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The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area.
−Removed: The Bank is the sole shareholder of Exchange Underwriters, Inc.
+Added: The Bank was the sole shareholder of Exchange Underwriters, Inc.
("Exchange Underwriters" or “EU”), a wholly-owned subsidiary located in Washington County that was a full-service, independent insurance agency that offered property and casualty, commercial liability, surety and other insurance products.
2 unchanged sentences
During 2024, the Company recognized an additional gain of $138,000 following the final settlement of all liabilities and an earn-out payment of $708,000.
+Added: During 2025, the Company recognized an earn-out payment of $759,000.
Assets remaining in the EU subsidiary at December 31, 2025 consisted primarily of cash received from the sale of assets.
−Removed: The Bank intends to merge EU into the Bank during 2025.
+Added: Effective September 29, 2025, EU merged with and into the Bank, with the Bank as the surviving institution.
The Bank was originally chartered in 1901 as The First National Bank of Carmichaels.
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• Enhance profitability and efficiency while continuing to invest for future growth.
−Removed: Margin compression continues to be a challenge.
−Removed: To combat this impact on core earnings, we view cost reduction as a key part of a company-wide efficiency effort.
+Added: We view cost reduction as a key part of a company-wide efficiency effort.
Short-term targeted cost reductions combined with long-term strategic initiatives will better position the Company for high performance.
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Demographics.
−Removed: As of December 31, 2024, we employed 159 full-time and 2 part-time employees in Pennsylvania and West Virginia.
+Added: As of December 31, 2025, we employed 169 full-time and 5 part-time employees primarily in Pennsylvania and West Virginia.
None of these employees are represented by a collective bargaining agreement.
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Our principal lending activity has been the origination in our local market area of residential one- to four-family, commercial real estate, construction, commercial and industrial, and consumer loans.
−Removed: At December 31, 2024, our total loans receivable, which excludes the allowance for credit losses, decreased $17.8 million, or 1.6%, to $1.09 billion compared to $1.11 billion at December 31, 2023.
+Added: At December 31, 2025, our total loans receivable, which excludes the allowance for credit losses, increased $69.6 million, or 6.4%, to $1.16 billion compared to $1.09 billion at December 31, 2024.
Residential Real Estate Loans .
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Included in residential real estate loans are traditional one- to four-family mortgage loans, home equity installment loans, and home equity lines of credit.
−Removed: We generate loans through our marketing efforts, existing customers and
−Removed: referrals, real estate brokers, builders and local businesses.
+Added: We generate loans through our marketing efforts, existing customers and referrals, real estate brokers, builders and local businesses.
At December 31, 2025, $329.2 million, or 28.3%, of our total loan portfolio was invested in residential loans.
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Adjustable-rate mortgage loans carry increased credit risk associated with potentially higher monthly payments by borrowers as general market interest rates increase.
−Removed: It is possible that during periods of rising interest rates that the risk of delinquencies and defaults on adjustable-rate mortgage loans may increase due to the upward adjustment of interest costs to the borrower, resulting in increased loan losses.
+Added: It is possible that during periods of rising interest rates that the risk of delinquencies and defaults on adjustable-rate mortgage loans may increase due to the upward adjustment of interest costs to the borrower, resulting in increased credit losses.
We do not offer an “interest only” mortgage loan product on one- to four-family residential properties (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan).
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At December 31, 2025, $161.1 million, or 13.9% of our total loan portfolio, consisted of commercial and industrial loans.
−Removed: Commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, SOFR or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.
+Added: Commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, Secured Overnight Financing Rate (SOFR) or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.
We generally obtain personal guarantees from the borrower or a third party as a condition to originating the loan.
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We originate consumer loans that primarily consist of indirect auto loans and, to a lesser extent, secured and unsecured loans and lines of credit.
−Removed: As of December 31, 2024, consumer loans totaled $70.5 million, or 6.5%, of our total loan portfolio, of which $62.5 million were indirect auto loans.
+Added: As of December 31, 2025, consumer loans totaled $42.9 million, or 3.7%, of our total loan portfolio.
Consumer loans are generally offered on a fixed-rate basis.
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however, the underwriting process also includes a comparison of the value of the collateral in relation to the proposed loan amount.
+Added: The Bank discontinued offering indirect auto loans as of June 30, 2023, but still had an outstanding portfolio of $32.1 million as of December 31, 2025.
Indirect auto loans are loans that are sold by auto dealerships to third parties, such as banks or other types of lenders.
−Removed: We work with various auto dealers throughout our lending area.
−Removed: The dealer collects information from the applicant and transmits it to us electronically for review, where we can either accept or reject the applicant without ever meeting the applicant.
−Removed: If the Bank approves the applicant’s request for financing, the Bank purchases the dealership-originated installment sales contract and is known as the holder in due course that is entitled to receive principal and interest payments from a borrower.
−Removed: As compensation for generating the loan, a portion of the rate is advanced to the dealer and accrued in a prepaid dealer reserve account.
+Added: We previously worked with various auto dealers throughout our lending area.
+Added: The dealer collected information from the applicant and transmitted it to us electronically for review, where we either accepted or rejected the applicant without ever meeting the applicant.
+Added: If the Bank approved the applicant’s request for financing, the Bank purchased the dealership-originated installment sales contract and is known as the holder in due course that is entitled to receive principal and interest payments from a borrower.
+Added: As compensation for generating the loan, a portion of the rate was advanced to the dealer and accrued in a prepaid dealer reserve account.
As a result, the Bank’s yield is below the contractual interest rate because the Bank must wait for the stream of loan payments to be repaid.
−Removed: The Bank will receive a pro rata refund of the amount prepaid to the dealer only if the loan prepays within the first six months or if the collateral for the loan is repossessed.
+Added: The Bank received a pro rata refund of the amount prepaid to the dealer only if the loan repaid within the first six months or if the collateral for the loan was repossessed.
The Bank is responsible for pursuing repossession if the borrower defaults on payments.
−Removed: The Bank discontinued this product offering as of June 30, 2023.
Consumer loans entail greater risks than one- to four-family residential mortgage loans, particularly consumer loans secured by rapidly depreciating assets, such as automobiles, or loans that are unsecured.
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Finally, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans in the event of a default.
+Added: We originate loans to municipal borrowers that are secured by improved properties, such as office buildings and other non-residential buildings or secured by collateral other than real estate, such as equipment, revenue receivable, and other business assets.
+Added: As of December 31, 2025, other loans totaled $31.5 million, or 2.7%, of our total loan portfolio.
+Added: These loans generally have terms consistent with other commercial real estate and commercial and industrial loans and are underwritten using the same standards as described above.
+Added: However, these loans differ in that the primary source of repayment is typically from municipal tax collections.
Loan Approval Procedures and Authority
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Loan approval authorities vary based on loan size in the aggregate.
−Removed: Individual officer loan approval authority generally applies to loans of up to $1.0
+Added: Individual officer loan approval authority generally applies to loans of up to $1.0 million.
Loans above that amount and up to 65% of the Bank’s legal lending limit may be approved by the Loan Committee.
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Our current investment policy permits us to invest in U.S.
−Removed: treasuries, U.S government agency securities, mortgage-backed securities (MBS's), collateralized mortgage obligations (CMO's), investment grade corporate bonds, obligations of states and political subdivisions, short-term instruments, collateralized loan obligations (CLO's) and other securities.
+Added: treasuries, U.S.
+Added: government agency securities, mortgage-backed securities (MBS's), collateralized mortgage obligations (CMO's), investment grade corporate bonds, obligations of states and political subdivisions, short-term instruments, collateralized loan obligations (CLO's) and other securities.
The investment policy also permits investments in certificates of deposit, securities purchased under an agreement to resell, banker’s acceptances, commercial paper and federal funds.
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The debt securities portfolio consists primarily of U.S.
−Removed: government agency securities, obligations of states and political subdivisions, mortgage-backed securities and collateralized mortgage obligations of government sponsored enterprises, collateralized loan obligations and corporate bonds.
+Added: government agency securities, obligations of states and political subdivisions, MBS's and CMO's of government sponsored enterprises, CLO's and corporate bonds.
We expect the composition of our debt securities portfolio to continue to change based on liquidity needs associated with loan origination activities.
During the year ended December 31, 2025, we had no debt securities that were deemed to be impaired.
−Removed: We also invest in equity securities, which consist primarily of mutual funds and a portfolio of bank stocks.
+Added: We also invest in equity securities, which consists exclusively of mutual funds.
This portfolio is valued at fair value with changes in market price recognized through noninterest income.
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Government Agency Securities.
−Removed: At December 31, 2024, we held U.S.
−Removed: Government and agency securities with a fair value of $3.9 million compared to $3.9 million at December 31, 2023.
−Removed: At December 31, 2024, these securities had an average expected life of 7.0 years.
−Removed: While these securities generally provide lower yields than other investments, such as mortgage-backed securities, our current investment strategy is to maintain investments in such instruments to the extent appropriate for liquidity and pledging purposes, as collateral for borrowings, and for prepayment protection.
+Added: At December 31, 2025, we had no U.S.
+Added: Government and agency securities compared to $3.9 million at December 31, 2024.
+Added: While these securities generally provide lower yields than other investments, such as mortgage-backed securities, our current investment strategy is to invest in such instruments to the extent appropriate for liquidity and pledging purposes, as collateral for borrowings, and for prepayment protection.
Obligations of States and Political Subdivisions.
At December 31, 2025, we held available-for-sale municipal bonds with a fair value of $36.2 million compared to $3.3 million at December 31, 2024.
−Removed: 100% of our municipal bonds are issued by local municipalities or school districts located in Pennsylvania.
−Removed: Municipal bonds may be general obligation of the issuer or secured by specific revenues.
+Added: Municipal bonds are issued by municipalities or school districts and may be general obligation of the issuer or secured by specific revenues.
The majority of our municipal bonds are general obligation bonds, which are backed by the full faith and credit of the municipality, paid off with funds from taxes and other fees, and have ratings (when available) of A or above.
−Removed: also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building.
+Added: We also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building.
Mortgage-Backed Securities.
We invest in MBS and CMO securities insured or guaranteed by the United States government or government-sponsored enterprises.
−Removed: These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had an amortized cost of $164.7 million and $178.0 million at December 31, 2024 and 2023, respectively, and a fair value of $145.3 million and $159.7 million at December 31, 2024 and 2023, respectively.
+Added: These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had a fair value of $108.7 million and $145.3 million at December 31, 2025 and 2024, respectively.
+Added: In addition, the we invest in CMO securities that are non-agency sponsored.
+Added: At December 31, 2025, these securities had a fair value of $10.5 million.
+Added: We did not have any non-agency sponsored CMO's at December 31, 2024.
At December 31, 2025, all MBS’s had fixed rates of interest.
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These floating-rate securities are backed by pools of high-quality commercial and industrial and commercial real estate loans, typically first-lien bank loans to corporations.
−Removed: Our CLO portfolio had an amortized cost of $98.7 million and $29.9 million at December 31, 2024 and 2023, respectively, and a fair value of $98.8 million and $29.8 million at December 31, 2024 and 2023, respectively.
+Added: Our CLO portfolio had a fair value of $101.2 million and $98.8 million at December 31, 2025 and 2024, respectively.
Corporate Debt.
14 unchanged sentences
Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals.
−Removed: The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition.
+Added: The flow of deposits is influenced significantly by general economic conditions, changes in prevailing interest rates and competition.
The variety of deposit accounts offered allows the Company to be competitive in obtaining funds and responding to changes in consumer demand.
Based on experience, the Company believes that its deposits are relatively stable.
−Removed: However, the ability to attract and maintain deposits and the rates paid on these deposits has been and will continue to be significantly affected by market conditions.
+Added: However, the ability to attract and maintain deposits and the interest rates paid on these deposits has been and will continue to be significantly affected by market conditions.
Deposits are our primary source of funds for lending and investment activities.
If the need arises, we may rely upon borrowings to supplement our supply of available funds and to fund deposit withdrawals.
−Removed: Our borrowings may consist of advances from the FHLB, subordinated debt, funds borrowed under repurchase agreements and federal funds purchased.
+Added: Our borrowings may consist of advances from the correspondent banks, subordinated debt, funds borrowed under repurchase agreements and federal funds purchased.
The FHLB functions as a central reserve bank providing credit for us and other member savings associations and financial institutions.
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As an alternative to pledging securities, the facility is also used for standby letters of credit to collateralize public deposits in excess of the level insured by the FDIC.
−Removed: There were no standby letters of credit issued on our behalf by the FHLB to secure public deposits as of December 31, 2024 and $18.9 million as of December 31, 2023.
+Added: There were no standby letters of credit issued on our behalf by the FHLB to secure public deposits as of December 31, 2025 and December 31, 2024.
Securities sold under agreements to repurchase represent business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase.
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Community Bank is the only subsidiary of the Company.
−Removed: The Bank's sole and wholly-owned subsidiary is Exchange Underwriters, Inc., a former full-service, independent insurance agency.
+Added: The Bank has no subsidiaries.
REGULATION AND SUPERVISION
8 unchanged sentences
This regulation and supervision establishes a comprehensive framework of activities in which a commercial bank can engage and is intended primarily for the protection of the FDIC and depositors.
−Removed: The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
+Added: The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate credit loss reserves for regulatory purposes.
Any change in such regulation, whether by the Pennsylvania Department of Banking and Securities, the FDIC, the Federal Reserve Board or Congress could have a material impact on the operations of the Bank.
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Capital Requirements.
−Removed: Federal regulations require state banks to meet three minimum capital standards:
−Removed: a 1.5% tangible capital ratio, a 4% core capital to assets leverage ratio (3% for savings associations receiving the highest rating on the composite, or “CAMELS,” rating system for capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk), and an 8% risk-based capital ratio.
−Removed: The risk-based capital standard for state banks requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively.
−Removed: In determining the amount of risk weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 1250%, assigned by the regulations, based on the risks believed inherent in the type of asset.
−Removed: Core capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships.
−Removed: The components of supplementary capital include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of net unrealized gains on available-for-sale securities with readily determinable fair market values.
−Removed: Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.
−Removed: Additionally, an institution that retains credit risk in connection with an asset sale is required to maintain additional regulatory capital because of the purchaser’s recourse against the institution.
−Removed: an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.
+Added: Federal regulations require federally-insured depository institutions, such as the Bank, to meet certain minimum capital standards:
+Added: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
+Added: In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off-balance sheet assets ( e.g.
+Added: , recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset.
+Added: Higher levels of capital are required for asset categories believed to present greater risk.
+Added: Common equity Tier 1 capital is generally defined as common stockholders’ equity and related surplus and retained earnings.
+Added: Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital.
+Added: Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.
+Added: Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital.
+Added: Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
+Added: Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets.
+Added: Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
+Added: In assessing an institution’s capital adequacy, the FDIC considers not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.
+Added: In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if an institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
+Added: In assessing an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.
At December 31, 2025, the Bank’s capital exceeded all applicable requirements.
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The FRB regulations historically required banks to maintain reserves against their transaction accounts (primarily Negotiable Order of Withdrawal, or NOW and regular checking accounts).
−Removed: The regulations generally provide that reserves be maintained against aggregate transaction accounts as follows for 2025:
−Removed: a 3% reserve ratio is assessed on net transaction accounts up to and including $645.8 million;
−Removed: a 10% reserve ratio is applied above $645.8 million.
−Removed: The first $37.8 million of otherwise reservable balances (subject to adjustments by the Federal Reserve Board) are exempted from the reserve requirements.
−Removed: The Bank complies with the foregoing requirements.
However, effective March 26, 2020, the FRB reduced reserve requirement ratios on all net transaction accounts to 0%, eliminating reserve requirements for all depository institutions, in response to the COVID-19 pandemic.
+Added: This change currently remains in place with no indication of reversal.
Other Regulations
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• The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
−Removed: Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s
−Removed: privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.
+Added: Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.
Holding Company Regulation
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The Company may exclude from income 100% of dividends received from the Bank as members of the same affiliated group of corporations.
−Removed: For federal income tax purposes, corporations may carryforward net operating losses
−Removed: indefinitely, but the deduction is limited to 80% of taxable income.
+Added: For federal income tax purposes, corporations may carryforward net operating losses indefinitely, but the deduction is limited to 80% of taxable income.
For its 2025 and 2024 fiscal year, the Company’s maximum federal income tax rate was 21%.
10 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.