CB Financial Services, Inc.

Previous wording

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of June 30, 2025, compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

Current wording

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of September 30, 2025, compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024.

Previous wording

Total assets increased $36.4 million, or 2.5%, to $1.52 billion at June 30, 2025 compared to $1.48 billion at December 31, 2024.

Current wording

Total assets increased $64.0 million, or 4.3%, to $1.55 billion at September 30, 2025 compared to $1.48 billion at December 31, 2024.

Previous wording

•Cash and due from banks increased $14.9 million, or 30.1%, to $64.5 million at June 30, 2025, compared to $49.6 million at December 31, 2024.

Current wording

•Cash and due from banks increased $6.3 million, or 12.7%, to $55.9 million at September 30, 2025, compared to $49.6 million at December 31, 2024.

Previous wording

•Total loans increased $18.2 million, or 1.7%, to $1.11 billion at June 30, 2025 compared to $1.09 billion at December 31, 2024. This was driven by increases in commercial real estate and commercial and industrial loans of $27.7 million and $26.2 million, respectively, partially offset by decreases in construction, consumer and residential real estate loans of $14.0 million, $13.1 million and $8.7 million, respectively. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to the discontinuation of this product offering as of June 30, 2023. This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products. Excluding the $16.6 million decrease in indirect automobile loans, total loans increased $34.8 million, or 3.2%. Loan production totaled $97.0 million while $51.5 million of loans were paid off since December 31, 2024.

Current wording

•Total loans increased $50.8 million, or 4.6%, to $1.14 billion compared to $1.09 billion, and included increases in commercial real estate, commercial and industrial and other loans of $53.9 million, $31.9 million and $6.3 million, respectively, partially offset by decreases in consumer, construction and residential real estate loans of $20.9 million, $15.8 million and $4.6 million, respectively. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to the discontinuation of this product offering as of June 30, 2023. This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products. Excluding the $23.1 million decrease in indirect automobile loans, total loans increased $73.9 million, or 7.2%. Loan production totaled $163.3 million while $73.4 million of loans were paid off since December 31, 2024.

Previous wording

•The allowance for credit losses (ACL) was $9.7 million at June 30, 2025 and $9.8 million at December 31, 2024. As a result, the ACL to total loans was 0.88% at June 30, 2025 and 0.90% at December 31, 2024. The provision for credit losses recorded for the six months ended June 30, 2025 was a net recovery of $32,000. The provision for credit losses - loans was a $68,000 recovery and was primarily due to a reduction of reserve required for individually assessed loans and changes in loan concentrations, partially offset by additional reserve required for overall loan growth and a change in qualitative factors relating to economic conditions. The provision for credit losses - unfunded commitments was $36,000 and was due to an increase in unfunded commitments and an increase in funding rates.

Current wording

•The allowance for credit losses (ACL) was $10.1 million at September 30, 2025 and $9.8 million at December 31, 2024. As a result, the ACL to total loans was 0.89% at September 30, 2025 and 0.90% at December 31, 2024. During the nine months ended September 30, 2025, the Company recorded a net provision for credit losses of $227,000 including a provision for credit losses on loans of $269,000, partially offset by a recovery for credit loses on unfunded commitments of $42,000.

Previous wording

•Net charge-offs for the six months ended June 30, 2025 were $15,000. Net charge-offs for the six months ended June 30, 2024 were $50,000, or 0.01% of average loans on an annualized basis.

Current wording

•Net recoveries for the nine months ended September 30, 2025 were $72,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2024 were $123,000, or 0.02% of average loans on an annualized basis.

Previous wording

•Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $1.8 million at June 30, 2025 and December 31, 2024. Nonperforming loans to total loans ratio was 0.16% at June 30, 2025 and December 31, 2024.

Current wording

•Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $2.2 million at September 30, 2025 and $1.8 million at December 31, 2024. Nonperforming loans to total loans ratio was 0.19% at September 30, 2025 and 0.16% at December 31, 2024.

Previous wording

Total liabilities increased $35.4 million, or 2.7%, to $1.37 billion at June 30, 2025 compared to $1.33 billion at December 31, 2024.

Current wording

Total liabilities increased $58.9 million, or 4.4%, to $1.39 billion at September 30, 2025 compared to $1.33 billion at December 31, 2024.

Previous wording

•Total deposits increased $25.9 million, or 2.0%, to $1.31 billion as of June 30, 2025 compared to $1.28 billion at December 31, 2024. Interest-bearing demand, non interest-bearing demand and savings deposits increased $36.7 million, $10.8 million and $1.5 million, respectively while time deposits decreased $16.7 million and money market deposits decreased $6.3 million, respectively. This favorable change in the deposit mix was the result of an increased focus on building core banking relationships while strategically reducing time deposit-only relationships. Brokered time deposits totaled $79.0 million as of June 30, 2025 and $39.0 million as of December 31, 2024, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities. At June 30, 2025, FDIC insured deposits totaled approximately 61.0% of total deposits while an additional 14.8% of total deposits were collateralized with investment securities.

Current wording

•Total deposits increased $50.9 million, or 4.0%, to $1.33 billion as of September 30, 2025 compared to $1.28 billion at December 31, 2024. Interest-bearing demand, non interest-bearing demand and time deposits increased $49.2 million, $24.0 million and $4.5 million, respectively, while money market and savings deposits decreased $25.3 million and $1.5 million, respectively. This favorable change in the deposit mix was the result of an increased focus on building core banking relationships while strategically reducing higher priced relationships. Brokered time deposits totaled $98.5 million as of September 30, 2025 and $39.0 million as of December 31, 2024, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities. At September 30, 2025, FDIC insured deposits totaled approximately 59.6% of total deposits while an additional 16.3% of total deposits were collateralized with investment securities.

Previous wording

•Accrued interest payable and other liabilities increased $9.5 million, or 59.6%, to $25.5 million at June 30, 2025, compared to $16.0 million at December 31, 2024 primarily due to the purchase of $9.0 million of syndicated loans not yet settled.

Current wording

•Accrued interest payable and other liabilities increased $7.9 million, or 49.5%, to $23.9 million at September 30, 2025, compared to $16.0 million at December 31, 2024 primarily due to $4.0 million of syndicated national credits purchased and not yet settled and $4.0 million of securities purchased and not yet settled.

Previous wording

Stockholders’ equity increased $984,000, or 0.7%, to $148.4 million at June 30, 2025, compared to $147.4 million at December 31, 2024. The key factors positively impacting stockholders’ equity were $5.9 million of net income for the current year, a $2.9 million decrease in accumulated other comprehensive loss and $1.1 million of shares issued as a result of stock option exercises, partially offset by $6.8 million of treasury shares purchased under the stock repurchase program and the payment of $2.5 million in dividends since December 31, 2024.

Current wording

Stockholders’ equity increased $5.1 million, or 3.5%, to $152.5 million at September 30, 2025, compared to $147.4 million at December 31, 2024. The key factors positively impacting stockholders’ equity was a $13.2 million decrease in accumulated other comprehensive loss resulting primarily from the securities repositioning strategy, $1.7 million of shares issued as a result of stock option exercises and $164,000 of net income for the current year, partially offset by $6.8 million of treasury shares purchased under the stock repurchase program and the payment of $3.8 million in dividends since December 31, 2024.

Previous wording

Book value per common share (GAAP) was $29.84 at June 30, 2025 compared to $28.71 at December 31, 2024, an increase of $1.13. Tangible book value per common share (Non-GAAP) increased $1.06, or 4.0%, to $27.88 compared to $26.82 at December 31, 2024.

Current wording

Book value per common share (GAAP) was $30.50 at September 30, 2025 compared to $28.71 at December 31, 2024, an increase of $1.79. Tangible book value per common share (Non-GAAP) increased $1.74, or 6.5%, to $28.56 compared to $26.82 at December 31, 2024.

Previous wording

Overview. Net income was $3.9 million for the three months ended June 30, 2025, an increase of $1.3 million compared to net income of $2.7 million for the three months ended June 30, 2024.

Current wording

Overview. Net loss was $5.7 million for the three months ended September 30, 2025, a decrease of $8.9 million compared to net income of $3.2 million for the three months ended September 30, 2024.

Previous wording

Net Interest and Dividend Income. Net interest and dividend income increased $1.1 million, or 9.3%, to $12.5 million for the three months ended June 30, 2025 compared to $11.5 million for the three months ended June 30, 2024. Net interest margin (GAAP) increased 36 basis points (bps) to 3.54% for the three months ended June 30, 2025 compared to 3.18% for the three months ended June 30, 2024. Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 36 bps to 3.55% for the three months ended June 30, 2025 compared to 3.19% for the three months ended June 30, 2024.

Current wording

Net Interest and Dividend Income. Net interest and dividend income increased $1.6 million, or 14.2%, to $13.1 million for the three months ended September 30, 2025 compared to $11.5 million for the three months ended September 30, 2024. Net interest margin (GAAP) increased 53 basis points (bps) to 3.64% for the three months ended September 30, 2025 compared to 3.11% for the three months ended September 30, 2024. Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 55 bps to 3.67% for the three months ended September 30, 2025 compared to 3.12% for the three months ended September 30, 2024.

Previous wording

•Interest and dividend income decreased $179,000, or 0.9%, to $18.8 million for the three months ended June 30, 2025 compared to $18.9 million the three months ended June 30, 2024.

Current wording

•Interest and dividend income decreased $432,000, or 2.2%, to $19.3 million for the three months ended September 30, 2025 compared to $19.8 million the three months ended September 30, 2024.

Previous wording

◦Interest income on loans increased $822,000, or 5.6%, to $15.5 million for the three months ended June 30, 2025 compared to $14.7 million for the three months ended June 30, 2024. The average yield on loans increased 18 bps to 5.68% from 5.50% despite a 100bp reduction in the federal funds rate since September 2024. While this led to the downward repricing of variable and adjustable rate loans, the impact was negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products. The increase in the average yield caused a $489,000 increase in interest income on loans. Additionally, the average balance of loans increased $22.2 million to $1.10 billion from $1.08 billion, causing a $349,000 increase in interest income on loans.

Current wording

◦Interest income on loans increased $1.0 million, or 6.9%, to $16.0 million for the three months ended September 30, 2025 compared to $14.9 million for the three months ended September 30, 2024. The average balance of loans increased $56.1 million to $1.12 billion from $1.06 billion, causing an $830,000 increase in interest income on loans. Additionally, the average yield on loans increased 8 bps to 5.68% from 5.60% despite a 125bp reduction in the federal funds rate since September 2024. While this led to the downward repricing of variable and adjustable rate loans, the impact was partially negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products. The increase in the average yield caused a $217,000 increase in interest income on loans.

Previous wording

◦Interest income on interest-earning deposits at other banks decreased $982,000 to $331,000 for the three months ended June 30, 2025 compared to $1.3 million for the three months ended June 30, 2024 driven by a 125 bp decrease in the average yield and a $67.7 million decrease in average balances. The decrease in the yield was primarily related to the reductions in the federal funds rate since September 2024.

Current wording

◦Interest income on interest-earning deposits at other banks decreased $1.2 million to $293,000 for the three months ended September 30, 2025 compared to $1.4 million for the three months ended September 30, 2024 driven by a 126 bp decrease in the average yield and a $81.4 million decrease in average balances. The decrease in the yield was primarily related to the Federal Reserve’s reductions in the federal funds rate while the decrease in the volume was due to the funding of loans and decrease in average deposits.

Previous wording

•Interest expense decreased $1.2 million, or 16.7%, to $6.2 million for the three months ended June 30, 2025 compared to $7.5 million for the three months ended June 30, 2024.

Current wording

•Interest expense decreased $2.1 million, or 24.8%, to $6.2 million for the three months ended September 30, 2025 compared to $8.3 million for the three months ended September 30, 2024.

Previous wording

◦Interest expense on deposits decreased $1.3 million, or 19.0%, to $5.7 million for the three months ended June 30, 2025 compared to $7.1 million for the three months ended June 30, 2024. The cost of interest-bearing deposits declined 47 bps to 2.28% for the three months ended June 30, 2025 from 2.75% for the three months ended June 30, 2024 due to the change in the deposit mix and the recent Federal Reserve federal funds rate decreases. The decrease in the cost of interest-bearing deposits accounted for a $1.2 million reduction in interest expense. Average interest-bearing deposit balances decreased $27.2 million, or 2.6%, to $1.01 billion as of June 30, 2025 compared to $1.03 billion as of June 30, 2024, primarily as the Bank strategically reduced brokered deposits and time deposit only relationships. The decrease in average balances accounted for a $161,000 reduction in interest expense.

Current wording

◦Interest expense on deposits decreased $2.1 million, or 26.4%, to $5.8 million for the three months ended September 30, 2025 compared to $7.9 million for the three months ended September 30, 2024. The cost of interest-bearing deposits declined 68 bps to 2.26% for the three months ended September 30, 2025 from 2.94% for the three months ended September 30, 2024 due to the change in the deposit mix and the recent Federal Reserve federal funds rate decreases. The decrease in the cost of interest-bearing deposits accounted for a $1.8 million decrease in interest expense. Average interest-bearing deposit balances decreased $47.0 million, or 4.4%, to $1.02 billion as of September 30, 2025 compared to $1.07 billion as of September 30, 2024, primarily as the Bank strategically reduced time deposit only relationships. The decrease in average balances accounted for a $320,000 decrease in interest expense.

Previous wording

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan interest income utilizing a marginal federal income tax rate of 21.0% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Current wording

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and security interest income utilizing a marginal federal income tax rate of 21.0% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Previous wording

Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan income utilizing a marginal federal income tax rate of 21.0%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

Current wording

Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and security income utilizing a marginal federal income tax rate of 21.0%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

Previous wording

Provision for Credit Losses. A provision for credit losses of $8,000 was recorded for the three months ended June 30, 2025. The provision for credit losses - loans was a $136,000 recovery and was primarily due to a reduction of reserve required for individually assessed loans and changes in loan concentrations, partially offset by additional reserve required for overall loan growth and a change in qualitative factors relating to economic conditions. The provision for credit losses - unfunded commitments was $144,000 and was due to an increase in unfunded commitments and an increase in funding rates. This compared to a net recovery of $36,000 recorded for the three months ended June 30, 2024 as the provision for credit losses - loans was $12,000 and was primarily due to an increase in the reserve required for individually assessed loans, partially offset by a decrease in loan balances while the provision for credit losses - unfunded commitments was a recovery of $48,000 and was due to a decrease in loss rates.

Current wording

Provision for Credit Losses. A provision for credit losses of $259,000 was recorded for the three months ended September 30, 2025. The provision for credit losses on loans was $336,000 and was primarily due to additional reserves required for overall loan growth, changes in qualitative factors and an addition to individually assessed loans requiring specific reserves, partially offset by favorable changes in portfolio concentrations and the calculated loss rate. This was partially offset by a $77,000 recovery for credit losses on unfunded commitments due to a decrease in unfunded commitments. This compared to a net recovery of $41,000 recorded for the three months ended September 30, 2024 as the recovery for credit losses on unfunded commitments was $66,000 due to a decreases in unfunded commitments and the loss rate on construction loans and the provision for credit losses on loans was $25,000 due to changes in qualitative factors partially offset by changes in loan portfolio concentrations and an improvement in loss rates.

Previous wording

Noninterest Income. Noninterest income increased $243,000, or 35.3%, to $931,000 for the three months ended June 30, 2025, compared to $688,000 for the three months ended June 30, 2024. This resulted primarily from a $205,000 increase in service fees primarily related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts.

Current wording

Noninterest Income. Noninterest income decreased $11.9 million, or 965.9%, to a loss of $10.7 million for the three months ended September 30, 2025, compared to income of $1.2 million for the three months ended September 30, 2024 as a result of $11.8 million in losses on the sale of securities from the securities repositioning strategy. Excluding security gains and losses from both periods and a gain on the sale of a subsidiary recognized during the three months ended September 30, 2024, noninterest income increased $225,000, or 26.5%, to $1.1 million for the three months ended September 30, 2025, compared to $850,000 for the three months ended September 30, 2024. This resulted primarily from a $123,000 increase in service fees primarily related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $112,000 increase in other income related to hedge fees.

Previous wording

Noninterest Expense. Noninterest expense decreased $236,000, or 2.6%, to $8.7 million for the three months ended June 30, 2025 compared to $9.0 million for the three months ended June 30, 2024. Occupancy expense decreased $324,000 due to environmental remediation costs related to a construction project on one of the Bank’s office locations recognized only in 2024 and certain property management cost savings initiatives implemented in 2025. Intangible amortization decreased $264,000 as the Bank’s core deposit intangibles were fully amortized in 2024. Data processing expense decreased $250,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform during mid-2024. Pennsylvania shares tax expense decreased $154,000 due to $217,000 of refunds received on amended returns filed for prior years. Legal and professional fees decreased $91,000 primarily due to timing differences related to internal and external audit and tax services. These decreases were partially offset as salaries and benefits increased $663,000, or 15.0%, to $5.1 million primarily due to merit increases, revenue producing staff additions and higher insurance benefit costs, partially offset by savings realized due to the reduction in force implemented earlier this year. Equipment expense increased $74,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service in 2024.

Current wording

Noninterest Expense. Noninterest expense increased $401,000, or 4.6%, to $9.2 million for the three months ended September 30, 2025 compared to $8.8 million for the three months ended September 30, 2024. Salaries and benefits increased $686,000, or 15.0%, to $5.2 million primarily due to merit increases, revenue producing staff additions and higher insurance benefit costs, partially offset by savings realized due to the reduction in force implemented earlier this year. Legal and professional fees increased $114,000 due to timing of internal and external audit services. Equipment expense increased $87,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service in 2024. These increases were partially offset as intangible amortization decreased $264,000 as the Bank’s core deposit intangibles were fully amortized in 2024. Occupancy expense decreased $181,000 due to environmental remediation costs related to a construction project on one of the Bank’s office locations recognized only in 2024 and certain property management cost savings initiatives implemented in 2025. Data processing expense decreased $64,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform during mid-2024.

Previous wording

Income Taxes. Income tax expense was $766,000 for the three months ended June 30, 2025 compared to $560,000 for the three months ended June 30, 2024. This change was primarily driven by a increase in pre-tax income to $4.7 million for the three months ended June 30, 2025 compared to $3.2 million for the three months ended June 30, 2024.

Current wording

Income Taxes. Income tax expense was a $1.3 million benefit for the three months ended September 30, 2025 compared to a $747,000 expense for the three months ended September 30, 2024. This change was primarily driven by a decrease in pre-tax income to a $7.0 million loss for the three months ended September 30, 2025 compared to $4.0 million of income for the three months ended September 30, 2024. This resulted from the loss recognized as a result of the securities repositioning strategy exectued during the three months ended September 30, 2025.

Previous wording

Overview. Net income was $5.9 million for the six months ended June 30, 2025, a decrease of $989,000 compared to $6.8 million for the six months ended June 30, 2024.

Current wording

Overview. Net income was $164,000 for the nine months ended September 30, 2025, a decrease of $9.9 million compared to $10.1 million for the nine months ended September 30, 2024.

Previous wording

Net Interest and Dividend Income. Net interest and dividend income increased $788,000, or 3.4%, to $23.9 million for the six months ended June 30, 2025 compared to $23.1 million for the six months ended June 30, 2024. Net interest margin (GAAP) increased to 3.40% for the six months ended June 30, 2025 compared to 3.27% for the six months ended June 30, 2024. Net interest margin (FTE) (Non-GAAP) increased 14 bps to 3.42% for the six months ended June 30, 2025 compared to 3.28% the six months ended June 30, 2024.

Current wording

Net Interest and Dividend Income. Net interest and dividend income increased $2.4 million, or 7.0%, to $36.9 million for the nine months ended September 30, 2025 compared to $34.5 million for the nine months ended September 30, 2024. Net interest margin (GAAP) increased to 3.49% for the nine months ended September 30, 2025 compared to 3.21% for the nine months ended September 30, 2024. Net interest margin (FTE) (Non-GAAP) increased 29 bps to 3.51% for the nine months ended September 30, 2025 compared to 3.22% the nine months ended September 30, 2024.

Previous wording

◦Interest income on loans increased $512,000, or 1.7%, to $30.0 million during the six months ended June 30, 2025 compared to $29.5 million for the six months ended June 30, 2024. The average yield on loans increased 9 bps to 5.59% for the six months ended June 30, 2025 compared to 5.50% for the six months ended June 30, 2024 resulting in a $485,000 increase in interest income on loans. The increase in loan yield has been driven by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products. The average balance of loans increased $4.8 million to $1.09 billion for the six months ended June 30, 2025 compared to $1.08 billion for the six months ended June 30, 2024 resulting in a $61,000 increase in interest income on loans.

Current wording

◦Interest income on loans increased $1.5 million, or 3.5%, to $46.0 million during the nine months ended September 30, 2025 compared to $44.5 million for the nine months ended September 30, 2024. The average balance of loans increased $22.1 million to $1.10 billion for the nine months ended September 30, 2025 compared to $1.08 billion for the nine months ended September 30, 2024 resulting in a $865,000 increase in interest income on loans. Additionally, the average yield on loans increased 9 bps to 5.62% for the nine months ended September 30, 2025 compared to 5.53% for the nine months ended September 30, 2024 resulting in a $731,000 increase in interest income on loans. The increase in the loan yield is despite a 125bp reduction in the federal funds rate since September 2024. While this led to the downward repricing of variable and adjustable rate loans, the impact was partially negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.

Previous wording

◦Interest income on taxable investment securities increased $489,000, or 9.5%, to $5.6 million during the six months ended June 30, 2025 compared to $5.1 million for the six months ended June 30, 2024 driven by a $30.5 million increase in average balances, partially offset by a 9 bp decrease in the average yield. The increase in volume was driven by a $39.5 million increase in the average balance of CLO securities as the Company executed a leverage strategy to purchase these assets funded with brokered certificates of deposits. The increase in the volume resulted in a $604,000 increase in interest income. The decrease in the average yield resulted in a $115,000 decrease in interest income and was the result of reductions in the federal funds rates since September 2024.

Current wording

◦Interest income on investment securities increased $194,000, or 2.3%, to $8.6 million during the nine months ended September 30, 2025 compared to $8.4 million for the nine months ended September 30, 2024 driven by a $14.7 million increase in average balances, partially offset by a 11 bp decrease in the average yield. The increase in volume and decrease in yield was driven by a $25.5 million increase in the average balance of CLO securities as the Company executed a leverage strategy to purchase these assets funded with brokered certificates of deposits. The increase in the volume resulted in a $515,000 increase in interest income. The decrease in the average yield resulted in a $282,000 decrease in interest income and was the result of reductions in the federal funds rates since September 2024.

Previous wording

◦Interest income on interest-earning deposits at other banks decreased $1.3 million, to $789,000 for the six months ended June 30, 2025 compared to $2.0 million for the six months ended June 30, 2024 as average balances decreased $40.8 million and the average yield decreased 109 bps. The volume decreased as cash was utilized to fund security purchases and loan originations while the average yield decrease resulted from reductions in the federal funds rate since September 2024.

Current wording

◦Interest income on interest-earning deposits at other banks decreased $2.4 million, to $1.1 million for the nine months ended September 30, 2025 compared to $3.5 million for the nine months ended September 30, 2024 as average balances decreased $54.5 million and the average yield decreased 114 bps. The volume decreased as cash was utilized to fund security purchases and loan originations and cover deposit fluctuations while the average yield decrease resulted from reductions in the federal funds rate since September 2024.

Previous wording

◦Interest expense on deposits decreased $1.2 million, or 9.4%, to $11.8 million for the six months ended June 30, 2025 compared to $13.1 million for the six months ended June 30, 2024. Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 24 bp decrease in the average cost of interest-bearing deposits compared to the six months ended June 30, 2024. This accounted for a $1.2 million increase in interest expense.

Current wording

◦Interest expense on deposits decreased $3.3 million, or 15.8%, to $17.6 million for the nine months ended September 30, 2025 compared to $20.9 million for the nine months ended September 30, 2024. Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 40 bp decrease in the average cost of interest-bearing deposits compared to the nine months ended September 30, 2024.

Previous wording

◦Interest expense on borrowed funds increased $115,000, or 14.2%, to $923,000 for the six months ended June 30, 2025 compared to $808,000 for the six months ended June 30, 2024. The average balance of borrowed funds increased $5.6 million due to FHLB short-term advances utilized during the six months ended June 30, 2025. The increase in the average balance accounted for a $131,000 increase in interest expense.

Current wording

◦Interest expense on borrowed funds increased $140,000, or 11.5%, to $1.4 million for the nine months ended September 30, 2025 compared to $1.2 million for the nine months ended September 30, 2024. The average balance of borrowed funds increased $5.6 million due to FHLB short-term advances utilized during the nine months ended September 30, 2025. The increase in the average balance accounted for a $200,000 increase in interest expense. Partially offsetting this increase, the average cost of borrowed funds decreased 19 bps as $20.0 million of long-term borrowings matured and were replaced at current market rates. The decrease in the cost accounted for a $60,000 decrease in interest expense.

Previous wording

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan interest income utilizing a marginal federal income tax rate of 21% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Current wording

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and security interest income utilizing a marginal federal income tax rate of 21% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Previous wording

(1)Annualized based on six months ended results.

Current wording

(1)Annualized based on nine months ended results.

Previous wording

Rate Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and income utilizing a marginal federal income tax rate of 21%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

Current wording

Rate Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and security income utilizing a marginal federal income tax rate of 21%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

Previous wording

Provision for Credit Losses. The provision for credit losses was a recovery of $32,000 for the six months ended June 30, 2025. The recovery was due to improvement of individually analyzed loans that required specific provision in prior periods, mainly offset by increases in loan balances. This compared to a recovery for credit losses of $73,000 for the six months ended June 30, 2024 due to a decrease in loan balances.

Current wording

Provision for Credit Losses. The net provision for credit losses was $227,000 for the nine months ended September 30, 2025. The provision for credit losses for loans was $269,000, partially offset by a recovery for credit losses for unfunded commitments of $42,000. The increase for provision for credit losses for loans was due to loan growth and increases in qualitative factors, partially offset by improvement of individually analyzed loans that required specific provision in prior periods and a decline in calculated loss rates. The recovery for unfunded commitments was due to a decline in the unfunded commitment balance. This compared to a recovery for credit losses of $114,000 for the nine months ended September 30, 2024 due to a decrease in loan balances. The prior period recovery for credit losses was comprised of $105,000 for loans and $9,000 for unfunded commitments.

Previous wording

Noninterest Income. Noninterest income decreased $886,000, or 34.0%, to $1.7 million for the six months ended June 30, 2025, compared to $2.6 million for the six months ended June 30, 2024. Net gain on bank-owned life insurance claims decreased as a $915,000 gain was realized for the six months ended June 30, 2024 and net gain on disposal of premises and equipment decreased as a gain of $274,000 was realized during six months ended June 30, 2024 from the sale of one branch office location.

Current wording

Noninterest Income. Noninterest income decreased $12.8 million, or 333.3%, to a $9.0 million loss for the nine months ended September 30, 2025, compared to $3.8 million of income for the nine months ended September 30, 2024. This decrease was mainly due to loss on securities for the securities repositioning of $11.8 million and a $64,000 loss mainly related to the sale of equity securities for the nine months ended September 30, 2025 compared to a $49,000 loss for the nine months ended September 30, 2024 which was primarily due to changes in the market value of equity securities, comprised mainly of bank stocks. Net gain on bank-owned life insurance claims decreased as a $915,000 gain was realized for the nine months ended September 30, 2024 and net gain on disposal of premises and equipment decreased as a gain of $274,000 was realized during nine months ended September 30, 2024 from the sale of one branch office location.

Previous wording

Partially offsetting these decreases, service fees increased $252,000, or 32.8%, to $1.0 million for six months ended June 30, 2025, compared to $769,000 for the six months ended June 30, 2024 primarily related to increases in fees related to corporate deposit accounts, Individual Covered Health Reimbursement Arrangement (ICHRA) accounts and check card activity. Additionally, the net loss on equity securities decreased $141,000 to a loss of $69,000 for the six months ended June 30, 2025 compared to a $197,000 loss for the six months ended June 30, 2024 which was primarily due to changes in the market value of equity securities, comprised mainly of bank stocks.

Current wording

Partially offsetting these decreases, service fees increased $375,000, or 30.7%, to $1.6 million for nine months ended September 30, 2025, compared to $1.2 million for the nine months ended September 30, 2024 primarily related to increases in fees related to corporate deposit accounts, Individual Covered Health Reimbursement Arrangement (ICHRA) accounts and check card activity.

Previous wording

Noninterest Expense. Noninterest expense increased $1.1 million, or 6.5%, to $18.5 million for the six months ended June 30, 2025 compared to $17.4 million for the six months ended June 30, 2024. Salaries and benefits increased $2.1 million primarily due to $1.0 million of one-time non-recurring expense recognized for the six months ended June 30, 2025 associated with the previously announced reduction in force, merit increases, revenue producing staff additions and higher insurance and benefit costs. Additionally, equipment expense increased $140,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service during late 2024 and FDIC expense increased $89,000.

Current wording

Noninterest Expense. Noninterest expense increased $1.5 million, or 5.9%, to $27.7 million for the nine months ended September 30, 2025 compared to $26.2 million for the nine months ended September 30, 2024. Salaries and benefits increased $2.8 million primarily due to $1.0 million of one-time non-recurring expense recognized for the nine months ended September 30, 2025 associated with the previously announced reduction in force, merit increases, revenue producing staff additions and higher insurance and benefit costs. Additionally, equipment expense increased $228,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service during late 2024 and FDIC expense increased $85,000.

Previous wording

Partially offsetting these increases, amortization of intangible assets decreased $605,000 as the Bank’s core deposit intangible was fully amortized in 2024, occupancy expense decreased $323,000 primarily due to environmental remediation costs recognized during the six months ended June 30, 2024 related to a construction project on one of the Bank’s office location, Pennsylvania shares tax expense decreased $195,000 due to $242,000 of refunds received during the six months ended June 30, 2025 as a result of amended prior year returns, and data processing expense decreased $145,000 due to higher 2024 costs associated with the initial implementation of a new loan origination system.

Current wording

Partially offsetting these increases, amortization of intangible assets decreased $870,000 as the Bank’s core deposit intangible was fully amortized in 2024, occupancy expense decreased $505,000 primarily due to environmental remediation costs recognized during the nine months ended September 30, 2024 related to a construction project on one of the Bank’s office location and certain property management cost savings initiatives implemented during the nine months ended September 30, 2025, Pennsylvania shares tax expense decreased $154,000 due to $242,000 of refunds received during the nine months ended September 30, 2025 as a result of amended prior year returns, and data processing expense decreased $210,000 due to higher 2024 costs associated with the initial implementation of a new loan origination system.