long-term market rates led to a $7,245 increase in the fair value associated with the Company’s AFS securities at September 30, 2025, of which, $1,219 was related to the realized loss on the sale of securities previously discussed. The fair value of an investment security moves inversely to interest rates, so as rates decreased, the fair value increased, causing the unrealized loss in the portfolio to decrease. These changes in rates are typical and do not impact earnings of the Company as long as the securities are held to full maturity.

Current wording

Included in the factors mentioned above were changes in net unrealized losses associated with AFS securities. During the first three months of 2026, an increase in long-term market rates led to a $2,810 decrease in the fair value associated with the Company’s AFS securities at March 31, 2026. The fair value of an investment security moves inversely to interest rates, so as rates increased, the fair value decreased, causing the unrealized loss in the portfolio to increase. These changes in rates are typical and do not impact earnings of the Company as long as the securities are held to full maturity.

Previous wording

Commercial real estate consists of owner-occupied, nonowner-occupied and construction loans. Owner-occupied loans consist of nonfarm, nonresidential properties. A commercial owner-occupied loan is a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans of the Company include loans secured by hospitals, churches, and hardware and convenience stores. Nonowner-occupied loans are property loans for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property, such as apartment buildings, condominiums, hotels, and motels. These loans are primarily impacted by the level of interest rates associated with the debt and to local economic conditions, which dictate occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine the impact on the borrower’s ability to maintain adequate debt service under different economic conditions. Furthermore, the Company monitors the concentration in any one industry and has established limits relative to capital. In addition, credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in our underwriting standards. Table I has been provided to illustrate the industry composition of the commercial real estate portfolio. Commercial construction loans are extended to individuals as well as corporations for the construction of an individual property or multiple properties and are secured by raw land and the subsequent improvements. Commercial real estate also includes loan participations with other banks outside the Company’s primary market area. Although the Company is not actively seeking to participate in loans originated outside its primary market area, it has taken advantage of the relationships it has with certain lenders in those areas where the Company believes it can profitably participate with an acceptable level of risk.

Current wording

Commercial real estate consists of owner-occupied, nonowner-occupied and construction loans. Owner-occupied loans consist of nonfarm, nonresidential properties. A commercial owner-occupied loan is a borrower-purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans of the Company include loans secured by hospitals, churches, and hardware and convenience stores. Nonowner-occupied loans are property loans for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property, such as apartment buildings, condominiums, hotels, and motels. These loans are primarily impacted by the level of interest rates associated with the debt and by local economic conditions, which dictate occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine the impact on the borrower’s ability to maintain adequate debt service under different economic conditions. Furthermore, the Company monitors the concentration in any one industry and has established limits relative to capital. In addition, credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in our underwriting standards. Table I has been provided to illustrate the industry composition of the commercial real estate portfolio. Commercial construction loans are extended to individuals as well as corporations for the construction of an individual property or multiple properties and are secured by raw land and the subsequent improvements. Commercial real estate also includes loan participations with other banks outside the Company’s primary market area. Although the Company is not actively seeking to participate in loans originated outside its primary market area, it has taken advantage of the relationships it has with certain lenders in those areas where the Company believes it can profitably participate with an acceptable level of risk.

Previous wording

The Company’s loan balances increased to $1,130,534 at September 30, 2025, representing an increase of $68,709, or 6.5%, as compared to $1,061,825 at December 31, 2024. The increase in loans came primarily from the commercial real estate and commercial and industrial portfolios, partially offset by a decrease in the consumer loan portfolio, while the residential real estate portfolio was relatively stable from year-end 2024.

Current wording

The Company’s loan balances increased to $1,214,814 at March 31, 2026, representing an increase of $18,796, or 1.6%, as compared to $1,196,018 at December 31, 2025. The increase in loans came primarily from both the commercial and residential real estate portfolios, as well as the commercial and industrial portfolio, while partially being offset by a decrease in the consumer loan portfolio from year-end 2025.

Previous wording

The Company’s commercial loan portfolio increased $83,449, or 15.7%, from year-end 2024. The most significant driver of this increase was higher loan balances within the commercial real estate portfolio, which increased $69,520, or 18.6%, from year-end 2024. At September 30, 2025, commercial real estate loans represented the largest segment of the Company’s total loan portfolio at 39.1%. The increase from year-end 2025 came primarily from new originations within the owner- and nonowner-occupied loan segments.

Current wording

The Company’s commercial loan portfolio increased $17,964, or 2.8%, from year-end 2025. The most significant driver of this increase was higher loan balances within the commercial real estate portfolio, which increased $14,206, or 3.0%, from year-end 2025. At March 31, 2026, commercial real estate loans represented the largest segment of the Company’s total loan portfolio at 39.9%. The increase from year-end 2025 came primarily from new originations within the nonowner-occupied and construction loan segments.

Previous wording

Commercial loans were also positively impacted by an increase in the commercial and industrial portfolio, which was up $13,929, or 8.8%, from year-end 2024. The growth was impacted by an increase in larger loan originations during the year. This included a $12,777 repurchase of two commercial and industrial loans in June 2025 that had been previously participated out. While management believes lending opportunities exist in the Company’s markets, future commercial lending activities will depend upon economic and other related conditions, such as general demand for loans in the Company’s primary markets, interest rates offered by the Company, and the effects of competitive pressure and normal underwriting considerations. Management will continue to place emphasis on its commercial lending, which generally yields a higher return on investment as compared to other types of loans.

Current wording

Commercial loans were also positively impacted by an increase in the commercial and industrial portfolio, which was up $3,758, or 2.2%, from year-end 2025. The growth was impacted by an increase in larger loan originations during the quarter. While management believes lending opportunities exist in the Company’s markets, future commercial lending activities will depend upon economic and other related conditions, such as general demand for loans in the Company’s primary markets, interest rates offered by the Company, and the effects of competitive pressure and normal underwriting considerations. Management will continue to place emphasis on its commercial lending, which generally yields a higher return on investment as compared to other types of loans.

Previous wording

The increases in the Company’s commercial and residential real estate loan portfolios at September 30, 2025 were partially offset by a decrease in the Company’s consumer loan portfolio, which was down $14,912, or 9.5%, from year-end 2024. This change was impacted by a $10,740, or 21.4%, decrease in automobile loans. This was directly impacted by management’s strategy to place more emphasis on higher yielding loan portfolios (i.e. commercial, and to a smaller extent, residential real estate). Indirect automobile loans bear additional costs from dealers that partially offset interest revenue and lower the rate of return. As a result, the Company exited the indirect lending business for automobiles and recreational vehicles during the fourth quarter of 2024. Decreases in consumer loans also came from a $9,066, or 14.1%, decrease in other consumer loans from year-end 2024, impacted by principal repayments and payoffs. Decreases in consumer loans were partially offset by a $4,894, or 11.5%, increase in home equity lines of credit.

Current wording

The increases in the Company’s commercial and residential real estate loan portfolios at March 31, 2026 were partially offset by a decrease in the Company’s consumer loan portfolio, which was down $5,009, or 3.6%, from year-end 2025. This change was impacted by a $3,411, or 6.4%, decrease in other consumer loans from year-end 2025, impacted by principal repayments and payoffs. Decreases in consumer loans also came from a $2,876, or 7.7%, decrease in automobile loans. This was directly impacted by management’s strategy to place more emphasis on higher yielding loan portfolios (i.e. commercial, and to a smaller extent, residential real estate). Indirect automobile loans bear additional costs from dealers that partially offset interest revenue and lower the rate of return. As a result, the Company exited the indirect lending business for automobiles and recreational vehicles in 2024. Decreases in consumer loans were partially offset by a $1,278, or 2.5%, increase in home equity lines of credit.

Previous wording

For AFS debt securities, the Company evaluates the securities at each measurement date to determine whether the decline in the fair value below the amortized costs basis is due to credit-related factors or noncredit-related factors. As of September 30, 2025, the Company determined that all AFS securities that experienced a decline in fair value below the amortized cost basis from year-end 2024 were due to non-credit related factors. Furthermore, the Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. Therefore, no ACL was recorded, and no provision expense was recognized during the three and nine months ended September 30, 2025.

Current wording

For AFS debt securities, the Company evaluates the securities at each measurement date to determine whether the decline in the fair value below the amortized costs basis is due to credit-related factors or noncredit-related factors. Upon adoption of ASC 326 on January 1, 2023, and as of March 31, 2026, the Company determined that all AFS securities that experienced a decline in fair value below the amortized cost basis were due to non-credit related factors. Therefore, no ACL was recorded, and no provision expense was recognized during the three months ended March 31, 2026.

Previous wording

For HTM debt securities, the Company evaluates the securities collectively by major security type at each measurement date to determine expected credit losses based on issuer’s bond rating, historical loss, financial condition, and timely principal and interest payments. At September 30, 2025, a $1 ACL was recognized based on a .02% cumulative default rate taken from the S&P and Moody’s bond rating index. The $1 ACL for HTM debt securities was unchanged from December 31, 2024, resulting in no provision expense during the three and nine months ended September 30, 2025.

Current wording

For HTM debt securities, the Company evaluates the securities collectively by major security type at each measurement date to determine expected credit losses based on the issuer’s bond rating, historical loss, financial condition, and timely principal and interest payments. At March 31, 2026, the ACL for HTM debt securities was $1 based on a .02% cumulative default rate taken from the S&P and Moody’s bond rating index. This compares to an ACL of $1 at December 31, 2025.

Previous wording

For loans, the Company’s ACL is management’s estimate of expected lifetime credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions, and forecasts of future economic conditions. The ACL on loans is established through a provision for credit losses recognized in earnings. The ACL on loans is reduced by charge-offs on loans and is increased by recoveries of amounts previously charged off. Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors within two main components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics. The second component involves individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments. The ACL for loans with similar risk characteristics are collectively evaluated for expected credit losses based on certain quantitative information that include historical loss rates, prepayment rates, and curtailment rates. Expected credit losses on loans with similar characteristics are also determined by certain qualitative factors that include national unemployment rates, national gross domestic product forecasts, changes in lending policy, quality of loan review, and delinquency status. The ACL for loans that do not share similar risk characteristics are individually evaluated for expected credit losses primarily based on foreclosure status and whether a loan is collateral dependent. Expected credit losses on individually evaluated loans are then determined using the present value of expected future cash flows based upon the loan’s original effective interest rate, at the loan’s observable market price, or if the loan was collateral dependent, at the fair value of the collateral.

Current wording

For loans, the Company’s ACL is management’s estimate of expected lifetime credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions, and forecasts of future economic conditions. The ACL on loans is established through a provision for credit losses recognized in earnings. The ACL on loans is reduced by charge-offs on loans and is increased by recoveries of amounts previously charged off. Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors within two main components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics. The second component involves individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments. The ACL for loans with similar risk characteristics are collectively evaluated for expected credit losses based on certain quantitative information that include historical loss rates, prepayment rates, and curtailment rates. Expected credit losses on loans with similar characteristics are also determined by considering certain qualitative factors that include national unemployment rates, national gross domestic product forecasts, changes in lending policy, quality of loan review, and delinquency status. The ACL for loans that do not share similar risk characteristics are individually evaluated for expected credit losses primarily based on foreclosure status and whether a loan is collateral-dependent. Expected credit losses on individually evaluated loans are then determined using the present value of expected future cash flows based upon the loan’s original effective interest rate, at the loan’s observable market price, or if the loan was collateral dependent, at the fair value of the collateral.

Previous wording

Deposits are used as part of the Company’s liquidity management strategy to meet obligations for depositor withdrawals, fund the borrowing needs of loan customers, and fund ongoing operations. Deposits continue to be the most significant source of funds used by the Company to support earning assets. Total deposits at September 30, 2025 increased $57,309, or 4.5%, from year-end 2024. The increase in deposits came primarily from interest-bearing deposit balances, which were up by $56,844, or 6.0%, from year-end 2024, while noninterest-bearing deposits increased $465, or 0.1%, from year-end 2024.

Current wording

Deposits are used as part of the Company’s liquidity management strategy to meet obligations for depositor withdrawals, fund the borrowing needs of loan customers, and fund ongoing operations. Deposits continue to be the most significant source of funds used by the Company to support earning assets. Total deposits at March 31, 2026 increased $94,007, or 7.1%, from year-end 2025. The increase in deposits came primarily from interest-bearing deposit balances, which were up by $75,378, or 7.4%, from year-end 2025, while noninterest-bearing deposits increased $18,629, or 5.9%, from year-end 2025.

Previous wording

The increase in interest-bearing deposits came primarily from time deposit balances, which increased $69,423, or 17.6%, from year-end 2024. The increase came from retail time deposits, which increased $55,116 from year-end 2024. The Company targeted growth in retail CDs by promoting a special CD rate offering during the third quarter of 2025 to assist in funding loan growth. The Company also utilized more wholesale CDs to help fund earning asset demand, which increased $14,307 from year-end 2024.

Current wording

The increase in interest-bearing deposits came primarily from time deposit balances, which increased $55,323, or 11.3%, from year-end 2025, $47,575 of which was a result of an increase in retail time deposits. The Company targeted growth in retail CDs by promoting a special CD rate during the first quarter of 2026 to assist in funding loan growth. The Company also utilized more wholesale CDs to help fund earning asset demand, which increased $7,748 from year-end 2025.

Previous wording

Partially offsetting the increases in time, savings and money market deposit balances were lower NOW account balances, which decreased $27,733, or 10.2%, from year-end 2024. The decrease was largely from a $24,859 decrease in the Company’s municipal NOW account with the Treasurer in relation to the Homebuyer Plus program. Excluding this decrease in the Treasurer account balances, the Company would have experienced a $2,874 decrease in its other municipal NOW product balances, particularly within the Gallia County, Ohio, and Mason County, West Virginia, market areas.

Current wording

Further increases in interest-bearing deposits came from NOW account balances, which increased $12,002, or 5.5%, from year-end 2025. The increase was largely from a $12,671 increase in the Company’s municipal NOW product balances, particularly within the Gallia County, Ohio, and Mason County, West Virginia, market areas.

Previous wording

Further increases in interest-bearing deposits came from savings and money market balances, which increased $15,154, or 5.3%, from year-end 2024. The increase came primarily from money market accounts, which increased $11,897 from year-end 2024, impacted mostly by increases in the Company’s tiered money market product (Money Fund) that was introduced in 2023 and offers a higher rate on tiered deposit balances. Savings account balances increased $3,257 impacted mostly by the Company’s statement savings account product.

Current wording

Savings and money market balances also increased $8,053, or 2.6%, from year-end 2025. The increase came primarily from money market accounts, which increased $4,913 from year-end 2025, impacted mostly by increases in the Company’s tiered money market product (Money Fund) that was introduced in 2023 and offers a higher rate on tiered deposit balances. Savings account balances increased $3,140 impacted mostly by the Company’s statement savings account product.

Previous wording

While facing increased competition for deposits in its market areas, the Company will continue to emphasize growth and retention in its core deposit relationships during the remainder of 2025, reflecting the Company’s efforts to reduce its reliance on higher cost funding and improve net interest income.

Current wording

The Company expects to continue to experience increased competition for deposits in its market areas, which could challenge its net growth. The Company will continue to emphasize growth and retention within its core deposit relationships during 2026, reflecting the Company’s efforts to reduce its reliance on higher cost funding and improving net interest income.

Previous wording

Other borrowed funds were $36,024 at September 30, 2025, a decrease of $3,716, or 9.4%, from year-end 2024. The decrease was related to the scheduled principal amortization for applicable FHLB advances. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize various wholesale funding sources to help manage interest rate sensitivity and liquidity.

Current wording

Other borrowed funds were $43,529 at March 31, 2026, a decrease of $1,319, or 2.9%, from year-end 2025. The decrease was related to the scheduled principal amortization for applicable FHLB advances. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize various wholesale funding sources to help manage interest rate sensitivity and liquidity.

Previous wording

Total shareholders' equity at September 30, 2025 increased $14,089, or 9.4%, to finish at $164,417, as compared to $150,328 at December 31, 2024. This was primarily from year-to-date net income and an increase in accumulated other comprehensive income, partially offset by cash dividends paid. The increase in accumulated other comprehensive income was related to the $4,697, net of tax, market appreciation of AFS securities due to a decrease in market interest rates and the recognition of a $950, net of tax, realized loss on the sale of securities that was previously unrealized.

Current wording

Total shareholders' equity at March 31, 2026 increased $1,023, or 0.6%, to finish at $171,280, as compared to $170,257 at December 31, 2025. This was primarily from year-to-date net income partially offset by cash dividends paid and a decrease in accumulated other comprehensive income. The decrease in accumulated other comprehensive income was related to the $2,190, net of tax, market depreciation of AFS securities due to an increase in market interest rates.

Previous wording

The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three and nine months ended September 30, 2025, compared to the same period in 2024. This discussion should be read in conjunction with the interim consolidated financial statements and the notes included in this Form 10‑Q.

Current wording

The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three months ended March 31, 2026, compared to the same period in 2025. This discussion should be read in conjunction with the interim consolidated financial statements and the notes included in this Form 10‑Q.

Previous wording

The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and interest expense incurred on interest-bearing liabilities. During the three and nine months ended September 30, 2025, net interest income increased $2,016, or 16.0%, and $6,538, or 18.3%, compared to the same periods in 2024, respectively. The quarterly and year-to-date improvement during 2025 came from average earning asset growth and the net interest margin. The average growth was impacted by a composition shift into higher-yielding loans and securities, combined with a consumer shift to more lower-cost deposit sources that helped minimize the higher average costs paid on deposits and borrowings.

Current wording

The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and interest expense incurred on interest-bearing liabilities. During the three months ended March 31, 2026, net interest income increased $1,748, or 13.3%, compared to the same period in 2025. The quarterly improvement during 2026 came from average earning asset growth and the net interest margin. The average growth was impacted by a composition shift into higher-yielding loans which contributed to margin improvement, combined with a decrease in the average cost on CDsthat helped minimize the higher average costs paid on deposits and borrowings.

Previous wording

Total interest and fee income recognized on the Company’s earning assets increased $2,142, or 11.0%, during the third quarter of 2025, and $6,645, or 11.9%, during the nine months ended September 30, 2025, compared to the same periods in 2024, respectively. The earnings growth was impacted by interest on loans, which increased $1,898, or 11.8%, and $4,970, or 10.8%, during the three and nine months ended September 30, 2025, compared to the same periods in 2024, respectively. This improvement was impacted by increases in both average loan balances and loan yields. Overall, average loans increased $76,514 during the third quarter of 2025 and $65,448 during the first nine months of 2025. Balance increases were mostly realized within the commercial and residential real estate loan portfolios due to higher commercial loan volume and a consumer preference for short-term, variable rate residential real estate loans. Loan revenue improvement also came from average loan yields increasing 24 basis points to 6.69% during the third quarter of 2025 and increasing 27 basis points to 6.68% during the first nine months of 2025, compared to the same periods in 2024. A portion of the loan yield improvement came from the recognition of a market discount on two purchased commercial and industrial loans totaling $817 in the second quarter of 2025. Loan yield increases were mostly impacted by the commercial and residential real estate loan portfolios.

Current wording

Total interest and fee income recognized on the Company’s earning assets increased $2,709, or 16.2%, during the first quarter of 2026, compared to the same period in 2025. The earnings growth was impacted by interest on loans, which increased $2,737, or 17.3%, compared to the same period in 2025. This improvement was impacted by increases in both average loan balances and loan yields. Overall, average loans increased $146,436 during the first quarter of 2026, primarily from the commercial and residential real estate loan portfolios due to higher commercial loan volume and a consumer preference for short-term, variable rate residential real estate loans. Loan revenue improvement also came from average loan yields increasing 12 basis points to 6.65% during the first quarter of 2026, compared to the same period in 2025. The loan yield increase was mostly impacted by the commercial and residential real estate loan portfolios.

Previous wording

Total interest income from interest-bearing deposits with banks decreased $227, or 28.7%, during the third quarter of 2025, and decreased $1,625, or 44.5%, during the first nine months of 2025, compared to the same periods in 2024. This was largely from average balance decreases with the Company’s interest-bearing FRB clearing account, which decreased $4,445 and $25,933 during the three and nine months ended September 30, 2025, compared to the same periods in 2024, respectively. FRB clearing balances were used to assist in funding loan growth, which contributed to the average balance decrease of FRB funds during 2025. Further impacting lower interest income from the FRB clearing account were short-term rate decreases during 2024 and 2025. Between September and December 2024, the FRB took action to reduce the rate associated with the FRB clearing account by 100 basis points due to inflationary pressures, which lowered the target federal funds rate to a range of 4.25% to 4.50% going into 2025. In 2025, the FRB again reduced the rate associated with the FRB clearing account by 25 basis points in September and another 25 basis points in October, due to concerns of a weakening labor market. This lowered the target federal funds rate to a range of 3.75% to 4.00% as of October 31, 2025. The decreases in interest rates had a negative impact on the FRB clearing account’s interest earnings.

Current wording

Total interest income from interest-bearing deposits with banks decreased $244, or 29.5%, during the first quarter of 2026, compared to the same period in 2025. This was largely from average balance decreases with the Company’s interest-bearing FRB clearing account, which decreased $11,360 during the three months ended March 31, 2026, compared to the same period in 2025. FRB clearing balances were used to assist in funding loan growth, which contributed to the average balance decrease of FRB funds during 2026. Further impacting lower interest income from the FRB clearing account were short-term rate decreases during 2025. Between September and December 2025, the FRB took action to reduce the rate associated with the FRB clearing account by 75 basis points due to inflationary pressures, which lowered the target federal funds rate to a range of 3.50% to 3.75% going into 2026. These decreases in interest rates had a negative impact on the FRB clearing account’s interest earnings during the first quarter of 2026.

Previous wording

The Company’s net interest margin is defined as fully tax-equivalent net interest income as a percentage of average earning assets. During 2025, the Company’s third quarter net interest margin increased to 4.05%, compared to 2024’s third quarter net interest margin of 3.76%. The Company’s year-to-date net interest margin increased to 4.03%, compared to 2024’s year-to-date net interest margin of 3.71%. Positive contributions to margin growth came from the Company’s average earning assets, which increased 7.3% and 8.8% during the third quarter and first nine months of 2025, respectively, mostly from higher-yielding loans and securities. Margin improvement was also positively impacted by lower average costs associated with the Bank’s interest-bearing liabilities due to a deposit composition shift into more lower-cost NOW, savings, and money market account deposits. Furthermore, the Company has benefited from its retail CDs repricing at lower product rates, while also relying less on wholesale funding sources. The Company’s primary focus is to invest its funds into higher yielding assets, particularly loans, as opportunities arise. However, if loan balances do not continue to expand and remain a larger component of overall earning assets, the Company will face pressure within its net interest income and margin improvement.

Current wording

The Company’s net interest margin is defined as fully tax-equivalent net interest income as a percentage of average earning assets. During the first quarter of 2026, the Company’s net interest margin increased 16 basis points to 4.01%, compared to 3.85% during the first quarter of 2025. Positive contributions to margin growth came from the Company’s average earning assets, which increased 8.6% during the first quarter of 2026, mostly from higher-yielding loans. Margin improvement was also positively impacted by a 12 basis point increase in the average yield on loans, while the average cost of time deposits, which was the primary funding source of earning assets during the first quarter of 2026, decreased 30 basis points to help limit the rise in interest expense. The Company’s primary focus is to invest its funds into higher yielding assets, particularly loans, as opportunities arise. However, if loan balances do not continue to expand and remain a larger component of overall earning assets, the Company will face pressure within its net interest income and margin improvement.

Previous wording

Provision for credit losses is recorded to achieve an ACL that is adequate to absorb estimated losses inherent in the Company’s loan portfolio, unfunded loans, and HTM debt securities. Management performs, on a quarterly basis, a detailed analysis of the ACL that encompasses asset portfolio composition, asset quality, loss experience and other relevant economic factors. For the three months ended September 30, 2025, the Company’s provision for credit losses expense totaled $1,112, an increase of $192 when compared to $920 in provision expense during the three months ended September 30, 2024. For the nine months ended September 30, 2025, the Company’s provision for credit losses expense totaled $2,676, an increase of $824 when compared to $1,852 in provision expense during the nine months ended September 30, 2024.

Current wording

Provision for credit losses is recorded to achieve an ACL that is adequate to absorb estimated losses inherent in the Company’s loan portfolio, unfunded loans, and HTM debt securities. Management performs, on a quarterly basis, a detailed analysis of the ACL that encompasses asset portfolio composition, asset quality, loss experience and other relevant economic factors. For the three months ended March 31, 2026, the Company’s provision for credit losses expense totaled $1,622, an increase of $1,206 over the three months ended March 31, 2025.

Previous wording

Higher noninterest expense also came from marketing expense, which increased $52 during the third quarter of 2025, and $164 during the first nine months of 2025. Higher costs in this category were the direct result of additional expense added to both the donations and advertising budgets for 2025.

Current wording

Higher noninterest expense also came from software expense, which increased $132 during the first quarter of 2026, compared to the same period in 2025. Higher costs in this category were the result of the investment in software to enhance internal processes.

Previous wording

The Company’s efficiency ratio is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. Comparing the three and nine months ended September 30, 2025 to the same periods in 2024, the Company has benefited from an increase in average earning assets, primarily from higher-yielding loans and securities, and a decrease in average costs on interest-bearing deposits associated with a deposit composition shift from higher-costing time deposits to lower-costing savings, NOW, money market and checking account deposits. Also positively impacting earnings were cost savings in salaries and employee benefits that resulted from management’s implementation of a voluntary retirement program in 2024. This has helped to limit overhead expense to just a 2.4% increase during the third quarter of 2025, and a 1.6% increase during the first nine months of 2025, over the same periods in 2024. These positive effects from lower personnel costs and strong net interest margin growth has more than offset the $1,219 in realized losses from the sale of securities in the third quarter of 2025. As a result, the Company’s quarterly efficiency number decreased (improved) to 69.70% during the three months ended September 30, 2025, compared to 72.01% during the three months ended September 30, 2024. The Company’s year-to-date efficiency number also decreased (improved) to 65.52% during the nine months ended September 30, 2025, compared to 72.27% during the nine months ended September 30, 2024.

Current wording

The Company’s efficiency ratio is a non-GAAP measurement and is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects of provision expense are excluded from the efficiency ratio. Management believes the efficiency ratio provides investors with important information regarding operational efficiency and operating performance. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. Comparing the three months ended March 31, 2026 to the same period in 2025, the Company has benefited from an increase in average earning assets, primarily from higher-yielding loans, combined with an increase in the net interest margin to increase net interest income $1,748, or 13.3%. The growth in net interest income was partially offset by a decrease in noninterest income of $358, or 9.8%, primarily due to lower electronic refund check and deposit fees due to the expiration of a tax processing agreement with a third party. In total, the net increase in these two revenue sources was $1,390 from the first quarter of 2025. For the three months ended March 31, 2026, noninterest expense increased $483, or 4.5%, from the same period in 2025. The increase was largely related to the $335 increase in salaries and employee benefits. Based on the net increase in revenue sources outpacing the increase in noninterest expense, the Company’s efficiency ratio decreased (improved) to 61.72% during the three months ended March 31, 2026, compared to 63.95% during the three months ended March 31, 2025.

Previous wording

Cash dividends paid by the Company were $3,204 during the first nine months of 2025. The year-to-date dividends paid totaled $0.68 per share.

Current wording

Cash dividends paid by the Company were $1,084 during the first three months of 2026. The year-to-date dividends paid totaled $0.23 per share.

Previous wording

In addition to the on-balance sheet liquidity discussed above, the Bank has established multiple sources of funding to further enhance the Bank’s ability to meet liquidity demands. The Bank has pledged collateral to the FHLB and the FRB to establish committed borrowing lines. At September 30, 2025, the Bank could borrow an additional $116,143 from the FHLB and the borrowing line with the FRB had availability of $44,597. For each of these sources, the Bank has established an internal limit of 85% of our borrowing capacity. In addition to the committed borrowing lines, the Bank has access to several wholesale funding sources, such as, brokered CDs, a $25 million federal funds purchase limit with two correspondent banks, and the ability to bid on available funds from select deposit placement services. The Bank has established limits for each respective funding source and a collective limit on all wholesale funding sources. The Bank’s internal limit on brokered CDs is 10% of total assets. At September 30, 2025, the amount of brokered CDs outstanding was 3.96% of total assets, as compared to 3.25% at December 31, 2024. At September 30, 2025, the Bank had utilized 44.47% of its FHLB capacity, a decrease from 52.21% at December 31, 2024. The collective internal limit on all wholesale funding sources is 40% of total assets. At September 30, 2025, the Bank’s total wholesale funding sources represented 11.86% of total assets. Based on the collective internal wholesale funding limit, the Bank had the capacity to borrow an additional $438 million in wholesale funds and the available funding from the respective wholesale funding sources exceeded this amount, which provides the flexibility to utilize one source more than another due to pricing or availability.

Current wording

In addition to the on-balance sheet liquidity discussed above, the Bank has established multiple sources of funding to further enhance the Bank’s ability to meet liquidity demands. The Bank has pledged collateral to the FHLB and the FRB to establish committed borrowing lines. At March 31, 2026, the Bank could borrow an additional $172,606 from the FHLB and the borrowing line with the FRB had availability of $39,097. For each of these sources, the Bank has established an internal limit of 85% of our borrowing capacity. In addition to the committed borrowing lines, the Bank has access to several wholesale funding sources, such as, brokered CDs, a $25 million federal funds purchase limit with two correspondent banks, and the ability to bid on available funds from select deposit placement services. The Bank has established limits for each respective funding source and a collective limit on all wholesale funding sources. The Bank’s internal limit on brokered CDs is 10% of total assets. At March 31, 2026, the amount of brokered CDs outstanding was 4.15% of total assets, as compared to 3.92% at December 31, 2025. At March 31, 2026, the Bank had utilized 34.03% of our FHLB capacity, a decrease from 37.62% at December 31, 2025. The collective internal limit on all wholesale funding sources is 40% of total assets. At March 31, 2026, the Bank’s total wholesale funding sources represented 11.36% of total assets, a decrease from 11.89% at December 31, 2025. Based on the collective internal wholesale funding limit, the Bank had the capacity to borrow an additional $476 million in wholesale funds and the available funding from the respective wholesale funding sources exceeded this amount, which provides the flexibility to utilize one source more than another due to pricing or availability.

Previous wording

As part of performing liquidity stress tests, the Bank monitors and evaluates the exposure to uninsured deposits. Of the Company’s $1,332,487 in total deposit balances at September 30, 2025, only 37.4%, or $498,790, were deemed uninsured as per the $250 FDIC threshold. A portion of these deposits are on behalf of public entity customers, which require the Bank to pledge securities or FHLB letters of credit to cover the amount of the deposit balance that is deemed uninsured. To the extent these deposits left the Bank, the level of unpledged securities and the borrowing capacity at the FHLB would increase or could be utilized to fund the deposit outflow. The sum of current on-balance sheet liquidity and available wholesale funding sources exceeded the balance of uninsured deposits at September 30, 2025. Included in on-balance sheet liquidity are AFS securities in an unrealized loss position. Although management does not intend to sell the securities before the recovery of its cost basis, they are a contingent resource from a liquidity perspective.

Current wording

As part of performing liquidity stress tests, the Bank monitors and evaluates the exposure to uninsured deposits. Of the Company’s $1,423,674 in total deposit balances at March 31, 2026, only 36.5%, or $520,282, were deemed uninsured as per the $250 FDIC threshold. A portion of these deposits are on behalf of public entity customers, which require the Bank to pledge securities or FHLB letters of credit to cover the amount of the deposit balance that is deemed uninsured. To the extent these deposits left the Bank, the level of unpledged securities and the borrowing capacity at the FHLB would increase or could be utilized to fund the deposit outflow. The sum of current on-balance sheet liquidity and available wholesale funding sources exceeded the balance of uninsured deposits at March 31, 2026. Included in on-balance sheet liquidity are AFS securities in an unrealized loss position. Although management does not intend to sell the securities before the recovery of its cost basis, they are a contingent resource from a liquidity perspective.