CITIZENS & NORTHERN CORP

Previous wording

and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the first six months of 2026.

Current wording

and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the first nine months of 2026.

Previous wording

Second quarter 2026 net income was $14,057,000, or $0.79 per diluted share, as compared to $6,117,000, or $0.40 per diluted share, in the second quarter 2025. Significant variances were as follows:

Current wording

Third quarter 2026 net income was $16,285,000, or $0.92 per diluted share, as compared to $6,551,000, or $0.42 per diluted share, in the third quarter 2025. Significant variances were as follows:

Previous wording

Net income for the six-month period ended June 30, 2026 was $14,330,000, or $0.81 per diluted share, as compared to $12,410,000, or $0.80 per diluted share, for the first six months of 2025. Significant variances were as follows:

Current wording

Net income for the nine-month period ended September 30, 2026 was $30,615,000, or $1.72 per diluted share, as compared to $18,961,000, or $1.22 per diluted share, for the first nine months of 2025. Significant variances were as follows:

Previous wording

elevated level of net charge-offs and was partially offset by decreases in the ACL related to changes in qualitative factors. Net charge-offs totaled $10,405,000, or 0.88% (annualized) of average loans receivable in the six months ended June 30, 2026 compared to $639,000 or 0.07% (annualized) of average loans receivable in the six months ended June 30, 2025. The significant increase in charge-offs in the six months ended June 30, 2026 was due to a non-owner occupied, commercial real estate loan originated in 2022 in the amount of $24 million of which $7,200,000 was participated with another financial institution. The loss of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed on nonaccrual status as of June 30, 2026 and March 31, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in a charge-off of $10,056,000 which was recorded in the first quarter 2026. In the second quarter 2026, the Corporation entered into a forbearance agreement with the borrower. During the second quarter 2026, the borrower made payments consistent with the terms of the forbearance agreement, including payments the Corporation recorded as reductions in the amortized cost basis of the loan totaling $171,000. At June 30, 2026, the amortized cost basis of the loan, net of the partial charge-off, is $5,665,000.

Current wording

of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed in nonaccrual status at September 30, June 30 and March 31, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in a charge-off of $10,056,000 which was recorded in the first quarter 2026. In the third quarter 2026, the Corporation recorded an additional charge-off of $352,000 related to this loan. The additional charge-off resulted from advances made to cover borrower expenses in order to protect the Corporation’s interest in the collateral. At September 30, 2026, the amortized cost basis of the loan, net of the partial charge-offs, is $5,836,000.

Previous wording

The allowance for credit losses is adjusted by qualitative factors to capture current economic conditions and risk characteristics not fully reflected in historical data. During the three months ended June 30, 2026, the Corporation refined its estimation methodology for calculating some of the qualitative factors, including changes in the application of external data used to assess trends in regional economic conditions, commercial real estate values and residential real estate values. Management believes these refinements in methodology result in an improved estimate of the impact on the ACL of recent trends in the external data.

Current wording

The allowance for credit losses is adjusted by qualitative factors to capture current economic conditions and risk characteristics not fully reflected in historical data. During the nine months ended at September 30, 2026, the Corporation refined its estimation methodology for calculating some of the qualitative factors, including changes in the application of external data used to assess trends in regional economic conditions, commercial real estate values and residential real estate values. Management believes these refinements in methodology result in an improved estimate of the impact on the ACL of recent trends in the external data. The Corporation also implemented a refinement to the qualitative factors scale framework for determining estimated aggregate maximum loss rates. Management believes this refinement in methodology results in an improved estimation process.

Previous wording

The Corporation’s primary source of operating income is net interest income, which is equal to the difference between the amounts of interest income and interest expense. Tables IV, V and VI include information regarding the Corporation’s net interest income for the three-month and six-month periods ended June 30, 2026 and 2025. In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. Management believes presentation of net interest income on a fully taxable-equivalent basis, which is a non-U.S. GAAP financial measure, provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans. Accordingly, the amount of net interest income on a fully taxable-equivalent basis reflected in these tables exceed the net interest income amounts presented in the consolidated financial statements. A reconciliation of net interest income on a fully taxable-equivalent basis to the closest U.S. GAAP financial measure is included with Table IV. The discussion that follows is based on amounts in the related tables.

Current wording

The Corporation’s primary source of operating income is net interest income, which is equal to the difference between the amounts of interest income and interest expense. Tables IV, V and VI include information regarding the Corporation’s net interest income for the three-month and nine-month periods ended September 30, 2026 and 2025. In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. Management believes presentation of net interest income on a fully taxable-equivalent basis, which is a non-U.S. GAAP financial measure, provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans. Accordingly, the amount of net interest income on a fully taxable-equivalent basis reflected in these tables exceeds the net interest income amounts presented in the consolidated financial statements. A reconciliation of net interest income on a fully taxable-equivalent basis to the closest U.S. GAAP financial measure is included with Table IV. The discussion that follows is based on amounts in the related tables.

Previous wording

Fully taxable equivalent net interest income (a non-U.S. GAAP measure) was $29,855,000 in the second quarter of 2026, $8,493,000 (39.8%) higher than in the second quarter of 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. As presented in Table VI, the net impact of changes in volume increased net interest income by $6,058,000 in the second quarter 2026 as compared to second quarter 2025 and changes in interest rates increased net interest income by $2,435,000 in the second quarter 2026 as compared to second quarter 2025. The increase in net interest income reflected an increase in interest income of $9,129,000 and an increase in interest expense of $636,000. As presented in Table V, the Net Interest Margin was 4.07% in the second quarter 2026 as compared to 3.52% in the second quarter 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.55% in 2026 from 2.84% in 2025. The average yield on earning assets of 5.70% was 0.31% higher in 2026 compared to 2025, and the average rate on interest-bearing liabilities of 2.15% in 2026 was 0.40% lower. Accretion of acquisition accounting valuation adjustments related to the Susquehanna merger had a positive impact of $416,000 including accretion of $379,000 on loans and $37,000 on time deposits.

Current wording

Fully taxable equivalent net interest income (a non-U.S. GAAP measure) was $30,440,000 in the third quarter of 2026, $7,959,000 (35.4%) higher than in the third quarter of 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. As presented in Table VI, the net impact of changes in volume increased net interest income by $5,647,000 in the third quarter 2026 as compared to third quarter 2025 and changes in interest rates increased net interest income by $2,312,000 in the third quarter 2026 as compared to third quarter 2025. The increase in net interest income reflected an increase in interest income of $8,643,000 and an increase in interest expense of $684,000. As presented in Table V, the Net Interest Margin was 4.13% in the third quarter 2026 as compared to 3.62% in the third quarter 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.59% in 2026 from 2.94% in 2025. The average yield on earning assets of 5.76% was 0.30% higher in 2026 compared to 2025, and the average rate on interest-bearing liabilities of 2.17% in 2026 was 0.35% lower. Accretion of acquisition accounting valuation adjustments related to the Susquehanna merger had a positive impact of $552,000 including accretion of $515,000 on loans and $37,000 on time deposits.

Previous wording

Interest income totaled $41,803,000 in 2026, an increase of $9,129,000, or 27.9%, from 2025.

Current wording

Interest income totaled $42,511,000 in 2026, an increase of $8,643,000, or 25.5%, from 2025.

Previous wording

Interest and fees from loans receivable increased $16,743,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.27%, up from 6.05% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $473,193,000 (24.9%) to $2,373,625,000 in 2026 from $1,900,432,000 in 2025 including the impact of the Susquehanna acquisition as well as organic growth.

Current wording

Interest and fees from loans receivable increased $7,893,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.40%, up from 6.14% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with

Previous wording

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $4,156,000 in 2026, up $1,169,000 from 2025. Theaverage balance (at amortized cost) increased $79,739,000 from 2025 and theaverage yield on the portfolio increased to 3.16% in 2026 from 2.67% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Current wording

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $4,291,000 in 2026, up $1,252,000 from 2025. Theaverage balance (at amortized cost) increased $86,734,000 from 2025 and theaverage yield on the portfolio increased to 3.20% in 2026 from 2.71% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Previous wording

Income from interest-bearing due from banks totaled $232,000 in 2026, a decrease of $623,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.50% in 2026 from 4.29% in 2025. The average balance of interest-bearing due from banks was $26,606,000 in 2026, down from $79,868,000 in 2025.

Current wording

Income from interest-bearing due from banks totaled $468,000 in 2026, a decrease of $514,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.69% in 2026 from 4.39% in 2025. The average balance of interest-bearing due from banks was $50,322,000 in 2026, down from $88,657,000 in 2025.

Previous wording

Interest expense on deposits increased $536,000, as the average balance of interest-bearing deposits increased $432,070,000 while the average rate on interest-bearing deposits decreased to 1.95% in 2026 from 2.34% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition as well as organic growth. In comparing 2026 to 2025, average interest checking deposits increased $154,475,000, average savings deposits increased $149,192,000, average time deposits increased $93,499,000, average noninterest-bearing demand deposits increased $55,659,000 and average total money market accounts increased $34,904,000.

Current wording

Interest expense on deposits increased $709,000, as the average balance of interest-bearing deposits increased $420,132,000 while the average rate on interest-bearing deposits decreased to 1.98% in 2026 from 2.32% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition. In comparing 2026 to 2025, average interest checking deposits increased $168,359,000, average savings deposits increased $137,719,000, average time deposits increased $75,574,000, average noninterest-bearing demand deposits increased $39,419,000 and average total money market accounts increased $38,480,000.

Previous wording

Interest expense on borrowed funds increased $100,000 in 2026 as compared to 2025. Interest expense on short-term borrowings was $337,000 in 2026 compared to $1,000 in 2025 as the average balance of short-term borrowings increased to $34,880,000 in 2026 from $980,000 in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $251,000 to $1,423,000 in 2026 from $1,674,000 in 2025. The average balance of long-term borrowings was $133,004,000 in 2026, down from an average balance of $149,704,000 in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations. The average rate on total borrowed funds was 4.21% in 2026 compared to 4.27% in 2025.

Current wording

Interest expense on short-term borrowings was $123,000 in 2026 compared to less than $1,000 in expense in 2025 as the average balance of short-term borrowings increased to $13,486,000 in 2026 from $658,000 in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $196,000 to $1,381,000 in 2026 from $1,577,000 in 2025. The average balance of long-term borrowings was $128,187,000 in 2026, down from an average balance of $138,749,000 in 2025 and the average rate on long-term borrowings was 4.27% in 2026 compared to 4.51% in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations.

Previous wording

On June 1, 2026, senior notes totaling $15,000,000 matured and were redeemed. Also on June 1, 2026, the interest rate on subordinated notes totaling $25,000,000 adjusted from a fixed rate of 3.25% to a variable rate that will reset quarterly based on the Term Secured Overnight Financing Rate plus 259 basis points. At June 30, 2026, the interest rate on the outstanding subordinated notes was 6.25%. The Corporation is entitled to redeem the subordinated notes, in whole or in part, at any time on or after June 1, 2026, subject to regulatory approval to the extent required.

Current wording

On June 1, 2026, senior notes totaling $15,000,000 matured and were redeemed. Also on June 1, 2026, the interest rate on subordinated notes totaling $25,000,000 adjusted from a fixed rate of 3.25% to a variable rate that resets quarterly based on the Term Secured Overnight Financing Rate plus 259 basis points. At September 30, 2026, the interest rate on the outstanding subordinated notes was 6.42%. The Corporation is entitled to redeem the subordinated notes, in whole or in part, at any time, subject to regulatory approval to the extent required. Interest expense on senior and subordinated debt totaled $402,000 in 2026, up $48,000 from the comparative total in 2025.

Previous wording

For the six-month periods, fully taxable equivalent net interest income was $58,540,000 in 2026, which was $16,992,000 (40.9%) higher than in 2025 including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The increase in net interest income reflected an increase in interest income of $18,028,000 and an increase in interest expense of $1,036,000. As presented in Table VI, the net impact of changes in volume increased net interest income by $12,007,000 in the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025 and changes in interest rates increased net interest income by $4,985,000 in the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. As presented in Table V, the Net Interest Margin was 4.02% in the first six months of 2026 as compared to 3.45% in the first six months of 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.50% in 2026 from 2.77% in 2025. The average yield on earning assets of 5.68% was 0.31% higher in 2026 as compared to 2025, while the average rate on interest-bearing liabilities of 2.18% in 2026 was 0.42% lower compared to 2025.

Current wording

For the nine-month periods, fully taxable equivalent net interest income was $88,980,000 in 2026, which was $24,951,000 (39.0%) higher than in 2025 including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The increase in net interest income reflected an increase in interest income of $26,671,000 and an increase in interest expense of $1,720,000. As presented in Table VI, the net impact of changes in volume increased net interest income by $17,654,000, and changes in interest rates increased net interest income by $7,297,000, in the nine-month period ended September 30, 2026 as compared to the nine-month period ended September 30, 2025. As presented in Table V, the Net Interest Margin was 4.06% in the first nine months of 2026 as compared to 3.51% in the first nine months of 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.53% in 2026 from 2.83% in 2025. The average yield on earning

Previous wording

Interest income totaled $82,622,000 in 2026, an increase of $18,028,000 from 2025.

Current wording

Interest income totaled $125,133,000 in 2026, an increase of $26,671,000 from 2025.

Previous wording

Interest and fees from loans receivable increased $8,568,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.29%, up from 6.07% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $480,770,000 (25.3%) to $2,382,190,000 in 2026 from $1,901,420,000 in 2025 including the impact of the Susquehanna acquisition as well as organic growth.

Current wording

Interest and fees from loans receivable increased $24,636,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.31%, up from 6.08% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $452,728,000 (23.7%) to $2,361,854,000 in 2026 from $1,909,126,000 in 2025 including the impact of the Susquehanna acquisition.

Previous wording

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $8,321,000 in 2026, up $2,384,000 from 2025. Theaverage balance (at amortized cost) increased $80,636,000 from 2025 and theaverage yield on the portfolio increased to 3.17% in 2026 from 2.66% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Current wording

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $12,612,000 in 2026, up $3,636,000 from 2025. Theaverage balance (at amortized cost) increased $82,691,000 from 2025 and theaverage yield on the portfolio increased to 3.18% in 2026 from 2.68% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Previous wording

Income from interest-bearing due from banks totaled $450,000 in 2026, a decrease of $1,126,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.48% in 2026 from 4.30% in 2025. The average balance of interest-bearing due from banks was $26,064,000 in 2026, down from $73,915,000 in 2025.

Current wording

Income from interest-bearing due from banks totaled $918,000 in 2026, a decrease of $1,640,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.58% in 2026 from 4.34% in 2025. The average balance of interest-bearing due from banks was $34,239,000 in 2026, down from $78,883,000 in 2025.

Previous wording

For the six-month periods, interest expense increased $1,036,000 to $24,082,000 in 2026 from $23,046,000 in 2025.

Current wording

For the nine-month periods, interest expense increased $1,720,000 to $36,153,000 in 2026 from $34,433,000 in 2025.

Previous wording

Interest expense on deposits increased $1,002,000, as the average balance of interest-bearing deposits increased $433,767,000 while the average rate on interest-bearing deposits decreased to 1.98% in 2026 from 2.40% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition as well as organic growth. Average total deposits (interest-bearing and noninterest-bearing) amounted to $2,568,895,000 for the first six months of 2026, up $493,355,000 (23.8%) from the first six months of 2025. Within average total deposits, average brokered deposits were $1,184,000 with an average interest rate of 3.75% in 2026, down from $17,531,000 with an average interest rate of 4.69% in 2025. In comparing 2026 to 2025, average savings accounts increased $157,594,000, average interest checking deposits increased $142,667,000, average time deposits increased $100,821,000, average noninterest-bearing demand deposits increased $59,588,000 and average money market accounts increased $32,685,000.

Current wording

Interest expense on deposits increased $1,711,000, as the average balance of interest-bearing deposits increased $429,172,000 while the average rate on interest-bearing deposits decreased to 1.98% in 2026 from 2.37% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition. Average total deposits (interest-bearing and noninterest-bearing) amounted to $2,574,578,000 for the first nine months of 2026, up $481,963,000 (23.0%) from the first nine months of 2025. Within average total deposits, average brokered deposits were $785,000 with an average interest rate of 3.75% in 2026, down from $13,287,000 with an average interest rate of 4.63% in 2025. In comparing 2026 to 2025, average interest checking deposits increased $151,325,000, average savings accounts increased $150,896,000, average time deposits increased $92,313,000, average noninterest-bearing demand deposits increased $52,791,000 and average money market accounts increased $34,638,000.

Previous wording

Interest expense on borrowed funds increased $34,000 in 2026 as compared to 2025. Interest expense on short-term borrowings of $613,000 in 2026 was up from $1,000 in 2025 as the average balance of short-term borrowings increased to $31,560,000 in 2026 from $1,189,000 in 2025. The average rate on short-term borrowings was 3.92% in 2026 compared to 0.17% in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $594,000 to $2,869,000 in 2026 from $3,463,000 in 2025 as the average balance of long-term borrowings decreased to $133,516,000 in 2026 from $156,013,000 in 2025 and the average rate on long-term borrowings was 4.33% in 2026 compared to 4.48% in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations. The average rate on total borrowed funds was 4.19% in 2026 and 4.27% in 2025.

Current wording

Interest expense on short-term borrowings of $736,000 in 2026 was up from $1,000 in 2025 as the average balance of short-term borrowings increased to $25,469,000 in 2026 from $1,010,000 in 2025. The average rate on short-term borrowings was 3.86% in 2026 compared to 0.13% in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $790,000 to $4,250,000 in 2026 from $5,040,000 in 2025 as the average balance of long-term borrowings decreased to $131,720,000 in 2026 from $150,195,000 in 2025 and the average rate on long-term borrowings was 4.31% in 2026 compared to 4.49% in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations.

Previous wording

On June 1, 2026, senior notes totaling $15,000,000 matured and were redeemed. Also on June 1, 2026, the interest rate on subordinated notes totaling $25,000,000 adjusted from a fixed rate of 3.25% to a variable rate that will reset quarterly based on the Term Secured Overnight Financing Rate plus 259 basis points. At June 30, 2026, the interest rate on the outstanding subordinated notes was 6.25%. The Corporation is entitled to redeem the subordinated notes, in whole or in part, at any time on or after June 1, 2026, subject to regulatory approval to the extent required.

Current wording

On June 1, 2026, senior notes totaling $15,000,000 matured and were redeemed. Also on June 1, 2026, the interest rate on subordinated notes totaling $25,000,000 adjusted from a fixed rate of 3.25% to a variable rate that resets quarterly based on the Term Secured Overnight Financing Rate plus 259 basis points. At September 30, 2026, the interest rate on the outstanding subordinated notes was 6.42%. The Corporation is entitled to redeem the subordinated notes, in whole or in part, at any time, subject to regulatory approval to the extent required. Interest expense on senior and subordinated debt totaled $1,124,000 in 2026, up $64,000 from the comparative total in 2025.

Previous wording

The income tax provision in interim periods is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The income tax provision for the second quarter 2026 of $3,368,000 was $1,953,000 higher than the provision for the second quarter 2025, and the provision for the six months ended June 30, 2026 of $3,430,000 was $604,000 higher than the amount for the first six months of 2025 due to a higher amount of pre-tax income in 2026. The effective tax rate (tax provision as a percentage of pre-tax income) was 19.3% in the second quarter 2026 compared to 18.8% in the second quarter 2025 and 19.3% for the first six months of 2026 as compared to 18.5% for the first six months of 2025. The Corporation’s effective tax rates differ from the statutory federal rate of 21% principally because of the effects of tax-exempt interest income, nondeductible interest expense, state income taxes and other permanent differences.

Current wording

The income tax provision in interim periods is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The income tax provision for the third quarter 2026 of $4,117,000 was $2,653,000 higher than the provision for the third quarter 2025, and the provision for the nine months ended September 30, 2026 of $7,547,000 was $3,257,000 higher than the amount for the first nine months of 2025 due to a higher amount of pre-tax income in 2026. The effective tax rate (tax provision as a percentage of pre-tax income) was 20.2% in the third quarter 2026 compared to 18.3% in the third quarter 2025 and 19.8% for the first nine months of 2026 as compared to 18.5% for the first nine months of 2025. The Corporation’s effective tax rates differ from the statutory federal rate of 21% principally because of the effects of tax-exempt interest income, nondeductible interest expense, state income taxes and other permanent differences.

Previous wording

As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $31,132,000, or 5.9%, at June 30, 2026, $29,685,000, or 5.5%, at December 31, 2025, $47,543,000, or 10.6%, at December 31, 2024 and $49,213,000, or 10.6%, at December 31, 2023. The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates.

Current wording

As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $50,093,000, or 9.3%, at September 30, 2026, $29,685,000, or 5.5%, at December 31, 2025, $47,543,000, or 10.6%, at December 31, 2024 and $49,213,000, or 10.6%, at December 31, 2023. The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates.

Previous wording

Also included in Table VII is additional detail as of June 30, 2026 and December 31, 2025 regarding the composition of the non-owner occupied commercial real estate loan portfolio. As shown in Table VII, at June 30, 2026, the amortized cost of non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $107,923,000, or 4.6% of gross loans receivable. At June 30, 2026, within this segment there were two loans with a total amortized cost basis of $6,832,000 in nonaccrual status with no individual allowances, including the loan discussed in the Earnings Overview and Provision and Allowance for Credit Losses section with a partial charge-off of $10,056,000 in the first quarter 2026 and an amortized cost basis at June 30, 2026 of $5,665,000. During the second quarter of 2026, a nonaccrual loan within this category of $1,717,000 was paid off by the borrower through third-party financing and a $675,000 recovery was recorded. The remainder of the non-owner occupied commercial real estate loans with a primary purpose of office space utilization were in accrual status with no individual allowance at June 30, 2026.

Current wording

Also included in Table VII is additional detail as of September 30, 2026 and December 31, 2025 regarding the composition of the non-owner occupied commercial real estate loan portfolio. As shown in Table VII, at September 30, 2026, the amortized cost of non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $107,245,000, or 4.6% of gross loans receivable. At September 30, 2026, within this segment there were two loans with a total amortized cost basis of $6,802,000 in nonaccrual status with no individual allowances, including the loan discussed in the Earnings Overview and Provision and Allowance for Credit Losses section with a partial charge-off of $10,056,000 in the first quarter 2026 and a partial charge-off of $352,000 in the third quarter 2026, and an amortized cost basis at September 30, 2026 of $5,836,000. During 2026, a nonaccrual loan within this category of $1,717,000 was paid off by the borrower through third-party financing and a $675,000 recovery was recorded. The remainder of the non-owner occupied commercial real estate loans with a primary purpose of office space utilization were in accrual status with no individual allowance at September 30, 2026.

Previous wording

While the Corporation’s lending activities are primarily concentrated in its market areas, a portion of the Corporation’s commercial loan segment consists of participation loans. Participation loans represent portions of larger commercial transactions for which other institutions are the “lead banks”. Although not the lead bank, the Corporation conducts detailed underwriting and monitoring of participation loan opportunities. Total participation loans outstanding amounted to $102,228,000 at June 30, 2026, down from $107,351,000 at December 31, 2025.

Current wording

While the Corporation’s lending activities are primarily concentrated in its market areas, a portion of the Corporation’s commercial loan segment consists of participation loans. Participation loans represent portions of larger commercial transactions for which other institutions are the “lead banks”. Although not the lead bank, the Corporation conducts detailed underwriting and monitoring of participation loan opportunities. Total participation loans outstanding amounted to $91,243,000 at September 30, 2026, down from $107,351,000 at December 31, 2025.

Previous wording

The Corporation is a party to financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. At June 30, 2026, the total contract amount of commitments to extend credit was $474,891,000 as compared to $506,996,000 at December 31, 2025, and the contract amount of standby letters of credit was $62,133,000 at June 30, 2026 as compared to $58,914,000 at December 31, 2025.

Current wording

The Corporation is a party to financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. At September 30, 2026, the total contract amount of commitments to extend credit was $490,415,000 as compared to $506,996,000 at December 31, 2025, and the contract amount of standby letters of credit was $62,366,000 at September 30, 2026 as compared to $58,914,000 at December 31, 2025.

Previous wording

The Corporation maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, commercial letters of credit and credit enhancement obligations related to residential mortgage loans sold with recourse, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a

Current wording

The Corporation maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, commercial letters of credit and credit enhancement obligations related to residential mortgage loans sold with recourse, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally

Previous wording

(credit) provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The allowance for credit losses for off-balance sheet exposures of $845,000 at June 30, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in the unaudited consolidated balance sheets.

Current wording

cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a (credit) provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The allowance for credit losses for off-balance sheet exposures of $902,000 at September 30, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in the unaudited consolidated balance sheets.

Previous wording

For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor. The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. At June 30, 2026, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,532,000, and the corresponding total outstanding balance of repurchased loans at December 31, 2025 was $2,598,000.

Current wording

For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor. The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. At September 30, 2026, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,505,000, and the corresponding total outstanding balance of repurchased loans at December 31, 2025 was $2,598,000.

Previous wording

At June 30, 2026, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $454,642,000, including loans sold through the MPF Xtra program of $175,388,000 and loans sold through the Original program of $279,254,000. At December 31, 2025, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $450,120,000, including loans sold through the MPF Xtra program of $177,464,000 and loans sold through the Original program of $272,656,000. Based on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of June 30, 2026 and December 31, 2025.

Current wording

At September 30, 2026, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $460,079,000, including loans sold through the MPF Xtra program of $172,342,000 and loans sold through the Original program of $287,737,000. At December 31, 2025, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $450,120,000, including loans sold through the MPF Xtra program of $177,464,000 and loans sold through the Original program of $272,656,000. Based on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of September 30, 2026 and December 31, 2025.

Previous wording

A summary of the (credit) provision for credit losses for the three-month and six-month periods ended June 30, 2026 and 2025 is as follows:

Current wording

A summary of the (credit) provision for credit losses for the three-month and nine-month periods ended September 30, 2026 and 2025 is as follows:

Previous wording

For the quarter ended June 30, 2026, there was a credit for credit losses (reduction in expense) of $1,846,000 as compared to a provision for credit losses of $2,354,000 in the second quarter 2025. For the six months ended June 30, 2026, there was a provision for credit losses of $11,756,000, compared to a provision for credit losses of $2,590,000 in 2025. The credit for credit losses in the second quarter 2026 included the impact on the allowance for credit losses (“ACL”) of changes in qualitative factors, net recoveries of $403,000 and a reduction in loans receivable. The increase in the provision in the six months ended June 30, 2026 was driven by the impact of the elevated level of net charge-offs, including a charge-off in the first quarter 2026 of $10,056,000 on a non-owner occupied commercial real estate loan discussed in more detail in the Earnings Overview section and was partially offset by net decreases in the ACL related to changes in qualitative factors. The ACL was 1.39% of gross loans receivable at June 30, 2026, down from 1.42% at March 31, 2026 and up from 1.32% December 31, 2025 and 1.13% at June 30, 2025.

Current wording

For the quarter ended September 30, 2026, there was a credit for credit losses (reduction in expense) of $3,171,000 as compared to a provision for credit losses of $2,163,000 in the third quarter 2025. For the nine months ended September 30, 2026, there was a provision for credit losses of $8,585,000, compared to a provision for credit losses of $4,753,000 in 2025. The credit for credit losses in the third quarter 2026 included the impact of a reduction in the ACL resulting from changes in qualitative factors based on external data used to assess trends in regional economic conditions and commercial real estate values and a reduction in loans receivable. The increase in the provision in the nine months ended September 30, 2026 was driven by the impact of the elevated level of net charge-offs, including a charge-off in the first quarter 2026 of $10,056,000 and an additional charge-off of $352,000 in the third quarter 2026 related to a non-owner occupied commercial real estate loan discussed in more detail in the Earnings Overview section and was partially offset by net reductions in the ACL related to changes in qualitative factors and a reduction in loans receivable. The ACL was 1.24% of gross loans receivable at September 30, 2026, down from 1.39% at June 30, 2026 and 1.32% December 31, 2025 and up from 1.21% at September 30, 2025.

Previous wording

As shown in Table IX, the ACL on loans individually evaluated decreased to $2,636,000 at June 30, 2026 from $2,772,000 at December 31, 2025, including an ACL of $2,414,000 at June 30, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

Current wording

As shown in Table IX, the ACL on loans individually evaluated decreased to $2,636,000 at September 30, 2026 from $2,772,000 at December 31, 2025, including $2,414,000 at September 30, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

Previous wording

In the first six months of 2026, net charge-offs totaled $10,405,000, or 0.88% (annualized) of average outstanding loans. Table VIII shows annual average net charge-off rates over the prior five calendar years ranging from a high of 0.26% in 2022 to a low of 0.01% in 2023.

Current wording

In the first nine months of 2026, net charge-offs totaled $10,808,000, or 0.61% (annualized) of average outstanding loans. Table VIII shows annual average net charge-off rates over the prior five calendar years ranging from a high of 0.26% in 2022 to a low of 0.01% in 2023.

Previous wording

Total nonperforming assets were $40,275,000 at June 30, 2026, up $7,162,000 from December 31, 2025. Nonperforming loans increased $7,170,000 from December 31, 2025. The increase in nonperforming assets and nonperforming loans in 2026 included the impact of classifying the nonowner occupied commercial real estate loan referenced above as nonaccrual at June 30, 2026. Table X shows that total nonperforming assets as a percentage of total assets was 1.28% at June 30, 2026, up from 1.06% at December 31, 2025. Table X

Current wording

Total nonperforming assets were $36,523,000 at September 30, 2026, up $3,410,000 from December 31, 2025. Nonperforming loans increased $3,263,000 from December 31, 2025. The increase in nonperforming assets and nonperforming loans in 2026 included the impact of classifying the nonowner occupied commercial real estate loan referenced above as nonaccrual at September 30, 2026 partially offset by the impact of moving a non-owner occupied commercial real estate loan with an amortized cost basis of $3,276,000 at September 30, 2026 from nonaccrual to accrual status. Table X shows that total nonperforming assets as a percentage of total assets was 1.16% at September 30, 2026, up from 1.06% at December 31, 2025. Table X also shows that total nonperforming assets as a

Previous wording

also shows that total nonperforming assets as a percentage of assets as of year-end 2021 through 2024, ranged from a high of 1.04% at December 31, 2021 to a low of 0.75% at December 31, 2023.

Current wording

percentage of assets as of year-end 2021 through 2024, ranged from a high of 1.04% at December 31, 2022 to a low of 0.75% at December 31, 2023.

Previous wording

Over the period from 2021through 2025 and the first 6 months of 2026, each period includes a few large commercial relationships that have required significant monitoring and workout efforts. As a result, a limited number of relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the (credit) provision for credit losses and the amount of total charge-offs reported in any one period.

Current wording

Over the period from 2021 through 2025 and the first nine months of 2026, each period includes a few large commercial relationships that have required significant monitoring and workout efforts. As a result, a limited number of relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the (credit) provision for credit losses and the amount of total charge-offs reported in any one period.

Previous wording

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. Management intends to use this line of credit as a contingency funding source. As collateral for the line, the Corporation has pledged available-for-sale debt securities with a carrying value of $24,882,000 at June 30, 2026.

Current wording

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. Management intends to use this line of credit as a contingency funding source. As collateral for the line, the Corporation has pledged available-for-sale debt securities with a carrying value of $25,148,000 at September 30, 2026.