MUNCY COLUMBIA FINANCIAL Corp

Net income for the three months ended September 30, 2025 was $6,719,000, or $1.90 per share, compared to $5,056,000, or $1.42 per share, for the three months ended September 30, 2024. Net income for the nine months ended September 30, 2025 was $16,832,000, or $4.76 per share compared to $13,799,000, or $3.86 per share for the same period in 2024. The increase in net income for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily attributable to a significant increase in net interest income, partially offset by an increase in non-interest expense.

Net interest income increased $2.9 million, or 22.5% to $15.7 million for the three months ended September 30, 2025, from $12.8 million for the same period in 2024. Non-interest income was $2.9 million for the three months ended September 30, 2025, an increase of $0.2 million, or 6.5%, from $2.7 million for the same period in 2024, which primarily reflected increases in gain on sale of loans and other non-interest income partially offset by a decrease in gains on marketable equity securities. Non-interest expense was $10.0 million for the three months ended September 30, 2025, an increase of $0.6 million, or 6.5%, from $9.4 million for the same period in 2024, which was primarily related to increases in professional fees, automated teller machine and interchange expenses and other non-interest expense.

Net interest income increased $7.3 million, or 19.6% to $44.3 million for the nine months ended September 30, 2025, from $37.1 million for the same period in 2024. Non-interest income was $7.6 million for the nine months ended September 30, 2025, a decrease of $0.1 million, or 1.2%, from $7.7 million for the same period in 2024, which primarily reflected increases in service charges and fees and trust income offset by decreases in realized losses on available-for-sale debt securities, net, and other non-interest income. Non-interest expense was $30.9 million for the nine months ended September 30, 2025, an increase of $2.7 million, or 9.6%, from $28.2 million for the same period in 2024, which was primarily related to increases in salaries and employee benefits, Pennsylvania shares tax and professional fees, partially offset by a decrease in merger-related expenses.

For the three and nine months ended September 30, 2025, the annualized return on average assets was 1.63% and 1.39%, respectively, compared to 1.26% and 1.13%, respectively, for the comparable periods of 2024. The annualized return on average equity was 14.81% and 12.88%, respectively, for the three and nine months ended September 30, 2025, compared to 12.34% and 11.39%, respectively, for the comparable periods of 2024. For the three months ended September 30, 2025 the Corporation declared and paid dividends to holders of common stock of $0.45 per share as compared to $0.44 for the same period of 2024. For the nine months ended September 30, 2025 the Corporation declared and paid dividends to holders of common stock of $1.85 per share, which includes the impact of a special one-time cash dividend of $0.50 per share, as compared to $1.32 for the same period of 2024.

Net Interest Income

Net interest income is the difference between (i) interest income, interest and fees on interest-earning assets, and (ii) interest expense, interest paid on deposits and borrowed funds. Net interest income represents the largest component of the Corporation’s operating income and, as such, is the primary determinant of profitability. Net interest income is impacted by variations in the volume, rate and composition of earning assets and interest-bearing liabilities, changes in general market interest rates and the level of non-performing assets. Interest income is shown on a fully tax-equivalent basis using the corporate statutory tax rate of 21.0% in 2025 and 2024.

Tax-equivalent net interest income** **increased $2.9 million, or 22.0%, to $15.9 million for the three months ended September 30, 2025 compared to $13.1 million for the same period in 2024. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, along with a decrease in interest expense which resulted primarily from a significant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing liabilities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 67 basis points to 4.15% for the three months ended September 30, 2025 compared to 3.48% for the same period of 2024, which was largely caused by increases in yields on earning assets along with a decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 72 basis points to 3.59% for the three months ended September 30, 2025 compared to 2.87% for the same period in 2024.

Tax-equivalent interest income increased $1.8 million, or 8.6%, to $22.9 million for the three months ended September 30, 2025 from $21.1 million for the same period in 2024, which was largely caused by growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $32.3 million, or 2.2%, to $1.525 billion for the three months ended September 30, 2025 from $1.493 billion for the same period in 2024, resulting in a corresponding increase to tax-equivalent interest income of $1.0 million. Specifically, average loans increased $50.6 million, or 4.5%, to $1.175 billion for the three months ended September 30, 2025 from $1.124 billion for the same period in 2024, which reflected strong organic loan growth. Total investment securities averaged $318.4 million for the three months ended September 30, 2025, a decrease of $43.0 million, or 11.9%, compared to $361.4 million for the same period in 2024, which contributed to a net decrease of $0.2 million in tax-equivalent interest income. The tax-equivalent yield on earning assets increased 34 basis points to 5.96% for the three months ended September 30, 2025 from 5.62% for the same period in 2024, which resulted in a corresponding increase in tax-equivalent interest income of $0.8 million. The Corporation's tax-equivalent yield on loans increased 6 basis points to 6.70% for the three months ended September 30, 2025 compared to 6.64% for the same period in 2024, resulting in a corresponding increase in tax-equivalent interest income of $0.2 million, due primarily to the origination of new loans at higher yields and the continued repricing of existing variable rate loans in the Corporation’s portfolio. Meanwhile, the tax-equivalent yield on investment securities increased 94 basis points to 3.38% for the three months ended September 30, 2025 from 2.44% for the same period in 2024 and caused a corresponding increase to tax-equivalent interest income of $0.7 million.

Interest expense decreased $1.1 million, or 13.3%, to $7.0 million for the three months ended September 30, 2025 from $8.0 million for the same period in 2024, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which is largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $61.2 million for the three months ended September 30, 2025, a decrease of $94.0 million from $155.2 million for the same period in 2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $1.2 million. Total average interest-bearing deposits increased $99.1 million, or 9.8%, to $1.106 billion for the three months ended September 30, 2025, compared to $1.007 billion for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.8 million. For the three months ended September 30, 2025, the Corporation's cost of funds decreased 39 basis points to 2.36% from 2.75% for the same period in 2024. The average rate paid on total borrowings decreased 33 basis points to 4.50% for the three months ended September 30, 2025 from 4.83% for the same period in 2024. The average rate paid on total interest-bearing deposits decreased 18 basis points to 2.24% for the three months ended September 30, 2025 from 2.42% for the same period in 2024, which resulted in a corresponding decrease in interest expense of $0.6 million.

On a year-to-date basis, tax equivalent net interest income increased $7.3 million, or 19.3%, to $45.2 million for the nine months ended September 30, 2025, from $37.9 million for the comparable period of 2024. The increase in tax-equivalent net interest income for the year-to-date period was largely due to a $4.3 million, or 6.9%, increase in tax equivalent interest income, to $66.0 million, from $61.7 million for 2024, combined with a decrease in interest expense of $3.0 million, or 12.7%, to $20.8 million for the nine months ended September 30, 2025, from $23.8 million for the nine months ended September 30, 2024. Similar to the quarterly period, the $4.3 million or 6.9%, increase in year-to-date tax equivalent interest income was primarily due to higher earning-asset yields, coupled with an increase in average earning assets balances. The tax-equivalent yield on average earning assets increased 31 basis points to 5.85% for the nine months ended September 30, 2025 from 5.54% for the same period in 2024, which resulted in a corresponding increase of $1.9 million to tax-equivalent interest income. The tax-equivalent yield on loans increased 10 basis points, while the tax-equivalent yield on investments increased 59 basis points comparing the year-to-date periods of 2025 and 2024, which resulted in corresponding increases in tax-equivalent interest income of $0.8 million and $1.2 million, respectively. Regarding earning-asset volumes, total average earning assets increased $19.1 million, or 1.3%, to $1.509 billion for the nine months ended September 30, 2025, from $1.490 billion for the same period of 2024, which resulted in a corresponding increase in tax-equivalent interest income of $2.4 million. Similar to the quarterly period, this was primarily due to an increase in average total loans which increased $51.2 million, or 4.6%, to $1.162 billion for the nine months ended September 30, 2025, from $1.111 billion for the same comparable period of 2024, which was primarily as a result of strong organic loan demand. This increase resulted in a corresponding increase in tax-equivalent interest income of $2.5 million.

The $3.0 million, or 12.7%, decrease in year-to-date interest expense was largely due to a significant decrease in average total borrowings. Average borrowed funds averaged $80.2 million for the nine months ended September 30, 2025, a decrease of $123.7 million from $203.9 million for the same period in 2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $4.5 million. This decrease was partially offset by an increase in interest-bearing deposit volumes. Comparing the year-to-date periods of 2025 and 2024, average interest-bearing deposits increased $118.8 million, or 12.4%, to $1.075 billion from $956.3 million, respectively, increasing interest expense by $2.1 million.

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders' equity for the three and nine months ended September 30, 2025 and 2024.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

THREE MONTHS ENDED SEPTEMBER 30,

(1) Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2) Interest on loans includes loan fee income.

(3) Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2025 and 2024.

(4) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

(5) Net interest margin is computed by dividing annualized tax-equivalent net interest income by total interest earning assets.

(6) Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

NINE MONTHS ENDED SEPTEMBER 30,

(1) Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2) Interest on loans includes loan fee income.

(3) Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2025 and 2024.

(4) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

(5) Net interest margin is computed by dividing annualized tax-equivalent net interest income by total interest earning assets.

(6) Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

Rate/Volume Analysis

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three and nine months ended September 30, 2025 versus September 30, 2024:

Provision for Credit Losses

A summary of the provision for credit losses for the three and nine months ended September 30, 2025 and 2024, is as follows:

For the three months ended September 30, 2025, there was a provision for credit losses of $479,000, an increase of $328,000 in expense compared to a provision for credit losses of $151,000 for the three months ended September 30, 2024. The provision for the three months ended September 30, 2025 included expense related to loans receivable of $475,000 and expense related to off-balance sheet exposures of $4,000. For the nine months ended September 30, 2025, there was a provision for credit losses of $843,000, an increase of $573,000 in expense compared to a provision for credit losses of $270,000 for the nine months ended September 30, 2024. The provision for the nine months ended September 30, 2025 included expense related to loans receivable of $841,000 and expense related to off-balance sheet exposures of $2,000.

The provision amounts for the three and nine months ended September 30, 2025 and 2024 primarily reflect an increase in volume in the loan portfolio, increases in non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staff, changes in lending policies and procedures and forecasted economic conditions.

See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s allowance for credit losses as of September 30, 2025.

Non-interest Income

Total non-interest income increased $177,000 to $2,892,000 for the third quarter 2025, compared to the third quarter 2024 amount of $2,715,000. This change was primarily due to increases in gain on sale of loans and other non-interest income of $111,000 and $81,000, respectively, due to an increase in mortgage sale activity and a one-time gain of $120,000 related to a bank-owned life insurance claim. These increases were partially offset by a decrease in gains on marketable equity securities of $115,000 due to market value changes comparing the third quarter 2025 to the third quarter 2024.

For the nine months ended September 30, 2025, total non-interest income decreased $92,000 or 1.2% to $7,574,000, compared to $7,666,000 for the nine months ended September 30, 2024. Realized losses on available-for-sale debt securities, net, resulted in a decrease of $418,000 which was partially offset by increases in service charges and fees and trust income of $196,000 and $133,000, respectively. Other non-interest income decreased $214,000 or 14.4% due primarily to one-time events during the nine months ended September 30, 2024, including incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in conjunction with the completion of a solar energy project.

Non-interest Expense

Total non-interest expense increased $611,000 from $9,367,000 for the third quarter 2024, to $9,978,000 for the third quarter 2025. Significant variances included an increase in professional fees of $132,000 due primarily to higher legal and consulting costs, an increase in automated teller machine and interchange of $123,000 due primarily to higher debit card marketing expenses and an increase in other non-interest expense of $175,000 due primarily to higher overall marketing and advertising costs comparing the third quarter 2025 to the third quarter 2024.

For the nine months ended September 30, 2025, total non-interest expense increased $2,718,000 or 9.6% to $30,925,000, compared to $28,207,000 for the nine months ended September 30, 2024. Salaries and employee benefits expense of $16,103,000 for the nine months ended September 30, 2025 increased $1,957,000 from $14,146,000 for the same period of 2024. The Corporation recorded one-time pretax expenses totaling $1,295,000 in conjunction with the retirement of its Executive Chairman during the three months ended March 31, 2025. Additionally, health insurance expenses associated with the Corporation’s partially self-funded health insurance plan were $545,000 higher in the nine months ended September 30, 2025 than the same period of 2024. In addition to the increase in salaries and employee benefits expense, Pennsylvania shares tax expense increased $247,000 or 35.7% for the nine months ended September 30, 2025 due to increased capital levels and professional fees increased $218,000, consistent with the quarterly variance noted above.

One standard to measure non-interest expense is to express annualized non-interest expense as a percentage of average total assets. For the three and nine months ended September 30, 2025 this percentage was 2.42% and 2.33%, respectively, compared to 2.56% and 2.37%, respectively, for the three and nine months ended September 30, 2024.

LIQUIDITY

Liquidity is the ability to quickly raise cash at a reasonable cost. An adequate liquidity position permits the Bank to pay creditors, compensate for unforeseen deposit fluctuations and fund unexpected loan demand. The Bank’s primary sources of funds are deposits, securities sold under agreements to repurchase, principal repayments of securities and outstanding loans, funds provided from operations, and day-to-day FHLB – Pittsburgh borrowings. In addition, the Bank invests excess funds in short-term interest-earning assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and repayments on loans and mortgage-backed securities.

The Bank strives to maintain sufficient liquidity to fund operations, loan demand and to satisfy fluctuations in deposit levels. The Bank is required to have enough investments that qualify as liquid assets in order to maintain sufficient liquidity to ensure safe and sound banking operations. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. The Bank attempts to maintain adequate but not excessive liquidity, and liquidity management is both a daily and long-term function of its business management. The Bank manages its liquidity in accordance with a board of directors-approved asset liability policy and liquidity contingency plan, which are administered by its asset-liability committee (“ALCO”). ALCO reports interest rate sensitivity, liquidity, capital and investment-related matters on a quarterly basis to the Bank’s board of directors.

The Bank reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At September 30, 2025, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $536.3 million.

Liquidity management is required to ensure that adequate funds will be available to meet anticipated and unanticipated deposit withdrawals, debt service payments, investment commitments, commercial and consumer loan demand, and ongoing operating expenses. Funding sources include principal repayments on loans, sale of assets, growth in time and core deposits, short and long-term borrowings, investment securities coming due, loan prepayments and repurchase agreements. Regular loan payments are a dependable source of funds, while the sale of investment securities, deposit growth and loan prepayments are significantly influenced by general economic conditions and the level of interest rates.

The statement of cash flows presents the change in cash and cash equivalents from operating, investing and financing activities. Cash and due from banks and interest-bearing deposits in other banks, which comprise cash and cash equivalents, are the Corporation’s most liquid assets. Cash and cash equivalents totaled $45.3 million at September 30, 2025, an increase of $27.9 million from $17.4 million at December 31, 2024, as net cash inflows reported from operating and financing activities outpaced net cash outflows from investing activities for the nine months ended September 30, 2025.

Net cash outflows from investing activities used $20.6 million of cash and cash equivalents during the nine months ended September 30, 2025. Accounting for the majority of the net cash outflows was $85.5 million related to proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities which was offset by purchases of available-for-sale debt securities of $69.6 million and a net increase in loans of $36.9 million, which reflected strong loan demand. Financing activities provided $31.1 million in net cash, which resulted primarily from a decrease in short-term borrowings, consisting of customer repurchase agreements and short-term FHLB borrowings, of $51.5 million along with a repayment of long-term borrowings of $15.2 million. These outflows were offset by a $104.2 million increase in deposits. Operating activities include net income, adjusted for the effects of non-cash transactions including, among others, depreciation and amortization and the provision for credit losses, and is the primary source of cash flows from operations. For the nine months ended September 30, 2025, operating activities provided the Corporation with $17.4 million in net cash, which primarily reflected net income of $16.8 million.

The Corporation regularly analyzes its ability to generate adequate amounts of cash to meet its short and long-term cash requirements and plans. As part of its quarterly asset liability management procedures, the Corporation performs liquidity cash flow forecasts in various base level and stress scenarios to monitor future cash needs. As of September 30, 2025, the Corporation is expected to maintain a level cash balance over the next 12 months. The Corporation has not identified any known demands, commitments, events or uncertainties that would result or that are reasonably likely to result in its liquidity position materially increasing or decreasing over the next 12 months. The Corporation’s long-term cash needs are regularly analyzed through its strategic planning process, which includes a detailed review of liquidity and funding needs.

We manage liquidity on a daily basis. We believe that our liquidity is sufficient to meet present and future financial obligations and commitments on a timely basis. However, see potential liquidity risk factors at Item 1A – Risk Factors of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 and refer to the Consolidated Statements of Cash Flows in this Form 10-Q.

INTEREST RATE RISK MANAGEMENT

Interest rate risk management involves managing the extent to which interest-sensitive assets and interest-sensitive liabilities are matched. Interest rate sensitivity is the relationship between market interest rates and earnings volatility due to the repricing characteristics of assets and liabilities. The Bank's net interest income is affected by changes in the level of market interest rates. In order to maintain consistent earnings performance, the Bank seeks to manage, to the extent possible, the repricing characteristics of its assets and liabilities.

One major objective of the Bank when managing the rate sensitivity of its assets and liabilities is to stabilize net interest income. The management of and authority to assume interest rate risk is the responsibility of the Bank's ALCO, which is comprised of senior management and Board members. ALCO meets quarterly to monitor the ratio of interest sensitive assets to interest sensitive liabilities. The process to review interest rate risk is a regular part of management of the Bank. Consistent policies and practices of measuring and reporting interest rate risk exposure, particularly regarding the treatment of noncontractual assets and liabilities, are in effect. In addition, there is an annual process to review the interest rate risk policy with the Board of Directors which includes limits on the impact to earnings from shifts in interest rates.

The ratio between assets and liabilities repricing in specific time intervals is referred to as an interest rate sensitivity gap. Interest rate sensitivity gaps can be managed to take advantage of the slope of the yield curve as well as forecasted changes in the level of interest rate changes.

To manage the interest sensitivity position, an asset/liability model called "gap analysis" is used to monitor the difference in the volume of the Bank's interest sensitive assets and liabilities that mature or reprice within given periods. A positive gap (asset sensitive) indicates that more assets reprice during a given period compared to liabilities, while a negative gap (liability sensitive) has the opposite effect. The Bank employs computerized net interest income simulation modeling to assist in quantifying interest rate risk exposure. This process measures and quantifies the impact on net interest income through varying interest rate changes and balance sheet compositions. The use of this model assists the ALCO to gauge the effects of the interest rate changes on interest sensitive assets and liabilities in order to determine what impact these rate changes will have upon our net interest spread. At September 30, 2025, our cumulative gap positions were within the internal risk management guidelines.

In addition to gap analysis, the Bank uses net interest income simulations and economic value of equity (“EVE”) simulations as the primary tools in measuring and managing the Bank’s position and considers balance sheet forecasts, the Bank’s liquidity position, the economic environment, anticipated direction of interest rates and the Bank’s earnings sensitivity to changes in these rates in its modeling. In addition, ALCO has established policy tolerance limits for acceptable negative changes in net interest income. Furthermore, as part of its ongoing monitoring, ALCO requires annual back testing of modeling results, which involves after-the-fact comparisons of projections with the Bank’s actual performance to measure the validity of assumptions used in the modeling techniques.

The following table illustrates the simulated impact of parallel and instantaneous interest rate shocks of +100, +200, +300, -100, -200, and -300 basis points on net interest income and the change in economic value over a one-year time horizon from the September 30, 2025 levels:

Model results from the simulation at September 30, 2025 indicated that the Bank was projected to see an increase in net interest income over a one-year horizon in any of the rate shock scenarios, with the exception of the +200 and +300 scenarios, which showed 1.40% and 6.00% decreases, respectively. The percent change in EVE is expected to decrease in all rates up scenarios and increase in all rates down scenarios. All modeled exposures to net interest income and EVE for the next twelve-month horizon are within internal ALCO policy guidelines.

This analysis does not represent a forecast for the Bank and should not be relied upon as being indicative of expected operating results. These simulations are based on numerous assumptions, including but not limited to, the nature and timing of interest rate levels, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacements of asset and liability cash flows, and other factors. While assumptions reflect current economic and local market conditions, the Bank cannot make any assurances as to the predictive nature of these assumptions, including changes in interest rates, customer preferences, competition and liquidity needs, or what actions ALCO might take in responding to these changes.

It is our opinion that the asset/liability mix and the interest rate risk associated with the balance sheet are within manageable parameters. Additionally, the Bank’s ALCO meets quarterly with an asset liability management consultant.

IMPACT OF INFLATION AND CHANGING PRICES

The preparation of financial statements in conformity with U.S. GAAP requires management to measure the Corporation’s financial position and operating results primarily in terms of historic dollars. Changes in the relative value of money due to inflation or recession are generally not considered. The effect of inflation on the Corporation's operations is primarily related to increases in operating expenses. Management considers changes in interest rates to impact our financial condition and results of operations to a far greater degree than changes in prices due to inflation. Although interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. The Corporation manages interest rate risk in several ways. There can be no assurance that the Corporation will not be materially adversely affected by future changes in interest rates, as interest rates are highly sensitive to many factors that are beyond its control. Additionally, inflation may adversely impact the financial condition of the Corporation's borrowers and could impact their ability to repay their loans, which could negatively affect the Corporation's asset quality through higher delinquency rates and increased charge-offs. Management will carefully consider the impact of inflation and rising interest rates on the Corporation’s borrowers in managing credit risk related to the loan portfolio.