MUNCY COLUMBIA FINANCIAL Corp

Previous wording

The Corporation is in the business of providing customary retail, commercial banking and financial services to individuals, businesses and local governments through its 22 branch offices operated by Journey Bank, the Corporation’s wholly-owned subsidiary. The Corporation’s 22 branch offices are operated in Clinton, Columbia, Lycoming, Montour and Northumberland counties in central Pennsylvania.

Current wording

The Corporation is in the business of providing customary retail, commercial banking and financial services to individuals, businesses and local governments through its 22 branch offices operated by Journey Bank, the Corporation’s wholly-owned subsidiary. The Corporation’s 22 branch offices are operated in Clinton, Columbia, Lycoming, Montour and Northumberland counties in Northcentral Pennsylvania.

Previous wording

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326,Financial Instruments – Credit Losses, provides guidance on the accounting for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASC 326 requires consideration of a broad range of reasonable and supportable information to form credit loss estimates in an effort to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit. Commonly referred to as Current Expected Credit Losses (“CECL”), requires a financial asset (or a group of financial assets) to be measured at an amortized cost basis and presented at the net amount expected to be collected. ASC 326 affects financial assets and net investment in leases that are not accounted for at fair value through net income, including such financial assets as loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

Current wording

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326,Financial Instruments – Credit Losses, provides guidance on the accounting for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASC 326 requires consideration of a broad range of reasonable and supportable information to form credit loss estimates in an effort to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit. Commonly referred to as Current Expected Credit Losses (“CECL”), ASC 326 requires a financial asset (or a group of financial assets) to be measured at an amortized cost basis and presented at the net amount expected to be collected. ASC 326 affects financial assets and net investment in leases that are not accounted for at fair value through net income, including such financial assets as loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

Previous wording

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2025 to March 31, 2025, the level of the ACL increased from $9.9 million to $10.0 million and the ACL to total loans decreased from 0.88% to 0.87%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

Current wording

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2025 to June 30, 2025, the level of the ACL increased from $9.9 million to $10.2 million and the ACL to total loans remained consistent at 0.88%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

Previous wording

Business combinations are accounted for by applying the acquisition method. As of acquisition date, the identifiable assets acquired and liabilities assumed are measured at fair value and recognized separately from goodwill. Results of operations of the acquired entity are included in the consolidated statement of income from the date of acquisition. The calculation of intangible assets including core deposits and the fair value of loans are based on significant judgements. Core deposit intangibles are calculated using a discounted cash flow model based on various factors including discount rate, attrition rate, interest rate, cost of alternative funds and net maintenance costs. Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Current wording

Business combinations are accounted for by applying the acquisition method. As of acquisition date, the identifiable assets acquired and liabilities assumed are measured at fair value and recognized separately from goodwill. Results of operations of the acquired entity are included in the consolidated statement of income from the date of acquisition. The calculation of intangible assets including core deposits and the fair value of loans are based on significant judgements. Core deposit intangibles are calculated using a discounted cash flow model based on various factors including discount rate, attrition rate, interest rate, cost of alternative funds and net maintenance costs. Core deposit intangibles are amortized over the expected life of each acquired cored deposit type, discounted at a long-term market oriented after-tax rate of return. Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Previous wording

Total assets at March 31, 2025, were $1.602 billion, an increase of $6.4 million, or 0.4% from $1.596 billion at December 31, 2024. The change in total assets primarily reflected increases in cash and cash equivalents and loans receivable, partially offset by a decrease in available-for-sale debt securities. Cash and cash equivalents increased $6.4 million and gross loans receivable increased $18.2 million. Available-for-sale debt securities decreased $15.8 million. Total liabilities at March 31, 2025, were $1.431 billion, an increase of $1.4 million, or 0.1% from $1.430 billion at December 31, 2024. Deposit balances increased by $46.2 million, short-term borrowings decreased $40.7 million and long-term borrowings decreased $5.2 million since December 31, 2024.

Current wording

Total assets at June 30, 2025, were $1.616 billion, an increase of $20.3 million, or 1.3% from $1.596 billion at December 31, 2024. The change in total assets primarily reflects increases in cash and cash equivalents and loans receivable, partially offset by a decrease in available-for-sale debt securities. Cash and cash equivalents increased $23.3 million and gross loans receivable increased $31.1 million. Available-for-sale debt securities decreased $30.5 million. Total liabilities at June 30, 2025, were $1.440 billion, an increase of $10.4 million, or 0.7% from $1.430 billion at December 31, 2024. Deposit balances increased by $68.6 million, short-term borrowings decreased $50.3 million and long-term borrowings decreased $10.1 million since December 31, 2024.

Previous wording

Total average assets increased 0.7% from $1.590 billion for the three months ended March 31, 2024, to $1.601 billion for the three months ended March 31, 2025. Average earning assets were $1.499 billion for the three months ended March 31, 2025 and $1.493 billion for the three months ended March 31, 2024. Average interest-bearing liabilities were $1.154 billion for the three months ended March 31, 2025 and $1.171 billion for the three months ended March 31, 2024.

Current wording

Total average assets increased 1.9% from $1.579 billion for the three months ended June 30, 2024, to $1.609 billion for the three months ended June 30, 2025. Average earning assets were $1.501 billion for the three months ended June 30, 2025 and $1.483 billion for the three months ended June 30, 2024. Average interest-bearing liabilities were $1.147 billion for the three months ended June 30, 2025 and $1.150 billion for the three months ended June 30, 2024.

Previous wording

Cash and cash equivalents increased $6.4 million or 36.7% from $17.4 million at December 31, 2024 to $23.8 million at March 31, 2025. This increase is primarily related to increased correspondent bank balances resulting from cash flows from available-for-sale debt securities during the three months ended March 31, 2025.

Current wording

Cash and cash equivalents increased $23.3 million or 134.2% from $17.4 million at December 31, 2024 to $40.7 million at June 30, 2025. This increase is primarily related to increased correspondent bank balances resulting from cash flows from available-for-sale debt securities activity during the six months ended June 30, 2025.

Previous wording

Gross loans receivable not held for sale increased $18.2 million or 1.6% to $1.144 billion at March 31, 2025 from $1.126 billion at December 31, 2024. This increase is related to strong loan demand during the three months ended March 31, 2025.

Current wording

Gross loans receivable not held for sale increased $31.1 million or 2.8% to $1.157 billion at June 30, 2025 from $1.126 billion at December 31, 2024. This increase is related to strong loan demand during the six months ended June 30, 2025.

Previous wording

Available-for-sale debt securities decreased $15.8 million to $307.5 million at March 31, 2025 from $323.2 million at December 31, 2024. The Corporation received proceeds from paydowns, calls and maturities of available-for-sale debt securities of $18.8 million during the three months ended March 31, 2025. Partially offsetting this activity was an increase in fair value of available-for-sale debt securities of $2.8 million for the three months ended March 31, 2025.

Current wording

Available-for-sale debt securities decreased $30.5 million to $292.8 million at June 30, 2025 from $323.2 million at December 31, 2024. The Corporation received proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities of $73.6 million during the six months ended June 30, 2025. Partially offsetting this activity were purchases of $37.2 million and an increase in fair value of available-for-sale debt securities of $5.4 million for the six months ended June 30, 2025.

Previous wording

Interest-bearing deposits increased $32.1 million to $1.065 billion at March 31, 2025 from $1.033 billion at December 31, 2024. Noninterest-bearing deposits increased 5.4% from $259.7 million at December 31, 2024 to $273.8 million at March 31, 2025. The increase in total deposits during the three months ended March 31, 2025 was a result of strong organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

Current wording

Interest-bearing deposits increased $55.7 million to $1.088 billion at June 30, 2025 from $1.033 billion at December 31, 2024. Noninterest-bearing deposits increased 5.0% from $259.7 million at December 31, 2024 to $272.7 million at June 30, 2025. The increase in total deposits during the six months ended June 30, 2025 was a result of strong organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

Previous wording

Short-term borrowings decreased $40.7 million to $27.7 million at March 31, 2025 from $68.4 million at December 31, 2024. This change was primarily related to the migration of customer repurchase agreements described above as well as a paydown in short-term FHLB borrowings during the three months ended March 31, 2025.

Current wording

Short-term borrowings decreased $50.3 million to $18.1 million at June 30, 2025 from $68.4 million at December 31, 2024. This change was primarily related to the migration of customer repurchase agreements described above as well as a paydown in short-term FHLB borrowings during the six months ended June 30, 2025.

Previous wording

Long-term borrowings were $50.4 million at March 31, 2025 compared to $55.5 million at December 31, 2024. This decrease is primarily related to $5.2 million in repayments on long-term borrowings during the three months ended March 31, 2025.

Current wording

Long-term borrowings were $45.5 million at June 30, 2025 compared to $55.5 million at December 31, 2024. This decrease is primarily related to $10.2 million in repayments on long-term borrowings during the six months ended June 30, 2025.

Previous wording

Total stockholder’s equity increased by $5.0 million, or 3.0%, from $166.4 million at December 31, 2024, to $171.4 million at March 31, 2025. This increase is primarily attributable to earnings, net of cash dividends, along with a decrease in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $11.7 million as of March 31, 2025 and $13.9 million as of December 31, 2024.

Current wording

Total stockholder’s equity increased by $9.9 million, or 5.9%, from $166.4 million at December 31, 2024, to $176.3 million at June 30, 2025. This increase is primarily attributable to earnings, net of cash dividends, along with a decrease in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $9.3 million as of June 30, 2025 and $13.9 million as of December 31, 2024.

Previous wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 86.4% as of December 31, 2024 to 84.7% as of March 31, 2025 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Current wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 86.4% as of December 31, 2024 to 84.3% as of June 30, 2025 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Previous wording

The majority of the Corporation’s debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security’s value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder’s equity, net of deferred income taxes. At March 31, 2025, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $11.7 million, net of deferred income taxes of $3.1 million, a decrease of $2.2 million compared to the net unrealized holding loss of $13.9 million, net of deferred income taxes of $3.7 million, at December 31, 2024. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation’s regulatory capital ratios.

Current wording

The majority of the Corporation’s debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security’s value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder’s equity, net of deferred income taxes. At June 30, 2025, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $9.3 million, net of deferred income taxes of $2.5 million, a decrease of $4.6 million compared to the net unrealized holding loss of $13.9 million, net of deferred income taxes of $3.7 million, at December 31, 2024. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation’s regulatory capital ratios.

Previous wording

At March 31, 2025 and and December 31, 2024, the Corporation held $1.3 and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2025 and 2024:

Current wording

At June 30, 2025 and and December 31, 2024, the Corporation held $1.3 and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2025 and 2024:

Previous wording

Gross loans receivable increased 1.6% from $1.126 billion at December 31, 2024 to $1.144 billion at March 31, 2025. The percentage distribution in the loan portfolio is shown in the tables below:

Current wording

Gross loans receivable increased 2.8% from $1.126 billion at December 31, 2024 to $1.157 billion at June 30, 2025. The percentage distribution in the loan portfolio is shown in the tables below:

Previous wording

As of March 31, 2025, commercial real estate loans totaled $377.9 million or 33.0% of total gross loans. Of this amount commercial mortgage loans represented $332.4 million or 29.0% of total gross loans and student housing loans represented $45.5 million or 4.0% of total gross loans. The following table presents the distribution of commercial mortgage loans and related percentage of the total loan portfolio as of March 31, 2025 and December 31, 2024:

Current wording

As of June 30, 2025, commercial real estate loans totaled $386.7 million or 33.4% of total gross loans. Of this amount commercial mortgage loans represented $339.1 million or 29.3% of total gross loans and student housing loans represented $47.6 million or 4.1% of total gross loans. The following table presents the distribution of commercial mortgage loans and related percentage of the total loan portfolio as of June 30, 2025 and December 31, 2024:

Previous wording

Total non-performing assets amounted to $12,300,000, or 0.77% of total assets at March 31, 2025, as compared to $10,117,000, or 0.63% of total assets at December 31, 2024. For the three months ended March 31, 2025, the Corporation experienced increases in non-accrual loans in all major loan classifications, however, the most significant increases were in commercial and industrial and commercial real estate loans which increased $477,000 and $1,636,000, respectively.

Current wording

Total non-performing assets amounted to $13,844,000, or 0.86% of total assets at June 30, 2025, as compared to $10,117,000, or 0.63% of total assets at December 31, 2024. For the six months ended June 30, 2025, the Corporation experienced increases in non-accrual loans in all major loan classifications, however, the most significant increases were in commercial real estate and residential real estate loans which increased $1.9 million and $1.4 million, respectively.

Previous wording

Residential real estate non-accrual loans are generally related to a homogenous population of well secured loans collateralized by 1-4 family residential properties. With respect to commercial and industrial and commercial real estate non-accrual loans, the Corporation has experienced a limited number of large commercial relationships that have required significant monitoring and workout efforts. As a result, these relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period.

Current wording

Residential real estate non-accrual loans are generally related to a homogenous population of well secured loans collateralized by 1-4 family residential properties. With respect to commercial real estate non-accrual loans, the Corporation has experienced a limited number of large commercial relationships that have required significant monitoring and workout efforts. As a result, these relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period.

Previous wording

The allowance for credit losses was $10.0 million at March 31, 2025, compared to $9.9 million at December 31, 2024. The allowance equaled 0.87% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at March 31, 2025 as compared to 0.88% of total loans at December 31, 2024. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies.

Current wording

The allowance for credit losses was $10.2 million at June 30, 2025, compared to $9.9 million at December 31, 2024. The allowance equaled 0.88% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at June 30, 2025 and December 31, 2024. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for three months ended March 31, 2025 and 2024, respectively:

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six months ended June 30, 2025 and 2024, respectively:

Previous wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three months ended March 31, 2025 and 2024, was 2.25% and 2.06%, respectively.

Current wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three and six months ended June 30, 2025 was 2.26% and 2.25%, respectively. The average cost of interest-bearing deposits for the three and six months ended June 30, 2024 was 2.34% and 2.20%, respectively.

Previous wording

At March 31, 2025, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $350.9 million. Of this amount, $131.0 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $104.4 million at March 31, 2025.

Current wording

At June 30, 2025, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $359.4 million. Of this amount, $143.9 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $101.1 million at June 30, 2025.

Previous wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 4.7% and 17.3% of total interest-bearing liabilities for the three months ended March 31, 2025 and 2024, respectively. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 and 2025.

Current wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 2.2% and 10.3% of total interest-bearing liabilities for the three months ended June 30, 2025 and 2024, respectively, and 3.4% and 13.8% of total interest-bearing liabilities for the six months ended June 30, 2025 and 2024, respectively. These changes were primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 and 2025.

Previous wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $825.9 million at March 31, 2025. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $591.0 million at March 31, 2025. The unused portion of these lines of credit was $517.0 million at March 31, 2025.

Current wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $846.2 million at June 30, 2025. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $604.6 million at June 30, 2025. The unused portion of these lines of credit was $541.3 million at June 30, 2025.

Previous wording

Net income for the three months ended March 31, 2025 amounted to $4.3 million, or $1.23 per share, an increase of $0.3 million compared to $4.0 million, or $1.13 per share for the three months ended March 31, 2024. The increase in net income for the three months ended March 31, 2025, compared to the same period in 2024, was primarily attributable to a significant increase in net interest income partially offset by an increase in non-interest expense.

Current wording

Net income for the three months ended June 30, 2025 was $5,768,000, or $1.63 per share, compared to $4,707,000, or $1.32 per share, for the three months ended June 30, 2024. Net income for the six months ended June 30, 2025 was $10,113,000, or $2.86 per share compared to $8,743,000, or $2.45 per share for the same period in 2024. The increase in net income for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily attributable to a significant increase in net interest income, partially offset by an increase in non-interest expense.

Previous wording

The annualized return on average assets was 1.10% for the three months ended March 31, 2025, compared to 1.02% for the same period in 2024. The annualized return on average equity was 10.33% for the three months ended March 31, 2025, compared to 10.52% for the same period in 2024. The Corporation declared and paid dividends to holders of common stock of $0.45 per share during the three months ended March 31, 2025 and $0.44 per share for the same period in 2024.

Current wording

For the three and six months ended June 30, 2025, the annualized return on average assets was 1.44% and 1.27%, respectively, compared to 1.20% and 1.11%, respectively, for the comparable periods of 2024. The annualized return on average equity was 13.33% and 11.85%, respectively, for the three and six months ended June 30, 2025, compared to 12.28% and 11.40%, respectively, for the comparable periods of 2024. For the three-months ended June 30, 2025 the Corporation declared and paid dividends to holders of common stock of $0.95 per share, which includes the impact of a special one-time cash dividend of $0.50 per share, as compared to $0.44 for the same period of 2024. For the six-months ended June 30, 2025 the Corporation declared and paid dividends to holders of common stock of $1.40 per share, as compared to $0.88 for the same period of 2024.

Previous wording

Tax-equivalent net interest income increased $2.0 million, or 16.0%, to $14.2 million for the three months ended March 31, 2025 compared to $12.2 million for the same period in 2024. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, along with a decrease in interest expense which resulted primarily from a significant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing liablities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 51 basis points to 3.83% for the three months ended March 31, 2025 compared to 3.32% for the same period of 2024, which was largely caused by increases in yields on earning assets along with a decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 57 basis points to 3.27% for the three months ended March 31, 2025 compared to 2.70% for the same period in 2024.

Current wording

Tax-equivalent net interest income** **increased $2.5 million, or 19.6%, to $15.1 million for the three months ended June 30, 2025 compared to $12.6 million for the same period in 2024. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, along with a decrease in interest expense which resulted primarily from a significant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing liabilities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 61 basis points to 4.04% for the three months ended June 30, 2025 compared to 3.43% for the same period of 2024, which was largely caused by increases in yields on earning assets along with a decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 66 basis points to 3.47% for the three months ended June 30, 2025 compared to 2.81% for the same period in 2024.

Previous wording

Tax-equivalent interest income increased $1.0 million, or 4.8%, to $21.1 million for the three months ended March 31, 2025 from $20.2 million for the same period in 2024, which was largely caused by growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $6.0 million, or 0.4%, to $1.499 billion for the three months ended March 31, 2025 from $1.493 billion for the same period in 2024, resulting in a corresponding increase to tax-equivalent interest income of $0.6 million. Specifically, average loans increased $51.4 million, or 4.7%, to $1.107 billion for the three months ended March 31, 2025 from $1.098 billion for the same period in 2024, which reflected strong organic loan growth. Taxable investment securities averaged $266.9 million for the three months ended March 31, 2025, a decrease of $44.2 million, or 14.2%, compared to $311.1 million for the same period in 2024, and tax-exempt securities averaged $79.1 million for the three months ended March 31, 2025, an increase of $0.4 million, or 0.52%, compared to $78.7 million for the same period in 2024, which contributed to a net decrease of $0.2 million in tax-equivalent interest income. The tax-equivalent yield on earning assets increased 29 basis points to 5.72% for the three months ended March 31, 2025 from 5.43% for the same period in 2024, which resulted in a corresponding increase in tax-equivalent interest income of $0.4 million. The Corporation’s tax-equivalent yield on loans increased 15 basis points to 6.63% for the three months ended March 31, 2025 compared to 6.48% for the same period in 2024, resulting in a corresponding increase in tax-equivalent interest income of $0.3 million, due primarily to the continued repricing of existing variable rate loans in the Corporation’s portfolio. Meanwhile, the tax-equivalent yield on investment securities increased 24 basis points to 2.73% for the three months ended March 31, 2025 from 2.48% for the same period in 2024 and caused a corresponding increase to tax-equivalent interest income of $0.1 million.

Current wording

Tax-equivalent interest income increased $1.5 million, or 7.3%, to $22.0 million for the three months ended June 30, 2025 from $20.5 million for the same period in 2024, which was largely caused by growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $18.5 million, or 1.2%, to $1.501 billion for the three months ended June 30, 2025 from $1.483 billion for the same period in 2024, resulting in a corresponding increase to tax-equivalent interest income of $0.7 million. Specifically, average loans increased $51.6 million, or 4.6%, to $1.161 billion for the three months ended June 30, 2025 from $1.110 billion for the same period in 2024, which reflected strong organic loan growth. Total investment securities averaged $330.4 million for the three months ended June 30, 2025, a decrease of $37.8 million, or 10.3%, compared to $368.2 million for the same period in 2024, which contributed to a net decrease of $0.2 million in tax-equivalent interest income. The tax-equivalent yield on earning assets increased 32 basis points to 5.87% for the three months ended June 30, 2025 from 5.55% for the same period in 2024, which resulted in a corresponding increase in tax-equivalent interest income of $0.8 million. The Corporation’s tax-equivalent yield on loans increased 9 basis points to 6.67% for the three months ended June 30, 2025 compared to 6.58% for the same period in 2024, resulting in a corresponding increase in tax-equivalent interest income of $0.3 million, due primarily to the origination of new loans at higher yields and the continued repricing of existing variable rate loans in the Corporation’s portfolio. Meanwhile, the tax-equivalent yield on investment securities increased 62 basis points to 3.08% for the three months ended June 30, 2025 from 2.46% for the same period in 2024 and caused a corresponding increase to tax-equivalent interest income of $0.4 million.

Previous wording

Interest expense decreased $1.0 million, or 12.3%, to $7.0 million for the three months ended March 31, 2025 from $8.0 million for the same period in 2024, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which is largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $108.0 million for the three months ended March 31, 2025, a decrease of $164.4 million from $272.5 million for the same period in 2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $2.0 million. Total average interest-bearing deposits increased $146.8 million, or 16.3%, to $1.046 billion for the three months ended March 31, 2025, compared to $898.8 million for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.6 million. For the three months ended March 31, 2025, the Corporation’s cost of funds decreased 28 basis points to 2.45% from 2.73% for the same period in 2024. The average rate paid on total borrowings decreased 53 basis points to 4.40% for the three months ended March 31, 2025 from 4.93% for the same period in 2024, which resulted in a corresponding decrease in interest expense of $0.2 million. The average rate paid on total interest-bearing deposits increased 19 basis points to 2.25% for the three months ended March 31, 2025 from 2.06% for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.6 million.

Current wording

Interest expense decreased $0.9 million, or 12.5%, to $6.9 million for the three months ended June 30, 2025 from $7.8 million for the same period in 2024, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which is largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $73.1 million for the three months ended June 30, 2025, a decrease of $111.3 million from $184.4 million for the same period in 2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $1.4 million. Total average interest-bearing deposits increased $107.8 million, or 11.2%, to $1.073 billion for the three months ended June 30, 2025, compared to $965.7 million for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.8 million. For the three months ended June 30, 2025, the Corporation’s cost of funds decreased 34 basis points to 2.40% from 2.74% for the same period in 2024. The average rate paid on total borrowings decreased 37 basis points to 4.48% for the three months ended June 30, 2025 from 4.85% for the same period in 2024, which resulted in a corresponding decrease in interest expense of $0.1 million. The average rate paid on total interest-bearing deposits decreased 8 basis points to 2.26% for the three months ended June 30, 2025 from 2.34% for the same period in 2024, which resulted in a corresponding decrease in interest expense of $0.3 million.

Previous wording

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders’ equity for the three months ended March 31, 2025 and 2024.

Current wording

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders’ equity for the three and six months ended June 30, 2025 and 2024.

Previous wording

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three months ended March 31, 2025 versus March 31, 2024:

Current wording

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three and six months ended June 30, 2025 versus June 30, 2024:

Previous wording

For the three months ended March 31, 2025, the Corporation recorded a $110,000 provision for credit losses on loans compared to $101,000 for the same period in 2024. The provision amounts for the three months ended March 31, 2025 and 2024 primarily reflect an increase in volume in the loan portfolio, increases in non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staff, changes in lending policies and procedures, and forecasted economic conditions.

Current wording

The provision amounts for the three and six months ended June 30, 2025 and 2024 primarily reflect an increase in volume in the loan portfolio, increases in non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staff, changes in lending policies and procedures and forecasted economic conditions.

Previous wording

Total non-interest income decreased $87,000 to $2,445,000 for the three months ended March 31, 2025, compared to $2,532,000 for the same period of 2024. Service charges and fees increased $107,000 due primarily to higher overdraft fee income, and losses on marketable equity securities decreased $83,000 due to market value changes comparing the three months ended March 31, 2025 to same period of 2024. Other non-interest income decreased $341,000 due to one-time events in the three months ended March 31, 2024 including incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in conjunction with the completion of a solar energy project.

Current wording

For the six months ended June 30, 2025, total non-interest income decreased $269,000 or 5.4% to $4,682,000, compared to $4,951,000 for the six months ended June 30, 2024. Similar to the quarterly period, realized losses on available-for-sale debt securities, net, resulted in a decrease of $418,000 which was partially offset by increases in brokerage income, trust income and gains on marketable equity securities of $69,000, $108,000 and $135,000, respectively. Other non-interest income decreased $295,000 or 27.4% due primarily to one-time events during the three months ended March 31, 2024, including incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in conjunction with the completion of a solar energy project.

Previous wording

Total non-interest expense increased $1,445,000 from $9,646,000 for the three months ended March 31, 2024, to $11,091,000 for the same period of 2025. Salaries and employee benefits expense of $6,320,000 for the three months ended March 31, 2025 increased $1,518,000 from $4,802,000 for the same period of 2024. The Corporation recorded one-time pretax expenses totaling $1,295,000 in conjunction with the retirement of its Executive Chairman during the three months ended March 31, 2025. Additionally, health insurance expenses associated with the Corporation’s partially self-funded health insurance plan were $151,000 higher in the three months ended March 31, 2025 than the same period of 2024.

Current wording

For the six months ended June 30, 2024, total non-interest expense increased $2,107,000 or 11.2% to $20,947,000, compared to $18,840,000 for the six months ended June 30, 2024. Salaries and employee benefits expense of $11,304,000 for the six months ended June 30, 2025 increased $1,862,000 from $9,442,000 for the same period of 2024. The Corporation recorded one-time pretax expenses totaling $1,295,000 in conjunction with the retirement of its Executive Chairman during the three months ended March 31, 2025. Additionally, health insurance expenses associated with the Corporation’s partially self-funded health insurance plan were $548,000 higher in the six months ended June 30, 2025 than the same period of 2024.

Previous wording

One standard to measure non-interest expense is to express annualized non-interest expense as a percentage of average total assets. For the three months ended March 31, 2025 this percentage was 2.81% compared to 2.44% for the three months ended March 31, 2024.

Current wording

One standard to measure non-interest expense is to express annualized non-interest expense as a percentage of average total assets. For the three and six months ended June 30, 2025 this percentage was 2.46% and 2.63%, respectively, compared to 2.49% and 2.39%, respectively, for the three and six months ended June 30, 2024.

Previous wording

The Bank reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At March 31, 2025, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $498.1 million.

Current wording

The Bank reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At June 30, 2025, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $522.0 million.

Previous wording

The statement of cash flows presents the change in cash and cash equivalents from operating, investing and financing activities. Cash and due from banks and interest-bearing deposits in other banks, which comprise cash and cash equivalents, are the Corporation’s most liquid assets. Cash and cash equivalents totaled $23.8 million at March 31, 2025, an increase of $6.4 million, or 36.7%, from $17.4 million at December 31, 2024, as net cash inflows from operating and investing activities were more than net cash outflows from financing activities.

Current wording

The statement of cash flows presents the change in cash and cash equivalents from operating, investing and financing activities. Cash and due from banks and interest-bearing deposits in other banks, which comprise cash and cash equivalents, are the Corporation’s most liquid assets. Cash and cash equivalents totaled $40.7 million at June 30, 2025, an increase of $23.3 million from $17.4 million at December 31, 2024, as net cash inflows were reported from operating, investing and financing activities for the six months ended June 30, 2025.

Previous wording

Net cash inflows from investing activities provided $3.0 million of cash and cash equivalents during the three months ended March 31, 2025. Accounting for the majority of the net cash inflows was $18.8 million related to proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities. This was partially offset by a net increase in loans of $15.7 million, which reflected strong loan demand. Financing activities used $1.4 million in net cash, which resulted primarily from a decrease in short-term borrowings, consisting of customer repurchase agreements and short-term FHLB borrowings, of $40.7 million along with a repayment of long-term borrowings of $5.2 million. These outflows were offset by a $46.1 million increase in deposits. Operating activities include net income, adjusted for the effects of non-cash transactions including, among others, depreciation and amortization and the provision for credit losses, and is the primary source of cash flows from operations. For the three months ended March 31, 2025, operating activities provided the Corporation with $4.7 million in net cash, which primarily reflected net income of $4.3 million.

Current wording

Net cash inflows from investing activities provided $10.4 million of cash and cash equivalents during the six months ended June 30, 2025. Accounting for the majority of the net cash inflows was $73.6 million related to proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities. This was partially offset by purchases of available-for-sale debt securities of $37.2 million and a net increase in loans of $26.3 million, which reflected strong loan demand. Financing activities provided $3.1 million in net cash, which resulted primarily from a decrease in short-term borrowings, consisting of customer repurchase agreements and short-term FHLB borrowings, of $50.3 million along with a repayment of long-term borrowings of $10.2 million. These outflows were offset by a $68.5 million increase in deposits. Operating activities include net income, adjusted for the effects of non-cash transactions including, among others, depreciation and amortization and the provision for credit losses, and is the primary source of cash flows from operations. For the six months ended June 30, 2025, operating activities provided the Corporation with $9.8 million in net cash, which primarily reflected net income of $10.1 million.