ORRSTOWN FINANCIAL SERVICES INC
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout 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.
Jun 30, 2026 · Filed Aug 6, 2026
ORRF$43.82-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001628280-26-032835
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054267
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 150 previous paragraphs and 208 current paragraphs.
84 unchanged; 62 reworded; 46 added; 4 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 13 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (46)
Current report
Net provision for credit losses on loans and unfunded loan commitments totaled $338 thousand and $109 thousand for the three months ended June 30, 2026 and 2025, respectively.
Current report
Noninterest income totaled $13.8 million for the three months ended June 30, 2026 compared to $12.9 million for the three months ended June 30, 2025.
Current report
Noninterest expenses totaled $37.7 million for the three months ended June 30, 2026 compared to $37.6 million for the three months ended June 30, 2025.
Current report
Income tax expense was $3.5 million for the three months ended June 30, 2026 compared to $5.3 million for the three months ended June 30, 2025. The Company's effective tax rate was 14.2% for the three months ended June 30, 2026 compared to 21.3% for the three months ended June 30, 2025.
Current report
Net interest income decreased by $681 thousand from $49.5 million for the three months ended June 30, 2025 to $48.8 million for the three months ended June 30, 2026. Interest income on loans increased by $279 thousand from $63.0 million for the three months ended June 30, 2025 to $63.3 million for the three months ended June 30, 2026. Interest income on investment securities increased by $464 thousand from $10.3 million for the three months ended June 30, 2025 to $10.7 million for the three months ended June 30, 2026. Total interest expense increased by $550 thousand from $25.3 million for the three months ended June 30, 2025 to $25.9 million for the three months ended June 30, 2026. Interest expense on deposits decreased by $1.2 million from $22.9 million for the three months ended June 30, 2025 to $21.7 million for the three months ended June 30, 2026. Interest expense on borrowings increased by $1.7 million to $4.2 million for the three months ended June 30, 2026 compared to $2.5 million for the three months ended June 30, 2025.
Current report
Taxable-equivalent net interest margin decreased by 20 basis points to 3.87% for the three months ended June 30, 2026 from 4.07% for the three months ended June 30, 2025. During the three months ended June 30, 2026, the Company redeemed the subordinated notes and accelerated the amortization of the related fair value mark of $1.6 million to interest expense, which reduced net interest margin by 13 basis points. Excluding the accelerated amortization of the fair value mark on the redeemed subordinated notes, net interest margin was 4.00% in the second quarter of 2026. See “Supplemental Reporting of Non-GAAP Measures” for additional information.
Current report
Accretion of purchase accounting adjustments on loans included in interest income was $4.3 million and $4.9 million for the three months ended June 30, 2026 and 2025, respectively. Accelerated accretion on loans totaled $731 thousand and $1.3 million for the three months ended June 30, 2026 and 2025, respectively. Prepayment fee income on loans decreased from $507 thousand for the three months ended June 30, 2025 to $343 thousand for the three months ended June 30, 2026.
Current report
Interest expense on interest-bearing liabilities increased by $550 thousand from $25.3 million for the three months ended June 30, 2025 to $25.9 million for the three months ended June 30, 2026. The cost of interest-bearing liabilities decreased by two basis points from 2.64% for the three months ended June 30, 2025 to 2.62% for the three months ended June 30, 2026, reflecting the impact of deposit rate reductions and the runoff of higher rate time deposits, partially offset by the increase in the average balance of interest-bearing deposits and FHLB advances and other borrowings and the accelerated amortization of $1.6 million from the redemption of subordinated notes. Excluding the impact of the subordinated notes redemption, the cost of interest-bearing liabilities was 2.45% for the three months ended June 30, 2026, a decrease of 17 basis points, from 2.62% during the three months ended June 30, 2025.
Current report
Interest expense on borrowings was $4.2 million for the three months ended June 30, 2026 compared to $2.5 million for the three months ended June 30, 2025. The cost of borrowings was 7.48% for the three months ended June 30, 2026 compared to 4.97% for the three months ended June 30, 2025. The redemption of subordinated notes resulted in the accelerated amortization of remaining fair value mark totaling $1.6 million for the three months ended June 30, 2026. Excluding the impact of the subordinated note redemption, the cost of borrowings was 4.57% for the three months ended June 30, 2026, a decrease of 40 basis points from 4.97% during the three months ended June 30, 2025.
Current report
Average borrowings increased by $25.5 million from $198.9 million for the three months ended June 30, 2025 to $224.4 million for the three months ended June 30, 2026. Average borrowings included average FHLB advances and other borrowings of $175.7 million for the three months ended June 30, 2026, an increase of $71.7 million, from an average of $104.1 million for the three months ended June 30, 2025. The increase was due to higher utilization of borrowings primarily to fund loan and investment growth.
Current report
The cost of the Company's subordinated notes, excluding the fair value mark, was 7.92% for the three months ended June 30, 2026 compared to 6.46% for the three months ended June 30, 2025, which was due to the interest rate on the $31.0 million subordinated notes, assumed from the Company's merger with Codorus Valley, converting to a variable rate on December 30, 2025. For the three months ended June 30, 2026 and 2025, the cost of the variable-rate trust preferred debt, excluding the fair value mark, was 5.70% and 6.30%, respectively. Amortization of fair value marks on acquired borrowings was $1.8 million and $150 thousand for the three months ended June 30, 2026 and 2025, respectively, which increased due to the redemption of the subordinated notes in 2026.
Current report
The ACL to total loan ratio was 1.13% at June 30, 2026 and 1.22% at June 30, 2025. The Company recorded a net provision for credit losses on loans and unfunded loan commitments of $338 thousand for the three months ended June 30, 2026 compared to $109 thousand for the same period in 2025. There was no change in the reserve for unfunded loan commitments during the three months ended June 30, 2026.
Current report
For the three months ended June 30, 2026, the provision for credit losses on loans reflects loan growth of $51.7 million during the second quarter of 2026, partially offset by adjustments to certain qualitative factors as a result of improvements in the underlying criteria. The qualitative factor for Collateral Valuation Trends, which was at a minor level at March 31, 2026, was reduced to no risk level for the commercial real estate segment based on improved trends in collateral valuations as supposed by the FRB's Financial Stability Report. The qualitative factor for Concentrations of Credit and Changes within Credit Concentrations, which was at a minor level at March 31, 2026, was reduced to no risk level for the acquisition and development loan segment as the concentration as a percentage of total risk-based capital was below the Bank's risk indicator for consecutive periods. A qualitative factor for Other External Factorswas increased to a minor level for all loan classes based on the potential impact to loan performance from the uncertainty stemming from the geopolitical conflict in the Middle East and inflationary pressures.
Current report
For the three months ended June 30, 2025, the provision for credit losses increased primarily due to an increase in loans of $55.4 million, partially offset by the removal of the Other External Factors qualitative factor for all loan classes during the second quarter of 2025. This qualitative factor was added at a minor level for all loan classes during the first quarter of 2025 based on the uncertainty on the impact from changes in U.S. economic policy, which included tariffs.
Current report
•Interchange income increased by $161 thousand due to an increase in card transactions from consumer spending activity.
Current report
•Salaries and employee benefits expense increased by $865 thousand due to staff additions that filled vacancies, thereby reducing use of third-party consultants, and merit salary increases effective in May.
Current report
•During the second quarter of 2025, the Company incurred merger-related expenses of $968 thousand, which included software conversion costs incurred in connection with the Merger.
Current report
Six months ended June 30, 2026 compared with six months ended June 30, 2025
Current report
Summary
Current report
Net interest income totaled $97.8 million for the six months ended June 30, 2026 compared to $98.3 million for the six months ended June 30, 2025.
Current report
Noninterest income totaled $29.4 million and $24.5 million for the six months ended June 30, 2026 and 2025, respectively.
Current report
Noninterest expenses totaled $74.4 million and $75.8 million for the six months ended June 30, 2026 and 2025, respectively.
Current report
Net Interest Income
Current report
Net interest income on a taxable-equivalent basis decreased by $396 thousand to $99.0 million for the six months ended June 30, 2026 from $99.4 million for the six months ended June 30, 2025. The Company's net interest spread decreased by 14 basis points from 3.45% for the six months ended June 30, 2025 to 3.31% for the six months ended June 30, 2026.
Current report
Taxable-equivalent net interest margin decreased by 15 basis points to 3.89% for the six months ended June 30, 2026 from 4.04% for the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company redeemed the subordinated notes and accelerated the amortization of the related fair value mark of $1.6 million to interest expense, which reduced net interest margin by six basis points. Excluding the accelerated amortization of the fair value mark on the redeemed subordinated notes, net interest margin was 3.95% for the six months ended June 30, 2026. See “Supplemental Reporting of Non-GAAP Measures” for additional information.
Current report
The taxable-equivalent yield on interest-earning assets decreased by 25 basis points from 6.15% for the six months ended June 30, 2025 to 5.90% for the six months ended June 30, 2026 due primarily to the impact of the decline in the Fed Funds rate during the fourth quarter of 2025 and the decrease in the accretion income recognized on purchase accounting marks for acquired loans and securities. The net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings was $7.9 million during the six months ended June 30, 2026 compared to $12.1 million during the six months ended June 30, 2025. The decrease was partially due to the accelerated amortization of the fair value mark of $1.6 million on the subordinated notes redeemed on June 30, 2026. Offsetting the impact from the redeemed subordinated notes, the net interest margin benefited from the decrease of 16 basis points in the cost of deposits from 2.08% for the six months ended June 30, 2025 to 1.92% for the six months ended June 30, 2026, reflecting the impact of deposit rate reductions over that time period and the runoff of higher rate time deposits.
Current report
Average loans increased by $170.8 million to $4.1 billion for the six months ended June 30, 2026 from $3.9 billion for the six months ended June 30, 2025. Average investment securities increased by $93.3 million to $978.0 million for the six months ended June 30, 2026 from $884.7 million for the six months ended June 30, 2025. Average interest-bearing liabilities increased by $101.2 million to $4.0 billion for the six months ended June 30, 2026 from $3.9 billion for the six months ended June 30, 2025.
Current report
The average balance of commercial loans increased by $101.1 million from $3.1 billion for the six months ended June 30, 2025 to $3.2 billion for the six months ended June 30, 2026. Average residential mortgage loans increased by $44.7 million from $467.4 million during the six months ended June 30, 2025 to $512.1 million during the six months ended June 30, 2026. Average home equity loans increased by $29.3 million from $289.4 million for the six months ended June 30, 2025 to $318.7 million for the six months ended June 30, 2026. Average installment and other consumer loans decreased by $4.3 million from $44.9 million for the six months ended June 30, 2025 to $40.6 million for the six months ended June 30, 2026.
Current report
Interest income on investment securities on a tax-equivalent basis increased by $1.4 million to $22.2 million for the six months ended June 30, 2026 from $20.8 million for the six months ended June 30, 2025, with the taxable equivalent yield decreasing from 4.70% for the six months ended June 30, 2025 to 4.54% for the six months ended June 30, 2026. The 16 basis point decrease reflects the impact from the decline in the market interest rates and the decrease in the accretion recognized on fair value marks to acquired securities. Accretion on acquired investment securities was $1.4 million for the six months ended June 30, 2026 compared to $1.6 million for the six months ended June 30, 2025. The average balance of investment securities increased by $93.3 million to $978.0 million for the six months ended June 30, 2026 from $884.7 million for the six months ended June 30, 2025 due primarily to investment security purchases. During the six months ended June 30, 2026 and 2025, the Company did not sell any investment securities.
Current report
Interest income on federal funds sold and interest-bearing bank balances on a tax-equivalent basis decreased by $2.5 million to $1.3 million for the six months ended June 30, 2026 from $3.8 million for the six months ended June 30, 2025. The average balance of federal funds sold and interest-bearing bank balances decreased by $99.6 million from $169.5 million for the six months ended June 30, 2025 to $69.9 million for the six months ended June 30, 2026, which was impacted by the increase in average loans and investment securities. This decrease was partially offset by the increase in average interest-bearing liabilities. The FOMC cut the Federal Funds rate by 75 basis points from September 2025 to December 2025.
Current report
Interest expense on interest-bearing liabilities decreased by $849 thousand from $52.1 million for the six months ended June 30, 2025 to $51.2 million for the six months ended June 30, 2026. The cost of interest-bearing liabilities decreased by 11 basis points from 2.70% for the six months ended June 30, 2025 to 2.59% for the six months ended June 30, 2026 reflecting the impact of deposit rate reductions and the runoff of higher rate time deposits, partially offset by the increase in the average balance of interest-bearing deposits and FHLB advances and other borrowings and the accelerated amortization of $1.6 million from the redemption of subordinated notes. Excluding the impact of the subordinated notes redemption, the cost of interest-bearing liabilities was 2.51% for the six months ended June 30, 2026, a decrease of 19 basis points from 2.70% during the six months ended June 30, 2025.
Current report
Interest expense on deposits was $43.7 million for the for the six months ended June 30, 2026 compared to $47.1 million for the six months ended June 30, 2025. The cost of deposits was 1.92% for the six months ended June 30, 2026 compared to 2.08% for the six months ended June 30, 2025. Average interest-bearing demand deposits increased by $87.6 million and totaled $2.6 billion for the six months ended June 30, 2026 compared to $2.5 billion for the six months ended June 30, 2025. The average balance of interest-bearing deposits increased by $37.9 million and totaled $3.7 billion for the six months ended June 30, 2026 from the six months ended June 30, 2025. Average time deposits decreased by $38.8 million to $903.6 million for the three months ended June 30, 2026 from $942.4 million for the three months ended June 30, 2025. Average savings deposits decreased by $10.9 million to $260.2 million for the six months ended June 30, 2026 from $271.1 million for the three months ended June 30, 2025. Amortization of fair value marks on acquired time deposits was $63 thousand for the six months ended June 30, 2026 compared to $707 thousand for the six months ended June 30, 2025.
Current report
Interest expense on borrowings increased by $2.6 million to $7.6 million for the six months ended June 30, 2026 from $5.0 million for the six months ended June 30, 2025. The cost of borrowings was 5.72% for the six months ended June 30, 2026 compared to 4.92% for the six months ended June 30, 2025. The redemption of subordinated notes resulted in the accelerated amortization of the remaining fair value mark totaling $1.6 million. Excluding the impact of the subordinated notes redemption, the cost of borrowings was 4.49% for the six months ended June 30, 2026, a decrease of 43 basis points from 4.92% during the six months ended June 30, 2025.
Current report
Average borrowings increased by $63.3 million from $203.3 million for the six months ended June 30, 2025 to $266.6 million for the six months ended June 30, 2026. Average borrowings included average FHLB advances and other borrowings of
Current report
$211.8 million for the six months ended June 30, 2026, an increase of $103.4 million, from an average of $108.4 million for the six months ended June 30, 2025. The increase was due to higher utilization of borrowings primarily to fund loan and investment growth.
Current report
The cost of the Company's subordinated notes, excluding the fair value mark, was 8.04% for the six months ended June 30, 2026 compared to 6.38% for the six months ended June 30, 2025, which was due to the interest rate on the $31.0 million subordinated notes, assumed from the Company's merger with Codorus Valley, converting to a variable rate on December 30, 2025. For the six months ended June 30, 2026 and 2025, the cost of the variable-rate trust preferred debt, excluding the fair value mark, was 5.71% and 6.34%, respectively. Amortization of fair value marks on acquired borrowings was $1.9 million and $302 thousand for the six months ended June 30, 2026 and 2025, respectively, which increased due to the redemption of the subordinated notes in 2026.
Current report
Provision for Credit Losses
Current report
Net charge-offs for the six months ended June 30, 2026 totaled $2.1 million compared to net charge-offs of $446 thousand for the six months ended June 30, 2025. The increase in net charge-offs during the six months ended June 30, 2026 included charge-offs of $1.0 million between two commercial and industrial loans and $753 thousand for a commercial and land development loan. Nonaccrual loans were 0.58% of gross loans at June 30, 2026 compared with 0.57% of gross loans at June 30, 2025.
Current report
During the second quarter of 2026, the qualitative factor for Collateral Valuation Trends, which was at a minor level March 31, 2026 and December 31, 2025, was reduced to no risk level for the commercial real estate segment based on improved trends in collateral valuations as supposed by the FRB's Financial Stability Report. The qualitative factor for Concentrations of Credit and Changes within Credit Concentrations, which was at a minor level at March 31, 2026, was reduced to no risk level for the acquisition and development loan segment as the concentration as a percentage of total risk-based capital was below the Bank's risk indicator for consecutive periods. A qualitative factor for Other External Factorswas increased to a minor level for all loan classes based on the potential impact to loan performance from the uncertainty stemming from the geopolitical conflict in the Middle East and inflationary pressures.
Current report
Noninterest Income
Showing the first 40 of 46 passages. Open the source sections for the rest.
Removed paragraphs (4)
Previous report
Noninterest income totaled $15.6 million and $11.6 million for the three months ended March 31, 2026 and 2025, respectively.
Previous report
Noninterest expenses totaled $36.7 million and $38.2 million for the three months ended March 31, 2026 and 2025, respectively.
Previous report
Interest expense on borrowings increased by $875 thousand to $3.4 million for the three months ended March 31, 2026 from $2.5 million for the three months ended March 31, 2025. The cost of borrowings increased by 46 basis points to 4.42% for the three months ended March 31, 2026 from 4.88% for the three months ended March 31, 2025. Average borrowings increased by $101.4 million from $207.8 million for the three months ended March 31, 2025 to $309.2 million for the three months ended March 31, 2026. Average borrowings included average FHLB advances and other borrowings of $248.4 million for the three months ended March 31, 2026, an increase of $135.5 million, from an average of $112.9 million for the three months ended March 31, 2025. The cost of the Company's subordinated notes, excluding the fair value mark, was 8.16% for the three months ended March 31, 2026 compared to 6.16% for the three months ended March 31, 2025, which was due to the interest rate converting to a variable rate on December 30, 2025. For the three months ended March 31, 2026 and 2025, the cost of the variable-rate trust preferred debt, excluding the fair value mark, was 5.72% and 6.37%, respectively. Amortization of fair value marks on acquired borrowings was $152 thousand for both the three months ended March 31, 2026 and 2025. Funding costs were elevated in the first half of the quarter in 2026 due to seasonal deposit declines, which increased borrowing balances temporarily. Significant deposit inflow in the back half of the quarter in 2026 enabled the Bank to significantly reduce its borrowing levels, but the average balance was still higher than the prior quarter.
Previous report
March 31, 2026, a decrease of $2.8 million from $30.2 million at December 31, 2025 due primarily to net upgrades of $2.2 million and repayments of $617 thousand. The Substandard-IEL category increased by $2.0 million from $28.2 million at December 31, 2025 to $30.2 million at March 31, 2026, primarily due to net downgrades of $5.2 million, partially offset by repayments of $2.3 million and charge-offs totaling $930 thousand.
Reworded paragraphs (62)
Previous wording
The Company, headquartered in Harrisburg, Pennsylvania, is a one-bank holding company that has elected status as a financial holding company. The consolidated financial information presented herein reflects the Company and its wholly-owned subsidiary, the Bank. At March 31, 2026, the Company had total assets of $5.6 billion, total liabilities of $5.0 billion and total shareholders’ equity of $603.2 million as reported in the unaudited consolidated balance sheets.
Current wording
The Company, headquartered in Harrisburg, Pennsylvania, is a one-bank holding company that has elected status as a financial holding company. The consolidated financial information presented herein reflects the Company and its wholly-owned subsidiary, the Bank. At June 30, 2026, the Company had total assets of $5.6 billion, total liabilities of $5.0 billion and total shareholders’ equity of $621.7 million as reported in the unaudited consolidated balance sheet.
Previous wording
For the three months ended March 31, 2026 and 2025, the Company had net income of $21.8 million and $18.1 million, respectively. Diluted earnings per share were $1.12 and $0.93 for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026 and 2025, the Company incurred merger-related expenses of zero and $1.6 million, respectively. The merger-related expenses are included in non-interest expenses in the unaudited consolidated statements of income.
Current wording
For the three and six months ended June 30, 2026, the Company had net income of $21.2 million and $43.0 million, respectively, compared to net income of $19.4 million and $37.5 million for the three and six months ended June 30, 2025, respectively. Diluted earnings per share was $1.09 and $1.01 for the three months ended June 30, 2026 and 2025, respectively. Diluted earnings per share was $2.21 and $1.94 for the six months ended June 30, 2026 and 2025, respectively. For the three and six months ended June 30, 2025, the Company incurred merger-related expenses of $968 thousand and $2.6 million, respectively. The Company did not incur merger-related expenses during the three and six months ended June 30, 2026. The merger-related expenses are included in non-interest expenses in the unaudited consolidated statements of income.
Previous wording
Preliminary real GDP increased at a rate of 2.0% on an annualized basis for the first quarter of 2026, which was an increase from 1.4% during the fourth quarter of 2025 and an increase from contraction of 0.3% during the first quarter of 2025. The increase during the first quarter of 2026 was primarily due to the rise in investment, which includes business spending and inventories, in addition to consumer spending and government spending, following the government shutdown at the end of 2025. Key contributors to investment presently are intellectual property and information processing equipment. An offsetting factor influencing the GDP rate was the increase in imports, which includes parts for information processing.
Current wording
Preliminary real GDP increased at a rate of 1.5% on an annualized basis for the second quarter of 2026, which was a decrease from 2.1% during the first quarter of 2026 and from 3.0% during the second quarter of 2025. The decrease during the second quarter of 2026 was primarily due to an increase in imports and decrease in government spending, partially offset by an increase in consumer spending and investments. The increase in imports, which reduces GDP, was primarily impacted by capital goods, which includes industrial equipment and semiconductors. Nondefense spending declined due to an increase in sales of crude oil. The increase in consumer spending was primarily driven by nondurable goods, including personal healthcare, motor vehicles and furniture. Investment in intellectual property products continues to rise.
Previous wording
The personal consumption expenditures ("PCE") price index increased by 4.5% in the first quarter of 2026 compared to an increase of 2.9% for the fourth quarter of 2025 and 2.3% during the first quarter of 2025. Excluding food and energy prices, the PCE price index increased by 4.3% in the first quarter of 2026, 2.7% in the fourth quarter of 2025 and 2.3% in the first quarter of 2025. The increase in the PCE price index reflects rising service sector costs and inflationary pressures. Rising costs include energy prices, which have been impacted by the geopolitical conflict in the Middle East, and pass-through costs on goods impacted by tariffs.
Current wording
The personal consumption expenditures ("PCE") price index increased by 5.1% in the second quarter of 2026 compared to an increase of 4.6% for the first quarter of 2026 and 2.1% during the second quarter of 2025. Excluding food and energy prices, the PCE price index increased by 3.4% in the second quarter of 2026, 4.4% in the first quarter of 2025 and 2.5% in the second quarter of 2025. The increase in the PCE price index reflects the rising costs from energy prices, which have been impacted by the geopolitical conflict in the Middle East, and pass-through costs on goods impacted by tariffs. Despite the inflationary pressures, consumer demand has allowed for prices to hold.
Previous wording
The national unemployment rate was 4.3% in March 2026 compared to 4.4% in December 2025. During the first quarter of 2026, there were job gains reported in healthcare, construction, transportation and warehousing. Within the Company's geographic footprint, the unemployment rate in Pennsylvania was 4.3% in March 2026 compared to 3.7% in December 2025. The unemployment rate in Maryland increased from 4.2% in December 2025 to 4.3% in March 2026. The unemployment rates in Pennsylvania and Maryland both remain aligned with the national level. These state-wide unemployment rates are consistent with those experienced by the counties in which the Company operates branches and other corporate offices.
Current wording
The national unemployment rate was 4.2% in June 2026 compared to 4.3% in March 2026 and 4.1% in June 2025. During the second quarter of 2026, there continued to be job gains in healthcare, professional services and social assistance; however, there was a decline in employment within leisure and hospitality. Within the Company's geographic footprint, the unemployment rate in Pennsylvania was 4.1% in June 2026 compared to 4.3% in March 2026 and 4.3% in June 2026. The unemployment rates in Pennsylvania and Maryland both remain aligned with the national level. These state-wide unemployment rates are consistent with those experienced by the counties in which the Company operates branches and other corporate offices.
Previous wording
Following a 25 basis point increase in July 2023, the Federal Funds rate remained unchanged until September 2024, when the FOMC cut the Federal Funds rate by 50 basis points. The FOMC subsequently implemented additional rate cuts of 25 basis points in December 2024, September 2025, October 2025 and December 2025. These changes were based on the FOMC's assessment of inflation, the unemployment rate and jobs report.
Current wording
During 2025, the FOMC implemented rate cuts of 25 basis points in September 2025, October 2025 and December 2025, reducing the target range to 3.50% to 3.75%. These changes were based on the FOMC's assessment of inflation, the unemployment rate and jobs report. There have been no rate changes in 2026.
Previous wording
At March 31, 2026, the 10-year Treasury bond yield was 4.30%, an increase from 4.14% at December 31, 2025. Contributing factors for the increase include geopolitical conflict, which has caused energy prices to rise and created concerns with inflationary pressure. Despite the recent FOMC rate cuts, the current geopolitical conflict could result in a pause or increase in the Federal Funds rate.
Current wording
At June 30, 2026, the 10-year Treasury bond yield was 4.44%, an increase from 4.30% at March 31, 2026 and 4.14% at December 31, 2025. Contributing factors for the increase include geopolitical conflict, which has caused energy prices to rise and created concerns with inflationary pressure. There is some belief that the current geopolitical conflict could result in an increase in the Federal Funds rate later in 2026.
Previous wording
Net income totaled $21.8 million for the three months ended March 31, 2026 compared to $18.1 million for the same period in 2025. Diluted earnings per share for the three months ended March 31, 2026 totaled $1.12 compared to $0.93 for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, the Company incurred merger-related expenses of zero and $1.6 million, respectively, which were included in non-interest expenses of the unaudited condensed consolidated statements of income. For the three months ended March 31, 2025, excluding these non-recurring expenses, net income and diluted earnings per common share totaled $19.3 million and $1.00, respectively. See “Supplemental Reporting of Non-GAAP Measures” for additional information.
Current wording
Net income totaled $21.2 million for the three months ended June 30, 2026 compared to net income of $19.4 million for the same period in 2025. Diluted earnings per share for the three months ended June 30, 2026 totaled $1.09 compared to $1.01 for the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, the Company incurred merger-related expenses of zero and $968 thousand, respectively, which were included in non-interest expenses of the unaudited condensed consolidated statements of income. For the three months ended June 30, 2025, excluding these non-recurring expenses, net income and diluted earnings per share totaled $20.2 million and $1.04, respectively. See “Supplemental Reporting of Non-GAAP Measures” for additional information.
Previous wording
Net interest income totaled $49.0 million for the three months ended March 31, 2026 compared to $48.8 million for the three months ended March 31, 2025.
Current wording
Net interest income totaled $48.8 million for the three months ended June 30, 2026 compared to $49.5 million for the three months ended June 30, 2025.
Previous wording
Net interest income on a taxable-equivalent basis increased by $368 thousand to $49.6 million for the three months ended March 31, 2026 from $49.2 million for the three months ended March 31, 2025. The Company's net interest spread decreased by six basis points from 3.41% for the three months ended March 31, 2025 to 3.35% for the three months ended March 31, 2026.
Current wording
Net interest income on a taxable-equivalent basis decreased by $659 thousand to $49.4 million for the three months ended June 30, 2026 from $50.1 million for the three months ended June 30, 2025. The Company's net interest spread decreased by 21 basis points from 3.49% for the three months ended June 30, 2025 to 3.28% for the three months ended June 30, 2026.
Previous wording
Taxable-equivalent net interest margin decreased by 10 basis points to 3.90% for the three months ended March 31, 2026 from 4.00% for the three months ended March 31, 2025. The taxable-equivalent yield on interest-earning assets decreased by 26 basis points from 6.17% for the three months ended March 31, 2025 to 5.91% for the three months ended March 31, 2026 due primarily to the impact of the decline in the Fed Funds rate and the decrease in the accretion income recognized on fair value marks to acquired loans and securities. The net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings was $4.7 million during the three months ended March 31, 2026 compared to $6.9 million in net accretion during the three months ended March 31, 2025. The net interest margin benefited from the decrease of 20 basis points in the cost of interest-bearing liabilities from 2.76% to 2.56%, reflecting the impact of deposit rate reductions over that time period and the runoff of higher rate time deposits and money market balances.
Current wording
The taxable-equivalent yield on interest-earning assets decreased by 23 basis points from 6.13% for the three months ended June 30, 2025 to 5.90% for the three months ended June 30, 2026 due primarily to the impact of the decline in the Fed Funds rate during the fourth quarter of 2025 and the decrease in the net accretion income recognized on purchase accounting marks for acquired loans and securities, partially offset by the increase in average loans and investment securities. The net accretion impact of purchase accounting marks on loans, securities, deposits and borrowings was $3.2 million during the three months ended June 30, 2026 compared to $5.2 million during the three months ended June 30, 2025. The decrease in the purchase accounting marks was primarily due to the accelerated amortization expense of the remaining fair value mark of $1.6 million on the subordinated notes redeemed on June 30, 2026. Offsetting the impact from the redeemed subordinated notes, net interest margin benefited from a decrease of 13 basis points in the cost of deposits from 2.01% for the three months ended June 30, 2025 to 1.88% for the three months ended June 30, 2026, reflecting the impact of deposit rate reductions over that time period and the runoff of higher rate time deposits.
Previous wording
Average loans increased by $161.2 million to $4.1 billion for the three months ended March 31, 2026 from $3.9 billion for the three months ended March 31, 2025. Average investment securities increased by $119.0 million to $984.1 million for the three months ended March 31, 2026 from $865.1 million for the three months ended March 31, 2025. Average interest-bearing liabilities increased by $84.8 million to $4.0 billion for the three months ended March 31, 2026 from $3.9 billion for the three months ended March 31, 2025.
Current wording
Average loans increased by $180.3 million from $3.9 billion for the three months ended June 30, 2025 to $4.1 billion for the three months ended June 30, 2026. Average investment securities increased by $67.8 million from $904.1 million for the three months ended June 30, 2025 to $971.9 million for the three months ended June 30, 2026. Average interest-bearing liabilities increased by $117.5 million to $4.0 billion for the three months ended June 30, 2026 from $3.8 billion for the three months ended June 30, 2025.
Previous wording
The average balance of commercial loans increased by $96.1 million from $3.1 billion for the three months ended March 31, 2025 to $3.2 billion for the three months ended March 31, 2026. Average residential mortgage loans increased by $46.2 million from $461.8 million during the three months ended March 31, 2025 to $508.0 million during the three months ended March 31, 2026. Average home equity loans increased by $23.6 million from $288.7 million for the three months ended March 31, 2025 to $312.3 million for the three months ended March 31, 2026. Average installment and other consumer loans decreased by $4.7 million from $45.9 million for the three months ended March 31, 2025 to $41.2 million for the three months ended March 31, 2026.
Current wording
The average balance of commercial loans increased by $106.0 million to $3.2 billion for the three months ended June 30, 2026 from $3.1 billion for the three months ended June 30, 2025. Average residential mortgage loans increased by $43.3 million from $473.0 million during the three months ended June 30, 2025 to $516.3 million during the three months ended June 30, 2026. Average home equity loans increased by $34.9 million from $290.1 million for the three months ended June 30, 2025 to $325.0 million for the three months ended June 30, 2026. Average installment and other consumer loans decreased by $3.9 million from $43.9 million for the three months ended June 30, 2025 to $40.0 million for the three months ended June 30, 2026.
Previous wording
Interest income on investment securities on a tax-equivalent basis increased by $1.0 million to $11.1 million for the three months ended March 31, 2026 from $10.1 million for the three months ended March 31, 2025, with the taxable equivalent yield decreasing from 4.65% for the three months ended March 31, 2025 to 4.51% for the three months ended March 31, 2026. The 14 basis point decrease reflects the impact from the decline in the market interest rates and the decrease in the accretion recognized on fair value marks to acquired securities. Accretion on acquired investment securities was $678 thousand for the three months ended March 31, 2026 compared to $839 thousand for the three months ended March 31, 2025. The average balance of investment securities increased by $119.0 million to $984.1 million for the three months ended March 31, 2026 from $865.1 million for the three months ended March 31, 2025 due primarily to investment security purchases. During the three months ended March 31, 2026 and 2025, the Company did not sell any investment securities.
Current wording
Interest income on investment securities on a tax-equivalent basis increased by $470 thousand to $11.1 million for the three months ended June 30, 2026 from $10.6 million for the three months ended June 30, 2025, with the taxable equivalent yield decreasing from 4.70% for the three months ended June 30, 2025 to 4.57% for the three months ended June 30, 2026. The 13 basis point decrease reflects the impact from the decline in the market interest rates and the decrease in the accretion recognized on fair value marks to acquired securities. Accretion on acquired investment securities was $698 thousand for the three months ended June 30, 2026 compared to $795 thousand for the three months ended June 30, 2025. The average balance of investment securities increased by $67.8 million to $971.9 million for the three months ended June 30, 2026 from $904.1 million for the three months ended June 30, 2025 due primarily to investment security purchases. During the three months ended June 30, 2026 and 2025, the Company did not sell any investment securities.
Previous wording
Interest income on federal funds sold and interest-bearing bank balances on a tax-equivalent basis decreased by $1.6 million to $637 thousand for the three months ended March 31, 2026 from $2.3 million for the three months ended March 31, 2025. The average balance of federal funds sold and interest-bearing bank balances decreased by $133.2 million from $203.3 million for the three months ended March 31, 2025 to $70.1 million for the three months ended March 31, 2026, which was derived from the increase in average loans and decrease in average deposits. The FOMC has cut the Federal Funds rate by 75 basis points since September 2025.
Current wording
Interest income on federal funds sold and interest-bearing bank balances on a tax-equivalent basis decreased by $874 thousand to $639 thousand for the three months ended June 30, 2026 from $1.5 million for the three months ended June 30, 2025. The average balance of federal funds sold and interest-bearing bank balances decreased by $66.3 million from $136.1 million for the three months ended June 30, 2025 to $69.8 million for the three months ended June 30, 2026, which was impacted by the increase in average loans and investment securities. This decrease was partially offset by the increase in average interest-bearing liabilities. The FOMC cut the Federal Funds rate by 75 basis points from September 2025 to December 2025.
Previous wording
Interest expense on interest-bearing liabilities decreased by $1.4 million from $26.8 million for the three months ended March 31, 2025 to $25.4 million for the three months ended March 31, 2026. The cost of interest-bearing liabilities decreased by 20 basis points from 2.76% for the three months ended March 31, 2025 to 2.56% for the three months ended March 31, 2026 reflecting the impact of deposit rate reductions and the runoff of higher rate time deposits and money market balances. The average balance of interest-bearing deposits decreased by $16.7 million and totaled $3.7 billion for the three months ended March 31, 2026 from three months ended March 31, 2025. Average time deposits decreased by $63.7 million to $906.9 million for the three months ended March 31, 2026 from $970.6 million for the three months ended March 31, 2025. Average savings deposits decreased by $13.7 million to $259.6 million for the three months ended March 31, 2026 from $273.3 million for the three months ended March 31, 2025. Average interest-bearing demand deposits increased by $60.7 million and totaled $2.5 billion for both the three months ended March 31, 2026 and 2025. Amortization of fair value marks on acquired time deposits was $38 thousand for the three months ended March 31, 2026 compared to $452 thousand for the three months ended March 31, 2025.
Current wording
Interest expense on deposits was $21.7 million for the three months ended June 30, 2026 compared to $22.9 million for the three months ended June 30, 2025. The cost of deposits was 1.88% for the three months ended June 30, 2026 compared to 2.01% for the three months ended June 30, 2025. The average balance of interest-bearing deposits increased by $91.9 million to $3.7 billion for the three months ended June 30, 2026 from $3.6 billion for the three months ended June 30, 2025. Average interest-bearing demand deposits increased by $114.2 million to $2.6 billion for the three months ended June 30, 2026 from $2.5 billion for the three months ended June 30, 2025. Average time deposits decreased by $13.7 million to $900.4 million for the three months ended June 30, 2026 from $914.1 million for the three months ended June 30, 2025. Average savings deposits decreased by $8.6 million to $260.7 million for the three months ended June 30, 2026 from $269.3 million for the three months ended June 30, 2025. Amortization of fair value marks on acquired time deposits was $25 thousand for the three months ended June 30, 2026 compared to $254 thousand for the three months ended June 30, 2025.
Previous wording
Net charge-offs for the three months ended March 31, 2026 totaled $946 thousand compared to net charge-offs of $331 thousand for the three months ended March 31, 2025. Nonaccrual loans were 0.74% of gross loans at March 31, 2026 compared with 0.59% of gross loans at March 31, 2025.
Current wording
Net charge-offs for the three months ended June 30, 2026 totaled $1.2 million compared to net charge-offs of $115 thousand for the three months ended June 30, 2025. The increase in net charge-offs during the second quarter of 2026 included charge-offs of $668 thousand for a commercial and land development loan and $349 thousand for a commercial and industrial loan. Nonaccrual loans were 0.58% of gross loans at June 30, 2026, compared with 0.57% of gross loans at June 30, 2025.
Previous wording
Noninterest income increased by $4.0 million from $11.6 million for the three months ended March 31, 2025 to $15.6 million for the three months ended March 31, 2026. The following were significant components of the change in this line item:
Current wording
Noninterest income increased by $921 thousand from $12.9 million for the three months ended June 30, 2025 to $13.8 million for the three months ended June 30, 2026. The following were significant components of the change in this line item:
Previous wording
•Wealth management income, which includes trust and investment management income and brokerage income, increased by $142 thousand due to improvement in market performance and increase in managed assets.
Current wording
•Wealth management income, which includes trust and investment management income and brokerage income, increased by $679 thousand due to improvement in market performance combined with new account generation driving an increase in managed assets.
Previous wording
Noninterest expense decreased by $1.5 million from $38.2 million for the three months ended March 31, 2025 to $36.7 million for the three months ended March 31, 2026. The following were additional significant components of the change in this line item:
Current wording
Noninterest expenses increased by $52 thousand from $37.6 million for the three months ended June 30, 2025 to $37.7 million for the three months ended June 30, 2026. The following were additional significant components of the change in this line item:
Previous wording
•Furniture and equipment expense decreased by $546 thousand due primarily to post-merger efficiencies over the past year.
Current wording
•Furniture and equipment expense decreased by $536 thousand due primarily to post-merger efficiencies created over the past year.
Previous wording
•Data processing expense increased by $613 thousand due to investments in technology as the Company focuses on the evolving needs of its clients.
Current wording
•Data processing expenses increased by $738 thousand due to investments in technology as the Company focuses on the evolving needs of its clients.
Previous wording
•Professional services expense decreased by $605 thousand due to the reduced reliance on consultants and other third-party service providers since the prior year.
Current wording
•Professional services expense decreased by $814 thousand due to the reduced use of consultants and other third-party service providers since the prior year.
Previous wording
Income tax expense totaled $5.7 million, an effective tax rate of 20.7%, for the three months ended March 31, 2026 compared with $4.7 million and an effective tax rate of 20.7% for the three months ended March 31, 2025. The Company’s effective tax rate is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and non-taxable income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") and other nondeductible items.
Current wording
Income tax expense totaled $3.5 million, an effective tax rate of 14.2%, for the three months ended June 30, 2026 compared to income tax expense of $5.3 million and an effective tax rate of 21.3% for the three months ended June 30, 2025. The Company’s effective tax rate is less than the 21% federal statutory rate primarily due to the purchase of federal income tax credits, which reduced income tax expense by $1.6 million. In addition, the effective tax rate was impacted by tax-exempt income, including interest earned on tax-exempt loans and securities and non-taxable income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") and other nondeductible items.
Previous wording
The net provision for credit losses on loans and unfunded loan commitments included expense of $352 thousand and a recovery of $554 thousand for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Net provision for credit losses on loans and unfunded loan commitments included an expense of $690 thousand and a recovery of $445 thousand for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Income tax expense totaled $5.7 million and $4.7 million for the three months ended March 31, 2026 and 2025, respectively. The Company's effective tax rate was 20.7% for both the three months ended March 31, 2026 and 2025.
Current wording
Income tax expense totaled $9.2 million and $10.0 million for the six months ended June 30, 2026 and 2025, respectively. The Company's effective tax rate was 17.6% for the six months ended June 30, 2026 compared to 21.0% for the six months ended June 30, 2025.
Previous wording
Net interest income increased by $244 thousand from $48.8 million for the three months ended March 31, 2025 to $49.0 million for the three months ended March 31, 2026. Interest income on loans decreased by $437 thousand from $63.4 million for the three months ended March 31, 2025 to $63.0 million for the three months ended March 31, 2026. Interest income on investment securities increased by $913 thousand from $9.8 million for the three months ended March 31, 2025 to $10.7 million for the three months ended March 31, 2026. Total interest expense decreased by $1.4 million from $26.8 million for the three months ended March 31, 2025 to $25.4 million for the three months ended March 31, 2026. Interest expense on deposits decreased by $2.3 million from $24.3 million for the three months ended March 31, 2025 to $22.0 million for the three months ended March 31, 2026. Interest expense on borrowings increased by $875 thousand from $2.5 million in the three months ended March 31, 2025 to $3.4 million for the three months ended March 31, 2026.
Current wording
Net interest income decreased by $437 thousand from $98.3 million for the six months ended June 30, 2025 to $97.8 million for the six months ended June 30, 2026. Interest income on loans decreased by $158 thousand from $126.5 million for the six months ended June 30, 2025 to $126.3 million for the six months ended June 30, 2026. Interest income on investment securities increased by $1.4 million from $20.1 million for the six months ended June 30, 2025 to $21.5 million for the six months ended June 30, 2026. Total interest expense decreased by $849 thousand from $52.1 million for the six months ended June 30, 2025 to $51.2 million for the six months ended June 30, 2026. Interest expense on deposits decreased by $3.4 million from $47.1 million for the six months ended June 30, 2025 to $43.7 million for the six months ended June 30, 2026. Interest expense on borrowings increased by $2.6 million from $5.0 million in the six months ended June 30, 2025 to $7.6 million for the six months ended June 30, 2026.
Previous wording
The following table presents the impact of rate and volume on the change in taxable-equivalent net interest income for the three months ended March 31, 2025 compared to the three months ended March 31, 2026:
Current wording
The following table presents the impact of rate and volume on the change in taxable-equivalent net interest income for the six months ended June 30, 2025 compared to the six months ended June 30, 2026:
Previous wording
The average yield on loans decreased by 30 basis points to 6.29% for the three months ended March 31, 2026 compared to 6.59% for the three months ended March 31, 2025. Taxable-equivalent interest income earned on loans decreased by $427 thousand primarily due to the impact of a decline in the Fed Funds rate and the decrease in the accretion income recognized on fair value marks to acquired loans, partially offset by an increase in the average loan balances.
Current wording
The average yield on loans decreased by 29 basis points to 6.27% for the six months ended June 30, 2026 compared to 6.56% for the six months ended June 30, 2025. Taxable-equivalent interest income earned on loans decreased by $126 thousand primarily due to the impact of a decline in the Fed Funds rate and the decrease in the accretion income recognized on fair value marks to acquired loans, partially offset by an increase in the average loan balances.
Previous wording
Accretion of purchase accounting adjustments on loans included in interest income was $4.2 million and $6.6 million for the three months ended March 31, 2026 and 2025, respectively, which included accelerated accretion totaling $1.0 million and $1.4 million during the three months ended March 31, 2026 and 2025, respectively. Prepayment income on loans increased from $300 thousand for the three months ended March 31, 2025 to $579 thousand for the three months ended March 31, 2026.
Current wording
Accretion of purchase accounting adjustments on loans included in interest income was $8.5 million and $11.5 million for the six months ended June 30, 2026 and 2025, respectively, which included accelerated accretion totaling $1.7 million and $2.7 million during the six months ended June 30, 2026 and 2025, respectively. Prepayment fee income on loans increased from $807 thousand for the six months ended June 30, 2025 to $922 thousand for the six months ended June 30, 2026.
Previous wording
The ACL as a percentage of the total loan portfolio was 1.17% at March 31, 2026 compared to 1.23% at March 31, 2025. The Company recorded a provision for credit losses on loans of $728 thousand for the three months ended March 31, 2026 compared to a recovery of $554 thousand for the same period in 2025. The recovery of credit losses on unfunded loan commitments was $376 thousand and zero during the three months ended March 31, 2026 and 2025, respectively.
Current wording
The ACL to total loan ratio was 1.13% at June 30, 2026 compared to 1.22% at June 30, 2025. The Company recorded a provision for credit losses on loans and unfunded commitments of $1.1 million for the six months ended June 30, 2026 compared to a recovery of $345 thousand for the same period in 2025. The recovery of credit losses on unfunded loan commitments was zero and $100 thousand during the six months ended June 30, 2026 and 2025, respectively.
Previous wording
For the three months ended March 31, 2026, the provision for credit losses was impacted by loan growth of $40.6 million, refinement to the Bank's peer group and loss driver factors, in addition to a reduction in prepayment speed assumptions, within the quantitative model due to current economic conditions partially offset by an improvement in the gross domestic product forecast and changes in certain qualitative factors. The qualitative factor for Delinquency and Classified Loan Trends was reduced from a moderate to a minor level for the commercial and industrial and commercial real estate owner-occupied loan classes. The change was based on reduced levels of delinquencies and migration to classified risk ratings over consecutive periods. The qualitative factor for the Quality of Loan Review System was reduced from a minor level to no risk level for the commercial loan classes. The change was supported by strong ratings in the Bank's risk assessment, credit administration and credit risk supervision processes, as reported in the third-party loan reviews for multiple consecutive periods. The qualitative factor for Concentrations of Credit and Changes within Credit Concentrationswas removed for the commercial real estate non-owner occupied loan class, which was based on the continuous decline in the commercial real estate concentration as a percentage of total risk-based capital.
Current wording
During the first quarter of 2026, the qualitative factor for Delinquency and Classified Loan Trends was reduced from a moderate to a minor level for the commercial and industrial and commercial real estate owner-occupied loan classes. The change was based on reduced levels of delinquencies and migration to classified risk ratings over consecutive periods. The qualitative factor for the Quality of Loan Review System was reduced from a minor level to no risk level for the commercial loan classes. The change was supported by strong ratings in the Bank's risk assessment, credit administration and credit risk supervision processes, as reported in the third-party loan reviews for multiple consecutive periods. The qualitative factor for Concentrations of Credit and Changes within Credit Concentrationswas removed for the commercial real estate non-owner occupied loan class, which was based on the continuous decline in the commercial real estate concentration as a percentage of total risk-based capital.
Previous wording
For the three months ended March 31, 2025, the provision for credit losses was primarily impacted by the decrease in loans, partially offset by increases in certain qualitative factors. A qualitative factor was added for Other External Factorsat a minor level for all loan classes due to the uncertainty created within the global and domestic markets from changes in U.S. economic policy, including the recently implemented tariffs;, the Economic Conditions qualitative factor at a minor level and the Delinquency and Classified Loan Trends qualitative factor at a moderate level were added for the residential senior liens loan class; and the Delinquency and Classified Loan Trends qualitative factor at a moderate level was added for the home equity loan class. An adjustment to the Economic Conditions qualitative factor was based on current market interest rates and prepayment speeds, and the adjustment to Delinquency and Classified Loan Trends was based on delinquencies and downgrades within the aforementioned loan classes.
Current wording
For the six months ended June 30, 2025, the provision for credit losses was primarily impacted by the changes in certain qualitative factors as loan balances were relatively flat over that period. During the first quarter of 2025, a qualitative factor was added for Other External Factorsat a minor level for all loan classes due to the uncertainty created within the global and domestic markets from changes in U.S. economic policy, including the recently implemented tariffs. The Economic Conditions qualitative factor, at a minor level, and the Delinquency and Classified Loan Trends qualitative factor, at a moderate level, were added for the residential senior liens loan class. The Delinquency and Classified Loan Trends qualitative factor was added for the home equity loan class at a moderate level. The addition of the Economic Conditions qualitative factor was based on current market interest rates and prepayment speeds, and the addition of the Delinquency and Classified Loan Trends was based on delinquencies and downgrades within the aforementioned loan classes. During the second quarter of 2025, the Other External Factors qualitative factor was removed for all loan classes as the impact from the changes in U.S. economic policy was then reflected in the macroeconomic conditions within the quantitative ACL model.
Previous wording
•Service charges on deposits and other service charges, commissions and fees increased by $339 thousand and $137 thousand, respectively, due to an increase in cash management services and other deposit fees.
Current wording
•Service charges on deposits and other service charges, commissions and fees increased by $360 thousand and $220 thousand, respectively, due to an increase in cash management services and other deposit fees.
Previous wording
•Swap fee income increased by $945 thousand due to higher swap volume.
Current wording
•Swap fee income increased by $927 thousand due to higher swap volume.
Previous wording
•The increase of $2.5 million in income from life insurance was due primarily to $2.4 million of death benefits from life insurance contracts for the three months ended March 31, 2026.
Current wording
•The increase of $2.5 million in income from life insurance was due primarily to $2.4 million of death benefits from life insurance contracts recognized during the three months ended March 31, 2026.
Previous wording
•Salaries and employee benefits expense increased by $769 thousand due to staff additions that filled vacancies, in addition to increases in merit-based compensation.
Current wording
•Salaries and employee benefits expense increased by $1.6 million due to staff additions that filled vacancies, thereby reducing use of third-party consultants, in addition to increases in merit-based compensation effective in May.
Previous wording
•ATM and interchange fee expense increased by $462 thousand due to an increase in debit card activity and costs incurred for enhanced ATM services.
Current wording
•ATM and interchange fee expense increased by $1.0 million due to an increase in debit card activity and costs incurred for enhanced ATM services.
Previous wording
•During the first quarter of 2025, the Company incurred merger-related expenses of $1.6 million, which included software conversion costs and professional fees, including external audit, associated with the conversion.
Current wording
•During the first half of 2025, the Company incurred merger-related expenses of $2.6 million, which included software conversion costs and professional fees, including external audit, incurred in connection with the Merger.
Previous wording
•Other operating expenses decreased by $392 thousand primarily due to sales tax credits from the Commonwealth of Pennsylvania and a decrease in credit valuation adjustments on non-hedging derivatives of $175 thousand.
Current wording
•Other operating expenses decreased by $298 thousand primarily due to a decrease in credit valuation adjustments on non-hedging derivatives of $446 thousand, partially offset by a decrease in the sales tax credits received from the Commonwealth of Pennsylvania. During the six months ended June 30, 2026, the Bank received sales tax credits of $368 thousand, a decrease of $193 thousand, compared to $561 thousand received during the six months ended June 30, 2025.
Showing the first 40 of 62 pairs. Open the source sections for the rest.
Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
The yield on loans decreased by 27 basis points to 6.25% for the three months ended June 30, 2026 compared to 6.52% for the three months ended June 30, 2025. Taxable-equivalent interest income earned on loans increased by $296 thousand primarily due to the impact of a decline in the Fed Funds rate during the fourth quarter of 2025 and the decrease in the accretion income recognized on fair value marks to acquired loans, partially offset by an increase in the average loan balances.
Current report — wording carried from elsewhere
•Automated teller machine and interchange fee expense increased by $552 thousand due to an increase in debit card activity and costs incurred for enhanced ATM services.
Current report — wording carried from elsewhere
Net income totaled $43.0 million for the six months ended June 30, 2026 compared to $37.5 million for the same period in 2025. Diluted earnings per share for the six months ended June 30, 2026 totaled $2.21 compared to $1.94 for the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, the Company incurred merger-related expenses of zero and $2.6 million, respectively, which were included in non-interest expenses of the unaudited condensed consolidated statements of income. For the six months ended June 30, 2025, excluding these non-recurring expenses, net income and diluted earnings per common share totaled $39.5 million and $2.04, respectively. See “Supplemental Reporting of Non-GAAP Measures” for additional information.
Current report — wording carried from elsewhere
The following table presents net interest income, net interest spread and net interest margin for the six months ended June 30, 2026 and 2025 on a taxable-equivalent basis:
Current report — wording carried from elsewhere
For the six months ended June 30, 2026, the provision for credit losses on loans reflects loan growth of $92.3 million, partially offset by adjustments to certain qualitative factors as a result of improvements in the underlying criteria. During the first quarter of 2026, the provision for credit losses was impacted by an update to the Bank's peer group and loss driver factors, in addition to a reduction in prepayment speed assumptions, within the quantitative model due to current economic conditions, which were partially offset by an improvement in the gross domestic product forecast.
Current report — wording carried from elsewhere
Additional information is included in the "Credit Risk Management" section herein.
Current report — wording carried from elsewhere
The following table compares noninterest income for the six months ended June 30, 2026 and 2025:
Current report — wording carried from elsewhere
•Wealth management income, which includes trust and investment management income and brokerage income, increased by $821 thousand due to improvement in market performance combined with new account generation driving an increase in managed assets.
Current report — wording carried from elsewhere
•Other line items within noninterest income showed fluctuations attributable to normal business operations.
Current report — wording carried from elsewhere
The following table compares noninterest expenses for the six months ended June 30, 2026 and 2025:
Current report — wording carried from elsewhere
•Furniture and equipment expense decreased by $1.1 million due primarily to post-merger efficiencies over the past year.
Current report — wording carried from elsewhere
•Data processing expense increased by $1.4 million due to investments in technology as the Company focuses on the evolving needs of its clients.
Current report — wording carried from elsewhere
•Professional services expense decreased by $1.4 million due to the reduced use of consultants and other third-party service providers since the prior year.
Current report — wording carried from elsewhere
•Other line items within noninterest expense showed fluctuations attributable to normal business operations.
Current report — wording carried from elsewhere
Income tax expense totaled $9.2 million, an effective tax rate of 17.6%, for the six months ended June 30, 2026 compared with $10.0 million and an effective tax rate of 21.0% for the six months ended June 30, 2025. The Company’s effective tax rate is less than the 21% federal statutory rate primarily due to the purchase of federal income tax credits, which reduced income tax expense by $1.6 million. In addition, the effective tax rate is impacted by tax-exempt income, including interest earned on tax-exempt loans and securities and non-taxable income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank's tax-exempt investments under TEFRA and other nondeductible items.
Current report — wording carried from elsewhere
Internal loan reviews are completed annually on all commercial relationships, secured by commercial real estate, with a committed loan balance in excess of $2.0 million, which includes confirmation of risk rating by an independent credit officer.