SECURITY FEDERAL CORP

Previous wording

**Assets -**Total assets increased$13.5 million to$1.63 billion at June 30, 2025 from$1.61 billion at December 31, 2024. This increase was primarily due to an increase in AFS securities, partially offset by a decrease in cash and cash equivalents and HTM securities. Changes in total assets are shown below.

Current wording

**Assets -**Total assets increased$244,000 to$1.61 billion at September 30, 2025 from$1.61 billion at December 31, 2024. This increase was primarily due to an increase in AFS securities, partially offset by a decrease in cash and cash equivalents and HTM securities. Changes in total assets are shown below.

Previous wording

Cash and cash equivalents decreased$36.1 million or 20.2% to$142.2 million at June 30, 2025 from$178.3 million at December 31, 2024, primarily due to the repayment of borrowings with the Federal Reserve Bank of Atlanta ("FRB") during thesix months ended June 30, 2025.

Current wording

Cash and cash equivalents decreased$126.5 million or 70.9% to$51.8 million at September 30, 2025 from$178.3 million at December 31, 2024, primarily due to the repayment of borrowings with the Federal Reserve Bank of Richmond ("FRB") during thenine months ended September 30, 2025.

Previous wording

AFS securities increased$62.6 million or 11.9% to$588.2 million at June 30, 2025 from$525.6 million at December 31, 2024 due to purchases of AFS securities exceeding sales, maturities and principal paydowns during thesix months ended June 30, 2025. HTM securities decreased$15.8 million to$119.4 million at June 30, 2025, from$135.2 million at December 31, 2024, due to paydowns and maturities exceeding purchases during thesix months ended June 30, 2025. The increase in AFS securities reflects reinvestment of maturing HTM securities into higher-yielding instruments amid a favorable interest rate environment.

Current wording

AFS securities increased$148.7 million or 28.3% to$674.3 million at September 30, 2025 from$525.6 million at December 31, 2024 due to purchases of AFS securities exceeding sales, maturities and principal paydowns during thenine months ended September 30, 2025. HTM securities decreased$20.2 million to$115.0 million at September 30, 2025, from$135.2 million at December 31, 2024, due to paydowns and maturities exceeding purchases during thenine months ended September 30, 2025. The increase in AFS securities reflects reinvestment of maturing HTM securities into higher-yielding instruments amid a favorable interest rate environment.

Previous wording

Total loans, excluding loans held for sale, decreased $1.0 million, or 0.1%, to$699.7 million at June 30, 2025 from$700.6 million at December 31, 2024, primarily reflecting decreases in construction loans and commercial and agricultural loans, partially offset by increases in consumer home equity lines of credit (HELOCs) and residential and commercial real estate loans originated during thesix months ended June 30, 2025. Residential real estate loans increased$2.4 million, or 1.2%, to$206.0 million at June 30, 2025 from$203.7 million at December 31, 2024. Commercial real estate loans increased$3.2 million, or 1.1%, to$291.7 million at June 30, 2025 from$288.5 million at December 31, 2024. Additionally, consumer HELOCs increased$3.0 million, or 8.0%, to$40.9 million at June 30, 2025 from$37.8 million at December 31, 2024. Offsetting these increases, construction loans decreased$5.2 million, or 4.8%, to$104.7 million at June 30, 2025 from$109.9 million at December 31, 2024 while commercial and agricultural loans decreased$4.6 million, or 12.6%, to$32.2 million at June 30, 2025 from$36.9 million at December 31, 2024. Other consumer loans increased slightly to $24.2 million at June 30, 2025 compared to$23.8 million at December 31, 2024.

Current wording

Total loans, excluding loans held for sale, decreased $9.5 million, or 1.3%, to$677.1 million at September 30, 2025 from$686.6 million at December 31, 2024, primarily reflecting decreases in construction loans and commercial and agricultural loans, partially offset by increases in consumer home equity lines of credit (HELOCs) and residential and commercial real estate loans originated during thenine months ended September 30, 2025. Residential real estate loans increased$19.0 million, or 9.3%, to$222.6 million at September 30, 2025 from$203.7 million at December 31, 2024. Commercial real estate loans increased$15.1 million, or 5.2%, to$303.7 million at September 30, 2025 from$288.5 million at December 31, 2024. Additionally, consumer HELOCs increased$2.2 million, or 5.9%, to$40.1 million at September 30, 2025 from$37.8 million at December 31, 2024. Offsetting these increases, construction loans decreased$40.7 million, or 37.1%, to$69.2 million at September 30, 2025 from$109.9 million at December 31, 2024 while commercial and agricultural loans decreased$5.9 million, or 15.9%, to$31.0 million at September 30, 2025 from$36.9 million at December 31, 2024. Other consumer loans increased slightly to$24.2 million at September 30, 2025 compared to$23.8 million at December 31, 2024.

Previous wording

At June 30, 2025 and 2024, the allowance for credit losses on loans as a percentage of total loans was 2.00% and 1.95%, and as a percentage of nonperforming loans was 0.85% and 1.07%, respectively. Loans past due 30 days or more decreased to $7.3 million or 1.0% of total loans at June 30, 2025, compared to $12.6 million, or 1.8%, at December 31, 2024. The decline in past due balances was primarily as a result of improvements in construction real estate, which decreased from $4.9 million to $1.9 million, and residential real estate, which decreased from $3.3 million to $1.3 million. Past due balances also improved across commercial and agricultural and commercial real estate portfolios. Current loans totaled $692.3 million, compared to $688.0 million at December 31, 2024. This improvement reflects a combination of successful loan repayments, active collection efforts, and generally favorable credit conditions in the Company’s lending markets during the first half of 2025.

Current wording

At September 30, 2025 and 2024, the allowance for credit losses on loans as a percentage of total loans was 1.97% and 1.95%, respectively. Loans past due 30 days or more decreased to $6.9 million, or 1.00% of total loans, at September 30, 2025, compared to $12.6 million, or 1.80% of total loans, at December 31, 2024. The decline in past due balances was primarily as a result of improvements in construction real estate, which decreased from $4.9 million to $2.1 million, and residential real estate, which decreased from $3.3 million to $1.7 million. Past due balances also improved across commercial and agricultural and commercial real estate portfolios. Current loans totaled$683.9 million, compared to$688.0 million at December 31, 2024. This improvement reflects a combination of successful loan repayments, active collection efforts, and generally favorable credit conditions in the Company’s lending markets during thenine months ended September 30, 2025.

Previous wording

Loans held for sale increased to $2.2 million at June 30, 2025 from$599,000 at December 31, 2024, primarily due to higher residential mortgage originations designated for sale during the six months ended June 30, 2025. The increase also reflects stronger secondary market demand and seasonal growth in home purchase activity during the spring and early summer months, which led to a higher volume of loans being originated with the intent to sell.

Current wording

Loans held for sale increased to $1.0 million at September 30, 2025 from$599,000 at December 31, 2024, primarily due to higher residential mortgage originations designated for sale during thenine months ended September 30, 2025. The increase also reflects stronger secondary market demand and seasonal growth in home purchase activity during the summer months, which led to a higher volume of loans being originated with the intent to sell.

Previous wording

Premises and equipment, net increased$4.1 million or 13.9% to$33.4 million at June 30, 2025 from$29.3 million at December 31, 2024, as a result of improvements made to existing branches and future branch opportunities.

Current wording

Premises and equipment, net increased$3.9 million or 13.2% to$33.2 million at September 30, 2025 from$29.3 million at December 31, 2024, as a result of improvements made to existing branches and future branch opportunities.

Previous wording

Other assets decreased $2.1 million or 12.5% to $14.7 million at June 30, 2025 from $16.8 million at December 31, 2024, primarily due to a $1.8 million decrease in the deferred tax asset associated with the unrealized loss on our AFS securities portfolio.

Current wording

Other assets decreased $2.0 million or 12.0% to $14.8 million at September 30, 2025 from $16.8 million at December 31, 2024, primarily due to a $2.4 million decrease in the deferred tax asset associated with the unrealized loss on our AFS securities portfolio.

Previous wording

Total deposits increased$59.2 million or 4.5% to$1.38 billion at June 30, 2025 from December 31, 2024, primarily due to increases in higher cost certificates of deposit and money market accounts, partially offset by a decrease in savings accounts. The growth in certificates of deposits was largely driven by targeted promotions to retain and attract customers amid heightened competition for deposits as market interest rates stabilized, while savings accounts declined as customers sought higher-yield alternatives. The Bank had$25.8 million in brokered time deposits at both June 30, 2025 and December 31, 2024. A portion of these brokered deposits include call options, giving the Bank the flexibility to redeem them early if interest rates move favorably. In addition, the Bank held$5.5 million of non-certificate brokered deposits at both June 30, 2025 and December 31, 2024.

Current wording

Total deposits increased$41.4 million or 3.1% to$1.37 billion at September 30, 2025 from December 31, 2024, primarily due to increases in higher cost certificates of deposit and money market accounts, partially offset by a decrease in checking accounts. The growth in certificates of deposits was largely the result of targeted promotions to retain and attract customers amid heightened competition for deposits as market interest rates stabilized, while checking accounts declined as customers sought higher-yield alternatives. The Bank had$24.4 million and$25.8 million in brokered time deposits at September 30, 2025 and December 31, 2024, respectively. A portion of these brokered deposits include call options, giving the Bank the flexibility to redeem them prior to maturity if interest rates decline. In addition, the Bank held$5.7 million and$5.4 million of non-certificate brokered deposits at September 30, 2025 and December 31, 2024, respectively.

Previous wording

At June 30, 2025 and December 31, 2024, we had no deposit relationships greater than 5% of outstanding deposits. At June 30, 2025, approximately$342.6 million or 24.8% of our$1.38 billion deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements. For additional details of deposits, see “Note 9 – Deposits” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Current wording

At September 30, 2025 and December 31, 2024, we did not have any deposit relationship with any individual or entity that was greater than 5% of outstanding deposits. At September 30, 2025, approximately$334.7 million or 24.5% of our$1.37 billion deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements. For additional details of deposits, see “Note 9 – Deposits” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Previous wording

We had no outstanding borrowings from the FRB at June 30, 2025, compared to $50.0 million at December 31, 2024. This decrease was primarily due to excess liquidity, which reduced the need for borrowed funds.

Current wording

We had no outstanding borrowings from the FRB at September 30, 2025, compared to$50.0 million at December 31, 2024. This decrease was primarily due to our excess liquidity, which reduced the need for borrowed funds.

Previous wording

We also had$24.4 million in other borrowings at June 30, 2025, compared to$27.8 million and December 31, 2024, which consisted of short-term repurchase agreements with certain commercial demand deposit customers for sweep accounts. For additional information, see “Note 10 – Borrowings” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Current wording

We also had$23.9 million in other borrowings at September 30, 2025, compared to$27.8 million and December 31, 2024, which consisted of short-term repurchase agreements with certain commercial demand deposit customers for sweep accounts. For additional information, see “Note 10 – Borrowings” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Previous wording

Shareholders’ equity increased$8.9 million or 4.9%, to$191.3 million at June 30, 2025 from$182.4 million at December 31, 2024. The increase was primarily attributable to$5.0 million in net income earned during the period and a$5.3 million reduction in accumulated other comprehensive loss (AOCL), driven by unrealized gains on AFS securities as market conditions improved. These increases were partially offset by $1.3 million in common stock dividends paid and $415,000 in preferred stock dividends paid to shareholders during thesix months ended June 30, 2025.

Current wording

Shareholders’ equity increased$12.4 million or 0.1%, to$194.8 million at September 30, 2025 from$182.4 million at December 31, 2024. The increase was primarily attributable to$8.1 million in net income earned during the period and a$7.9 million reduction in accumulated other comprehensive loss (AOCL), driven by unrealized gains on AFS securities as market conditions improved. These increases were partially offset by$1.7 million in common stock dividends paid and$1.2 million in preferred stock dividends paid to shareholders during thenine months ended September 30, 2025.

Previous wording

Net income available to common shareholders increased $247,000, or 11.6%, to$2.4 million or$0.75 per basic common share for the quarter ended June 30, 2025, compared to$2.1 million or$0.66 per basic common share for the quarter ended June 30, 2024. The increase was the result ofincreases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, which were partially offset by increases in non-interest expense, provision for income taxes and the payment of preferred stock dividends during the second quarter of 2025.

Current wording

Net income available to common shareholders increased $1.2 million, or 59.1%, to$3.2 million or$1.01 per basic common share for the quarter ended September 30, 2025, compared to$2.0 million or$0.62 per basic common share for the quarter ended September 30, 2024. The increase was the result of anincrease in net interest income and a reduction to the provision for credit losses, which were partially offset by an increase in non-interest expense during the third quarter of 2025.

Previous wording

Net interest income increased $1.1 million or 11.1% to $11.3 million during the quarter ended June 30, 2025, compared to $10.2 million for the same quarter in 2024 due to increases in both average interest-earning assets and net interest margin. During the quarter ended June 30, 2025, average interest-earning assets increased $72.8 million or 5.1% to $1.50 billion from $1.43 billion for the same quarter in 2024, while average interest-bearing liabilities increased $33.1 million or 3.0% to $1.13 billion for the quarter ended June 30, 2025 from $1.09 billion for the comparable quarter in 2024. The Company's net interest margin was 3.02% for the quarter ended June 30, 2025 compared to 2.86% for the comparable quarter in 2024. The Company's net interest spread on a tax equivalent basis was 2.29% for the quarter ended June 30, 2025 compared to 2.12% for the quarter ended June 30, 2024.

Current wording

Net interest income increased $1.7 million or 16.0% to $12.1 million during the quarter ended September 30, 2025, compared to $10.4 million for the same quarter in 2024 due to increases in both average interest-earning assets and net interest margin. During the quarter ended September 30, 2025, average interest-earning assets increased $72.3 million or 5.0% to $1.53 billion from $1.46 billion for the same quarter in 2024, while average interest-bearing liabilities increased $34.2 million or 3.1% to $1.15 billion for the quarter ended September 30, 2025 from $1.11 billion for the comparable quarter in 2024. The Company's net interest margin was 3.17% for the quarter ended September 30, 2025 compared to 2.87% for the comparable quarter in 2024. The Company's net interest spread on a tax equivalent basis was 2.47% for the quarter ended September 30, 2025 compared to 2.10% for the quarter ended September 30, 2024.

Previous wording

The increase in the net interest margin was the result of several key factors. Primarily, the yield on loans improved by 24 basis points due to a combination of adjustable-rate loan repricing as interest rates increased in the market and the origination of new loans at higher rates. Additionally, the reduction in interest expense on borrowings, particularly a significant decrease in the average balance and cost of FRB borrowings and repurchase agreements, contributed to lower funding costs. Although interest expense on certificates of deposit increased as a result of a higher average balance and rates paid on those deposits, the overall cost of interest-bearing liabilities declined due to the lower cost and balances of other borrowing types and decreases in deposit rates on checking and savings accounts. The favorable mix of higher-yielding earning assets combined with lower overall funding costs resulted in an improved net interest spread and net interest margin.

Current wording

The increase in the net interest margin was the result of several key factors. Primarily, the yield on loans increased by 18 basis points due to a combination of adjustable-rate loan repricing as interest rates increased in the market and the origination of new loans at higher rates. Additionally, the reduction in interest expense on borrowings, particularly a significant decrease in the average balance and cost of FRB borrowings and repurchase agreements, contributed to lower funding costs. Interest expense on deposits decreased slightly as a result of lower rates paid on those deposits. The cost of interest-bearing liabilities and related interest expense declined due to the lower cost and balances of other borrowing types and decreases in deposit rates. The favorable mix of higher-yielding earning assets combined with lower funding costs resulted in an improved net interest spread and net interest margin.

Previous wording

Interest income on loans increased $1.1 million or 10.7% to $11.1 million for the quarter ended June 30, 2025 from $10.0 million for thesecond quarter of 2024. The increase was the result of a $42.3 million increase in the average loan portfolio balance combined with a 24 basis point increase in the average yield on loans receivable as adjustable-rate loans reset and new loans were originated at higher market interest rates.

Current wording

Interest income on loans increased $438,000 or 4.1% to $11.0 million for the quarter ended September 30, 2025 from $10.6 million for thethird quarter of 2024. The increase was the result of a $8.2 million increase in the average loan portfolio balance combined with an increase of 18 basis points in the average yield on loans receivable as adjustable-rate loans reset or paid off and new loans were originated at higher market interest rates.

Previous wording

Interest income from deposits with other banks increased $257,000 to $1.4 million during the quarter ended June 30, 2025, from $1.2 million for thesecond quarter of 2024, due to a $41.8 million increase in the average balance of these assets.

Current wording

Interest income from deposits with other banks decreased $593,000 to $858,000 during the quarter ended September 30, 2025, from $1.5 million for thethird quarter of 2024, due to a $29.2 million decrease in the average balance of these assets.

Previous wording

Total interest expense decreased $502,000 or 5.8% to $8.1 million for the quarter ended June 30, 2025 compared to $8.6 million for the same quarter in 2024 primarily due toan $800,000 reduction in interest expense on other borrowings resulting from lower average balances and lower rates. This decline was partially offset by higher interest expense on certificates of deposit as a result of significant growth in average balances and slightly higher rates. Additionally, interest expense on checking, savings and money market accounts decreased due to lower rates.

Current wording

Total interest expense decreased $1.0 million or 11.7% to $8.1 million for the quarter ended September 30, 2025 compared to $9.1 million for the same quarter in 2024 primarily due toan $818,000 reduction in interest expense on other borrowings resulting from lower average balances and lower rates. This decline was partially offset by higher interest expense on certificates of deposit as a result of significant growth in average balances, which was partially offset by lower rates paid on these deposits. Additionally, interest expense on checking, savings and money market accounts decreased due to lower rates.

Previous wording

The amount of the provision and the adequacy of the allowance for credit losses for loans and unfunded commitments is determined by management’s on-going monthly analysis. The Company has policies and procedures in place for evaluating and monitoring the overall credit quality of the loan portfolio and for timely identification of potential problem loans including internal and external loan reviews. The adequacy of the allowance for credit losses is reviewed monthly by the Asset Classification Committee and quarterly by the Board of Directors.

Current wording

The amount of the provision and the adequacy of the allowance for credit losses for loans and unfunded commitments is determined by management’s on-going monthly analysis. The Company has policies and procedures in place for evaluating and monitoring the credit quality of the loan portfolio and for timely identification of potential problem loans including internal and external loan reviews. The adequacy of the allowance for credit losses is reviewed monthly by the Asset Classification Committee and quarterly by the Board of Directors.

Previous wording

The Company recorded no provision for credit losses during the quarter ended June 30, 2025, compared to $175,000 in total provision for credit losses of $335,000 during the quarter ended June 30, 2024. The absence of a provision in the current quarter reflects stable credit quality, minimal net charge-offs, and management’s determination that the existing allowance for credit losses was adequate based on current portfolio performance, economic conditions, and loan loss expectations. Net recoveries totaled $3,000 for thesecond quarter of 2025 compared to net charge-offs of $59,000 during thesecond quarter of 2024. For additional information on the changes in the allowance for credit losses, see "Note 6 - Investments, AFS", "Note 7 - Investments, HTM, and “Note 8 - Loans Receivable" of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Current wording

The Company recorded a $317,000 reversal to the provision for credit losses on loans and $117,000 in provision for credit losses on unfunded commitments, resulting in a $200,000 net reversal to the provision for credit losses during the quarter ended September 30, 2025, compared to $585,000 in total provision for credit losses during the quarter ended September 30, 2024. The reversal of provision for credit losses on loans in the current quarter reflects stable credit quality and management’s determination that the existing allowance for credit losses was adequate based on current portfolio performance, economic conditions, and loan loss expectations. Net charge-offs totaled $88,000 for thethird quarter of 2025 compared to net charge-offs of $79,000 during thethird quarter of 2024. For additional information on the changes in the allowance for credit losses, see "Note 6 - Investments, AFS", "Note 7 - Investments, HTM, and “Note 8 - Loans Receivable" of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Previous wording

For additional details of the changes in non-interest income, see “Note 14 - Non-Interest Income” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Current wording

Non-interest income remained unchanged at $2.6 million for the quarters ended September 30, 2025 and 2024. The most significant fluctuations include a $199,000 increase in other non-interest income, which was offset by a $229,000 decrease in trust income. For additional details of the changes in non-interest income, see “Note 14 - Non-Interest Income” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Previous wording

Non-interest expense increased $692,000 or 7.2% to $10.4 million for the quarter ended June 30, 2025 compared to $9.7 million for the quarter ended June 30, 2024. The following table summarizes the changes in non-interest expense:

Current wording

Non-interest expense increased $1.0 million, or 11.1%, to $10.4 million for the quarter ended September 30, 2025 compared to $9.3 million for the quarter ended September 30, 2024. The following table summarizes the changes in non-interest expense:

Previous wording

The largest increase in non-interest expense during thesecond quarter of 2025 was compensation and employee benefits expense, which increased $332,000 or 6.0% to $5.9 million for the quarter ended June 30, 2025, compared to $5.5 million during the same period in 2024. These increases were primarily the result of higher staffing levels and additional compensation-related costs to support our growth and operational needs.

Current wording

The largest increase in non-interest expense during thethird quarter of 2025 was compensation and employee benefits expense, which increased $648,000 or 12.1% to $6.0 million for the quarter ended September 30, 2025, compared to $5.4 million during the same period in 2024. These increases were primarily the result of higher staffing levels and additional compensation-related costs to support our growth and operational needs.

Previous wording

Occupancy expense increased $124,000, or 15.3%, due to higher building maintenance, utility costs, and lease-related expenses. Debit card expense increased $152,000, or 38.2%, due to higher transaction volumes and increased network processing fees. These increases were partially offset by a $125,000 decrease in depreciation and maintenance of equipment, or 23.8%, as certain assets reached full depreciation and equipment replacement activity was lower.

Current wording

Occupancy expense increased $136,000, or 17.0%, due to higher building maintenance, utility costs, and lease-related expenses. Depreciation and maintenance of equipment increased $97,000, or 32.7%, due to higher equipment maintenance costs for the quarter ended September 30, 2025. Debit card expense increased $79,000, or 20.4%, due to higher transaction volumes and increased network processing fees.

Previous wording

The provision for income taxes increased 33.8% to $756,000 for the quarter ended June 30, 2025, from $565,000 for the same period in 2024, due to higher pre-tax net income. Pre-tax net income was $3.5 million for the quarter ended June 30, 2025 compared to $2.8 million for thesecond quarter of 2024. The Company’s combined federal and state effective income tax rate was 21.3% and 20.2% for the quarters ended June 30, 2025 and 2024, respectively.

Current wording

The provision for income taxes increased 33.8% to $756,000 for the quarter ended September 30, 2025, from $565,000 for the same period in 2024, due to higher pre-tax net income. Pre-tax net income was $3.5 million for the quarter ended September 30, 2025 compared to $2.8 million for thethird quarter of 2024. The Company’s combined federal and state effective income tax rate was 21.3% and 23.3% for the quarters ended September 30, 2025 and 2024, respectively.

Previous wording

Results of Operations for the Six Months Ended June 30, 2025 and 2024

Current wording

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Previous wording

Net income available to common shareholders increased $1.1 million, or 27.9%, to$5.0 million or$0.75 per basic common share for the six months ended June 30, 2025, compared to$3.9 million or $1.20 per basic common share for the six months ended June 30, 2024. The increase was the result ofincreases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, which were partially offset by increases in non-interest expense, provision for income taxes and the payment of preferred stock dividends during the second quarter of 2025.

Current wording

Net income available to common shareholders increased $2.3 million, or 38.5%, to$8.1 million or $ 2.57 per basic common share for the nine months ended September 30, 2025, compared to$5.9 million or $1.83 per basic common share for the nine months ended September 30, 2024. The increase was the result ofincreases in net interest income and non-interest income, as well as a reduction to the provision for credit losses, which were partially offset by increases in non-interest expense and provision for income taxes during the third quarter of 2025.

Previous wording

The following table compares detailed average balances, average yields on interest-earning assets, average costs of interest-bearing liabilities and the resulting changes in interest income and expense for the six months ended June 30, 2025 and 2024. The average balances were derived from the daily balances throughout the periods indicated. The average yields or costs were calculated by dividing the income or expense by the average balance of the corresponding assets or liabilities. Nonaccrual loans are included in earning assets in the following table. Loan yields have been reduced to reflect the negative impact on our earnings of loans on nonaccrual status. Interest income from non-taxable investments is calculated on a tax equivalent basis, which recognizes the income tax savings when comparing taxable and tax-exempt assets and was calculated using the effective tax rate for the six months ended June 30, 2025 and 2024.

Current wording

The following table compares detailed average balances, average yields on interest-earning assets, average costs of interest-bearing liabilities and the resulting changes in interest income and expense for the nine months ended September 30, 2025 and 2024. The average balances were derived from the daily balances throughout the periods indicated. The average yields or costs were calculated by dividing the income or expense by the average balance of the corresponding assets or liabilities. Nonaccrual loans are included in earning assets in the following table. Loan yields have been reduced to reflect the negative impact on our earnings of loans on nonaccrual status. Interest income from non-taxable investments is calculated on a tax equivalent basis, which recognizes the income tax savings when comparing taxable and tax-exempt assets and was calculated using the effective tax rate for the nine months ended September 30, 2025 and 2024.

Previous wording

Net interest income on a tax equivalent basis increased $2.3 million or 11.5% to $22.6 million during thesix months ended June 30, 2025, compared to $20.2 million for the samesix months in 2024 due to increases in both average interest-earning assets and net interest margin. During thesix months ended June 30, 2025, average interest-earning assets increased $43.7 million or 3.0% to $1.49 billion from $1.44 billion for the firstsix months in 2024, while average interest-bearing liabilities increased $12.3 million or 1.1% to $1.12 billion for thesix months ended June 30, 2025 from $1.11 billion for the comparablesix months in 2024. The Company's net interest margin was 3.03% for thesix months ended June 30, 2025 compared to 2.80% for the comparablesix months in 2024. The Company's net interest spread on a tax equivalent basis was 2.33% for thesix months ended June 30, 2025 compared to 2.07% for thesix months ended June 30, 2024.

Current wording

Net interest income on a tax equivalent basis increased $4.0 million or 13.1% to $34.7 million during thenine months ended September 30, 2025, compared to $30.7 million for the same nine months in 2024 due to increases in both average interest-earning assets and net interest margin. During thenine months ended September 30, 2025, average interest-earning assets increased $53.4 million or 3.7% to $1.50 billion from $1.45 billion for the first nine months in 2024, while average interest-bearing liabilities increased $19.7 million or 1.8% to $1.13 billion for thenine months ended September 30, 2025 from $1.11 billion for the comparable nine months in 2024. The Company's net interest margin was 3.08% for thenine months ended September 30, 2025 compared to 2.83% for the comparable nine months in 2024. The Company's net interest spread on a tax equivalent basis was 2.37% for thenine months ended September 30, 2025 compared to 2.08% for thenine months ended September 30, 2024.

Previous wording

Interest income on loans increased $2.7 million or 13.6% to $22.2 million for thesix months ended June 30, 2025 from $19.6 million for thesix months of 2024. The increase was the result of a $50.2 million increase in the average loan portfolio balance combined with a 33 basis point increase in the average yield on loans receivable as adjustable-rate loans reset and new loans were originated at higher market interest rates.

Current wording

Interest income on loans increased $3.1 million or 10.3% to $33.3 million for thenine months ended September 30, 2025 from $30.2 million for thenine months ended September 30, 2024. The increase was the result of a $36.1 million increase in the average loan portfolio balance combined with a 28 basis point increase in the average yield on loans receivable as adjustable-rate loans reset or paid off and new loans were originated at higher market interest rates.

Previous wording

Interest income from taxable investments decreased $1.2 million or 7.8% to $13.8 million during thesix months ended June 30, 2025, from $15.0 million for thesix months of 2024, due to a $8.6 million decrease in the average balance of taxable investments combined with a 30 basis point decrease in the average yield to 4.18%. Tax equivalent interest income from non-taxable investments decreased $276,000 to $81,000 during thesix months ended June 30, 2025 primarily due to a $14.1 million decrease in the average balance of non-taxable investments.

Current wording

Interest income from taxable investments decreased $441,000 or 2.0% to $21.9 million during thenine months ended September 30, 2025, from $22.4 million for the first nine months of 2024, due to a 25 basis point decrease in the average yield to 4.24%, which was partially offset by $25.9 million increase in the average balance of taxable investments. Tax equivalent interest income from non-taxable investments decreased $244,000 to $226,000 during thenine months ended September 30, 2025 primarily due to a $9.6 million decrease in the average balance of non-taxable investments.

Previous wording

Interest income from deposits with other banks decreased $116,000 to $2.6 million during thesix months ended June 30, 2025, from $2.7 million for thesix months of 2024, due to a 96 basis point decrease in the average yield earned on these assets reflecting lower market interest rates, which was partially offset by a 16.2 million increase in the average balance of these assets.

Current wording

Interest income from deposits with other banks decreased $709,000 to $3.4 million during thenine months ended September 30, 2025, from $4.1 million for thenine months ended September 30, 2024, due to a 96 basis point decrease in the average yield earned on these assets reflecting lower market interest rates, which was partially offset by a $936,000 increase in the average balance of these assets.

Previous wording

Total interest expense decreased $1.2 million or 7.1% to $16.1 million for thesix months ended June 30, 2025 compared to $17.4 million for the samesix months in 2024, primarily due to the payoff of borrowings from the FRB combined with a decrease in market interest rates.

Current wording

Total interest expense decreased $2.3 million or 8.7% to $24.2 million for thenine months ended September 30, 2025 compared to $26.5 million for the same nine months in 2024, primarily due to the payoff of borrowings from the FRB combined with a decrease in market interest rates.

Previous wording

Interest expense on deposits increased $1.3 million to $15.5 million for thesix months ended June 30, 2025, from $14.2 million for thesix months of 2024, due to a $111.4 million increase in the average balance of interest-bearing deposits, particularly certificates of deposit accounts, which increased $80.7 million, which was partially offset by a decrease of seven basis points in the average cost of deposits.

Current wording

Interest expense on deposits increased $1.3 million to $23.2 million for thenine months ended September 30, 2025, from $21.9 million for the same nine month period in 2024, due to a $115.1 million increase in the average balance of interest-bearing deposits, particularly certificates of deposit accounts, which increased $71.7 million, which was partially offset by a decrease of 16 basis points in the average cost of deposits.

Previous wording

Interest expense on FRB and other borrowings decreased $2.1 million to $250,000 for thesix months ended June 30, 2025, from $2.3 million for the firstsix months of 2024. This decrease was primarily due to the repayment of FRB borrowings and lower utilization of repurchase agreements, resulting in an $82.6 million decrease in average balances and a 236 basis point reduction in the average cost of these borrowings to 1.82% for the six months ended June 30, 2025, from 4.18% for the same period in 2024, reflecting lower market interest rates.

Current wording

Interest expense on FRB and other borrowings decreased $2.9 million to $355,000 for thenine months ended September 30, 2025, from $3.2 million for thenine months ended September 30, 2024. This decrease was primarily due to the repayment of FRB borrowings and lower utilization of repurchase agreements, resulting in a $78.9 million decrease in average balances and a 222 basis point reduction in the average cost of these borrowings to 1.94% for thenine months ended September 30, 2025, from 4.16% for the same period in 2024, reflecting lower market interest rates.

Previous wording

The Company recorded no provision for credit losses during thesix months ended June 30, 2025, compared to a $475,000 provision for credit losses on loans and a $35,000 provision for credit losses on unfunded commitments, resulting in a total provision for credit losses of $510,000 during thesix months ended June 30, 2024. Net recoveries totaled $114,000 for thesix months of 2025 compared to net charge-offs of $86,000 during the firstsix months of 2024. For additional information on the changes in the allowance for credit losses, see "Note 6 - Investments, AFS", "Note 7 - Investments, HTM, and “Note 8 - Loans Receivable" of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Current wording

The Company recordeda $317,000 reversal of provision for credit losses on loans and a $117,000 provision for credit losses on unfunded commitments, resulting in a $200,000 net reversal in the provision for credit losses for thenine months ended September 30, 2025, compared to a $1.2 million provision for credit losses on loans and a $110,000 reversal of provision for credit losses on unfunded commitments, resulting in a total provision for credit losses of $1.1 million during thenine months ended September 30, 2024. The reversal of provision for credit losses on loans in 2025 reflects stable credit quality, minimal net charge-offs, and management’s determination that the existing allowance for credit losses was adequate based on current portfolio performance, economic conditions, and loan loss expectations. Net recoveries totaled $26,000 for thenine months ended September 30, 2025, compared to net charge-offs of $165,000 during thenine months ended September 30, 2024. For additional information on the changes in the allowance for credit losses, see "Note 6 - Investments, AFS", "Note 7 - Investments, HTM, and “Note 8 - Loans Receivable" of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.

Previous wording

Non-interest income increased $264,000 or 5.5% to $5.0 million for thesix months ended June 30, 2025 compared to $4.8 million for thesix months ended June 30, 2024, primarily due to a $220,000 increase in other non-interest income, which included a $166,000 increase in rental income and $62,000 gain on sale of land held for sale. During the first quarter of 2025, we purchased a multi-tenant property resulting in an increase to rental income, which is intended to be the future site of a full-service branch.

Current wording

Non-interest income increased $273,000 or 3.7% to $7.7 million for thenine months ended September 30, 2025 compared to $7.4 million for thenine months ended September 30, 2024, primarily due to a $418,000 increase in other non-interest income, which included a $365,000 increase in rental income and $62,000 gain on sale of land held for sale. During the first quarter of 2025, we purchased a multi-tenant property resulting in an increase to rental income. This property is intended to be the future site of a full-service branch of the Bank.

Previous wording

Non-interest expense increased $898,000 or 4.7% to $20.2 million for the six months ended June 30, 2025 compared to $19.3 million for the six months ended June 30, 2024. The following table summarizes the changes in non-interest expense:

Current wording

Non-interest expense increased $1.9 million or 6.8% to $30.6 million for the nine months ended September 30, 2025 compared to $28.6 million for the nine months ended September 30, 2024. The following table summarizes the changes in non-interest expense:

Previous wording

The largest increase in non-interest expense during the six months of 2025 was compensation and employee benefits expense, which increased $587,000 or 5.3% to $11.7 million for the six months ended June 30, 2025, compared to $11.1 million during the same period in 2024. These increases were primarily the result of higher staffing levels and additional compensation-related costs to support our growth and operational needs.

Current wording

The largest increase in non-interest expensewas compensation and employee benefits expense, which increased $1.2 million, or 7.5%, to $17.7 million for thenine months ended September 30, 2025, compared to $16.4 million during the same period in 2024, as a result of higher staffing levels and additional compensation-related costs to support our growth and operational needs.