Citizens Community Bancorp Inc.

Previous wording

Factors that could affect actual results or outcomes include the matters described under the caption “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026, (“2025 10-K”), and the following:

Current wording

Factors that could affect actual results or outcomes include the matters described under the caption “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026, (“2025 10-K”), Item 1A in Part II of this report, and the following:

Previous wording

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of March 31, 2026, and our consolidated results of operations for the three months ended March 31, 2026, compared to the same period in the prior fiscal year ended March 31, 2025. This discussion should be read in conjunction with the interim consolidated financial statements and the condensed notes thereto included with this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes related thereto included in our 2025 10-K. Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.

Current wording

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of June 30, 2026, and our consolidated results of operations for the three and six months ended June 30, 2026, compared to the same period in the prior fiscal year ended June 30, 2025. This discussion should be read in conjunction with the interim consolidated financial statements and the condensed notes thereto included with this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes related thereto included in our 2025 10-K. Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.

Previous wording

We reported net income of $3.8 million or $0.39 per diluted share for the three months ended March 31, 2026, compared to net income of $3.2 million or $0.32 per diluted share for the three months ended March 31, 2025, respectively.

Current wording

We reported net income of $1.1 million and $4.9 million, or $0.11 and $0.50 per diluted share for the three and six months ended June 30, 2026, compared to net income of $3.3 million and $6.5 million, or $0.33 and $0.65 per diluted share for the three and six months ended June 30, 2025, respectively.

Previous wording

The following is a summary of some of the significant factors that affected our operating results for the three months ended March 31, 2026, and March 31, 2025.

Current wording

The following is a summary of some of the significant factors that affected our operating results for the three and six months ended June 30, 2026, and June 30, 2025.

Previous wording

Non-interest expense increased $0.2 million in the first quarter of 2026 from $10.5 million in the first quarter of 2025. The increase was primarily due to an increase in compensation due to the full quarter impact of the 2025 annual employee pay raises and benefit expenses, partially offset by lower data processing costs.

Current wording

Non-interest expense decreased $0.2 million in the second quarter of 2026 from $10.8 million in the second quarter of 2025. The decrease was primarily due to lower compensation costs and lower data processing costs.

Previous wording

Provision for income taxes increased to $0.88 million in the first quarter of 2026, from $0.78 million in the first quarter of 2025, primarily due to the impact of a 2025 tax credit investment.

Current wording

Provision for income taxes decreased to $0.14 million in the second quarter of 2026, from $0.78 million in the second quarter of 2025, primarily due to lower pre-tax income and a lower effective tax rate.

Previous wording

The total provision for credit losses for the first quarter ended March 31, 2026, was $0.75 million compared to a negative provision for credit losses of $0.25 million for the quarter ended March 31, 2025. The first quarter of 2026 provision was largely due to: (1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by lower loss rates on collectively evaluated loans; (2) modest charge-offs of $0.2 million; (3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million; and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million. The total benefit, i.e., negative provision, for credit losses for the first quarter ended March 31, 2025, of $0.25 million was due to decreases in ACL related to a decrease in on-balance sheet ACL of $0.35 million; partially offset by an increase in off-balance sheet reserves to fund commitments of $0.1 million.

Current wording

The total provision for credit losses for the six months ended June 30, 2026, was $5.075 million compared to a provision for credit losses of $1.100 million for the six months ended June 30, 2025. The $3.0 million was attributable to the factors discussed above. The total provision for credit losses for the first quarter ended March 31, 2026, was $0.75 million compared to a negative provision for credit losses of $0.25 million for the quarter ended March 31, 2025. The first quarter of 2026 provision was largely due to: (1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by lower loss rates on collectively evaluated loans; (2) modest charge-offs of $0.2 million; (3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million; and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million. The total benefit, i.e., negative provision, for credit losses for the first quarter ended March 31, 2025, of $0.25 million was due to decreases in ACL related to a decrease in on-balance sheet ACL of $0.35 million, partially offset by an increase in off-balance sheet reserves to fund commitments of $0.1 million.

Previous wording

Interest rate spread and net interest margin are used to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest earning assets and the rate paid for interest-bearing liabilities that fund those assets. Net interest margin is expressed as the percentage of net interest income to average interest earning assets. Net interest margin currently exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discusses net interest income, and net interest margin for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.

Current wording

Interest rate spread and net interest margin are used to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest earning assets and the rate paid for interest-bearing liabilities that fund those assets. Net interest margin is expressed as the percentage of net interest income to average interest earning assets. Net interest margin currently exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discusses net interest income, and net interest margin for the three-month and six-month periods ended June 30, 2026, and June 30, 2025, respectively.

Previous wording

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following net interest income analysis table presents interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates on a tax equivalent basis. Shown below is the weighted average tax equivalent yield on interest earning assets, rates paid on interest-bearing liabilities and the resultant spread at or during the three-month periods ended March 31, 2026, and March 31, 2025. Non-accruing loans have been included in the table as loans carrying a zero yield.

Current wording

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following net interest income analysis table presents interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates on a tax equivalent basis. Shown below is the weighted average tax equivalent yield on interest earning assets, rates paid on interest-bearing liabilities and the resultant spread at or during the three and six-month periods ended June 30, 2026, and June 30, 2025. Non-accruing loans have been included in the table as loans carrying a zero yield.

Previous wording

Rate/Volume Analysis. The following tables present the dollar amount of changes in interest income and interest expense for the components of interest earning assets and interest-bearing liabilities that are presented in the preceding table. For each category of interest earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume, which are changes in the average outstanding balances multiplied by the prior period rate (i.e., holding the initial rate constant); and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e., holding the initial balance constant). Rate changes have been discussed previously in the net interest income section above. Changes in asset volume include an increase in interest-bearing cash, resulting from the cash deployment of the 2025 loan shrinkage as the bank reduced non-strategic relationships, and the reinvestment of investment securities amortization of mortgage-backed certificates, U.S. government securities and student loan asset-backed securities into interest-bearing cash.

Current wording

Rate/Volume Analysis. The following tables present the dollar amount of changes in interest income and interest expense for the components of interest earning assets and interest-bearing liabilities that are presented in the preceding table. For each category of interest earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume, which are changes in the average outstanding balances multiplied by the prior period rate (i.e., holding the initial rate constant) and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e., holding the initial balance constant). Rate changes have been discussed previously in the net interest income section above. Changes in asset volume include an increase in interest-bearing cash, resulting from the cash deployment of the 2025 loan shrinkage as the bank reduced non-strategic relationships, and the reinvestment of investment securities amortization of mortgage-backed certificates, U.S. government securities and student loan asset-backed securities into interest-bearing cash and the increase in deposits being invested in interest-bearing cash at the Federal Reserve.

Previous wording

The table below shows the principal balance and current contractual rate of fixed-rate loans, securities, and certificates of deposits as of March 31, 2026, that mature or reprice for the remaining three quarters of 2026 and the four quarters of 2027.

Current wording

The table below shows the principal balance and current contractual rate of fixed-rate loans, securities, and certificates of deposits as of June 30, 2026, that mature or reprice for the remaining two quarters of 2026 and the four quarters of 2027.

Previous wording

The total provision for credit losses for the first quarter ended March 31, 2026, was $0.75 million compared to a negative provision for credit losses of $0.25 million for the quarter ended March 31, 2025. The first quarter of 2026 provision was largely due to: (1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by loss rates on collectively evaluated loans; (2) modest charge-offs of $0.2 million; (3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million; and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million. The first quarter ended March 31, 2025, negative provision for credit losses was primarily due to decreases in ACL related to: (1) on-balance sheet ACL of $0.1 million, and (2) reductions in off-balance sheet reserves to fund commitments of $0.3 million.

Current wording

The total provision for credit losses for the six months ended June 30, 2026, was $5.075 million compared to a provision for credit losses of $1.100 million for the six months ended June 30, 2025. The second quarter of 2026 changes compared to the second quarter of 2025 are discussed above. The total provision for credit losses for the first quarter ended March 31, 2026, was $0.75 million compared to a negative provision for credit losses of $0.25 million for the quarter ended March 31, 2025. The first quarter of 2026 provision was largely due to: (1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by lower loss rates on collectively evaluated loans; (2) modest charge-offs of $0.2 million; (3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million; and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million. The total benefit, i.e., negative provision, for credit losses for the first quarter ended March 31, 2025, of $0.25 million was due to decreases in ACL related to a decrease in on-balance sheet ACL of $0.35 million; partially offset by an increase in off-balance sheet reserves to fund commitments of $0.1 million.

Previous wording

Management believes that the provision recorded for the current year’s three-month period is adequate in view of the present condition of our loan portfolio and the sufficiency of collateral supporting our non-performing loans. We continually monitor non-performing loan relationships and will adjust our provision, as necessary, if changing facts and circumstances require a change in the ACL. In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers, or our market areas, or otherwise, could all affect the adequacy of our ACL. If there are significant charge-offs against the ACL, or we otherwise determine that the ACL is inadequate, we will need to record an additional provision in the future.

Current wording

Management believes that the provision recorded for the current year’s three and six-month periods is adequate in view of the present condition of our loan portfolio and the sufficiency of collateral supporting our nonperforming loans. We continually monitor nonperforming loan relationships and will adjust our provision, as necessary, if changing facts and circumstances require a change in the ACL. In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers, or our market areas, or otherwise, could all affect the adequacy of our ACL. If there are significant charge-offs against the ACL, or we otherwise determine that the ACL is inadequate, we will need to record an additional provision in the future.

Previous wording

Non-interest Income. The following table reflects the various components of non-interest income for the three-month periods ended March 31, 2026 and 2025, respectively.

Current wording

Non-interest Income. The following table reflects the various components of non-interest income for the three and six-month periods ended June 30, 2026 and 2025, respectively.

Previous wording

Gain on sale of loans increased in the three-month period ended March 31, 2026, compared to the three-month period ended March 31, 2025. Higher gains on SBA loan sales account for approximately two-thirds of the increase, with the remainder of the increase due to higher gains on sale of residential loans.

Current wording

Gain on sale of loans decreased in the three-month period ended June 30, 2026, compared to the three-month period ended June 30, 2025. Lower gains on SBA loan sales contributed to most of the decrease, partially offset by higher residential gains on sale.

Previous wording

The increase in other income for the three-month period ending March 31, 2026, compared to the same period in 2025, was primarily due to the termination of the remaining lease obligation on a previously closed branch.

Current wording

Other income increased for the six-month period ending June 30, 2026, compared to the same period in 2025, primarily due to the termination of the remaining lease obligation in the first quarter of 2026 on a previously closed branch. To a lesser extent, income for Bank owned life insurance increased.

Previous wording

Non-interest Expense. The following table reflects the various components of non-interest expense for the three-month periods ended March 31, 2026 and 2025, respectively.

Current wording

Non-interest Expense. The following table reflects the various components of non-interest expense for the three and six-month periods ended June 30, 2026 and 2025, respectively.

Previous wording

Data processing expense for the three-months ended March 31, 2026, decreased from the same 2025 period, largely due to contract renegotiations which lowered our costs.

Current wording

Data processing expense for the three and six-months ended June 30, 2026, decreased from the same 2025 periods, largely due to contract renegotiations which lowered our costs.

Previous wording

Amortization of intangibles decreased for the three-month period ending March 31, 2026, from the same 2025 period, as an intangible was fully amortized in the third quarter of 2025.

Current wording

Amortization of intangibles decreased for the three-month and six-month periods ending June 30, 2026, from the same 2025 periods, as an intangible was fully amortized in the third quarter of 2025.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents increased $30.3 million to $149.2 million at March 31, 2026, compared to $118.9 million at December 31, 2025. This increase was primarily due to an increase in interest-bearing cash provided by deposit growth, partially offset by loan growth.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $2.9 million to $121.8 million at June 30, 2026, compared to $118.9 million at December 31, 2025. This increase was primarily due to deposit growth partially offset by loan growth.

Previous wording

Investment Securities. We manage our securities portfolio to provide liquidity, manage interest rate risk, and enhance income. Our investment portfolio is comprised of securities available-for-sale and securities held-to-maturity. Securities available-for-sale decreased $3.2 million during the three months ended March 31, 2026, to $130.9 million from $134.1 million at December 31, 2025. There were principal repayments of $3.0 million, and a net decrease in the corporate debt portfolio due to redemptions of $1.3 million. These reductions were partially offset by purchases of $0.8 million of corporate debt and a decrease in the unrealized loss of $0.3 million.

Current wording

Investment Securities. We manage our securities portfolio to provide liquidity, manage interest rate risk, and enhance income. Our investment portfolio is comprised of securities available-for-sale and securities held-to-maturity. Securities available-for-sale decreased $5.7 million during the six months ended June 30, 2026, to $128.4 million from $134.1 million at December 31, 2025. There were principal repayments of $7.6 million and redemptions of $3.1 million in the corporate debt portfolio. These reductions were partially offset by purchases of $4.3 million of corporate debt and a decrease in the unrealized loss of $0.7 million.

Previous wording

Securities held-to-maturity decreased $1.2 million to $79.0 million during the three-month period ended March 31, 2026, from $80.2 million at December 31, 2025, due to principal repayments.

Current wording

Securities held-to-maturity decreased $2.8 million to $77.4 million during the six-month period ended June 30, 2026, from $80.2 million at December 31, 2025, due to principal repayments.

Previous wording

At March 31, 2026, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $31.6 million as collateral to secure a line of credit with the Federal Reserve Bank. As of March 31, 2026, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of March 31, 2026, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.1 million and mortgage-backed securities with a carrying value of $1.5 million as collateral against specific municipal deposits. As of March 31, 2026, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

Current wording

At June 30, 2026, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $31.1 million as collateral to secure a line of credit with the Federal Reserve Bank. As of June 30, 2026, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of June 30, 2026, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.04 million and mortgage-backed securities with a carrying value of $1.7 million as collateral against specific municipal deposits. As of June 30, 2026, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

Previous wording

Loans. Total loans outstanding, net of deferred loan fees and costs and unamortized discount on acquired loans, increased by $0.02 billion, to $1.36 billion as of March 31, 2026, from $1.34 billion at December 31, 2025. The following table reflects the composition of our loan portfolio at March 31, 2026, and December 31, 2025:

Current wording

Loans. Total loans outstanding, net of deferred loan fees and costs and unamortized discount on acquired loans, increased by $0.04 billion, to $1.38 billion as of June 30, 2026, from $1.34 billion at December 31, 2025. The following table reflects the composition of our loan portfolio at June 30, 2026, and December 31, 2025:

Previous wording

In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.48 million at March 31, 2026, and $0.49 million at December 31, 2025, classified in other liabilities on the consolidated balance sheets.

Current wording

In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.457 million at June 30, 2026, and $0.490 million at December 31, 2025, classified in other liabilities on the consolidated balance sheets.

Previous wording

When interest accruals are discontinued, interest credited to income is reversed. If collection is in doubt, cash receipts on non-accrual loans are used to reduce principal rather than being recorded as interest income.

Current wording

When interest accruals are discontinued, interest credited to income is reversed. If collection is in doubt, cash receipts on nonaccrual loans are used to reduce principal rather than being recorded as interest income.

Previous wording

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended March 31, 2026:

Current wording

There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2026.

Previous wording

The table below shows a summary of criticized loans, split by special mention and substandard loans for the past five quarters. Changes in balances over $3 million include changes in special mention commercial loans in the second quarter of 2025, due to one new $9 million multi-family loan that is experiencing slower leasing activity than expected. In the third quarter of 2025, the $9 million special mention loan moved to substandard and nonaccrual, which was partially offset by the payoff of a $5.2 million substandard loan that was on nonaccrual.

Current wording

Special mention loans increased $1.3 million to $24.5 million at December 31, 2025, from June 30, 2025, largely due to increases in the fourth quarter of 2025, due to the addition of two loan relationships: (1) a $5.7 million relationship on 3 businesses, largely secured by real estate; (2) a $5.3 million owner-occupied commercial real estate and equipment loan, partially offset by; and (3) a $9 million special mention loan that moved to substandard in the third quarter of 2025. Substandard loans increased $3.5 million primarily due to an increase in nonaccrual loan balances due to changes in the third quarter of one new $9 million multi-family loan that is experiencing slower leasing activity than expected moving from special mention, which was partially offset by the payoff of a $5.2 million substandard loan that was on nonaccrual.

Previous wording

The fair market value of the Company’s MSR asset was $4.8 million at March 31, 2026, compared to $5.1 million at March 31, 2025.

Current wording

The fair market value of the Company’s MSR asset was $5.1 million at June 30, 2026, and $4.7 million at December 31, 2025.

Previous wording

The unpaid balances of one-to-four family residential real estate loans serviced for others as of March 31, 2026, and December 31, 2025, were $473.0 million and $474.0 million, respectively. The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at March 31, 2026, and December 31, 2025, was 1.02% and 0.98%, respectively.

Current wording

The unpaid balances of one-to-four family residential real estate loans serviced for others as of June 30, 2026, and December 31, 2025, were $471.8 million and $474.0 million, respectively. The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at June 30, 2026, and December 31, 2025, was 1.08% and 0.98%, respectively.

Previous wording

Deposits. Total deposits increased $41.5 million during the three months ended March 31, 2026, to $1.57 billion. The increase was largely due to the growth in commercial and public deposits, most of which are seasonal. Deposits by type for five quarters are detailed below:

Current wording

Deposits. Total deposits increased $30.3 million during the six months ended June 30, 2026, to $1.55 billion. The increase was largely due to the growth in commercial and public deposits, most of which are seasonal. Deposits by type for five quarters are detailed below:

Previous wording

At March 31, 2026, the deposit portfolio composition was 57% consumer, 28% commercial, 14% public, and 1% wholesale deposits compared to 57% consumer, 28% commercial, 14% public and 1% wholesale deposits at December 31, 2025. Deposit composition by type for five quarters are detailed below:

Current wording

At June 30, 2026, the deposit portfolio composition was 57% consumer, 28% commercial, 13% public, and 2% wholesale deposits compared to 58% consumer, 28% commercial, 12% public and 2% wholesale deposits at December 31, 2025. Deposit composition by type for five quarters are detailed below:

Previous wording

Uninsured and uncollateralized deposits were $322.6 million, or 20% of total deposits, at March 31, 2026, and $323.5 million, or 21% of total deposits, at December 31, 2025. Uninsured deposits alone at March 31, 2026, were $499.6 million, or 32% of total deposits, and $478.4 million, or 31% of total deposits at December 31, 2025.

Current wording

Uninsured and uncollateralized deposits were $312.5 million, or 20% of total deposits, at June 30, 2026, and $323.5 million, or 21% of total deposits, at December 31, 2025. Uninsured deposits alone at June 30, 2026, were $479.4 million, or 31% of total deposits, and $478.4 million, or 31% of total deposits at December 31, 2025.

Previous wording

On-balance sheet liquidity, collateralized new borrowing capacity, and uncommitted federal funds borrowing availability was $799 million, or 248% of uninsured and uncollateralized deposits at March 31, 2026. At December 31, 2025, on-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds availability totaled $792 million, or 243% of uninsured and uncollateralized deposits.

Current wording

On-balance sheet liquidity, collateralized new borrowing capacity, and uncommitted federal funds borrowing availability was $781 million, or 246% of uninsured and uncollateralized deposits at June 30, 2026. At December 31, 2025, on-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds availability totaled $792 million, or 245% of uninsured and uncollateralized deposits.

Previous wording

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans, and certain other loans which had pledged balances of $1,039.3 million and $1,017.6 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $410.1 million compared to $433.7 million as of December 31, 2025.

Current wording

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans, and certain other loans which had pledged balances of $1,054.2 million and $1,017.6 million at June 30, 2026 and December 31, 2025, respectively. At June 30, 2026, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $427.5 million compared to $433.7 million as of December 31, 2025.

Previous wording

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $0 million and $5.0 million, during the three months ended March 31, 2026 and the twelve months ended December 31, 2025, respectively.

Current wording

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $0 million and $5.0 million, during the six months ended June 30, 2026 and the twelve months ended December 31, 2025, respectively.

Previous wording

(a) A term note, which was originally entered into in June of 2019 and subsequently refinanced in March 2022, modified in February of 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 3.00%.

Current wording

(a) A $12 million term note, which was originally entered into in June 2019 and subsequently refinanced in March 2022, modified in February 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 3.00%.

Previous wording

(b) A $5.0 term note entered into in October 2025, requiring quarterly interest-only payments through October 2028, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 4.00%.

Current wording

(b) A $5 million term note entered into in October 2025, requiring quarterly interest-only payments through October 2028, and quarterly principal and interest payments thereafter. Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 4.00%.

Previous wording

(a) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bore a fixed interest rate of 6.00% for five years. On July 7, 2025, the Board of Directors approved the redemption of the entire $15,000 balance of the 6% subordinated debentures due September 1, 2030, which were scheduled to reprice on September 1, 2025, to the Secured Overnight Financing Rate (“SOFR”) plus 591 basis points. The redemption occurred on September 1, 2025.

Current wording

(a) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bore a fixed interest rate of 6.00% for five years. On July 7, 2025, the Board of Directors approved the redemption of the entire $15 million balance of the 6% subordinated debentures due September 1, 2030, which were scheduled to reprice on September 1, 2025, to the Secured Overnight Financing Rate (“SOFR”) plus 591 basis points. The redemption occurred on September 1, 2025.

Previous wording

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75% for five years. In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term SOFR plus 329 basis points. The note is callable by the Bank when, and anytime after, the floating rate is initially set. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

Current wording

(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75% for five years. In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term SOFR plus 329 basis points. The note is callable by the Company when, and anytime after, the floating rate is initially set. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.