MUNCY COLUMBIA FINANCIAL Corp

Previous wording

The Corporation’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices within the banking industry. In the preparation of its financial statements, the Corporation is required to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The Corporation’s critical accounting policies are fundamental to understanding this MD&A and are more fully described in Note 1 (“Summary of Significant Accounting Policies”) within the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

The Corporation’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices within the banking industry. In the preparation of its financial statements, the Corporation is required to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The Corporation’s critical accounting policies are fundamental to understanding this MD&A and are more fully described in Note 1 (“Summary of Significant Accounting Policies”) within the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as Note 1 to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q.

Previous wording

The ACL consists of two components, a specific component and a general component. The specific component relates to loans that are individually analyzed for impairment. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience as adjusted for qualitative factors. The general reserve component of the ACL is based on pools of performing loans segregated by loan segment. Historical loss factors are applied based on historical losses in each risk rating category to determine the appropriate reserve related to those loans.

Current wording

The ACL consists of two components, a specific component and a general component. The specific component relates to loans that are individually analyzed for impairment. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the loan is lower than the carrying value of that loan. The general component covers all other loans and is based on loss experience as adjusted for qualitative factors. The general reserve component of the ACL is based on pools of loans segregated by loan segment. Loss factors are applied based on a loss driver analysis for each loan segment to determine the appropriate reserve related to those loans.

Previous wording

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2026 to June 30, 2026, the level of the ACL increased from $10.0 million to $10.3 million and the ACL to total loans remained consistent at 0.85%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

Current wording

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2026 to September 30, 2026, the level of the ACL increased from $10.0 million to $11.0 million and the ACL to total loans increased from 0.85% to 0.91%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Notes 1 “Summary of Significant Accounting Policies” and 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

Previous wording

Goodwill arises from business combinations and is determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill is not amortized but is periodically evaluated for impairment. Impairment testing is performed using either a qualitative or quantitative approach. The Corporation has selected September 30 as the date to perform the annual goodwill impairment test. Additionally, a goodwill impairment evaluation is performed on an interim basis when events or circumstances indicate impairment potentially exists. Based on the annual goodwill impairment test completed September 30, 2025, no impairment was noted. No assurance can be given that future impairment tests will not result in a charge to earnings.

Current wording

Goodwill arises from business combinations and is determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill is not amortized but is periodically evaluated for impairment. Impairment testing is performed using either a qualitative or quantitative approach. The Corporation has selected September 30 as the date to perform the annual goodwill impairment test. Additionally, a goodwill impairment evaluation is performed on an interim basis when events or circumstances indicate impairment potentially exists. Based on the annual goodwill impairment test completed as of September 30, 2025, no impairment was noted. The annual goodwill impairment test as of September 30, 2026 has not yet been finalized as of the date of issuance of these unaudited consolidated financial statements, however management anticipates no impairment as no triggering events or circumstances were identified. No assurance can be given that future impairment tests will not result in a charge to earnings.

Previous wording

Total assets at June 30, 2026, were $1.672 billion, a decrease of $0.9 million, or 0.1% from $1.673 billion at December 31, 2025. The change in total assets primarily reflects a decrease in cash and cash equivalents offset by an increase in loans receivable. Cash and cash equivalents decreased $28.4 million and gross loans receivable increased $28.6 million. Total liabilities at June 30, 2026, were $1.474 billion, a decrease of $7.0 million, or 0.5% from $1.481 billion at December 31, 2025. Deposit balances increased by $20.8 million, short-term borrowings increased by $11.8 million and long-term borrowings decreased by $40.6 million since December 31, 2025.

Current wording

Total assets at September 30, 2026, were $1.688 billion, an increase of $15.0 million, or 0.9% from $1.673 billion at December 31, 2025. The change in total assets primarily reflects a decrease in cash and cash equivalents offset by an increase in loans receivable. Cash and cash equivalents decreased $12.8 million and gross loans receivable held for investment increased $30.8 million. Total liabilities at September 30, 2026, were $1.495 billion, an increase of $14.5 million, or 1.0% from $1.481 billion at December 31, 2025. Deposit balances increased by $59.1 million, short-term borrowings decreased by $4.9 million and long-term borrowings decreased by $40.6 million since December 31, 2025.

Previous wording

Total average assets increased 5.1% from $1.605 billion for the six months ended June 30, 2025, to $1.687 billion for the six months ended June 30, 2026. Average earning assets were $1.570 billion for the six months ended June 30, 2026 and $1.500 billion for the six months ended June 30, 2025. Average interest-bearing liabilities were $1.194 billion for the six months ended June 30, 2026 and $1.150 billion for the six months ended June 30, 2025.

Current wording

Total average assets increased 4.4% from $1.616 billion for the nine months ended September 30, 2025 to $1.686 billion for the nine months ended September 30, 2026. Average earning assets were $1.568 billion for the nine months ended September 30, 2026 and $1.509 billion for the nine months ended September 30, 2025. Average interest-bearing liabilities were $1.192 billion for the nine months ended September 30, 2026 and $1.155 billion for the nine months ended September 30, 2025.

Previous wording

Cash and cash equivalents decreased $28.4 million or 58.5% from $48.5 million at December 31, 2025 to $20.1 million at June 30, 2026. This decrease is directly related to the prepayment of long-term borrowings during the six months ended June 30, 2026, which is discussed in further detail below.

Current wording

Cash and cash equivalents decreased $12.8 million or 26.3% from $48.5 million at December 31, 2025 to $35.8 million at September 30, 2026. This decrease is directly related to the prepayment of long-term borrowings during the nine months ended September 30, 2026, which is discussed in further detail below.

Previous wording

Gross loans receivable held for investment increased $28.6 million or 2.4% to $1.206 billion at June 30, 2026 from $1.178 billion at December 31, 2025. New loan originations for the six months ended June 30, 2026 totaled $34.4 million. Partially offsetting this increase was the sale of approximately $9.8 million in mortgage loans for the six months ended June 30, 2026. On January 28, 2026, the Bank entered into an Asset Purchase and Interim Servicing Agreement pursuant to which the Bank agreed to sell a portfolio of 82 individual delinquent, nonperforming or reperforming 1-4 family residential mortgage loans. The outstanding principal balance of the loans was approximately $9.8 million. The sale resulted in reductions in past-due and nonaccrual residential real estate loans comparing respective June 30, 2026 and December 31, 2025 amounts.

Current wording

Gross loans receivable held for investment increased $30.8 million or 2.6% to $1.208 billion at September 30, 2026 from $1.178 billion at December 31, 2025. Net new loan originations for the nine months ended September 30, 2026 totaled $35.4 million. Partially offsetting this increase was the sale of approximately $9.8 million in mortgage loans for the nine months ended September 30, 2026. On January 28, 2026, the Bank entered into an Asset Purchase and Interim Servicing Agreement pursuant to which the Bank agreed to sell a portfolio of 82 individual delinquent, nonperforming or reperforming 1-4 family residential mortgage loans. The outstanding principal balance of the loans was approximately $9.8 million. The sale resulted in reductions in past-due and nonaccrual residential real estate loans comparing respective September 30, 2026 and December 31, 2025 amounts.

Previous wording

Interest-bearing deposits increased $20.5 million to $1.156 billion at June 30, 2026 from $1.136 billion at December 31, 2025. Noninterest-bearing deposits increased 0.1% from $277.0 million at December 31, 2025 to $277.4 million at June 30, 2026. The increase in total deposits during the six months ended June 30, 2026 was a result of organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

Current wording

Interest-bearing deposits increased $62.4 million to $1.198 billion at September 30, 2026 from $1.136 billion at December 31, 2025. Noninterest-bearing deposits decreased 1.2% from $277.0 million at December 31, 2025 to $273.7 million at September 30, 2026. The increase in total deposits during the nine months ended September 30, 2026 was a result of organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

Previous wording

Short-term borrowings, which consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term FHLB advances, increased $11.8 million from $12.5 million at December 31, 2025 to $24.3 million at June 30, 2026. Included in this change was a decrease of securities sold under agreements to repurchase of $6.0 million along with an increase in short-term FHLB advances of $17.8 million. The decrease in repurchase agreements was due to the strategic initiative noted above. Short-term FHLB advances are utilized in the daily management of the Bank’s loan and deposit portfolios and increased due to strong loan demand experienced during the six months ended June 30, 2026.

Current wording

Short-term borrowings, which consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term FHLB advances, decreased $4.9 million from $12.5 million at December 31, 2025 to $7.5 million at September 30, 2026. This change was exclusively related to a decrease in securities sold under agreements to repurchase due to the strategic initiative noted above. Short-term FHLB advances are utilized in the daily management of the Bank’s loan and deposit portfolios. No short-term FHLB advances were outstanding at September 30, 2026 or December 31, 2025.

Previous wording

Long-term borrowings, which consist of advances due to the FHLB – Pittsburgh, totaled $40.6 million at December 31, 2025 and $0 at June 30, 2026. The Corporation prepaid, in full, its outstanding long-term FHLB borrowings during the three months ended June 30, 2026. This resulted in an aggregate prepayment penalty of approximately $49,000, as well as the immediate recognition of approximately $313,000 of remaining unamortized fair value adjustments related to these borrowings during the three months ended June 30, 2026, on a pretax basis. The prepayment of long-term borrowings was executed to reduce borrowing costs and enhance net interest margin on a prospective basis. The weighted-average FHLB interest rate of long-term borrowings which were prepaid was 3.96%.

Current wording

Long-term borrowings, which consist of advances due to the FHLB – Pittsburgh, totaled $40.6 million at December 31, 2025 and $0 at September 30, 2026. The Corporation prepaid, in full, its outstanding long-term FHLB borrowings during the nine months ended September 30, 2026. The prepayment of long-term borrowings was executed to reduce borrowing costs and enhance net interest margin on a prospective basis. The weighted-average FHLB interest rate of long-term borrowings which were prepaid was 3.96%.

Previous wording

Total stockholder’s equity increased by $6.1 million, or 3.2%, from $192.5 million at December 31, 2025, to $198.7 million at June 30, 2026. This increase is primarily attributable to earnings, net of cash dividends, offset by an increase in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $5.5 million as of June 30, 2026 and $4.0 million as of December 31, 2025.

Current wording

Total stockholder’s equity increased by $0.5 million, or 0.3%, from $192.5 million at December 31, 2025, to $193.0 million at September 30, 2026. This increase is primarily attributable to earnings, net of cash dividends, offset by an increase in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $15.6 million as of September 30, 2026 and $4.0 million as of December 31, 2025.

Previous wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio increased from 82.6% as of December 31, 2025 to 83.4% as of June 30, 2026 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Current wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 82.6% as of December 31, 2025 to 81.3% as of September 30, 2026 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Previous wording

The majority of the Corporation's debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security's value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder's equity, net of deferred income taxes. At June 30, 2026, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $5.5 million, net of deferred income taxes of $1.5 million, an increase of $1.5 million compared to the net unrealized holding loss of $4.0 million, net of deferred income taxes of $1.1 million, at December 31, 2025. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation's regulatory capital ratios.

Current wording

The majority of the Corporation's debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security's value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder's equity, net of deferred income taxes. At September 30, 2026, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $15.6 million, net of deferred income taxes of $4.1 million, an increase of $11.5 million compared to the net unrealized holding loss of $4.0 million, net of deferred income taxes of $1.1 million, at December 31, 2025. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation's regulatory capital ratios.

Previous wording

At June 30, 2026 and December 31, 2025, the Corporation held $1.6 million and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2026 and 2025:

Current wording

At September 30, 2026 and December 31, 2025, the Corporation held $1.6 million and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2026 and 2025:

Previous wording

Gross loans receivable increased 2.4% from $1.178 billion at December 31, 2025 to $1.206 billion at June 30, 2026. The percentage distribution in the loan portfolio is shown in the tables below:

Current wording

Gross loans receivable increased 2.6% from $1.178 billion at December 31, 2025 to $1.208 billion at September 30, 2026. The percentage distribution in the loan portfolio is shown in the tables below at September 30, 2026, reflecting changes made to the Corporation’s allowance methodology and related loan segments, and at December 31, 2025, reflecting the Corporation’s previous allowance methodology and related loan segments:

Previous wording

As of June 30, 2026, commercial real estate loans totaled $435.7 million or 36.1% of total gross loans. Of this amount commercial mortgage loans represented $386.1 million or 32.0% of total gross loans and student housing loans represented $49.7 million or 4.1% of total gross loans. The following table presents the distribution of commercial real estate loans and related percentage of the total loan portfolio as of June 30, 2026 and December 31, 2025:

Current wording

As of September 30, 2026, commercial real estate loans totaled $401.1 million or 33.2% of total gross loans. The following table presents the distribution of commercial real estate loans and related percentage of the total loan portfolio as of September 30, 2026 and December 31, 2025:

Previous wording

Non-performing loans are monitored on an ongoing basis as part of the Corporation’s loan review process. Additionally, work-outs for non-performing loans and foreclosed assets held for sale are actively monitored through the Bank’s Credit Department. A potential loss on a non-performing asset is generally determined by comparing the outstanding loan balance to the fair market value of the pledged collateral, less estimated cost to sell.

Current wording

Non-performing loans are monitored on an ongoing basis as part of the Corporation’s loan review process. Additionally, work-outs for non-performing loans and foreclosed assets held for sale are actively monitored through the Bank’s Collections Department. A potential loss on a non-performing asset is generally determined by comparing the outstanding loan balance to the fair market value of the pledged collateral, less estimated cost to sell.

Previous wording

Total non-performing assets amounted to $8,881,000, or 0.53% of total assets at June 30, 2026, as compared to $11,978,000, or 0.72% of total assets at December 31, 2025. For the six months ended June 30, 2026, the Corporation experienced a significant decrease in nonaccrual loans, which was largely driven by nonaccrual residential real estate loans which decreased $3.0 million, primarily related to the loan sale mentioned previously.

Current wording

Total non-performing assets amounted to $11,272,000, or 0.67% of total assets at September 30, 2026, as compared to $11,978,000, or 0.72% of total assets at December 31, 2025. For the nine months ended September 30, 2026, the Corporation experienced a decrease in nonaccrual loans, which was largely driven by nonaccrual residential real estate loans which decreased $1.6 million, primarily related to the loan sale mentioned previously.

Previous wording

The allowance for credit losses was $10.3 million and $10.0 million at June 30, 2026 and December 31, 2025, respectively. The allowance equaled 0.85% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at June 30, 2026 and December 31, 2025. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies.

Current wording

The allowance for credit losses was $11.0 million and $10.0 million at September 30, 2026 and December 31, 2025, respectively. The allowance equaled 0.91% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at September 30, 2026 and 0.85% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at December 31, 2025. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are reviewed by the full Board no less than monthly to determine compliance with policies.

Previous wording

The following tables present the allocation of the allowance for credit losses as of June 30, 2026 and December 31, 2025:

Current wording

The following tables present the allocation of the allowance for credit losses as of September 30, 2026, reflecting the changes made to the Corporation’s allowance methodology described in further detail below, and December 31, 2025, reflecting the Corporation’s previous allowance methodology:

Previous wording

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 June 30, 2026.

Current wording

See Notes 1 and 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, 2026.

Previous wording

Deposits are the primary source of funds for the Corporation’s lending and investing activities. The Corporation provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts and time deposits. These accounts generally earn interest at rates the Corporation establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Corporation’s primary focus is on establishing customer relationships to attract core deposits, at times, the Corporation may use brokered deposits and other wholesale deposits to supplement its funding sources. As of June 30, 2026, the Corporation held no brokered deposits.

Current wording

Deposits are the primary source of funds for the Corporation’s lending and investing activities. The Corporation provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts and time deposits. These accounts generally earn interest at rates the Corporation establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in commercial loan pricing decisions. While the Corporation’s primary focus is on establishing customer relationships to attract core deposits, at times, the Corporation may use brokered deposits and other wholesale deposits to supplement its funding sources. As of September 30, 2026, the Corporation held no brokered deposits.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six months ended June 30, 2026 and 2025, respectively:

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and nine months ended September 30, 2026 and 2025, respectively:

Previous wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three and six months ended June 30, 2026 was 2.08% and 2.09%, respectively. The average cost of interest-bearing deposits for the three and six months ended June 30, 2025 was 2.26% and 2.25%, respectively.

Current wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three and nine months ended September 30, 2026 was 2.10% and 2.09%, respectively. The average cost of interest-bearing deposits for the three and nine months ended September 30, 2025 was 2.24% and 2.25%, respectively.

Previous wording

At June 30, 2026, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $396.9 million. Of this amount, $152.8 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $111.0 million at June 30, 2026.

Current wording

At September 30, 2026, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Insurance Corporation insurance limit, totaled $406.0 million. Of this amount, $193.5 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $113.0 million at September 30, 2026.

Previous wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 1.1% of total average interest-bearing liabilities for both the three and six months ended June 30, 2026. Average short-term borrowings amounted to 2.2% and 3.4% of total average interest-bearing liabilities for the three and six months ended June 30, 2025, respectively.

Current wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 0.8% and 1.0% of total average interest-bearing liabilities for the three and nine months ended September 30, 2026, respectively. Average short-term borrowings amounted to 1.5% and 2.8% of total average interest-bearing liabilities for the three and nine months ended September 30, 2025, respectively.

Previous wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $833.5 million at June 30, 2026. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $600.8 million at June 30, 2026. The unused portion of these lines of credit was $577.0 million at June 30, 2026.

Current wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $863.8 million at September 30, 2026. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $622.1 million at September 30, 2026. The unused portion of these lines of credit was $595.7 million at September 30, 2026.

Previous wording

Net income for the three months ended June 30, 2026 was $7.2 million, or $0.67 per share, compared to $5.8 million, or $0.54 per share, for the three months ended June 30, 2025. Net income for the six months ended June 30, 2026 was $14.3 million, or $1.35 per share, compared to $10.1 million, or $0.95 per share, for the six months ended June 30, 2025. The increase in net income for the three and six months ended June 30, 2026, compared to the same period in 2025, was primarily attributable to a significant increase in net interest income.

Current wording

Net income for the three months ended September 30, 2026 was $6.0 million, or $0.57 per share, compared to $6.7 million, or $0.63 per share, for the three months ended September 30, 2025. Net income for the nine months ended September 30, 2026 was $20.4 million, or $1.92 per share, compared to $16.8 million, or $1.59 per share, for the nine months ended September 30, 2025. The decrease in net income for the three months ended September 30, 2026, compared to the same period in 2025, was primarily attributable to an increase in net interest income, offset by a decrease in non-interest income. The increase in net income for the nine months ended September 30, 2026, compared to the same period in 2025, was primarily attributable to a significant increase in net interest income, partially offset by a decrease in non-interest income.

Previous wording

Net interest income increased $2.0 million, or 13.2% to $16.8 million for the three months ended June 30, 2026, from $14.8 million for the same period in 2025. Non-interest income was $2.6 million for the three months ended June 30, 2026, an increase of $0.3 million, or 14.4%, from $2.2 million for the same period in 2025, which primarily reflected increases in gain on settlement of bank-owned life insurance claims and other non-interest income offset by increases in realized losses on available-for-sale debt securities. Non-interest expense was $10.4 million for the three months ended June 30, 2026, an increase of $0.6 million, or 5.7%, from $9.9 million for the same period in 2025, which was primarily related to increases in salaries and employee benefits partially offset by a decrease in data processing and telecommunications.

Current wording

Net interest income increased $2.0 million, or 12.7% to $17.6 million for the three months ended September 30, 2026, from $15.7 million for the same period in 2025. Non-interest income was $0.6 million for the three months ended September 30, 2026, a decrease of $2.3 million, or 78.9%, from $2.9 million for the same period in 2025, which primarily reflected increases in realized losses on available-for-sale debt securities. Non-interest expense was $10.1 million for the three months ended September 30, 2026, an increase of $0.1 million, or 0.7%, from $10.0 million for the same period in 2025, which was primarily related to increases in salaries and employee benefits partially offset by decreases in professional fees and other non-interest expense.

Previous wording

Net interest income increased $4.5 million, or 15.8% to $33.2 million for the six months ended June 30, 2026, from $28.7 million for the same period in 2025. Non-interest income was $5.1 million for the six months ended June 30, 2026, an increase of $0.4 million, or 7.9%, from $4.7 million for the same period in 2025, which primarily reflected increases in gain on settlement of bank-owned life insurance claims and other non-interest income offset by increases in loss on sale of loans and realized losses on available-for-sale debt securities. Non-interest expense was $20.6 million for the six months ended June 30, 2026, an decrease of $0.3 million, or 1.6%, from $20.9 million for the same period in 2025, which was primarily related to decreases in salaries and employee benefits partially offset by an increase in professional fees.

Current wording

Net interest income increased $6.5 million, or 14.7% to $50.8 million for the nine months ended September 30, 2026, from $44.3 million for the same period in 2025. Non-interest income was $5.7 million for the nine months ended September 30, 2026, a decrease of $1.9 million, or 25.3%, from $7.6 million for the same period in 2025, which primarily reflected increases in gain on settlement of bank-owned life insurance claims and other non-interest income offset by increases in loss on sale of loans and realized losses on available-for-sale debt securities. Non-interest expense was $30.7 million for the nine months ended September 30, 2026, a decrease of $0.3 million, or 0.8%, from $30.9 million for the same period in 2025, which was primarily related to an increase in salaries and employee benefits offset by a decrease in other non-interest expense.

Previous wording

For the three and six months ended June 30, 2026, the annualized return on average assets was 1.70% and 1.71%, respectively, compared to 1.44% and 1.27%, respectively for the comparable periods of 2025. The annualized return on average equity was 14.65% and 14.74%, respectively, for the three and six months ended June 30, 2026, compared to 13.33% and 11.85%, respectively, for the comparable periods of 2025. For the three months ended June 30, 2026 total cash dividends of $0.155 per share were declared as compared to $0.317 for the same period of 2025. For the six months ended June 30, 2026, total cash dividends of $0.642 per share were declared as compared to $0.467 for the same period of 2025, which included the impact of special one-time dividends of $0.333 per share and $0.167 per share for the six months ended June 30, 2026 and 2025, respectively.

Current wording

For the three and nine months ended September 30, 2026, the annualized return on average assets was 1.42% and 1.61%, respectively, compared to 1.63% and 1.39%, respectively for the comparable periods of 2025. The annualized return on average equity was 11.97% and 13.79%, respectively, for the three and nine months ended September 30, 2026, compared to 14.81% and 12.88%, respectively, for the comparable periods of 2025. For the three months ended September 30, 2026 total cash dividends of $0.155 per share were declared as compared to $0.150 for the same period of 2025. For the nine months ended September 30, 2026, total cash dividends of $0.797 per share were declared as compared to $0.617 for the same period of 2025, which included the impact of special one-time dividends of $0.333 per share and $0.167 per share for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Tax-equivalent net interest income increased $2.0 million, or 13.0%, to $17.1 million for the three months ended June 30, 2026 compared to $15.1 million for the same period in 2025. 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 33 basis points to 4.37% for the three months ended June 30, 2026 compared to 4.04% for the same period of 2025, 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 36 basis points to 3.83% for the three months ended June 30, 2026 compared to 3.47% for the same period in 2025.

Current wording

Tax-equivalent net interest income increased $2.0 million, or 12.4%, to $17.9 million for the three months ended September 30, 2026 compared to $15.9 million for the same period in 2025. 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 39 basis points to 4.54% for the three months ended September 30, 2026 compared to 4.15% for the same period of 2025, which was largely caused by increases in yields on earning assets along with a decrease in total 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 44 basis points to 4.03% for the three months ended September 30, 2026 compared to 3.59% for the same period in 2025.

Previous wording

Tax-equivalent interest income increased $1.7 million, or 7.9%, to $23.7 million for the three months ended June 30, 2026 from $22.0 million for the same period in 2025, 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 $67.0 million, or 4.5%, to $1.568 billion for the three months ended June 30, 2026 from $1.501 billion for the same period in 2025, resulting in a corresponding increase to tax-equivalent interest income of $0.7 million. Specifically, average loans increased $29.0 million, or 2.5%, to $1.190 billion for the three months ended June 30, 2026 from $1.161 billion for the same period in 2025, which reflected strong organic loan growth, partially offset by the loan sale noted above. Total investment securities averaged $364.5 million for the three months ended June 30, 2026, an increase of $34.1 million, or 10.3%, compared to $330.4 million for the same period in 2025. The tax-equivalent yield on earning assets increased 19 basis points to 6.06% for the three months ended June 30, 2026 from 5.87% for the same period in 2025, which resulted in a corresponding increase in tax-equivalent interest income of $1.0 million. The Corporation's tax-equivalent yield on loans increased 11 basis points to 6.78% for the three months ended June 30, 2026 compared to 6.67% for the same period in 2025, resulting in a corresponding increase in tax-equivalent interest income of $0.3 million. Meanwhile, the tax-equivalent yield on investment securities increased 68 basis points to 3.76% for the three months ended June 30, 2026 from 3.08% for the same period in 2025 and caused a corresponding increase to tax-equivalent interest income of $0.7 million.

Current wording

Tax-equivalent interest income increased $1.4 million, or 6.0%, to $24.3 million for the three months ended September 30, 2026 from $22.9 million for the same period in 2025, 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 $40.6 million, or 2.7%, to $1.566 billion for the three months ended September 30, 2026 from $1.525 billion for the same period in 2025, resulting in a corresponding increase to tax-equivalent interest income of $0.6 million. Specifically, average loans increased $37.2 million, or 3.2%, to $1.212 billion for the three months ended September 30, 2026 from $1.175 billion for the same period in 2025, which reflected strong organic loan growth, partially offset by the loan sale noted above. Total investment securities averaged $340.3 million for the three months ended September 30, 2026, an increase of $21.9 million, or 6.9%, compared to $318.4 million for the same period in 2025. The tax-equivalent yield on earning assets increased 19 basis points to 6.15% for the three months ended September 30, 2026 from 5.96% for the same period in 2025, which resulted in a corresponding increase in tax-equivalent interest income of $0.8 million. The Corporation's tax-equivalent yield on loans increased 11 basis points to 6.81% for the three months ended September 30, 2026 compared to 6.70% for the same period in 2025, resulting in a corresponding increase in tax-equivalent interest income of $0.3 million. Meanwhile, the tax-equivalent yield on investment securities increased 53 basis points to 3.91% for the three months ended September 30, 2026 from 3.38% for the same period in 2025 and caused a corresponding increase to tax-equivalent interest income of $0.5 million.

Previous wording

Interest expense decreased $0.2 million, or 3.3%, to $6.7 million for the three months ended June 30, 2026 from $6.9 million for the same period in 2025, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which are largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $25.6 million for the three months ended June 30, 2026, a decrease of $47.5 million from $73.1 million for the same period in 2025. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $0.5 million. Total average interest-bearing deposits increased $90.8 million, or 8.5%, to $1.164 billion for the three months ended June 30, 2026, compared to $1.073 billion for the same period in 2025, which resulted in a corresponding increase in interest expense of $0.6 million. For the three months ended June 30, 2026, the Corporation's cost of funds decreased 16 basis points to 2.24% from 2.40% for the same period in 2025. The average rate paid on total borrowings increased to 9.06% for the three months ended June 30, 2026 from 4.48% for the same period in 2025. The increase in the average rate paid on total borrowings is related to the prepayment of long-term borrowings during the three months ended June 30, 2026 discussed above and associated recognition of approximately $0.3 million of remaining unamortized fair value adjustments as a yield adjustment during the period. The average rate paid on total interest-bearing deposits decreased 18 basis points to 2.08% for the three months ended June 30, 2026 from 2.26% for the same period in 2025, which resulted in a corresponding decrease in interest expense of $0.6 million.

Current wording

Interest expense decreased $0.6 million, or 8.9%, to $6.3 million for the three months ended September 30, 2026 from $6.9 million for the same period in 2025, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which are largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $9.9 million for the three months ended September 30, 2026, a decrease of $51.4 million from $61.2 million for the same period in 2025. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $0.6 million. Total average interest-bearing deposits increased $72.7 million, or 6.6%, to $1.178 billion for the three months ended September 30, 2026, compared to $1.106 billion for the same period in 2025, which resulted in a corresponding increase in interest expense of $0.5 million. For the three months ended September 30, 2026, the Corporation's cost of funds decreased 25 basis points to 2.11% from 2.36% for the same period in 2025. The average rate paid on total borrowings decreased to 3.78% for the three months ended September 30, 2026 from 4.50% for the same period in 2025. The average rate paid on total interest-bearing deposits decreased 14 basis points to 2.10% for the three months ended September 30, 2026 from 2.24% for the same period in 2025, which resulted in a corresponding decrease in interest expense of $0.5 million.

Previous wording

On a year-to-date basis, tax equivalent net interest income increased $4.54 million, or 15.5%, to $33.8 million for the six months ended June 30, 2026, from $29.3 million for the comparable period of 2025. The increase in tax-equivalent net interest income for the year-to-date period was largely due to a $3.8 million, or 8.8%, increase in tax equivalent interest income, to $46.9 million, from $43.1 million for 2025, combined with a decrease in interest expense of $0.7 million, or 5.3%, to $13.1 million for the six months ended June 30, 2026, from $13.8 million for the six months ended June 30, 2025. Similar to the quarterly period, the $3.8 million or 8.8%, 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 23 basis points to 6.03% for the six months ended June 30, 2026 from 5.80% for the same period in 2025, which resulted in a corresponding increase of $2.1 million to tax-equivalent interest income. The tax-equivalent yield on loans increased 13 basis points, while the tax-equivalent yield on investments increased 76 basis points comparing the year-to-date periods of 2026 and 2025, which resulted in corresponding increases in tax-equivalent interest income of $0.8 million and $1.4 million, respectively. Regarding earning-asset volumes, total average earning assets increased $69.5 million, or 4.6%, to $1.570 billion for the six months ended June 30, 2026, from $1.500 billion for the same period of 2025, which resulted in a corresponding increase in tax-equivalent interest income of $1.7 million. Similar to the quarterly period, this was primarily due to an increase in average total loans which increased $33.3 million, or 2.9%, to $1.189 billion for the six months ended June 30, 2026, from $1.156 billion for the same comparable period of 2025, which was primarily as a result of strong organic loan demand. This increase resulted in a corresponding increase in tax-equivalent interest income of $1.1 million.

Current wording

On a year-to-date basis, tax equivalent net interest income increased $6.5 million, or 14.4%, to $51.8 million for the nine months ended September 30, 2026, from $45.2 million for the comparable period of 2025. The increase in tax-equivalent net interest income for the year-to-date period was largely due to a $5.2 million, or 7.8%, increase in tax equivalent interest income, to $71.2 million, from $66.0 million for 2025, combined with a decrease in interest expense of $1.4 million, or 6.5%, to $19.4 million for the nine months ended September 30, 2026, from $20.8 million for the nine months ended September 30, 2025. Similar to the quarterly period, the $5.2 million or 7.8%, 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 22 basis points to 6.07% for the nine months ended September 30, 2026 from 5.85% for the same period in 2025, which resulted in a corresponding increase of $2.9 million to tax-equivalent interest income. The tax-equivalent yield on loans increased 12 basis points, while the tax-equivalent yield on investments increased 68 basis points comparing the year-to-date periods of 2026 and 2025, which resulted in corresponding increases in tax-equivalent interest income of $1.1 million and $1.9 million, respectively. Regarding earning-asset volumes, total average earning assets increased $59.7 million, or 4.0%, to $1.568 billion for the nine months ended September 30, 2026, from $1.509 billion for the same period of 2025, which resulted in a corresponding increase in tax-equivalent interest income of $2.3 million. Similar to the quarterly period, this was primarily due to an increase in average total loans which increased $34.7 million, or 3.0%, to $1.197 billion for the nine months ended September 30, 2026, from $1.162 billion for the same comparable period of 2025, which was primarily as a result of strong organic loan demand. This increase resulted in a corresponding increase in tax-equivalent interest income of $1.8 million.

Previous wording

The $0.7 million, or 5.3%, decrease in year-to-date interest expense was largely due to a significant decrease in average total borrowings. Average borrowed funds averaged $39.7 million for the six months ended June 30, 2026, a decrease of $50.7 million from $90.4 million for the same period in 2025. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $1.1 million. This decrease was partially offset by an increase in interest-bearing deposit volumes. Comparing the year-to-date periods of 2026 and 2025, average interest-bearing deposits increased $94.3 million, or 8.9%, to $1.154 billion from $1.060 billion, respectively, increasing interest expense by $1.2 million.

Current wording

The $1.4 million, or 6.5%, decrease in year-to-date interest expense was largely due to a significant decrease in average total borrowings. Average borrowed funds totaled $29.7 million for the nine months ended September 30, 2026, a decrease of $50.5 million from $80.2 million for the same period in 2025. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $1.7 million. This decrease was partially offset by an increase in interest-bearing deposit volumes. Comparing the year-to-date periods of 2026 and 2025, average interest-bearing deposits increased $87.0 million, or 8.1%, to $1.162 billion from $1.075 billion, respectively, increasing interest expense by $1.7 million.

Previous wording

The following Average Balance Sheet and Rate Analysis tables present the average assets, actual income or expense and the average yield on assets, liabilities and stockholders' equity for the three and six months ended June 30, 2026 and 2025.

Current wording

The following Average Balance Sheet and Rate Analysis tables present 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, 2026 and 2025.

Previous wording

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 six months ended June 30, 2026 versus June 30, 2025:

Current wording

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, 2026 versus September 30, 2025:

Previous wording

A summary of the provision for credit losses for the three and six months ended June 30, 2026 and 2025, is as follows:

Current wording

A summary of the provision for credit losses for the three and nine months ended September 30, 2026 and 2025, is as follows: