What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-12 · 229 added, 88 removed, 270 unchanged (54% of the section changed)

26 unchanged sentences

The Bank operates from nine branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia.

The Bank also has a loan production office in Allegheny County, a corporate center in Washington County and an operations center in Greene County, all of which are in Pennsylvania.

The Bank also has a loan production office in Allegheny County, a loan production office and a corporate center in Washington County and an operations center in Greene County, all of which are in Pennsylvania.

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 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.

The detailed discussion focuses on our consolidated financial condition as of June 30, 2026, compared to the consolidated financial condition as of December 31, 2025 and the consolidated results of operations for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025.

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

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The interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis.

The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans using the federal statutory income tax rate of 21.0%.

The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities using the federal statutory income tax rate of 21.0%.

We believe the presentation of net interest income on a FTE basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

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 March 31,

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

(Dollars in Thousands)

1 unchanged sentence

Adjustment to FTE Basis

178 57 356 112

Interest Income (FTE) (Non-GAAP)

6 unchanged sentences

Adjustment to FTE Basis

0.04 0.02 0.05 0.02

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

3 unchanged sentences

Adjustment to FTE Basis

0.05 0.01 0.05 0.02

Net Interest Margin (FTE) (Non-GAAP)

11 unchanged sentences

Consolidated Statements Of Financial Condition Analysis

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.

Total assets increased $108.7 million, or 7.0%, to $1.66 billion at June 30, 2026 compared to $1.55 billion at December 31, 2025.

Cash and Securities

• 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.

• Cash and due from banks increased $44.4 million, or 140.1%, to $76.1 million at June 30, 2026, compared to $31.7 million at December 31, 2025, driven by deposit growth.

• Securities increased $45.7 million, or 16.3%, to $325.6 million at June 30, 2026, compared to $279.9 million at December 31, 2025.

This was primarily due to $84.9 million of security purchases, partially offset by $37.9 million of maturities and 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 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.

This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products.

• Total loans increased $17.5 million, or 1.5%, to $1.18 billion compared to $1.16 billion, and included increases in commercial real estate and construction loans of $19.6 million and $13.5 million, respectively, partially offset by decreases in consumer and residential real estate loans of $11.8 million and $2.2 million, respectively.

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

This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on higher yielding commercial products.

Excluding the $11.1 million decrease in indirect automobile loans, total loans increased $28.5 million, or 2.5%.

Loan production totaled $90.8 million while $64.8 million of loans were paid off since December 31, 2025.

• 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 allowance for credit losses (ACL) was $10.5 million at June 30, 2026 and $10.1 million at December 31, 2025.

As a result, the ACL to total loans was 0.89% at June 30, 2026 and 0.87% at December 31, 2025.

During the six months ended June 30, 2026, the Company recorded a net provision for credit losses of $259,000 including a provision for credit losses on loans of $385,000 and a recovery of provision for credit losses on unfunded commitments of $126,000.

• Net charge-offs for the six months ended June 30, 2026 were $50,000, or 0.01% of average loans on an annualized basis, compared to net charge-offs for the six months ended June 30, 2025 of $15,000.

• Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $3.4 million at June 30, 2026 and $5.3 million at December 31, 2025.

Nonperforming loans to total loans ratio was 0.29% at June 30, 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.

Total liabilities increased $104.2 million, or 7.5%, to $1.49 billion at June 30, 2026 compared to $1.39 billion at December 31, 2025.

• Excluding brokered funding, deposits increased $105.1 million, or 8.5%, to $1.35 billion as of June 30, 2026 compared to $1.24 billion at December 31, 2025.

Interest-bearing demand and money market deposits increased $103.1 million and

$11.6 million, respectively, while noninterest deposits and time deposits decreased $5.1 million and $4.1 million, respectively.

This growth has occurred as the Bank began onboarding Specialty Treasury clients during the first quarter of 2026.

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

• Brokered deposits decreased $64.9 million, or 65.9%, to $33.6 million as of June 30, 2026 compared to $98.5 million at December 31, 2025, as the Bank elected to utilize lower cost FHLB borrowings instead.

The remaining brokered deposits mature within three months and were utilized primarily to fund the purchase of floating rate CLO securities.

At June 30, 2026, FDIC insured deposits totaled approximately 55.1% of total deposits while an additional 19.7% of total deposits were collateralized with investment securities.

Borrowed Funds

• Short-term borrowings increased $65.0 million to $65.0 million as of June 30, 2026 as the Bank replaced maturing brokered deposits with lower cost FHLB borrowings.

Stockholders’ Equity

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.

Stockholders’ equity increased $4.6 million, or 2.9%, to $162.1 million at June 30, 2026, compared to $157.5 million at December 31, 2025.

The key factors positively impacting stockholders’ equity were $8.2 million of net income for the current year and $551,000 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 $2.8 million in dividends and $306,000 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.

Book value per common share (GAAP) was $31.91 at June 30, 2026 compared to $31.28 at December 31, 2025, an increase of $0.63.

Tangible book value per common share (Non-GAAP) was $29.99 at June 30, 2026 compared to $29.35 at December 31, 2025, an increase of $0.64.

Consolidated Results of Operations for the Three Months Ended June 30, 2026 and 2025

Net income was $4.3 million for the three months ended June 30, 2026, an increase of $352,000 compared to net income of $3.9 million for the three months ended June 30, 2025.

Net Interest and Dividend Income .

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.

Net interest and dividend income increased $2.0 million, or 15.9%, to $14.5 million for the three months ended June 30, 2026 compared to $12.5 million for the three months ended June 30, 2025.

Net interest margin (GAAP) increased 14 basis points (bps) to 3.68% for the three months ended June 30, 2026 compared to 3.54% for the three months ended June 30, 2025.

Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 18 bps to 3.73% for the three months ended June 30, 2026 compared to 3.55% for the three months ended June 30, 2025.

Interest and Dividend Income

• 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 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.

• Interest and dividend income increased $2.1 million, or 11.4%, to $20.9 million for the three months ended June 30, 2026 compared to $18.8 million the three months ended June 30, 2025.

◦ Interest income on loans increased $685,000, or 4.4%, to $16.2 million for the three months ended June 30, 2026 compared to $15.5 million for the three months ended June 30, 2025.

The average balance of loans increased $54.6 million to $1.15 billion from $1.10 billion, causing a $768,000 increase in interest income on loans.

Partially offsetting this increase, the average yield on loans decreased 3 bps to 5.65% from 5.68% 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 mostly negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.

The decrease in the average yield caused a $82,000 decrease in interest income on loans.

◦ Interest income on investment securities increased $943,000, or 33.0%, to $3.8 million for the three months ended June 30, 2026 compared to $2.9 million for the three months ended June 30, 2025 driven by an 80 bp increase in the average yield, coupled with a $41.0 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.

3 unchanged sentences

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%.

◦ 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.

The increase in the average balance resulted from current year purchases.

◦ Interest income on interest-earning deposits at other banks increased $514,000 to $845,000 for the three months ended June 30, 2026 compared to $331,000 for the three months ended June 30, 2025 driven by a $66.3 million increase in average balances, partially offset by a 56 bp decrease in the average yield.

The increase in the volume was due to deposit growth while the decrease in the yield was related to the Federal Reserve’s reductions in the target federal funds rate.

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.

• Interest expense increased $152,000, or 2.4%, to $6.4 million for the three months ended June 30, 2026 compared to $6.2 million for the three months ended June 30, 2025.

◦ Interest expense on deposits increased $219,000, or 3.8%, to $5.9 million for the three months ended June 30, 2026 compared to $5.7 million for the three months ended June 30, 2025.

Average interest-bearing deposit balances increased $137.5 million, or 13.7%, to $1.14 billion as of June 30, 2026 compared to $1.01 billion as of June 30, 2025, primarily as the Bank grew core banking relationships and onboarded Specialty Treasury clients.

The increase in average balances accounted for a $748,000 increase in interest expense.

This was partially offset as the cost of interest-bearing deposits decreased 20 bps to 2.08% for the three months ended June 30, 2026 from 2.28% for the three months ended June 30, 2025 due to the Federal Reserve federal funds target rate decreases since September 2025.

The decrease in the cost of interest-bearing deposits accounted for a $529,000 decrease 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 March 31,

Three Months Ended June 30,

Balance Interest

22 unchanged sentences

Total Interest-Bearing Deposits 1,059,994 5,145 1.95 956,518 5,176 2.17

Brokered Deposits 84,053 795 3.79 49,990 545 4.37

Total Interest-Bearing Deposits 1,144,047 5,940 2.08 1,006,508 5,721 2.28

Short-Term Borrowings 7,089 70 3.96 9,143 108 4.74

32 unchanged sentences

The total column represents the sum of the prior columns.

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Three Months Ended June 30, 2026

Three Months Ended June 30, 2025

Increase (Decrease) Due to

17 unchanged sentences

Provision for Credit Losses.

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.

A provision for credit losses of $17,000 was recorded for the three months ended June 30, 2026.

The provision for credit losses on loans was $157,000 and was primarily due loan growth.

This was partially offset by a $140,000 reversal of provision for credit losses on unfunded commitments primarily due to a decrease in unfunded commitments.

This compared to a provision for credit losses of $8,000 recorded for the three months ended June 30, 2025 as the provision for credit losses on loans was a $136,000 recovery primarily due to a reduction of reserves required for individually assessed loans and changes in loan concentrations, partially offset by additional reserve required for overall loan growth and a change in qualitative factors relating to economic conditions, and the provision for credit losses on unfunded commitments was $144,000 due to an increase in unfunded commitments and an increase in funding rates.

Noninterest Income.

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 income increased $41,000, or 4.4%, to $972,000 for the three months ended June 30, 2026, compared to $931,000 for the three months ended June 30, 2025 primarily due to a $23,000 increase in service fees related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $19,000 increase in net gain on sale of loans.

Noninterest Expense.

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.

Noninterest expense increased $1.6 million, or 18.8%, to $10.4 million for the three months ended June 30, 2026 compared to $8.7 million for the three months ended June 30, 2025.

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.

Data processing expense increased $379,000 due to the implementation of enhanced treasury and commercial banking platforms in late 2025 and early 2026.

Pennsylvania shares tax increased $124,000 due to $179,000 of refunds received in 2025 on amended returns filed for prior years.

Legal and professional fees increased $81,000 due to the timing of internal audit services and higher legal fees associated with treasury services.

Contracted services increased $54,000 due to outsourced information security services.

Income Taxes.

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.

Income tax expense was $798,000 for the three months ended June 30, 2026 compared to $766,000 for the three months ended June 30, 2025.

This change was primarily driven by an increase in pre-tax income to $5.1 million for the three months ended June 30, 2026 compared to $4.7 million of income for the three months ended June 30, 2025.

Results of Operations for the Six Months Ended June 30, 2026 and 2025

Net income was $8.2 million for the six months ended June 30, 2026, an increase of $2.3 million compared to $5.9 million for the six months ended June 30, 2025.

Net Interest and Dividend Income.

Net interest and dividend income increased $4.6 million, or 19.1%, to $28.4 million for the six months ended June 30, 2026 compared to $23.9 million for the six months ended June 30, 2025.

Net interest margin (GAAP) increased to 3.75% for the six months ended June 30, 2026 compared to 3.40% for the six months ended June 30, 2025.

Net interest margin (FTE) (Non-GAAP) increased 38 bps to 3.80% for the six months ended June 30, 2026 compared to 3.42% the six months ended June 30, 2025.

Interest and Dividend Income

• Interest and dividend income increased $4.0 million, or 10.8%, to $40.6 million for the six months ended June 30, 2026 compared to $36.6 million for the six months ended June 30, 2025.

◦ Interest income on loans increased $2.1 million, or 7.0%, to $32.1 million during the six months ended June 30, 2026 compared to $30.0 million for the six months ended June 30, 2025.

The average balance of loans increased $65.7 million to $1.15 billion for the six months ended June 30, 2026 compared to $1.09 billion for the six months ended June 30, 2025 resulting in a $1.9 million increase in interest income on loans.

Additionally, the average yield on loans increased 5 bps to 5.64% for the six months ended June 30, 2026 compared to 5.59% for the six months ended June 30, 2025 resulting in a $272,000 increase in interest income on loans.

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

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

◦ Interest income on investment securities increased $1.6 million, or 28.1%, to $7.2 million during the six months ended June 30, 2026 compared to $5.6 million for the six months ended June 30, 2025 driven by a $24.0 million increase in average balances and a 87 bp increase in the average yield.

The increase in yield was primarily due to the third quarter 2025 balance sheet repositioning strategy and resulted in a $976,000 increase in interest income while the increase in the volume resulted from current year purchases and resulted in a $837,000 increase in interest income.

◦ Interest income on interest-earning deposits at other banks increased $257,000, to $1.0 million for the six months ended June 30, 2026 compared to $789,000 for the six months ended June 30, 2025 as average balances increased $24.5 million, partially offset as the average yield decreased 74 bps.

The volume increased due to deposit growth while the average yield decrease resulted from reductions in the federal funds rate since September 2025.

Interest Expense

• Interest expense decreased $605,000, or 4.7%, to $12.2 million for the six months ended June 30, 2026 compared to $12.8 million for the six months ended June 30, 2025.

◦ Interest expense on deposits decreased $661,000, or 5.6%, to $11.2 million for the six months ended June 30, 2026 compared to $11.8 million for the six months ended June 30, 2025.

Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 31 bp decrease in the average cost of interest-bearing deposits compared to the six months ended June 30, 2025.

This accounted for a $1.6 million decrease in interest expense.

Partially offsetting this decrease, the average balance of interest-bearing deposits increased $88.7 million resulting in a $967,000 increase in interest expense.

◦ Interest expense on borrowed funds increased $56,000, or 6.1%, to $979,000 for the six months ended June 30, 2026 compared to $923,000 for the six months ended June 30, 2025.

The average balance of borrowed funds increased $7.4 million due to FHLB short-term advances utilized during the six months ended June 30, 2026.

The increase in the average balance accounted for a $151,000 increase in interest expense.

Partially offsetting this increase, the average cost of borrowed funds decreased 49 bps as $20.0 million of long-term borrowings matured in June 2025 and were replaced at current market rates.

The decrease in the cost accounted for a $95,000 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.

Six Months Ended June 30,

Balance Interest

Dividends Yield/

Balance Interest

Dividends Yield/

(Dollars in thousands) (Unaudited)

Interest-Earning Assets:

Loans, Net (2)

$ 1,152,627 $ 32,259 5.64 % $ 1,086,955 $ 30,132 5.59 %

Debt Securities

Taxable 268,567 6,351 4.73 281,447 5,637 4.01

Tax Exempt 36,881 1,099 5.96 — — —

Equity Securities 1,000 14 2.80 1,832 37 4.04

Interest-Earning Deposits at Banks 63,746 1,046 3.28 39,278 789 4.02

Other Interest-Earning Assets 3,574 146 8.24 3,484 123 7.12

Total Interest-Earning Assets 1,526,395 40,915 5.41 1,412,996 36,718 5.24

Noninterest-Earning Assets 83,011 65,758

Total Assets $ 1,609,406 $ 1,478,754

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits $ 412,318 3,970 1.94 % $ 326,322 3,203 1.98 %

Savings Accounts 169,924 91 0.11 173,193 83 0.10

Money Market Accounts 215,155 2,304 2.16 234,436 3,473 2.99

Time Deposits 211,942 3,171 3.02 228,651 4,127 3.64

Total Interest-Bearing Deposits 1,009,339 9,536 1.91 962,602 10,886 2.28

Brokered Deposits 85,586 1,636 3.85 43,578 947 4.38

Total Interest-Bearing Deposits 1,094,925 11,172 2.06 1,006,180 11,833 2.37

Short-Term Borrowings 13,008 258 4.00 5,584 131 4.73

Other Borrowings 34,769 721 4.18 34,728 792 4.60

Total Interest-Bearing Liabilities 1,142,702 12,151 2.14 1,046,492 12,756 2.46

Noninterest-Bearing Demand Deposits 292,753 268,140

Total Funding and Cost of Funds 1,435,455 1.71 1,314,632 1.96

Other Liabilities 14,121 16,673

Total Liabilities 1,449,576 1,331,305

Stockholders' Equity 159,830 147,449

Total Liabilities and Stockholders' Equity $ 1,609,406 $ 1,478,754

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

$ 28,764 $ 23,962

Net Interest-Earning Assets (4)

$ 383,693 $ 366,504

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

3.27 % 2.78 %

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 9.93 9.97

Average Interest-Earning Assets to Average Interest-Bearing Liabilities 133.58 135.02

(1) Annualized based on six 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.

Six Months Ended June 30, 2026

Six Months Ended June 30, 2025

Increase (Decrease) Due to

Volume Rate Total

(Dollars in thousands) (Unaudited)

Interest and Dividend Income:

Loans, net $ 1,855 $ 272 $ 2,127

Debt Securities:

Taxable (262) 976 714

Exempt From Federal Tax 1,099 — 1,099

Equity Securities (14) (9) (23)

Cash at Other Banks 422 (165) 257

Other Interest-Earning Assets 4 19 23

Total Interest-Earning Assets 3,104 1,093 4,197

Interest Expense:

Deposits 967 (1,628) (661)

Short-Term Borrowings 150 (23) 127

Other Borrowings 1 (72) (71)

Total Interest-Bearing Liabilities 1,118 (1,723) (605)

Change in Net Interest and Dividend Income $ 1,986 $ 2,816 $ 4,802

Provision for Credit Losses.

The net provision for credit losses was $259,000 for the six months ended June 30, 2026.

The provision for credit losses for loans was $385,000, partially offset by a recovery for credit losses for unfunded commitments of $126,000.

The increase for provision for credit losses for loans was due to loan growth and individually analyzed loans that required specific provision, partially offset by changes in loan concentrations and a decrease in qualitative factors.

The recovery for unfunded commitments was due to a decline in the unfunded commitment balance and calculated loss rates.

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

The prior period recovery for credit losses was comprised of a recovery of $68,000 for loans partially offset by a provision of $36,000 for unfunded commitments.

Noninterest Income.

Noninterest income increased $218,000, or 12.7%, to $1.9 million for the six months ended June 30, 2026, compared to $1.7 million for the six months ended June 30, 2025.

This increase was mainly due to a $115,000 increase in service fees related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $59,000 decrease in net loss on securities.

Net loss on securities was $10,000 for the six months ended June 30, 2026, compared to $69,000 for the six months ended June 30, 2025 due to changes in the market value of equity securities.

Noninterest Expense.

Noninterest expense increased $1.9 million, or 10.0%, to $20.4 million for the six months ended June 30, 2026 compared to $18.5 million for the six months ended June 30, 2025.

Salaries and benefits increased $993,000 primarily due to revenue producing treasury and commercial banking personnel additions, merit increases and higher benefit compensation costs, partially offset due to $1.0 million of one-time non-recurring expense recognized for the six months ended June 30, 2025 associated with the previously announced reduction in force.

Additionally, data processing expense increased $523,000 due to the implementation of enhanced treasury and commercial banking platforms in late 2025 and early 2026, Pennsylvania shares tax expense increased $154,000 due to $242,000 of refunds received during the six months ended June 30, 2025 as a result of amended prior year returns and contracted services increased $149,000 due to costs associated with outsourced information technology services, treasury consulting and robotic process automation projects.

Income Taxes.

Income tax expense increased $319,000, or 26.7%, to $1.5 million for the six months ended June 30, 2026 compared to $1.2 million for the six months ended June 30, 2025.

The change between the periods was primarily driven by an increase in pre-tax income to $9.7 million for the six months ended June 30, 2026 compared to $7.1 million for the six months ended June 30, 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 March 31, 2026 and December 31, 2025.

Refer to Note 7 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of June 30, 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 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 Company believes that it had sufficient liquidity at June 30, 2026 to satisfy its short- and long-term liquidity needs.

The Company’s most liquid assets are cash and due from banks, which totaled $76.1 million at June 30, 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 $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.

Unpledged securities, which provide an additional source of liquidity, totaled $145.1 million at June 30, 2026.

In addition, at June 30, 2026, the Company had the ability to borrow up to $541.6 million from the FHLB of Pittsburgh, of which $454.6 million was available.

The Company also has the ability to borrow up to $62.7 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 $55.0 million;

currently these credit arrangements remain unused.

At June 30, 2026, $213.5 million, or 91.4% 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.

2 unchanged sentences

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

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;

At June 30, 2026, the Bank's current deposit portfolio is 55.1% insured by the FDIC, and with additional coverage of 19.7% from the Bank's investment securities;

of the total deposits held at the Bank only 25.2% are uninsured.

7 unchanged sentences

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

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

At June 30, 2026, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $6.2 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.

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

At June 30, 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.

March 31, 2026 December 31, 2025

June 30, 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 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.

At June 30, 2026, the Company's loans totaled $1.18 billion, representing a $17.5 million, or 1.5%, increase compared to $1.16 billion at December 31, 2025.

The table below provides the composition of the loan portfolio:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(Dollars in Thousands)

11 unchanged sentences

Commercial lending by asset class, specific limits for Commercial Real Estate ("CRE") project types, loans secured by residential real estate, large dollar exposures and designated high risk loan categories represent examples of specifically tracked components of our concentration management process.

There are no identified concentrations that exceed the assigned exposure limits.

As of June 30, 2026, there were no identified concentrations that exceed the assigned exposure limits.

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 $550.0 million at March 31, 2026, a decrease of $2.2 million, or 0.4%, compared to December 31, 2025.

The Company's CRE portfolio totaled $571.8 million at June 30, 2026, an increase of $19.6 million, or 3.5%, 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 March 31, 2026:

The tables below provides further detail of the composition of the CRE portfolio as of June 30, 2026:

CRE Nonowner Occupied Loans

6 unchanged sentences

Manufacturing 31,036 6.93 2,821 45.94

Medical Facilities 17,844 4.07 1,190 55.10

Medical 17,585 3.93 1,172 54.47

Hotels 15,231 3.40 1,904 61.76

Vacant Land 3,203 0.73 3,203 41.03

Oil and Gas 4,629 1.03 1,543 57.09

Senior Housing 3,184 0.71 3,184 40.78

8 unchanged sentences

Office Space 9,286 7.50 489 72.43

Medical Facilities 8,385 7.51 699 73.90

Medical 8,285 6.69 753 73.18

Senior Housing 5,788 4.67 1,930 18.66

Oil and Gas 5,108 4.12 638 66.86

Manufacturing 3,302 2.67 330 57.20

Vacant Land 5,815 5.21 1,938 26.80

Other 41,628 33.59 534 56.49

2 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