AUBURN NATIONAL BANCORPORATION, INC

For the period ended Sep 30, 2026. Filed Nov 6, 2026.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Sep 30, 2026 · Filed Nov 6, 2026

AUBN$25.76-2.6%Stored close · as of Nov 6, 2026

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Contents

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements

NOTE1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company whose primary business is conducted by its wholly-owned subsidiary, AuburnBank (the “Bank”). AuburnBank is a commercial bank located in

Auburn, Alabama. The Bank provides a full range of banking services in its primary market area, Lee County, which includes the Auburn-Opelika Metropolitan Statistical Area.

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements donot include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair statement of the financial position and the results of operations for all periods presented. All such adjustments are of a normal recurring nature. The results of operations in the interim statements arenot necessarily indicative of the results of operations that the Company and its subsidiaries* mayachieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form10*-K for the year ended* December 31, 2025.*

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany transactions and accounts are eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of allowance for credit losses on loans and investment securities, the fair value of financial instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”).

Segment Information

The Company’s operations consist of asingle reportable segment, community banking, which is conducted through the Bank. The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”). The CODM assesses performance and allocates resources based on consolidated net earnings and total assets, as reported in the accompanying consolidated statements of earnings and balance sheets, and regularly reviews expense information at the level of the captions presented in the consolidated statements of earnings. Accordingly, the segment’s revenues, significant expenses, measure of profit or loss and total assets are the consolidated amounts presented in those statements, andno reconciliation is necessary.

Subsequent Events

The Company has evaluated the effects of events and transactions through the date of this filing that have occurred subsequent to* September 30, 2026.The Company doesnot* believe there were any material subsequent events during this period that would have required further recognition or disclosure in the unaudited consolidated financial statements included in this report.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current-period presentation. These reclassifications hadno effect on the Company’s previously reported net earnings or total stockholders’ equity.

Accounting Developments

In thefirst nine months of2026, the Company didnot adopt any new accounting guidance.

NOTE2: BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average common shares outstanding for the respective period. Diluted net earnings per share reflects the potential dilution that could occur upon exercise of securities or other rights for, or convertible into, shares of the Company’s common stock. During2026, the Company granted 8,172 restricted stock units (“RSUs”), which represent potential common shares. During2025, the Company granted 3,029 RSUs, which vested during thefirst quarter of2026. RSUs are included in the computation of diluted net earnings per share using the treasury stock method. See “Note5 – Stock-Based Compensation.”

The basic and diluted net earnings per share computations for the respective periods are presented below:

· · Quarter ended September 30, · · · Nine months ended September 30, ·
(Dollars in thousands, except share and per share data) · · 2026 · · · 2025 · · · 2026 · · · 2025 ·
Basic:
Net earnings	$2,523	$2,227	$7,019	$5,590
Weighted average common shares outstanding	3,484,168	3,493,699	3,490,131	3,493,699
Net earnings per share	$0.72	$0.64	$2.01	$1.60

Diluted:
Net earnings	$2,523	$2,227	$7,019	$5,590
Weighted average common shares outstanding, basic	3,484,168	3,493,699	3,490,131	3,493,699
Dilutive effect of restricted stock units	1,040	2,273	996	766
Weighted average common shares outstanding, diluted	3,485,208	3,495,972	3,491,127	3,494,465
Net earnings per share	$0.72	$0.64	$2.01	$1.60

NOTE3: SECURITIES

At* September 30, 2026and December 31, 2025,respectively, all securities within the scope of ASC320,* Investments–* Debt Securities,were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by contractual maturity at September 30, 2026and December 31, 2025,respectively, are presented below. In August 2026,the Company purchased U.S. Treasury securities with contractual maturities of more thanten* years and designated a pay-fixed, receive-floating interest rate swap with a notional amount of $90.0 million as a fair value hedge of the change in fair value of these securities attributable to changes in the benchmark interest rate. The cumulative fair value hedging adjustment is recognized as an adjustment to the amortized cost of the hedged securities and is included in the amortized cost amounts presented in the table below. See “Note7 – Derivative Instruments.”

· · 1 year · · · 1 to 5 · · · 5 to 10 · · · After 10 · · · Fair · · · Gross Unrealized · · · Amortized ·
(Dollars in thousands) · · or less · · · years · · · years · · · years · · · Value · · · Gains · · · Losses · · · Cost ·
September 30, 2026
U.S. Treasury (a)	$—	—	—	84,784	84,784	256	—	$84,528
Agency obligations (b)	257	42,758	7,323	—	50,338	—	5,907	56,245
Agency MBS (b)	—	20,159	23,856	96,727	140,742	—	24,710	165,452
State and political subdivisions	—	6,087	4,326	5,540	15,953	—	3,308	19,261
Total available-for-sale	$257	69,004	35,505	187,051	291,817	256	33,925	$325,486

December 31, 2025
Agency obligations (b)	$—	35,580	18,204	—	53,784	—	4,727	$58,511
Agency MBS (b)	—	20,112	16,171	125,644	161,927	—	19,063	180,990
State and political subdivisions	—	1,590	9,160	6,798	17,548	1	2,103	19,650
Total available-for-sale	$—	57,282	43,535	132,442	233,259	1	25,893	$259,151

(a)	Amortized cost of U.S. Treasury securities at September 30, 2026 includes a cumulative fair value hedging adjustment of $(4,420) related to an interest rate swap designated as a fair value hedge of these securities. See "Note 7 - Derivative Instruments."

(b)	Includes securities issued by U.S. government agencies or government-sponsored entities. Expected lives of these securities may differ from contractual maturities because (i) issuers may have the right to call or repay such securities obligations with or without prepayment penalties and (ii) loans included in Agency MBS generally have the right to prepay such loan in whole or in part at any time.

Securities with aggregate fair values of $190.8 million and $209.4 million at* September 30, 2026and December 31, 2025,*were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank of Atlanta (“FHLB – Atlanta”) advances, and for other purposes required or permitted by law.

Included in other assets on the accompanying consolidated balance sheets are nonmarketable equity investments. The carrying amounts of nonmarketable equity investments were $1.4 million at both* September 30, 2026and December 31, 2025.*Nonmarketable equity investments include FHLB - Atlanta stock, Federal Reserve Bank (“FRB”) stock, and stock in a privately held financial institution.

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at* September 30, 2026and December 31, 2025,respectively, segregated by those securities that have been in an unrealized loss position for less than12* months and12 months or longer, are presented below.

· · Less than 12 Months · · · 12 Months or Longer · · · Total ·
· · Fair · · · Unrealized · · · Fair · · · Unrealized · · · Fair · · · Unrealized ·
(Dollars in thousands) · · Value · · · Losses · · · Value · · · Losses · · · Value · · · Losses ·
September 30, 2026:
Agency obligations	$—	—	50,338	5,907	$50,338	5,907
Agency MBS	2,384	181	138,358	24,529	140,742	24,710
State and political subdivisions	3,197	220	12,756	3,088	15,953	3,308
Total	$5,581	401	201,452	33,524	$207,033	33,925
December 31, 2025:
Agency obligations	$—	—	53,784	4,727	$53,784	4,727
Agency MBS	—	—	161,840	19,063	161,840	19,063
State and political subdivisions	—	—	14,827	2,103	14,827	2,103
Total	$—	—	230,451	25,893	$230,451	25,893

For the securities in the previous table, the Company assesses whether ornot it intends to sell the security, or more likely thannot will be required to sell the security, before recovery of its amortized cost basis. Unrealized losses havenot been recognized into income as the decline in fair value is largely due to changes in interest rates andnot credit quality. For the securities in the previous table, as of* September 30, 2026the Company doesnot* intend to sell and it is likely that management willnot be required to sell the securities prior to their anticipated recovery.

U.S. Treasury

Investments in U.S. Treasury obligations are guaranteed of full and timely payments by the federal government. Based on management's analysis and judgment, there wereno credit losses attributable to the Company’s investments in U.S. Treasury obligations at* September 30, 2026.*

Agency Obligations

Investments in agency obligations are guaranteed of full and timely payments by the issuing agency. Based on management's analysis and judgment, there wereno credit losses attributable to the Company’s investments in agency obligations at* September 30, 2026.*

Agency MBS

Investments in agency MBS are issued by Ginnie Mae, Fannie Mae, and Freddie Mac. Each of these agencies provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based on management's analysis and judgment, there wereno credit losses attributable to the Company’s investments in agency MBS at* September 30, 2026.*

State and Political Subdivisions

Investments in state and political subdivisions are securities issued by various municipalities in the United States. The majority of the portfolio was rated AA or higher, withno securities rated below investment grade at* September 30, 2026.Based on management's analysis and judgment, there wereno credit losses attributable to the Company’s investments in state and political subdivisions at September 30, 2026.*

Realized Gains and Losses

The Company hadno sales of securities during the quarters andnine months ended* September 30, 2026and2025,* respectively.

NOTE4: LOANS AND ALLOWANCE FOR CREDIT LOSSES

· · September 30, · · · December 31, ·
(Dollars in thousands) · · 2026 · · · 2025 ·
Commercial and industrial	$27,061	$33,887
Municipal	34,318	24,513
Construction and land development	57,067	56,436
Commercial real estate:
Owner occupied	53,903	59,568
Hotel/motel	56,292	47,870
Multifamily	56,873	51,516
Other	159,907	166,567
Total commercial real estate	326,975	325,521
Residential real estate:
Consumer mortgage	60,096	59,781
Investment property	58,304	56,773
Total residential real estate	118,400	116,554
Consumer installment	8,886	8,421
Total loans, net of unearned income before basis adjustment	572,707	565,332
Basis adjustment associated with fair value hedge (1)	(860)	22
Total loans, net of unearned income	$571,847	$565,354

(1) Represents the basis adjustment associated with application of hedge accounting on certain loans. The basis adjustment will be allocated to the amortized cost of associated loans within the portfolio if the hedge accounting is discontinued. Refer to Note7 - Derivative Instruments for additional information.

Loans secured by real estate were approximately 87.7% of the Company’s total loan portfolio at* September 30, 2026.At September 30, 2026,*the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama, and surrounding areas.

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan portfolio is disaggregated into the following portfolio segments: commercial and industrial, municipal, construction and land development, commercial real estate, residential real estate, and consumer installment. Where appropriate, the Company’s loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk.

During thefirst quarter of2026, the Company refined its loan portfolio segmentation to separately identify municipal loans, which were previously included within commercial and industrial loans, due to their recent growth and distinct risk characteristics. The allowance for credit losses related to municipal loans is determined using a discounted cash flow methodology incorporating probability of default and loss given default assumptions derived from external data sources. As a result of this refinement, the total allowance decreased due to the lower expected credit losses associated with these loans. This refinement represents a change in accounting estimate and is accounted for prospectively. Accordingly, the allowance for credit losses and the provision for credit losses for prior periods havenot been revised. Loan balances in prior period tables have been reclassified to conform to the current period presentation.

The following describes the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial—* *includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural production. Generally, the primary source of repayment is the cash flow from business operations and activities of the borrower.

Municipal—* *includes loans to state and local governmental entities and related public-sector organizations to finance capital projects, infrastructure improvements, and other governmental or public service needs. These loans are typically supported by general tax revenues, utility revenues, special assessments, or other dedicated revenue sources of the municipality. Repayment is primarily dependent on the financial capacity and revenue-generating ability of the governmental entity.

Construction and land development—* *includes both loans and credit lines for the purpose of purchasing, carrying, and developing land into commercial developments or residential subdivisions. Also included are loans and lines for construction of residential, multifamily, and commercial buildings. Generally, the primary source of repayment is dependent upon the sale or refinancing of the real estate collateral.

Commercial real estate—* *includes loans disaggregated in these classes:

●

Owner-occupied – includes loans secured by business facilities to finance business operations, equipment and owner-occupied facilities primarily for small and medium-sized commercial customers. Generally, the primary source of loan repayment are the cash flows from business operations and activities of the borrower, who owns the property.

●

Hotel/motel – includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower.

●

Multifamily – primarily includes loans to finance income-producing multifamily properties. Loans in this class include loans for 5 or more unit residential property and apartments leased to residents. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the respective borrower.

●

Other – primarily includes loans to finance income-producing commercial real estate. Loans in this class include loans for neighborhood retail centers, medical and professional offices, single retail stores, industrial buildings, and warehouses leased generally to local businesses and residents. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower.

Residential real estate—* includes loans disaggregated intotwo* classes:

●

Consumer mortgage – primarily includes first or second lien mortgages and home equity lines to consumers that are secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and property value.

●

Investment property – primarily includes loans to finance income-producing 1-4 family residential properties. Generally, the primary source of repayment is dependent upon income generated from leasing the property securing the loan. The underwriting of these loans takes into consideration the rental rates, as well as the financial health of the borrowers.

Consumer installment—* *includes loans to individuals, both secured by personal property and unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and, if applicable, property value.

The following is a summary of current, accruing past due, and nonaccrual loans by portfolio segment and class as of* September 30, 2026and December 31, 2025.*

· · · · · · Accruing · · · Accruing · · · Total · · · · · · · · ·
· · · · · · 30-89 Days · · · Greater than · · · Accruing · · · Non- · · · Total ·
(Dollars in thousands) · · Current · · · Past Due · · · 90 days · · · Loans · · · Accrual · · · Loans ·
September 30, 2026:
Commercial and industrial	$26,991	48	—	27,039	22	$27,061
Municipal	34,318	—	—	34,318	—	34,318
Construction and land development	57,067	—	—	57,067	—	57,067
Commercial real estate:
Owner occupied	53,903	—	—	53,903	—	53,903
Hotel/motel	56,292	—	—	56,292	—	56,292
Multifamily	56,873	—	—	56,873	—	56,873
Other	159,907	—	—	159,907	—	159,907
Total commercial real estate	326,975	—	—	326,975	—	326,975
Residential real estate:
Consumer mortgage	59,887	13	—	59,900	196	60,096
Investment property	58,160	144	—	58,304	—	58,304
Total residential real estate	118,047	157	—	118,204	196	118,400
Consumer installment	8,860	26	—	8,886	—	8,886
Total	$572,258	231	—	572,489	218	$572,707
December 31, 2025:
Commercial and industrial	$33,881	6	—	33,887	—	$33,887
Municipal	24,513	—	—	24,513	—	24,513
Construction and land development	56,395	41	—	56,436	—	56,436
Commercial real estate:
Owner occupied	59,085	105	—	59,190	378	59,568
Hotel/motel	47,870	—	—	47,870	—	47,870
Multifamily	51,516	—	—	51,516	—	51,516
Other	166,567	—	—	166,567	—	166,567
Total commercial real estate	325,038	105	—	325,143	378	325,521
Residential real estate:
Consumer mortgage	58,993	720	—	59,713	68	59,781
Investment property	56,737	—	—	56,737	36	56,773
Total residential real estate	115,730	720	—	116,450	104	116,554
Consumer installment	8,348	73	—	8,421	—	8,421
Total	$563,905	945	—	564,850	482	$565,332

Credit Quality Indicators

The credit quality of the loan portfolio is summarizedno less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are defined as follows:

●	Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

●	Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment, even though they are currently performing. These loans are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are not corrected.

●	Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected.

During2026, the Company established municipal loans as a separate portfolio segment. Certain prior period amounts have been reclassified to conform to the current period presentation. The following tables present credit quality indicators for the loan portfolio segments and classes by year of origination as of* September 30, 2026and December 31, 2025.*

Year of Origination · · 2026 · · · 2025 · · · 2024 · · · 2023 · · · 2022 · · · Prior to 2022 · · · Revolving Loans · · · TotalLoans ·
(Dollars in thousands)
September 30, 2026:
Commercial and industrial
Pass	$2,783	4,384	3,075	1,851	751	5,722	8,284	26,850
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	72	—	—	—	117	—	—	189
Nonaccrual	—	—	—	—	22	—	—	22
Total commercial and industrial	2,855	4,384	3,075	1,851	890	5,722	8,284	27,061
Current period gross charge-offs	—	—	—	5	—	—	—	5

Municipal
Pass	$11,814	—	—	1,157	3,448	17,507	392	34,318
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total municipal	11,814	—	—	1,157	3,448	17,507	392	34,318
Current period gross charge-offs	—	—	—	—	—	—	—	—

Construction and land development
Pass	26,472	23,733	3,418	1,436	1,872	—	1	56,932
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	53	82	—	—	135
Nonaccrual	—	—	—	—	—	—	—	—
Total construction and land development	26,472	23,733	3,418	1,489	1,954	—	1	57,067
Current period gross charge-offs	—	—	—	—	—	—	—	—

Commercial real estate:
Owner occupied
Pass	2,340	10,597	1,144	8,428	5,438	20,620	4,148	52,715
Special mention	—	601	—	—	—	—	—	601
Substandard accruing	102	—	485	—	—	—	—	587
Nonaccrual	—	—	—	—	—	—	—	—
Total owner occupied	2,442	11,198	1,629	8,428	5,438	20,620	4,148	53,903
Current period gross charge-offs	—	—	—	—	—	378	—	378

Hotel/motel
Pass	17,672	4,838	14,126	5,816	8,619	5,221	—	56,292
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total hotel/motel	17,672	4,838	14,126	5,816	8,619	5,221	—	56,292
Current period gross charge-offs	—	—	—	—	—	—	—	—

Year of Origination · · 2026 · · · 2025 · · · 2024 · · · 2023 · · · 2022 · · · Prior to 2022 · · · Revolving Loans · · · TotalLoans ·
(Dollars in thousands)
September 30, 2026:
Multifamily
Pass	3,268	1,220	3,538	19,839	16,110	9,295	685	53,955
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	2,918	—	2,918
Nonaccrual	—	—	—	—	—	—	—	—
Total multifamily	3,268	1,220	3,538	19,839	16,110	12,213	685	56,873
Current period gross charge-offs	—	—	—	—	—	—	—	—

Other
Pass	30,209	21,705	30,393	16,252	25,723	33,530	1,253	159,065
Special mention	—	—	842	—	—	—	—	842
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total other	30,209	21,705	31,235	16,252	25,723	33,530	1,253	159,907
Current period gross charge-offs	—	—	—	—	—	—	—	—

Residential real estate:
Consumer mortgage
Pass	6,327	5,282	3,525	15,285	15,676	12,258	656	59,009
Special mention	—	—	—	—	51	224	—	275
Substandard accruing	—	—	—	—	—	616	—	616
Nonaccrual	—	—	—	—	—	196	—	196
Total consumer mortgage	6,327	5,282	3,525	15,285	15,727	13,294	656	60,096
Current period gross charge-offs	—	—	—	—	—	—	—	—

Investment property
Pass	11,178	5,677	7,093	8,562	8,954	12,924	3,879	58,267
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	36	—	1	—	37
Nonaccrual	—	—	—	—	—	—	—	—
Total investment property	11,178	5,677	7,093	8,598	8,954	12,925	3,879	58,304
Current period gross charge-offs	—	—	—	—	—	—	—	—

Consumer installment
Pass	4,042	2,233	1,355	557	587	82	—	8,856
Special mention	—	—	11	—	—	—	—	11
Substandard accruing	—	2	16	1	—	—	—	19
Nonaccrual	—	—	—	—	—	—	—	—
Total consumer installment	4,042	2,235	1,382	558	587	82	—	8,886
Current period gross charge-offs	1	23	—	14	—	—	—	38

Total loans
Pass	116,105	79,669	67,667	79,183	87,178	117,159	19,298	566,259
Special mention	—	601	853	—	51	224	—	1,729
Substandard accruing	174	2	501	90	199	3,535	—	4,501
Nonaccrual	—	—	—	—	22	196	—	218
Total loans	$116,279	80,272	69,021	79,273	87,450	121,114	19,298	$572,707
Total current period gross charge-offs	$1	23	—	19	—	378	—	$421

Year of Origination · · 2025 · · · 2024 · · · 2023 · · · 2022 · · · 2021 · · · Prior to 2021 · · · Revolving Loans · · · TotalLoans ·
(Dollars in thousands)
December 31, 2025:
Commercial and industrial
Pass	$8,566	5,035	3,970	2,865	4,366	8,074	778	$33,654
Special mention	74	4	7	—	—	—	—	85
Substandard accruing	—	—	7	139	2	—	—	148
Nonaccrual	—	—	—	—	—	—	—	—
Total commercial and industrial	8,640	5,039	3,984	3,004	4,368	8,074	778	33,887
Current period gross charge-offs	40	—	99	3	—	—	—	142

Municipal
Pass	$837	—	1,156	4,190	6,013	9,145	3,172	$24,513
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total municipal	837	—	1,156	4,190	6,013	9,145	3,172	24,513
Current period gross charge-offs	—	—	—	—	—	—	—	—

Construction and land development
Pass	31,315	14,175	7,321	2,080	69	711	765	56,436
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total construction and land development	31,315	14,175	7,321	2,080	69	711	765	56,436
Current period gross charge-offs	—	—	—	—	—	—	—	—

Commercial real estate:
Owner occupied
Pass	9,755	1,312	11,889	6,235	13,830	11,618	2,682	57,321
Special mention	620	—	—	—	—	—	750	1,370
Substandard accruing	—	499	—	—	—	—	—	499
Nonaccrual	—	—	—	—	—	378	—	378
Total owner occupied	10,375	1,811	11,889	6,235	13,830	11,996	3,432	59,568
Current period gross charge-offs	—	—	—	—	—	296	—	296

Hotel/motel
Pass	5,012	14,161	6,143	8,976	2,948	10,630	—	47,870
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total hotel/motel	5,012	14,161	6,143	8,976	2,948	10,630	—	47,870
Current period gross charge-offs	—	—	—	—	—	—	—	—

Year of Origination · · 2025 · · · 2024 · · · 2023 · · · 2022 · · · 2021 · · · Prior to 2021 · · · Revolving Loans · · · TotalLoans ·
(Dollars in thousands)
December 31, 2025:
Multifamily
Pass	1,254	3,615	12,550	20,560	1,726	8,652	142	48,499
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	—	—	—	—	—	3,017	—	3,017
Nonaccrual	—	—	—	—	—	—	—	—
Total multifamily	1,254	3,615	12,550	20,560	1,726	11,669	142	51,516
Current period gross charge-offs	—	—	—	—	—	—	—	—

Other
Pass	25,027	41,004	12,501	28,033	17,244	24,310	17,589	165,708
Special mention	—	364	—	—	495	—	—	859
Substandard accruing	—	—	—	—	—	—	—	—
Nonaccrual	—	—	—	—	—	—	—	—
Total other	25,027	41,368	12,501	28,033	17,739	24,310	17,589	166,567
Current period gross charge-offs	—	—	—	—	—	—	—	—

Residential real estate:
Consumer mortgage
Pass	6,413	4,344	16,249	16,527	2,263	10,977	1,692	58,465
Special mention	—	—	—	—	—	184	65	249
Substandard accruing	—	—	—	—	—	754	245	999
Nonaccrual	—	—	68	—	—	—	—	68
Total consumer mortgage	6,413	4,344	16,317	16,527	2,263	11,915	2,002	59,781
Current period gross charge-offs	—	—	4	—	—	1	—	5

Investment property
Pass	9,332	8,045	10,016	9,849	6,790	10,375	1,999	56,406
Special mention	—	—	—	—	—	—	—	—
Substandard accruing	236	—	—	91	4	—	—	331
Nonaccrual	—	—	36	—	—	—	—	36
Total investment property	9,568	8,045	10,052	9,940	6,794	10,375	1,999	56,773
Current period gross charge-offs	—	—	2	—	—	—	—	2

Consumer installment
Pass	4,121	1,981	972	780	137	81	304	8,376
Special mention	—	7	2	—	—	—	—	9
Substandard accruing	8	7	21	—	—	—	—	36
Nonaccrual	—	—	—	—	—	—	—	—
Total consumer installment	4,129	1,995	995	780	137	81	304	8,421
Current period gross charge-offs	42	45	9	—	—	—	—	96

Total loans
Pass	101,632	93,672	82,767	100,095	55,386	94,573	29,123	557,248
Special mention	694	375	9	—	495	184	815	2,572
Substandard accruing	244	506	28	230	6	3,771	245	5,030
Nonaccrual	—	—	104	—	—	378	—	482
Total loans	$102,570	94,553	82,908	100,325	55,887	98,906	30,183	$565,332
Total current period gross charge-offs	$82	45	114	3	—	297	—	$541

Allowance for Credit Losses

The allowance for credit losses is estimated under the Current Expected Credit Losses (“CECL”) methodology set forth in FASB ASC326, Financial Instruments–* Credit Losses*. Under the CECL methodology, the allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and for loans that donot share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis.

The composition of the provision for credit losses for the respective periods is presented below.

· · Quarter ended September 30, · · · Nine months ended September 30, ·
(Dollars in thousands) · · 2026 · · · 2025 · · · 2026 · · · 2025 ·
Provision for credit losses: · · · · · · · · · · · · · · · ·
Loans	$(107)	$(196)	$(317)	$(87)
Reserve for unfunded commitments	57	(59)	(57)	(65)
Total provision for credit losses	$(50)	$(255)	$(374)	$(152)

The provision for credit losses for the quarter andnine months reflects both changes in credit conditions and the impact of the refinement in portfolio segmentation during thefirst quarter of2026, including the reclassification of municipal loans previously included in commercial and industrial loans. The following table details the changes in the allowance for credit losses for loans, by portfolio segment, for the respective periods.

(Dollars in thousands) · · Commercial and industrial · · · Municipal · · · Construction and land development · · · Commercial real estate · · · Residential real estate · · · Consumer installment · · · Total ·
Quarter ended September 30, 2026: · · · · · · · · · · · · · · · · · · · · · · · · ·
Beginning balance	$542	150	675	3,959	1,094	166	$6,586
Charge-offs	—	—	—	—	—	(2)	(2)
Recoveries	1	—	—	—	2	7	10
Net (charge-offs) recoveries	1	—	—	—	2	5	8
Provision for credit losses	(13)	(3)	(13)	(88)	36	(26)	(107)
Ending balance	$530	147	662	3,871	1,132	145	$6,487

Nine months ended September 30, 2026: · · · · · · · · · · · · · · · · · · · · · · · · ·
Beginning balance	$1,129	—	1,304	3,777	837	129	$7,176
Charge-offs	(5)	—	—	(378)	—	(38)	(421)
Recoveries	5	—	—	—	11	33	49
Net (charge-offs) recoveries	—	—	—	(378)	11	(5)	(372)
Provision for credit losses	(599)	147	(642)	472	284	21	(317)
Ending balance	$530	147	662	3,871	1,132	145	$6,487

Quarter ended September 30, 2025: · · · · · · · · · · · · · · · · · · · · · · · · ·
Beginning balance	$1,212	n/a	1,613	3,151	866	123	$6,965
Charge-offs	—	n/a	—	—	—	(87)	(87)
Recoveries	—	n/a	—	—	4	5	9
Net (charge-offs) recoveries	—	n/a	—	—	4	(82)	(78)
Provision for credit losses	(86)	n/a	(61)	(113)	(34)	98	(196)
Ending balance	$1,126	n/a	1,552	3,038	836	139	$6,691

Nine months ended September 30, 2025: · · · · · · · · · · · · · · · · · · · · · · · · ·
Beginning balance	$1,244	n/a	1,059	3,842	588	138	$6,871
Charge-offs	(103)	n/a	—	—	(7)	(96)	(206)
Recoveries	30	n/a	—	—	68	15	113
Net (charge-offs) recoveries	(73)	n/a	—	—	61	(81)	(93)
Provision for credit losses	(45)	n/a	493	(804)	187	82	(87)
Ending balance	$1,126	n/a	1,552	3,038	836	139	$6,691

The Company designates certain individually evaluated loans on nonaccrual status as collateral-dependent loans. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans donot share common risk characteristics and arenot included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized costs. If the fair value of the collateral exceeds the amortized cost,no allowance is required.

The Company hadno collateral dependent loans which were individually evaluated at* September 30, 2026.The following table presents the amortized cost basis of collateral dependent loans, which were individually evaluated to determine expected credit losses at December 31, 2025.*

(Dollars in thousands)	Real Estate	Total Loans
· · · · · · · ·
December 31, 2025: · · · · · · · ·
Commercial real estate	$378	$378
Total	$378	$378

At* September 30, 2026and December 31, 2025,the Company hadone* additional individually evaluated commercial real estate loan in the amount of $3.0 million that wasnot considered collateral dependent and was accruing in accordance with its contractual terms. This loan had an allowance of $0.4 million at* September 30, 2026and $0.5 million at December 31, 2025,*respectively. The allowance for this loan was measured using the present value of expected future cash flows, discounted at the loan’s effective interest rate. Expected cash flows were developed using probability of default and loss given default assumptions specific to the borrower.

The following table summarizes the Company’s nonaccrual loans by major categories for the respective periods.

· · Nonaccrual Loans · · · Nonaccrual Loans · · · Total ·
(Dollars in thousands) · · With No Allowance · · · With An Allowance · · · Nonaccrual Loans ·
September 30, 2026
Commercial and industrial	$—	22	$22
Residential real estate	—	196	196
Total	$—	218	$218

December 31, 2025
Commercial real estate	$378	—	$378
Residential real estate	—	104	104
Total	$378	104	$482

The Company didnot recognize any interest income on nonaccrual loans during the quarter ornine months ended* September 30, 2026and2025.*

There wereno modifications to borrowers experiencing financial difficulty during the quarter ornine months ended* September 30, 2026and2025.*

NOTE5: STOCK-BASED COMPENSATION

The Company maintains the2024 Equity and Incentive Compensation Plan (the “Plan”), which permits the grant of equity-based awards, including restricted stock units (“RSUs”), to employees of the Company and its subsidiaries.

On* June 5, 2026,the Compensation Committee (the “Committee”) of the Board of Directors adopted and approved grants of 8,172 RSUs pursuant to the Plan and a Notice of Discretionary Equity Award Agreement and related Terms and Conditions (together, the “RSU Award Agreement”). The RSUs vest in installments of 33% in2027,* 33% in2028, and 34% in2029, subject to the recipient’s continued service through each vesting date. The grant-date fair value of the RSUs was $25.09 per unit, based on the closing price of the Company’s common stock on the date of grant, resulting in an aggregate grant-date fair value of approximately $205 thousand. The RSUs accrue dividend equivalents on unvested units equal to cash dividends declared on the Company’s common stock, which are subject to the same vesting conditions as the underlying RSUs. Upon vesting, the Company will withhold a portion of the shares otherwise issuable to satisfy the recipients’ tax withholding obligations.

The Company recognized approximately $17 thousand and $22 thousand of stock-based compensation expense related to this grant during the quarter andnine months ended* September 30, 2026,respectively. Such expense is included in salaries and benefits expense, with a corresponding increase to additional paid-in capital. At September 30, 2026,*unrecognized compensation expense related to unvested RSUs was approximately $183 thousand.

RSUs granted on* July 24, 2025vested during thefirst* quarter of2026, andno unvested awards remained outstanding at* September 30, 2026related to that grant. The Company recognized $24 thousand of stock-based compensation expense related to those RSUs during thefirst* nine months of2026, all of which was recognized in thefirst quarter of2026, compared to $25 thousand during both the quarter andnine months ended* September 30, 2025.*

Total stock-based compensation expense was $17 thousand and $46 thousand for the quarter andnine months ended* September 30, 2026,respectively, compared to $25 thousand for both the quarter andnine* months ended* September 30, 2025.*

NOTE6: COMMITMENTS AND CONTINGENT LIABILITIES

Contingent Liabilities

During thesecond quarter of2026, the Company identified a loss contingency in connection with the release of a mortgage lien. Based on the facts known to management, the Company determined that a loss was probable and reasonably estimable and recorded a pre-tax accrual of $390 thousand within other noninterest expense during thesecond quarter of2026, in accordance with applicable accounting guidance for loss contingencies.

The Company has submitted a claim to its insurer for recovery, which is pending a final determination. As of* September 30, 2026,the Company hasnot* recorded a receivable for any potential insurance recovery, as the recognition criteria for a gain contingency under generally accepted accounting principles havenot yet been satisfied. Any recovery received from the insurer will be recognized in the period in which it is realized or realizable.

NOTE7: DERIVATIVE INSTRUMENTS

The Company enters into interest rate swaps and interest rate floors to manage exposure to changes in interest rates on certain loans and investment securities. The Company doesnot enter into derivative instruments for speculative or trading purposes. All of the Company’s derivatives are designated as hedging instruments.

The Company’s pay-fixed, receive-SOFR interest rate swaps are designated as fair value hedges of the change in fair value of specified fixed-rate loans and, beginning in* August 2026,of U.S. Treasury securities classified as available-for-sale, in each case attributable to changes in the SOFR benchmark rate. The swaps qualify for the shortcut method under ASC815,* and changes in the fair value of the swaps and of the hedged items attributable to the hedged risk are recognized in interest income (loans) or interest income (securities), as applicable. For the hedged securities, the change in fair value attributable to the hedged risk is recognized as an adjustment to amortized cost rather than in accumulated other comprehensive income (“AOCI”).

In* August 2026,the Company terminated a $10.0 million swap hedging a specified loan and received a termination payment of $0.2 million; the related cumulative basis adjustment was reclassified to deferred loan fees and is being accreted into interest income (loans) over the remaining life of the loan. At September 30, 2026,$0.2 million of this basis adjustment remained unaccreted and is included in loans, net of unearned income. The terminated swap was the Company’s only derivative instrument outstanding at December 31, 2025.*

In* August 2026,the Company purchased a $90.0 million interest rate floor with a strike rate of 3.65% for a premium of $1.6 million, designated as a cash flow hedge of the variability in interest income on a pool of variable-rate investment securities. The floor expires in August 2031and was assessed as highly effective at September 30, 2026.*The time value of the floor is excluded from the assessment of effectiveness, and the premium is amortized into interest income (securities) on a straight-line basis over the term of the floor; the remaining change in the fair value of the floor is recorded in AOCI and reclassified into interest income (securities) as the hedged interest income affects earnings.

The following table presents the fair value of derivative instruments designated as hedging instruments as of* September 30, 2026and December 31, 2025:*

· Balance Sheet · · Notional · · · Fair Value · · · Fair Value ·
(Dollars in thousands) · Location · · Amount · · · Asset · · · Liability ·
September 30, 2026:
Interest rate swaps (fair value hedges)	Other Assets		$102,000		5,280		$—
Interest rate floor (cash flow hedge)	Other Assets		90,000		939		—
Total derivative instruments		$192,000		6,219		$—

· Balance Sheet · · Notional · · · Fair Value · · · Fair Value ·
(Dollars in thousands) · Location · · Amount · · · Asset · · · Liability ·
December 31, 2025: · · · · · · · · · · · · ·
Interest rate swap (fair value hedge)	Other Liabilities		$9,988		—		$22
Total derivative instruments		$9,988		—		$22

The following table presents the carrying amount of hedged loans and investment securities and the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged items:

· · · · · · Cumulative Fair ·
· · · · · · Value Hedging ·
· · Carrying Amount · · · Adjustment Included ·
(Dollars in thousands) · · of Hedged Items · · · in Carrying Amount ·
September 30, 2026:
Loans, net of unearned income	$11,140	$(860)
Investment securities available-for-sale, at amortized cost	84,528	(4,420)
December 31, 2025:
Loans, net of unearned income	$10,010	$22

The following table presents the effect of fair value hedge accounting on the consolidated statements of earnings for the quarters andnine months ended* September 30, 2026and2025.* Amounts for swaps hedging loans include the swap terminated in* August 2026*through the date of termination:

· · Quarter ended September 30, · · · Nine months ended September 30, ·
(Dollars in thousands) · · 2026 · · · 2025 · · · 2026 · · · 2025 ·
Interest income (loans):
Total interest income (loans)	$8,303	$7,793	$24,420	$23,012
Amount of gain (loss) recognized in income on derivative	786	—	1,100	—
Amount of gain (loss) recognized in income on hedged item attributable to hedged risk	(786)	—	(1,100)	—
Net impact on interest income (loans)	$—	$—	$—	$—
Interest income (securities):
Total interest income (securities)	$1,590	$1,288	$4,015	$3,956
Amount of gain (loss) recognized in income on derivative	4,420	—	4,420	—
Amount of gain (loss) recognized in income on hedged item attributable to hedged risk	(4,420)	—	(4,420)	—
Net impact on interest income (securities)	$—	$—	$—	$—

The following table presents the effect of the cash flow hedge on AOCI and the consolidated statements of earnings for the quarter andnine months ended* September 30, 2026and2025:*

· · Quarter ended September 30, · · · Nine months ended September 30, ·
(Dollars in thousands) · · 2026 · · · 2025 · · · 2026 · · · 2025 ·
Amount of gain (loss) recognized in other comprehensive income on derivative	$(628)	$—	$(628)	$—
Amount of gain (loss) reclassified from AOCI into interest income (securities)	—	—	—	—
Amortization of excluded component recognized in interest income (securities)	(37)	—	(37)	—

At* September 30, 2026,accumulated other comprehensive loss of $25.7 million consisted of $25.2 million of net unrealized losses on securities available-for-sale and $0.5 million of net deferred loss on the interest rate floor, each net of tax. The amounts recognized in OCI related to the floor during2026* represent the change in the floor’s time value, which is excluded from the assessment of hedge effectiveness. The Company expects to recognize approximately $0.3 million of premium amortization as a reduction of interest income (securities) over the nexttwelve months and, based on the forward SOFR curve at* September 30, 2026,doesnot* expect to reclassify a significant amount of the net deferred loss from AOCI into earnings over that period.

The Company hadno derivatives designated as hedging instruments during the quarter andnine months ended* September 30, 2025.*

The Company is exposed to credit risk in the event of nonperformance by its derivative counterparty. The Company’s agreements with the counterparty provide that, if the Bank fails to remain “well capitalized” under applicable regulatory capital requirements, the counterparty could terminate the derivative positions and settle them at fair value. At* September 30, 2026,the Company’s derivative positions were in a net asset position, andno* additional collateral or settlement amount would have been required had this provision been triggered.

The Company’s derivatives are subject to a master netting arrangement with a single counterparty that provides for the netting of amounts due upon an event of default or early termination and for the exchange of collateral based on the net fair value of the derivatives; however, the Company doesnot offset derivative assets and liabilities on its consolidated balance sheets. At* September 30, 2026,the gross and net amounts of derivative assets subject to the arrangement were each $6.2 million, andno* collateral had been received from the counterparty. Subsequent to* September 30, 2026,*the Company received cash collateral from the counterparty as permitted under the arrangement in an amount approximating the net fair value of the Company’s derivative positions.

NOTE8: FAIR VALUE

Fair Value Hierarchy

“Fair value” is defined by ASC820, Fair Value Measurement, as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for an asset or liability at the measurement date. GAAP establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets.

Level2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that arenot active, or inputs that are observable for the asset or liability, either directly or indirectly.

Level3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the inputs market participants would use in pricing the asset or liability.

Level changes in fair value measurements

Transfers between levels of the fair value hierarchy are generally recognized at the end of each reporting period. The Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such that transfers in and out of any level are expected to be infrequent. For thenine months ended* September 30, 2026,there wereno* transfers between levels andno changes in valuation techniques for the Company’s financial assets and liabilities.

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level2 inputs. For these securities, the Company obtains pricing fromthird-party pricing services. Thesethird-party pricing services consider observable data that* mayinclude broker quotes, market spreads, cash flows, market consensus prepayment speeds, benchmark yields, reported trades for similar securities, credit information, and the securities’ terms and conditions. On a quarterly basis, management reviews the pricing received from thethird*-party pricing services for reasonableness given current market conditions. As part of its review, management* mayobtain non-bindingthird*-party broker quotes to validate the fair value measurements. In addition, management will periodically submit pricing provided by thethird-party pricing services to another independent valuation firm on a sample basis. This independent valuation firm will compare the price provided by thethird-party pricing service with its own price and will review the significant assumptions and valuation methodologies used with management.

Interest Rate Swaps

The fair values of the Company’s interest rate swaps are estimated using a discounted cash flow model. The model considers the present value of expected future cash flows under the terms of the swap and incorporates observable market data such as: relevant interest rate swap curves, benchmark yield curves (e.g., SOFR-based or other market-based curves), and forward interest rate expectations over the contractual term of the instruments. Because the significant inputs used in valuing the interest rate swaps are observable in active markets, the Company classifies these instruments within Level2 of the fair value hierarchy.

Interest Rate Floor

The fair value of the Company’s interest rate floor is estimated using an option-pricing model that incorporates observable market inputs, including the SOFR forward curve, benchmark discount rates and market-implied interest rate volatility over the remaining term of the floor. Because the significant inputs used in valuing the interest rate floor are observable in active markets, the Company classifies this instrument within Level2 of the fair value hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring basis as of* September 30, 2026and December 31, 2025,respectively, by caption, on the accompanying consolidated balance sheets by ASC820* valuation hierarchy (as described above).

· · · · · · Quoted Prices in · · · Significant · · · · ·
· · · · · · Active Markets · · · Other · · · Significant ·
· · · · · · for · · · Observable · · · Unobservable ·
· · · · · · Identical Assets · · · Inputs · · · Inputs ·
(Dollars in thousands) · · Amount · · · (Level 1) · · · (Level 2) · · · (Level 3) ·
September 30, 2026:
Securities available-for-sale:
U.S. Treasury	$84,784	—	84,784	—
Agency obligations	50,338	—	50,338	—
Agency MBS	140,742	—	140,742	—
State and political subdivisions	15,953	—	15,953	—
Total securities available-for-sale	291,817	—	291,817	—
Other assets - interest rate swaps	5,280	—	5,280	—
Other assets - interest rate floor	939	—	939	—
Total assets at fair value	$298,036	—	298,036	—

December 31, 2025:
Securities available-for-sale:
Agency obligations	$53,784	—	53,784	—
Agency MBS	161,927	—	161,927	—
State and political subdivisions	17,548	—	17,548	—
Total securities available-for-sale	233,259	—	233,259	—
Total assets at fair value	$233,259	—	233,259	—

Other liabilities - interest rate swap	22	—	22	—
Total liabilities at fair value	$22	—	22	—

Assets and liabilities measured at fair value on a nonrecurring basis

Collateral dependent loans

Collateral dependent loans are measured at the fair value of the collateral securing the loan less estimated selling costs. The fair value of real estate collateral is determined based on real estate appraisals which are generally based on recent sales of comparable properties which are then adjusted for property specific factors. Non-real estate collateral is valued based on various sources, includingthird party asset valuations and internally determined values based on cost adjusted for depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified within Level3 of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower's underlying financial condition.

Mortgage servicing rights, net

MSRs, net, included in other assets on the accompanying consolidated balance sheets, are carried at the lower of cost or estimated fair value. MSRs donot trade in an active market with readily observable prices. To determine the fair value of MSRs, the Company engages an independentthird party. The independentthird party’s valuation model calculates the present value of estimated future net servicing income using assumptions that market participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the Company will review broker surveys and other market research to validate significant assumptions used in the model. The significant unobservable inputs include prepayment speeds or the constant prepayment rate (“CPR”) and the weighted average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of the Company’s MSRs are classified within Level3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of* September 30, 2026and December 31, 2025,respectively, by caption, on the accompanying consolidated balance sheets and by the ASC820* valuation hierarchy described above:

· · · · · · Quoted Prices in · · · · · · · · ·
· · · · · · Active Markets · · · Other · · · Significant ·
· · · · · · for · · · Observable · · · Unobservable ·
· · Carrying · · · Identical Assets · · · Inputs · · · Inputs ·
(Dollars in thousands) · · Amount · · · (Level 1) · · · (Level 2) · · · (Level 3) ·
September 30, 2026:
Other assets (2)	$725	—	—	725
Total assets at fair value	$725	—	—	725

December 31, 2025:
Loans, net(1)	$378	—	—	378
Other assets (2)	771	—	—	771
Total assets at fair value	$1,149	—	—	1,149

(1)Loans considered collateral dependent under ASC326 Financial Instruments - Credit Losses.

(2)Represents MSRs, net, carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level3 Fair Value Measurements

At* September 30, 2026and December 31, 2025,the Company hadno* Level3 assets measured at fair value on a recurring basis. For Level3 assets measured at fair value on a non-recurring basis at* September 30, 2026and December 31, 2025,*the significant unobservable inputs used in the fair value measurements are presented below.

· · · · · · · · Range of · · · Weighted ·
· · Carrying · · · Significant · · Unobservable · · · Average ·
(Dollars in thousands) · · Amount · · Valuation Technique · Unobservable Input · · Inputs · · · of Input ·
September 30, 2026: · · · · · · · · · · · · · ·
Mortgage servicing rights, net	$725	Discounted cash flow	Prepayment speed or CPR	5.6	-	9.4%	5.7%
			Discount rate	10.0	-	12.0	10.0
December 31, 2025:
Collateral dependent loans	$378	Appraisal	Appraisal discounts	10.0	-	10.0%	10.0%
Mortgage servicing rights, net	771	Discounted cash flow	Prepayment speed or CPR	6.8	-	8.4	8.2
			Discount rate	9.5	-	11.5	9.5

Fair Value of Financial Instruments

ASC825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether ornot recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices arenot available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following fair value estimates cannot be substantiated by comparison to independent markets and shouldnot be considered representative of the liquidation value of the Company’s financial instruments, but rather are good-faith estimates of the fair value of financial instruments held by the Company. ASC825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Loans, net

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Loans held for sale

Loans held for sale are recorded at the lower of cost or fair value. Fair values are determined using quoted secondary market prices for similar loans.

Time Deposits

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently offered for deposits with similar remaining maturities.

The carrying values, related estimated fair values, and placements in the fair value hierarchy of the Company’s financial instruments at* September 30, 2026and December 31, 2025are presented below. This table excludes financial instruments recorded at fair value on a recurring basis, and financial instruments for which the carrying amount approximates fair value. Financial assets for which fair value approximates carrying value included cash and cash equivalents. Financial liabilities for which fair value approximates carrying value included noninterest-bearing demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates the carrying value of these financial liabilities due to these products havingno* stated maturity. Additionally, financial liabilities for which fair value approximates carrying value included overnight borrowings such as federal funds purchased and securities sold under agreements to repurchase.

The following table summarizes our fair value estimates:

· · · · · · · · · · Fair Value Hierarchy ·
· · Carrying · · · Estimated · · · Level 1 · · · Level 2 · · · Level 3 ·
(Dollars in thousands) · · amount · · · fair value · · · inputs · · · inputs · · · Inputs ·
September 30, 2026:
Financial Assets:
Loans, net (1)	$565,360	$549,065	—	—	$549,065
Financial Liabilities:
Time Deposits	$186,499	$185,529	—	185,529	$—

December 31, 2025:
Financial Assets:
Loans, net (1)	$558,178	$542,382	—	—	$542,382
Loans held for sale	172	179	—	179	—
Financial Liabilities:
Time Deposits	$176,801	$176,137	—	176,137	$—

(1) Represents loans, net of allowance for credit losses. The fair value of loans was measured using an exit price notion.

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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.