What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-07 · 91 added, 239 removed, 267 unchanged (55% of the section changed)

28 unchanged sentences

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.

Subsequent Event

As reported on the Company's Current Report on Form 8-K filed with the SEC on May 11, 2026, the Company became aware of an internal incident involving the disclosure of certain non-public customer information using an unauthorized artificial intelligence-based software application.

Due to the volume and confidential nature of the information at issue, the event was determined to be material;

however, the Company does not expect a material impact on its consolidated financial condition or results of operations.

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations.

It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith.

The detailed discussion focuses on our consolidated financial condition as of September 30, 2025, compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024.

The detailed discussion focuses on our consolidated financial condition as of March 31, 2026, compared to the consolidated financial condition as of December 31, 2025 and the consolidated results of operations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Our results of operations depend primarily on our net interest income.

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The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated:

Three Months Ended

Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Three Months Ended March 31,

(Dollars in Thousands)

1 unchanged sentence

Adjustment to FTE Basis

100 42 213 118

Interest Income (FTE) (Non-GAAP)

6 unchanged sentences

Adjustment to FTE Basis

0.03 0.02 0.02 0.02

Net Interest Rate Spread (FTE) (Non-GAAP)

3 unchanged sentences

Adjustment to FTE Basis

0.03 0.01 0.02 0.01

Net Interest Margin (FTE) (Non-GAAP)

2 unchanged sentences

We believe this non-GAAP measure serves as a useful tool to help evaluate the strength and discipline of the Company's capital management strategies and as an additional, conservative measure of the Company’s total value.

September 30,

2026 December 31, 2025

7 unchanged sentences

Consolidated Statements Of Financial Condition Analysis

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

Total assets increased $35.6 million, or 2.3%, to $1.58 billion at March 31, 2026 compared to $1.55 billion at December 31, 2025.

Cash and Securities

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

• Securities increased $10.4 million, or 4.0%, to $272.6 million at September 30, 2025, compared to $262.2 million at December 31, 2024.

During the quarter ended September 30, 2025, the Bank implemented a balance sheet repositioning strategy of its portfolio of available-for-sale investment securities in which $129.6 million in book value of lower-yielding investment securities with an average yield of 2.87% were sold for an after-tax realized loss of $9.3 million.

Investment securities sold included $121.1 million of mortgage-backed securities/collateralized mortgage obligations issued by the U.S.

government-sponsored agencies, $5.0 million of U.S.

government agency securities and $3.5 million of municipal securities.

The Bank then purchased $117.8 million of higher-yielding mortgage-backed securities/collateralized mortgage obligations issued by U.S government-sponsored agencies, municipal securities, subordinated debt investments and non-agency guaranteed securitizations with an expected tax-equivalent yield of approximately 5.43%.

This strategy is expected to add nearly 19 basis points to net interest margin (“NIM”) and approximately $0.40 to annual earnings per share.

The Company expects to recover the $9.3 million loss in approximately 4.2 years.

• Cash and due from banks increased $23.9 million, or 75.3%, to $55.5 million at March 31, 2026, compared to $31.7 million at December 31, 2025.

• Securities increased $15.6 million, or 5.6%, to $295.5 million at March 31, 2026, compared to $279.9 million at December 31, 2025.

This was primarily due to $26.0 million of security purchases, partially offset by $8.8 million of repayments on amortizing securities and a $1.9 million increase in unrealized losses on the portfolio.

Loans, Allowance for Credit Losses (ACL) and Credit Quality

• Total loans increased $50.8 million, or 4.6%, to $1.14 billion compared to $1.09 billion, and included increases in commercial real estate, commercial and industrial and other loans of $53.9 million, $31.9 million and $6.3 million, respectively, partially offset by decreases in consumer, construction and residential real estate loans of $20.9 million, $15.8 million and $4.6 million, respectively.

• Total loans decreased $4.4 million, or 0.4%, to $1.158 billion compared to $1.162 billion, and included decreases in consumer, commercial and industrial, commercial real estate and other loans of $6.2 million, $3.4 million, $2.2 million and $228,000, respectively, partially offset by increases in construction and residential real estate loans of $6.0 million and $1.5 million, respectively.

The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to the discontinuation of this product offering as of June 30, 2023.

2 unchanged sentences

Loan production totaled $30.5 million while $29.4 million of loans were paid off since December 31, 2025.

• The allowance for credit losses (ACL) was $10.1 million at September 30, 2025 and $9.8 million at December 31, 2024.

As a result, the ACL to total loans was 0.89% at September 30, 2025 and 0.90% at December 31, 2024.

During the nine months ended September 30, 2025, the Company recorded a net provision for credit losses of $227,000 including a provision for credit losses on loans of $269,000, partially offset by a recovery for credit loses on unfunded commitments of $42,000.

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

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

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

Nonperforming loans to total loans ratio was 0.19% at September 30, 2025 and 0.16% at December 31, 2024.

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

• Total deposits increased $50.9 million, or 4.0%, to $1.33 billion as of September 30, 2025 compared to $1.28 billion at December 31, 2024.

Interest-bearing demand, non interest-bearing demand and time deposits increased $49.2 million, $24.0 million and $4.5 million, respectively, while money market and savings deposits decreased $25.3 million and $1.5 million, respectively.

This favorable change in the deposit mix was the result of an increased focus on building core banking relationships while strategically reducing higher priced relationships.

Brokered time deposits totaled $98.5 million as of September 30, 2025 and $39.0 million as of December 31, 2024, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities.

At September 30, 2025, FDIC insured deposits

totaled approximately 59.6% of total deposits while an additional 16.3% of total deposits were collateralized with investment securities.

Accrued Interest Payable and Other Liabilities

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

• The allowance for credit losses (ACL) was $10.3 million at March 31, 2026 and $10.1 million at December 31, 2025.

As a result, the ACL to total loans was 0.89% at March 31, 2026 and 0.87% at December 31, 2025.

During the three months ended March 31, 2026, the Company recorded a net provision for credit losses of $241,000 including a provision for credit losses on loans of $228,000 and a provision for credit losses on unfunded commitments of $13,000.

• Net charge-offs for the three months ended March 31, 2026 were $41,000, or 0.01% of average loans on an annualized basis.

Net charge-offs for the three months ended March 31, 2025 were $54,000, or 0.02% of average loans on an annualized basis.

• Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $3.3 million at March 31, 2026 and $5.3 million at December 31, 2025.

Nonperforming loans to total loans ratio was 0.29% at March 31, 2026 and 0.46% at December 31, 2025.

The decrease in nonperforming loans was due to the full repayment of a $2.0 million commercial real estate loan which was placed on nonaccrual status in the fourth quarter of 2025.

Total liabilities increased $34.4 million, or 2.5%, to $1.42 billion at March 31, 2026 compared to $1.39 billion at December 31, 2025.

• Total deposits increased $35.6 million, or 2.7%, to $1.38 billion as of March 31, 2026 compared to $1.34 billion at December 31, 2025.

Interest-bearing demand, non interest-bearing demand, savings and money market deposits increased $27.5 million, $9.3 million, $2.9 million and $92,000, respectively, while time deposits decreased $4.1 million.

This favorable change in the deposit mix occurred as the Bank began onboarding Specialty Treasury clients during the three months ended March 31, 2026.

The Bank continues to focus on building core banking relationships while strategically reducing higher priced funding.

Brokered time deposits totaled $98.5 million as of March 31, 2026 and December 31, 2025, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities.

At March 31, 2026, FDIC insured deposits totaled approximately 58.8% of total deposits while an additional 16.7% of total deposits were collateralized with investment securities.

Stockholders’ Equity

Stockholders’ equity increased $5.1 million, or 3.5%, to $152.5 million at September 30, 2025, compared to $147.4 million at December 31, 2024.

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

Book value per common share (GAAP) was $30.50 at September 30, 2025 compared to $28.71 at December 31, 2024, an increase of $1.79.

Tangible book value per common share (Non-GAAP) increased $1.74, or 6.5%, to $28.56 compared to $26.82 at December 31, 2024.

Consolidated Results of Operations for the Three Months Ended September 30, 2025 and 2024

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

Stockholders’ equity increased $1.2 million, or 0.8%, to $158.8 million at March 31, 2026, compared to $157.5 million at December 31, 2025.

The key factors positively impacting stockholders’ equity were $3.9 million of net income for the current year and $341,000 of shares issued as a result of stock option exercises, partially offset by a $1.5 million increase in accumulated other comprehensive loss resulting from the securities market interest rate changes, the payment of $1.4 million in dividends and $292,000 of treasury shares purchased under the stock repurchase program since December 31, 2025.

Book value per common share (GAAP) was $31.30 at March 31, 2026 compared to $31.28 at December 31, 2025, an increase of $0.02.

Tangible book value per common share (Non-GAAP) was $29.38 at March 31, 2026 compared to $29.35 at December 31, 2025, an increase of $0.03.

Consolidated Results of Operations for the Three Months Ended March 31, 2026 and 2025

Net income was $3.9 million for the three months ended March 31, 2026, an increase of $2.0 million compared to net income of $1.9 million for the three months ended March 31, 2025.

Net Interest and Dividend Income .

Net interest and dividend income increased $1.6 million, or 14.2%, to $13.1 million for the three months ended September 30, 2025 compared to $11.5 million for the three months ended September 30, 2024.

Net interest margin (GAAP) increased 53 basis points (bps) to 3.64% for the three months ended September 30, 2025 compared to 3.11% for the three months ended September 30, 2024.

Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 55 bps to 3.67% for the three months ended September 30, 2025 compared to 3.12% for the three months ended September 30, 2024.

Net interest and dividend income increased $2.6 million, or 22.6%, to $13.9 million for the three months ended March 31, 2026 compared to $11.3 million for the three months ended March 31, 2025.

Net interest margin (GAAP) increased 56 basis points (bps) to 3.83% for the three months ended March 31, 2026 compared to 3.27% for the three months ended March 31, 2025.

Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 60 bps to 3.88% for the three months ended March 31, 2026 compared to 3.28% for the three months ended March 31, 2025.

Interest and Dividend Income

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

◦ Interest income on loans increased $1.0 million, or 6.9%, to $16.0 million for the three months ended September 30, 2025 compared to $14.9 million for the three months ended September 30, 2024.

The average balance of loans increased $56.1 million to $1.12 billion from $1.06 billion, causing an $830,000 increase in interest income on loans.

Additionally, the average yield on loans increased 8 bps to 5.68% from 5.60% despite a 125bp reduction in the federal funds rate since September 2024.

While this led to the downward repricing of variable and adjustable rate loans, the impact was partially negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.

• Interest and dividend income increased $1.8 million, or 10.1%, to $19.7 million for the three months ended March 31, 2026 compared to $17.8 million the three months ended March 31, 2025.

◦ Interest income on loans increased $1.4 million, or 9.8%, to $16.0 million for the three months ended March 31, 2026 compared to $14.5 million for the three months ended March 31, 2025.

The average balance of loans increased $76.9 million to $1.15 billion from $1.08 billion, causing a $1.1 million increase in interest income on loans.

Additionally, the average yield on loans increased 14 bps to 5.64% from 5.50% despite a 75 bp reduction in the federal funds target rate since September 2025.

While this led to the downward repricing of variable and adjustable rate loans, the impact was partially by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.

The increase in the average yield caused a $378,000 increase in interest income on loans.

◦ Interest income on investment securities decreased $295,000, or 9.0%, to $3.0 million for the three months ended September 30, 2025 compared to $3.3 million for the three months ended September 30, 2024 driven by a $16.6 million decrease in average balances and a 9 bp decrease in average yield.

The decrease in volume was due to the timing of sales and subsequent repurchases in the securites repositioning strategy.

The decrease in yield resulted from the reductions in the federal funds rate since September 2024.

◦ Interest income on interest-earning deposits at other banks decreased $1.2 million to $293,000 for the three months ended September 30, 2025 compared to $1.4 million for the three months ended September 30, 2024 driven by a 126 bp decrease in the average yield and a $81.4 million decrease in average balances.

The decrease in the yield was primarily related to the Federal Reserve’s reductions in the federal funds rate while the decrease in the volume was due to the funding of loans and decrease in average deposits.

◦ Interest income on investment securities increased $638,000, or 23.0%, to $3.4 million for the three months ended March 31, 2026 compared to $2.8 million for the three months ended March 31, 2025 driven by a 96 bp increase in the average yield, coupled with a $6.8 million increase in average balances.

The increase in yield was primarily due to the third quarter 2025 implementation of a balance sheet repositioning strategy of the Bank’s portfolio of available-for-sale investment securities in which $129.6 million in book value of lower-yielding investment securities with an average yield of 2.87% were sold for an after-tax realized loss of $9.3 million.

Investment securities sold included $121.1 million of mortgage-backed securities/collateralized mortgage obligations issued by the U.S.

government-sponsored agencies, $5.0 million of U.S.

government agency securities and $3.5 million of municipal securities.

◦ Interest income on interest-earning deposits at other banks decreased $259,000 to $200,000 for the three months ended March 31, 2026 compared to $459,000 for the three months ended March 31, 2025 driven by a 113 bp decrease in the average yield and a $17.8 million decrease in average balances.

The decrease in the yield was primarily related to the Federal Reserve’s reductions in the target federal funds rate while the decrease in the volume was due to the funding of loans.

Interest Expense

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

◦ Interest expense on deposits decreased $2.1 million, or 26.4%, to $5.8 million for the three months ended September 30, 2025 compared to $7.9 million for the three months ended September 30, 2024.

The cost of interest-bearing deposits declined 68 bps to 2.26% for the three months ended September 30, 2025 from 2.94% for the three months ended September 30, 2024 due to the change in the deposit mix and the recent Federal Reserve federal funds rate decreases.

The decrease in the cost of interest-bearing deposits accounted for a $1.8 million decrease in interest

Average interest-bearing deposit balances decreased $47.0 million, or 4.4%, to $1.02 billion as of September 30, 2025 compared to $1.07 billion as of September 30, 2024, primarily as the Bank strategically reduced time deposit only relationships.

The decrease in average balances accounted for a $320,000 decrease in interest expense.

• Interest expense decreased $757,000, or 11.6%, to $5.8 million for the three months ended March 31, 2026 compared to $6.5 million for the three months ended March 31, 2025.

◦ Interest expense on deposits decreased $879,000, or 14.4%, to $5.2 million for the three months ended March 31, 2026 compared to $6.1 million for the three months ended March 31, 2025.

The cost of interest-bearing deposits declined 43 bps to 2.03% for the three months ended March 31, 2026 from 2.46% for the three months ended March 31, 2025 due to the change in the deposit mix and the recent Federal Reserve federal funds target rate decreases.

The decrease in the cost of interest-bearing deposits accounted for a $1.1 million decrease in interest expense.

This was partially offset as average interest-bearing deposit balances increased $39.4 million, or 3.9%, to $1.05 billion as of March 31, 2026 compared to $1.01 billion as of March 31, 2025, primarily as the Bank grew core banking relationships, onboarded Specialty Treasury clients and strategically reduced time deposit only relationships.

The increase in average balances accounted for a $221,000 increase in interest expense.

Average Balances and Yields .

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The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Three Months Ended September 30,

Three Months Ended March 31,

Balance Interest

56 unchanged sentences

The total column represents the sum of the prior columns.

Three Months Ended September 30, 2025

Three Months Ended September 30, 2024

Increase (Decrease) Due to

Volume Rate Total

(Dollars in thousands) (Unaudited)

Interest and Dividend Income:

Loans, net $ 830 $ 217 $ 1,047

Debt Securities:

Taxable (329) (112) (441)

Exempt From Federal Tax 185 — 185

Equity Securities (14) (7) (21)

Cash at Other Banks (866) (289) (1,155)

Other Interest-Earning Assets 16 (5) 11

Total Interest-Earning Assets (178) (196) (374)

Interest Expense:

Deposits (320) (1,762) (2,082)

Short-Term Borrowings 68 — 68

Other Borrowings 2 (45) (43)

Total Interest-Bearing Liabilities (250) (1,807) (2,057)

Change in Net Interest and Dividend Income $ 72 $ 1,611 $ 1,683

Provision for Credit Losses.

A provision for credit losses of $259,000 was recorded for the three months ended September 30, 2025.

The provision for credit losses on loans was $336,000 and was primarily due to additional reserves required for overall loan growth, changes in qualitative factors and an addition to individually assessed loans requiring specific reserves, partially offset by favorable changes in portfolio concentrations and the calculated loss rate.

This was partially offset by a $77,000 recovery for credit losses on unfunded commitments due to a decrease in unfunded commitments.

This compared to a net recovery of $41,000 recorded for the three months ended September 30, 2024 as the recovery for credit losses on unfunded commitments was $66,000 due to a decreases in unfunded commitments and the loss rate on construction loans and the provision for credit losses on loans was $25,000 due to changes in qualitative factors partially offset by changes in loan portfolio concentrations and an improvement in loss rates.

Noninterest Income .

Noninterest income decreased $11.9 million, or 965.9%, to a loss of $10.7 million for the three months ended September 30, 2025, compared to income of $1.2 million for the three months ended September 30, 2024 as a result of $11.8 million in losses on the sale of securities from the securities repositioning strategy.

Excluding security gains and losses from both periods and a gain on the sale of a subsidiary recognized during the three months ended September 30, 2024, noninterest income increased $225,000, or 26.5%, to $1.1 million for the three months ended September 30, 2025, compared to $850,000 for the three months ended September 30, 2024.

This resulted primarily from a $123,000 increase in service fees primarily related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $112,000 increase in other income related to hedge fees.

Noninterest Expense.

Noninterest expense increased $401,000, or 4.6%, to $9.2 million for the three months ended September 30, 2025 compared to $8.8 million for the three months ended September 30, 2024.

Salaries and benefits increased $686,000, or 15.0%, to $5.2 million primarily due to merit increases, revenue producing staff additions and higher insurance benefit costs, partially offset by savings realized due to the reduction in force implemented earlier this year.

Legal and professional fees increased $114,000 due to timing of internal and external audit services.

Equipment expense increased $87,000 due to higher

depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service in 2024.

These increases were partially offset as intangible amortization decreased $264,000 as the Bank’s core deposit intangibles were fully amortized in 2024.

Occupancy expense decreased $181,000 due to environmental remediation costs related to a construction project on one of the Bank’s office locations recognized only in 2024 and certain property management cost savings initiatives implemented in 2025.

Data processing expense decreased $64,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform during mid-2024.

Income Taxes.

Income tax expense was a $1.3 million benefit for the three months ended September 30, 2025 compared to a $747,000 expense for the three months ended September 30, 2024.

This change was primarily driven by a decrease in pre-tax income to a $7.0 million loss for the three months ended September 30, 2025 compared to $4.0 million of income for the three months ended September 30, 2024.

This resulted from the loss recognized as a result of the securities repositioning strategy exectued during the three months ended September 30, 2025.

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

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

Net Interest and Dividend Income.

Net interest and dividend income increased $2.4 million, or 7.0%, to $36.9 million for the nine months ended September 30, 2025 compared to $34.5 million for the nine months ended September 30, 2024.

Net interest margin (GAAP) increased to 3.49% for the nine months ended September 30, 2025 compared to 3.21% for the nine months ended September 30, 2024.

Net interest margin (FTE) (Non-GAAP) increased 29 bps to 3.51% for the nine months ended September 30, 2025 compared to 3.22% the nine months ended September 30, 2024.

Interest and Dividend Income

• Interest and dividend income decreased $752,000, or 1.3%, to $55.9 million for the nine months ended September 30, 2025 compared to $56.7 million for the nine months ended September 30, 2024.

◦ Interest income on loans increased $1.5 million, or 3.5%, to $46.0 million during the nine months ended September 30, 2025 compared to $44.5 million for the nine months ended September 30, 2024.

The average balance of loans increased $22.1 million to $1.10 billion for the nine months ended September 30, 2025 compared to $1.08 billion for the nine months ended September 30, 2024 resulting in a $865,000 increase in interest income on loans.

Additionally, the average yield on loans increased 9 bps to 5.62% for the nine months ended September 30, 2025 compared to 5.53% for the nine months ended September 30, 2024 resulting in a $731,000 increase in interest income on loans.

The increase in the loan yield is despite a 125bp reduction in the federal funds rate since September 2024.

◦ Interest income on investment securities increased $194,000, or 2.3%, to $8.6 million during the nine months ended September 30, 2025 compared to $8.4 million for the nine months ended September 30, 2024 driven by a $14.7 million increase in average balances, partially offset by a 11 bp decrease in the average yield.

The increase in volume and decrease in yield was driven by a $25.5 million increase in the average balance of CLO securities as the Company executed a leverage strategy to purchase these assets funded with brokered certificates of deposits.

The increase in the volume resulted in a $515,000 increase in interest income.

The decrease in the average yield resulted in a $282,000 decrease in interest income and was the result of reductions in the federal funds rates since September 2024.

◦ Interest income on interest-earning deposits at other banks decreased $2.4 million, to $1.1 million for the nine months ended September 30, 2025 compared to $3.5 million for the nine months ended September 30, 2024 as average balances decreased $54.5 million and the average yield decreased 114 bps.

The volume decreased as cash was utilized to fund security purchases and loan originations and cover deposit fluctuations while the average yield decrease resulted from reductions in the federal funds rate since September 2024.

Interest Expense

• Interest expense decreased $3.2 million, or 14.3%, to $19.0 million for the nine months ended September 30, 2025 compared to $22.2 million for the nine months ended September 30, 2024.

◦ Interest expense on deposits decreased $3.3 million, or 15.8%, to $17.6 million for the nine months ended September 30, 2025 compared to $20.9 million for the nine months ended September 30, 2024.

Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 40 bp decrease in the average cost of interest-bearing deposits compared to the nine months ended September 30, 2024.

This accounted for a $3.0 million decrease in interest expense.

Additionally, the average balance of interest-bearing deposits decreased $15.6 million resulting in a $276,000 decrease in interest expense.

◦ Interest expense on borrowed funds increased $140,000, or 11.5%, to $1.4 million for the nine months ended September 30, 2025 compared to $1.2 million for the nine months ended September 30, 2024.

The average balance of borrowed funds increased $5.6 million due to FHLB short-term advances utilized during the nine months ended September 30, 2025.

The increase in the average balance accounted for a $200,000 increase in interest expense.

Partially offsetting this increase, the average cost of borrowed funds decreased 19 bps as $20.0 million of long-term borrowings matured and were replaced at current market rates.

The decrease in the cost accounted for a $60,000 decrease in interest expense.

Average Balances and Yields.

The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs.

Average balances are derived from daily balances over the periods indicated.

The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

FTE yield adjustments have been made for tax exempt loan and security interest income utilizing a marginal federal income tax rate of 21% for the periods presented.

As such, amounts will not agree to income as reported in the consolidated financial statements.

The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

Nine Months Ended September 30,

Balance Interest

Dividends Yield/

Balance Interest

Dividends Yield/

(Dollars in thousands) (Unaudited)

Interest-Earning Assets:

Loans, Net (2)

$ 1,098,105 $ 46,167 5.62 % $ 1,076,052 $ 44,571 5.53 %

Debt Securities

Taxable 273,949 8,485 4.13 263,433 8,437 4.27

Tax Exempt 4,199 185 5.87 — — —

Equity Securities 1,552 44 3.78 2,693 82 4.06

Interest-Earning Deposits at Banks 36,044 1,083 4.01 90,507 3,493 5.15

Other Interest-Earning Assets 3,648 196 7.18 3,166 234 9.87

Total Interest-Earning Assets 1,417,497 56,160 5.30 1,435,851 56,817 5.29

Noninterest-Earning Assets 69,034 55,366

Total Assets $ 1,486,531 $ 1,491,217

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits $ 334,380 5,039 2.01 % $ 325,383 5,576 2.29 %

Savings Accounts 172,517 126 0.10 184,017 157 0.11

Money Market Accounts 226,760 4,874 2.87 211,921 4,885 3.08

Time Deposits 277,424 7,604 3.66 305,386 10,330 4.52

Total Interest-Bearing Deposits 1,011,081 17,643 2.33 1,026,707 20,948 2.73

Short-Term Borrowings 5,607 199 4.75 1 — —

Other Borrowings 34,733 1,156 4.45 34,692 1,215 4.68

Total Interest-Bearing Liabilities 1,051,421 18,998 2.42 1,061,400 22,163 2.79

Noninterest-Bearing Demand Deposits 269,259 271,511

Total Funding and Cost of Funds 1,320,680 1.92 1,332,911 2.22

Other Liabilities 17,812 16,045

Total Liabilities 1,338,492 1,348,956

Stockholders' Equity 148,039 142,261

Total Liabilities and Stockholders' Equity $ 1,486,531 $ 1,491,217

Net Interest Income (FTE) (Non-GAAP) (3)

$ 37,162 $ 34,654

Net Interest-Earning Assets (4)

$ 366,076 $ 374,451

Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)

2.88 % 2.50 %

Net Interest Margin (GAAP) (6)

Net Interest Margin (FTE) (Non-GAAP) (3)(6)

Return on Average Assets (1)

Return on Average Equity (1)

Average Equity to Average Assets 9.96 9.54

Average Interest-Earning Assets to Average Interest-Bearing Liabilities 134.82 135.28

(1) Annualized based on nine months ended results.

(2) Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3) Refer to Explanation and Use of Non-GAAP Financial Measures in this filing for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Rate Volume Analysis.

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated.

FTE yield adjustments have been made for tax exempt loan and security income utilizing a marginal federal income tax rate of 21%.

The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).

The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).

For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

The total column represents the sum of the prior columns.

Nine Months Ended September 30, 2025

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Increase (Decrease) Due to

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Provision for Credit Losses.

The net provision for credit losses was $227,000 for the nine months ended September 30, 2025.

The provision for credit losses for loans was $269,000, partially offset by a recovery for credit losses for unfunded commitments of $42,000.

The increase for provision for credit losses for loans was due to loan growth and increases in qualitative factors, partially offset by improvement of individually analyzed loans that required specific provision in prior periods and a decline in calculated loss rates.

The recovery for unfunded commitments was due to a decline in the unfunded commitment balance.

This compared to a recovery for credit losses of $114,000 for the nine months ended September 30, 2024 due to a decrease in loan balances.

The prior period recovery for credit losses was comprised of $105,000 for loans and $9,000 for unfunded commitments.

A provision for credit losses of $241,000 was recorded for the three months ended March 31, 2026.

The provision for credit losses on loans was $228,000 and was primarily due to additional reserves required for individually assessed loans requiring specific reserves and charge-offs.

Additionally, the provision for credit losses on unfunded commitments was $13,000 and was due to an increase in unfunded commitments.

This compared to a recovery for credit losses of $40,000 recorded for the three months ended March 31, 2025 as the provision for credit losses on loans was $68,000 primarily due to qualitative adjustments on economic factors, and the provision for credit losses on unfunded commitments was $108,000 due to a decrease in unfunded commitments and a decrease in funding rates.

Noninterest Income.

Noninterest income decreased $12.8 million, or 333.3%, to a $9.0 million loss for the nine months ended September 30, 2025, compared to $3.8 million of income for the nine months ended September 30, 2024.

This decrease was mainly due to loss on securities for the securities repositioning of $11.8 million and a $64,000 loss mainly related to the sale of equity securities for the nine months ended September 30, 2025 compared to a $49,000 loss for the nine months ended September 30, 2024 which was primarily due to changes in the market value of equity securities, comprised mainly of bank stocks.

Net gain on bank-owned life insurance claims decreased as a $915,000 gain was realized for the nine months ended September 30, 2024 and net gain on disposal of premises and equipment decreased as a gain of $274,000 was realized during nine months ended September 30, 2024 from the sale of one branch office location.

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

Noninterest income increased $175,000, or 22.2%, to $962,000 for the three months ended March 31, 2026, compared to $787,000 for the three months ended March 31, 2025 primarily due to a $92,000 increase in service fees related to new corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $77,000 increase in net gain on securities due to net losses of $69,000 recognized for the three months ended March 31, 2025 related primarily to the sale of equity securities.

Noninterest Expense.

Noninterest expense increased $1.5 million, or 5.9%, to $27.7 million for the nine months ended September 30, 2025 compared to $26.2 million for the nine months ended September 30, 2024.

Salaries and benefits increased $2.8 million primarily due to $1.0 million of one-time non-recurring expense recognized for the nine months ended September 30, 2025 associated with the previously announced reduction in force, merit increases, revenue producing staff additions and higher insurance and benefit costs.

Additionally, equipment expense increased $228,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service during late 2024 and FDIC expense increased $85,000.

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

Noninterest expense increased $210,000, or 2.1%, to $10.0 million for the three months ended March 31, 2026 compared to $9.8 million for the three months ended March 31, 2025.

Data processing expense increased $145,000 due to the implementation of enhanced treasury and commercial banking platforms in late 2025.

Contracted services increased $95,000 due to outsourced information security services and robotic process automation projects.

Other noninterest expense increased $76,000 due to increases in travel, meals and entertainment expenses related to sales activities and increases in dues and subscriptions and printing and office supplies expenses.

Partially offsetting these increases, occupancy expense decreased $94,000 due to certain property management cost savings initiatives implemented in 2025 and salaries and benefits decreased $39,000.

During the three months ended March 31, 2025, the Bank recorded $1.0 million of one-time non-recurring expenses related to a reduction in force.

Excluding these one-time charges, salaries and benefits increased $1.0 million primarily due to revenue producing treasury and commercial banking personnel additions, merit increases and higher benefit compensation costs.

Income Taxes.

Income tax expense decreased $2.4 million to a $131,000 income tax benefit for the nine months ended September 30, 2025 compared to $2.2 million of income tax expense for the nine months ended September 30, 2024.

The change between the periods was driven by a decrease in pre-tax income to $33,000 for the nine months ended September 30, 2025 compared to $12.3 million for the nine months ended September 30, 2024.

The decrease in pre-tax income was mainly due to the securities repositioning in the current year.

Income tax expense was $714,000 for the three months ended March 31, 2026 compared to $427,000 for the three months ended March 31, 2025.

This change was primarily driven by an increase in pre-tax income to $4.6 million for the three months ended March 31, 2026 compared to $2.3 million of income for the three months ended March 31, 2025.

Off-Balance Sheet Arrangements

Other than loan commitments and standby and performance letters of credit, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a significant current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Refer to Note 7 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of September 30, 2025 and December 31, 2024.

Refer to Note 7 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of March 31, 2026 and December 31, 2025.

Liquidity and Capital Management

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Excess liquid assets are invested generally in interest-earning deposits with other banks and short- and intermediate-term securities.

The Company believes that it had sufficient liquidity at September 30, 2025 to satisfy its short- and long-term liquidity needs.

The Company’s most liquid assets are cash and due from banks, which totaled $55.9 million at September 30, 2025.

The Company believes that it had sufficient liquidity at March 31, 2026 to satisfy its short- and long-term liquidity needs.

The Company’s most liquid assets are cash and due from banks, which totaled $55.5 million at March 31, 2026.

The levels of these assets depend on our operating, financing, lending and investing activities during any given period.

Unpledged securities, which provide an additional source of liquidity, totaled $93.2 million at September 30, 2025.

In addition, at September 30, 2025, the Company had the ability to borrow up to $500.4 million from the FHLB of Pittsburgh, of which $478.6 million was available.

The Company also has the ability to borrow up to $69.8 million from the FRB through its Borrower-In-Custody line of credit agreement and the Company also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of both September 30, 2025 and December 31, 2024, currently these credit arrangements have remained unused.

At September 30, 2025, $264.9 million, or 87.9% of total time deposits mature within one year.

Unpledged securities, which provide an additional source of liquidity, totaled $126.5 million at March 31, 2026.

In addition, at March 31, 2026, the Company had the ability to borrow up to $536.0 million from the FHLB of Pittsburgh, of which $514.0 million was available.

The Company also has the ability to borrow up to $76.6 million from the FRB through its Borrower-In-Custody line of credit agreement and the Company also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of both March 31, 2026 and December 31, 2025, currently these credit arrangements have remained unused.

At March 31, 2026, $277.9 million, or 90.1% of total time deposits mature within one year.

If these time deposits do not remain with the Company, the Company will be required to seek other sources of funds.

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The Company has the ability to attract and retain deposits by adjusting the interest rates offered.

At September 30, 2025, the Bank's current deposit portfolio is 59.6% insured by the FDIC, and with additional coverage of 16.3% from the Bank's investment securities;

At March 31, 2026, the Bank's current deposit portfolio is 58.8% insured by the FDIC, and with additional coverage of 16.7% from the Bank's investment securities;

of the total deposits held at the Bank only 24.5% are uninsured.

2 unchanged sentences

We anticipate that we will have sufficient funds to meet our current funding commitments.

The marginal cost of new funding,

however, whether from deposits or borrowings from the FHLB, will be carefully considered as we monitor our liquidity needs.

The marginal cost of new funding, however, whether from deposits or borrowings from the FHLB, will be carefully considered as we monitor our liquidity needs.

Therefore, in order to minimize our cost of funds, we may consider additional borrowings from the FHLB in the future.

2 unchanged sentences

The Bank’s ability to pay dividends to CB Financial is subject to regulatory limitations.

At September 30, 2025, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $9.1 million.

At March 31, 2026, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $7.5 million.

The ability to pay future dividends or conduct stock repurchases may be limited under applicable banking regulations and regulatory policies due to expected losses for future periods and/or the inability to upstream funds from the Bank to the Company as a result of lower income or regulatory capital levels.

5 unchanged sentences

Under the Regulatory Capital Rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier I capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets.

At September 30, 2025 and December 31, 2024, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action.

At March 31, 2026 and December 31, 2025, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action.

The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized as of the dates indicated.

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Amount Ratio Amount Ratio

18 unchanged sentences

Refer to the "Lending Activities" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for a description of each loan portfolio segment.

At September 30, 2025, the Company's loans totaled $1.14 billion, representing a $50.8 million, or 4.6%, increase compared to $1.09 billion at December 31, 2024.

At March 31, 2026, the Company's loans totaled $1.158 billion, representing a $4.4 million, or 0.4%, decrease compared to $1.162 billion at December 31, 2025.

The table below provides the composition of the loan portfolio:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

(Dollars in Thousands)

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Our concentration management policy is approved by the Company's Board of Directors and is used to ensure a high-quality, well diversified portfolio that is consistent with our overall objective of maintaining an acceptable level of risk.

The Company's CRE portfolio totaled $539.4 million at September 30, 2025, an increase of $53.9 million, or 11.1%, compared to December 31, 2024.

The Company's CRE portfolio totaled $550.0 million at March 31, 2026, a decrease of $2.2 million, or 0.4%, compared to December 31, 2025.

CRE loans are concentrated in the Pittsburgh metropolitan area.

The tables below provides further detail of the composition of the CRE portfolio as of September 30, 2025:

(Dollars in thousands) CRE Nonowner Occupied Loans

The tables below provides further detail of the composition of the CRE portfolio as of March 31, 2026:

CRE Nonowner Occupied Loans

Outstanding Balance Percent Average Loan Size Average LTV (1)

(Dollars in Thousands)

Retail Space $ 109,314 24.93 % $ 1,497 61.69 %

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(1) Based on collateral value at the time of loan origination.

(Dollars in Thousands) CRE Owner Occupied Loans

CRE Owner Occupied Loans

Outstanding Balance Percent Average Loan Size Average LTV (1)

(Dollars in Thousands)

Retail Space $ 26,341 23.60 % $ 675 50.05 %

3 unchanged sentences

Senior Housing 5,160 4.62 645 67.78

Multifamily 3,726 3.22 3,726 70.56

Manufacturing 3,022 2.71 336 56.60

4 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis