COMMUNITY BANCORP /VT 10-Q

ITEM 1. Financial Statements (Unaudited) The following are the unaudited consolidated financial statements for the Company. Community Bancorp. and Subsidiary September 30, December 31, Consolidated Balance Sheets 2025 2024 (Unaudited) Assets Cash and due from banks $ 11,813,247 $ 9,875,427 Federal funds sold and overnight deposits 49,052,312 101,064,775 Total cash and cash equivalents 60,865,559 110,940,202 Securities available-for-sale (amortized cost $ 165,580,624 and $ 179,668,079 at 9/30/25 and 12/31/24, respectively) 152,248,319 159,697,420 Restricted equity securities, at cost 3,256,550 2,629,350 Loans held-for-sale 1,269,208 0 Loans 961,882,509 927,940,805 Allowance for credit losses ( 10,769,269 ) ( 9,810,212 ) Deferred net loan costs 738,390 648,695 Net loans 951,851,630 918,779,288 Bank premises and equipment, net 12,391,426 12,072,985 Accrued interest receivable 4,459,788 4,472,474 Bank owned life insurance 5,378,643 5,318,354 Goodwill 11,574,269 11,574,269 Other real estate owned 319,019 0 Other assets 22,556,932 23,445,787 Total assets $ 1,226,171,343 $ 1,248,930,129 Liabilities and Shareholders' Equity Liabilities Deposits: Demand, non-interest bearing $ 205,211,509 $ 197,697,470 Interest-bearing transaction accounts 284,204,977 304,212,085 Money market funds 155,502,114 169,533,067 Savings 143,737,440 142,925,828 Time deposits, $ 250,000 and over 43,064,201 42,637,716 Other time deposits 176,579,922 144,638,592 Total deposits 1,008,300,163 1,001,644,758 Repurchase agreements 34,178,676 48,943,996 Borrowed funds 46,275,022 72,600,000 Junior subordinated debentures 12,887,000 12,887,000 Accrued interest and other liabilities 12,650,140 14,806,170 Total liabilities 1,114,291,001 1,150,881,924 Shareholders' Equity Preferred stock, 1,000,000 shares authorized, 15 shares issued and outstanding at 09/30/25 and 12/31/24 ($ 100,000 liquidation value, per share) 1,500,000 1,500,000 Common stock - $ 2.50 par value; 15,000,000 shares authorized, 5,867,045 shares issued at 09/30/25 and 5,809,035 shares issued at 12/31/24 14,667,613 14,522,588 Additional paid-in capital 39,725,620 38,801,755 Retained earnings 69,843,878 61,623,460 Accumulated other comprehensive loss ( 10,532,522 ) ( 15,776,821 ) Less: treasury stock, at cost; 247,554 shares at 09/30/25 and 210,101 shares at 12/31/24 ( 3,324,247 ) ( 2,622,777 ) Total shareholders' equity 111,880,342 98,048,205 Total liabilities and shareholders' equity $ 1,226,171,343 $ 1,248,930,129 Book value per common share outstanding $ 19.64 $ 17.24 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 3 Table of Contents Community Bancorp. and Subsidiary Three Months Ended September 30, Consolidated Statements of Income 2025 2024 (Unaudited) Interest income Interest and fees on loans $ 14,201,931 $ 12,739,224 Interest on taxable debt securities 912,616 881,822 Interest on tax-exempt debt securities 80,411 80,411 Dividends 68,400 64,051 Interest on federal funds sold and overnight deposits 153,496 201,959 Total interest income 15,416,854 13,967,467 Interest expense Interest on deposits 3,765,915 3,676,889 Interest on borrowed funds 663,155 1,159,214 Interest on repurchase agreements 234,756 194,151 Interest on junior subordinated debentures 242,038 275,290 Total interest expense 4,905,864 5,305,544 Net interest income 10,510,990 8,661,923 Credit loss expense 258,753 460,745 Net interest income after credit loss expense 10,252,237 8,201,178 Non-interest income Service fees 1,002,753 972,338 Income from sold loans 102,389 96,294 Other income from loans 260,459 381,170 Other income 729,453 556,872 Total non-interest income 2,095,054 2,006,674 Non-interest expense Salaries and wages 2,432,661 2,358,000 Employee benefits 959,918 986,804 Occupancy expenses, net 748,354 683,980 Other expenses 2,452,565 2,479,874 Total non-interest expense 6,593,498 6,508,658 Income before income taxes 5,753,793 3,699,194 Income tax expense 1,007,006 584,943 Net income $ 4,746,787 $ 3,114,251 Earnings per common share $ 0.84 $ 0.55 Weighted average number of common shares used in computing earnings per share 5,607,086 5,563,774 Dividends declared per common share $ 0.25 $ 0.24 The accompanying notes are an integral part of these unaudited interim consolidated financial statements . 4 Table of Contents Community Bancorp. and Subsidiary Nine Months Ended September 30, Consolidated Statements of Income 2025 2024 (Unaudited) Interest income Interest and fees on loans $ 41,108,667 $ 36,484,552 Interest on taxable debt securities 2,719,893 2,786,379 Interest on tax-exempt debt securities 241,234 241,234 Dividends 174,886 169,706 Interest on federal funds sold and overnight deposits 547,302 342,343 Total interest income 44,791,982 40,024,214 Interest expense Interest on deposits 11,923,830 10,116,896 Interest on borrowed funds 1,478,729 3,379,454 Interest on repurchase agreements 818,772 570,913 Interest on junior subordinated debentures 726,796 836,089 Total interest expense 14,948,127 14,903,352 Net interest income 29,843,855 25,120,862 Credit loss expense 990,853 1,105,906 Net interest income after credit loss expense 28,853,002 24,014,956 Non-interest income Service fees 2,859,310 2,834,439 Income from sold loans 268,470 273,867 Other income from loans 862,385 913,994 Other income 1,742,209 1,390,698 Total non-interest income 5,732,374 5,412,998 Non-interest expense Salaries and wages 7,145,388 7,104,000 Employee benefits 3,034,163 2,840,194 Occupancy expenses, net 2,324,661 2,100,714 Other expenses 7,260,297 7,035,466 Total non-interest expense 19,764,509 19,080,374 Income before income taxes 14,820,867 10,347,580 Income tax expense 2,488,849 1,682,242 Net income $ 12,332,018 $ 8,665,338 Earnings per common share $ 2.18 $ 1.55 Weighted average number of common shares used in computing earnings per share 5,608,353 5,542,353 Dividends declared per common share $ 0.73 $ 0.70 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 5 Table of Contents Community Bancorp. and Subsidiary Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended September 30, 2025 2024 Net income $ 4,746,787 $ 3,114,251 Other comprehensive income Unrealized holding gain on securities AFS arising during the period 2,475,089 6,150,345 Tax effect ( 519,769 ) ( 1,291,573 ) Other comprehensive income, net of tax 1,955,320 4,858,772 Total comprehensive income $ 6,702,107 $ 7,973,023 Nine Months Ended September 30, 2025 2024 Net income $ 12,332,018 $ 8,665,338 Other comprehensive income, net of tax: Unrealized holding gain on securities AFS arising during the period 6,638,354 4,444,072 Tax effect ( 1,394,055 ) ( 933,258 ) Other comprehensive income, net of tax 5,244,299 3,510,814 Total comprehensive income $ 17,576,317 $ 12,176,152 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 6 Table of Contents Community Bancorp. and Subsidiary Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Nine Months Ended September 30, 2025 Additional Total Common Preferred paid-in Retained Treasury shareholders' Stock Stock capital earnings AOCI* stock equity January 1, 2025 $ 14,522,588 $ 1,500,000 $ 38,801,755 $ 61,623,460 $ ( 15,776,821 ) $ ( 2,622,777 ) $ 98,048,205 Issuance of common stock 53,085 310,454 363,539 Cash dividends declared Common stock ( 1,343,515 ) ( 1,343,515 ) Preferred stock ( 28,125 ) ( 28,125 ) Shares purchased through stock buyback plan ( 35,380 ) ( 35,380 ) Comprehensive income Net income 3,525,455 3,525,455 Other comprehensive income 2,374,851 2,374,851 March 31, 2025 $ 14,575,673 $ 1,500,000 $ 39,112,209 $ 63,777,275 $ ( 13,401,970 ) $ ( 2,658,157 ) $ 102,905,030 Issuance of common stock 46,397 305,745 352,142 Cash dividends declared Common stock ( 1,346,706 ) ( 1,346,706 ) Preferred stock ( 28,125 ) ( 28,125 ) Shares purchased through stock buyback plan ( 512,838 ) ( 512,838 ) Comprehensive income Net income 4,059,776 4,059,776 Other comprehensive income 914,128 914,128 June 30, 2025 $ 14,622,070 $ 1,500,000 $ 39,417,954 $ 66,462,220 $ ( 12,487,842 ) $ ( 3,170,995 ) $ 106,343,407 Issuance of common stock 45,543 307,666 353,209 Cash dividends declared Common stock ( 1,337,004 ) ( 1,337,004 ) Preferred stock ( 28,125 ) ( 28,125 ) Shares purchased through stock buyback plan ( 153,252 ) ( 153,252 ) Comprehensive income Net income 4,746,787 4,746,787 Other comprehensive income 1,955,320 1,955,320 September 30, 2025 $ 14,667,613 $ 1,500,000 $ 39,725,620 $ 69,843,878 $ ( 10,532,522 ) $ ( 3,324,247 ) $ 111,880,342 *Accumulated other comprehensive loss 7 Table of Contents Community Bancorp. and Subsidiary Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Nine Months Ended September 30, 2024 Additional Total Common Preferred paid-in Retained Treasury shareholders' Stock Stock capital earnings AOCI* stock equity January 1, 2024 $ 14,310,378 $ 1,500,000 $ 37,574,578 $ 54,198,230 $ ( 15,931,595 ) $ ( 2,622,777 ) $ 89,028,814 Issuance of common stock 52,890 307,561 360,451 Cash dividends declared Common stock ( 1,268,320 ) ( 1,268,320 ) Preferred stock ( 31,875 ) ( 31,875 ) Comprehensive income Net income 2,822,901 2,822,901 Other comprehensive loss ( 1,508,008 ) ( 1,508,008 ) March 31, 2024 $ 14,363,268 $ 1,500,000 $ 37,882,139 $ 55,720,936 $ ( 17,439,603 ) $ ( 2,622,777 ) $ 89,403,963 Issuance of common stock 50,000 291,418 341,418 Cash dividends declared Common stock ( 1,273,008 ) ( 1,273,008 ) Preferred stock ( 31,875 ) ( 31,875 ) Comprehensive income Net income 2,728,186 2,728,186 Other comprehensive income 160,050 160,050 June 30, 2024 $ 14,413,268 $ 1,500,000 $ 38,173,557 $ 57,144,239 $ ( 17,279,553 ) $ ( 2,622,777 ) $ 91,328,734 Issuance of common stock 58,207 298,396 356,603 Cash dividends declared Common stock ( 1,278,030 ) ( 1,278,030 ) Preferred stock ( 31,875 ) ( 31,875 ) Comprehensive income Net income 3,114,251 3,114,251 Other comprehensive income 4,858,772 4,858,772 September 30, 2024 $ 14,471,475 $ 1,500,000 $ 38,471,953 $ 58,948,585 $ ( 12,420,781 ) $ ( 2,622,777 ) $ 98,348,455 *Accumulated other comprehensive loss The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 8 Table of Contents Community Bancorp. and Subsidiary Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2025 2024 Cash Flows from Operating Activities: Net income $ 12,332,018 $ 8,665,338 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, bank premises and equipment 782,239 780,718 Credit loss expense 990,853 1,105,906 Deferred income tax (benefit) provision ( 11,389 ) 352,399 Gain on sale of loans ( 80,495 ) ( 66,682 ) Loss (gain) on sale of bank premises and equipment 7,839 ( 13,981 ) Income from CFS Partners ( 1,388,678 ) ( 979,747 ) Amortization of bond premium, net 34,695 158,121 Proceeds from sales of loans held for sale 3,724,595 3,972,232 Originations of loans held for sale ( 4,913,308 ) ( 3,905,550 ) Increase (decrease) in taxes payable 158,634 ( 388,763 ) Decrease (increase) in interest receivable 12,686 ( 106,384 ) Decrease in mortgage servicing rights 65,997 66,093 Decrease in right-of-use assets 178,394 144,684 Increase (decrease) in operating lease liabilities 279,239 ( 18,220 ) Decrease (increase) in other assets 31,633 ( 19,409 ) Increase in cash surrender value of BOLI ( 60,289 ) ( 64,253 ) Amortization of limited partnerships 638,604 447,606 Change in net deferred loan fees and costs ( 89,695 ) ( 59,177 ) (Decrease) increase in interest payable ( 1,912,291 ) 1,355,993 Decrease in accrued expenses ( 305,597 ) ( 492,340 ) Decrease in other liabilities ( 118,187 ) ( 58,875 ) Net cash provided by operating activities 10,357,497 10,875,709 Cash Flows from Investing Activities: Investments - AFS Maturities, calls, pay downs and sales 29,024,533 24,514,443 Purchases ( 14,971,773 ) 0 Proceeds from redemption of restricted equity securities 2,547,700 4,152,400 Purchases of restricted equity securities ( 3,174,900 ) ( 5,301,300 ) Increase in loans, net ( 34,401,822 ) ( 69,016,918 ) Capital expenditures net of proceeds from sales of bank premises and equipment ( 1,206,710 ) ( 864,341 ) Recoveries of loans charged off 88,395 75,906 Net cash used in investing activities ( 22,094,577 ) ( 46,439,810 ) 9 Table of Contents 2025 2024 Cash Flows from Financing Activities: Net decrease in demand and interest-bearing transaction accounts ( 12,493,069 ) ( 393,264 ) Net decrease in money market and savings accounts ( 13,219,341 ) ( 17,654,364 ) Net increase in time deposits 32,367,815 50,659,935 Net decrease in repurchase agreements ( 14,765,320 ) ( 3,651,802 ) Net (decrease) increase in short-term borrowings ( 31,500,000 ) 9,000,000 Proceeds from long-term borrowings 5,175,022 30,000,000 Decrease in finance lease obligations ( 175,057 ) ( 169,659 ) Shares purchased through stock buyback program ( 701,470 ) 0 Dividends paid on preferred stock ( 84,375 ) ( 95,625 ) Dividends paid on common stock ( 2,941,768 ) ( 2,744,617 ) Net cash (used in) provided by financing activities ( 38,337,563 ) 64,950,604 Net (decrease) increase in cash and cash equivalents ( 50,074,643 ) 29,386,503 Cash and cash equivalents: Beginning 110,940,202 20,434,513 Ending $ 60,865,559 $ 49,821,016 Supplemental Schedule of Cash Paid During the Period: Interest $ 16,860,418 $ 13,547,359 Income taxes, net of refunds $ 1,703,000 $ 1,271,000 Supplemental Schedule of Noncash Investing and Financing Activities: Change in unrealized gain on securities AFS $ 6,638,354 $ 4,444,072 Loans transferred to OREO $ 319,019 $ 275,000 Additions to operating lease liabilities $ 510,199 $ 138,058 Investment in limited partnerships, not yet paid $ 4,356,000 $ 0 Common Shares Dividends Paid: Dividends declared $ 4,027,225 $ 3,819,358 Increase in dividends payable attributable to dividends declared ( 16,567 ) ( 16,269 ) Dividends reinvested ( 1,068,890 ) ( 1,058,472 ) Total dividends paid $ 2,941,768 $ 2,744,617 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 10 Table of Contents Notes to Consolidated Financial Statements Note 1. Basis of Presentation and Consolidation and Certain Definitions Basis of Presentation and Consolidation. The interim consolidated financial statements of Community Bancorp. and Subsidiary are unaudited. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments necessary for the fair presentation of the consolidated financial condition and results of operations of the Company and its subsidiary, Community National Bank (the Bank), contained herein have been made. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024, contained in the Company's Annual Report on Form 10-K. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for any other interim period or for the full annual period ending December 31, 2025. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide smaller reporting company scaled disclosures where management deems it appropriate, and to provide its audited consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two year, rather than a three year, period is considered a “smaller reporting company” under the disclosure rules of the SEC, as amended in 2018. In addition to the definitions provided elsewhere in this quarterly report, the definitions, acronyms and abbreviations identified below are used throughout this report, including in Part I. “Financial Information” and Part II. “Other Information” and are intended to aid the reader and provide a reference page when reviewing this report. ABS: Asset backed security FASB: Financial Accounting Standards Board ACL: Allowance for Credit Losses FDIC: Federal Deposit Insurance Corporation AFS: Available-for-sale FDICIA: Federal Deposit Insurance Corporation Agency MBS: MBS issued by a US government agency Improvement Act of 1991 or GSE FHLBB: Federal Home Loan Bank of Boston ALCO: Asset Liability Committee FHLMC: Federal Home Loan Mortgage Corporation AOCI: Accumulated other comprehensive income FOMC: Federal Open Market Committee ASC: Accounting Standards Codification FRB: Federal Reserve Board ASU: Accounting Standards Update FRBB: Federal Reserve Bank of Boston Bancorp: Community Bancorp. GAAP: Generally Accepted Accounting Principles Bank: Community National Bank in the United States BHG: Bankers Healthcare Group GSE: Government sponsored enterprise BIC: Borrower-in-Custody HTM: Held-to-maturity Board: Board of Directors ICS: Insured Cash Sweeps of the IntraFi Network BOLI: Bank owned life insurance IRS: Internal Revenue Service bp or bps: Basis point(s) JNE: Jobs for New England BTFP: Bank Term Funding Program Jr: Junior CDARS: Certificate of Deposit Accounts Registry MBS: Mortgage-backed security Service of the IntraFi Network MSRs: Mortgage servicing rights CDs: Certificates of deposit NII: Net interest income CECL: Current Expected Credit Loss OAS: Other amortizing security CFSG: Community Financial Services Group, LLC OBS: Off-balance sheet CFS Partners: Community Financial Services Partners, OCI: Other comprehensive income (loss) LLC OREO: Other real estate owned CME: CME Group Benchmark Administration Ltd. OTTI: Other-than-temporary impairment CMO: Collateralized Mortgage Obligations PMI: Private mortgage insurance Company: Community Bancorp. and Subsidiary PPP: Paycheck Protection Program CRE: Commercial Real Estate RD: USDA Rural Development DCF: Discounted cash flow SBA: U.S. Small Business Administration DDA or DDAs: Demand Deposit Account(s) SEC: U.S. Securities and Exchange Commission DTC: Depository Trust Company SOFR: Secured Overnight Financing Rate DRIP: Dividend Reinvestment Plan USDA: U.S. Department of Agriculture Exchange Act: Securities Exchange Act of 1934 VA: U.S. Veterans Administration 11 Table of Contents Note 2. Recent Accounting Developments In December 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Public business entities must disclose the amount of employee compensation, depreciation, and intangible asset amortization. A qualitative description of the amounts remaining in relevant expense captions must be disclosed if not disaggregated quantitatively. The ASU is effective for annual periods beginning after December 15, 2026. Management is reviewing the ASU but does not expect that it will have a material effect on the Company’s consolidated financial statements. Note 3. Earnings per Common Share Earnings per common share amounts are computed based on the weighted average number of shares of common stock issued during the period (retroactively adjusted for stock splits and stock dividends, if any), including Dividend Reinvestment Plan shares issuable upon reinvestment of dividends declared, and reduced for shares held in treasury. The following tables illustrate the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock: Three Months Ended September 30, 2025 2024 Net income, as reported $ 4,746,787 $ 3,114,251 Less: dividends to preferred shareholders 28,125 31,875 Net income available to common shareholders $ 4,718,662 $ 3,082,376 Weighted average number of common shares used in calculating earnings per share 5,607,086 5,563,774 Earnings per common share $ 0.84 $ 0.55 Nine Months Ended September 30, 2025 2024 Net income, as reported $ 12,332,018 $ 8,665,338 Less: dividends to preferred shareholders 84,375 95,625 Net income available to common shareholders $ 12,247,643 $ 8,569,713 Weighted average number of common shares used in calculating earnings per share 5,608,353 5,542,353 Earnings per common share $ 2.18 $ 1.55 Note 4. Investment Securities Debt securities AFS as of the balance sheet dates consisted of the following: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2025 U.S. GSE debt securities $ 12,000,000 $ 0 $ 648,053 $ 11,351,947 U.S. Government securities 13,532,112 0 289,382 13,242,730 Taxable Municipal securities 300,000 0 37,739 262,261 Tax-exempt Municipal securities 10,727,737 43,899 633,269 10,138,367 Agency MBS 124,624,532 430,579 12,098,002 112,957,109 ABS and OAS 1,745,579 0 71,883 1,673,696 CMO 2,154,664 0 17,115 2,137,549 Other investments 496,000 0 11,340 484,660 Total $ 165,580,624 $ 474,478 $ 13,806,783 $ 152,248,319 12 Table of Contents Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2024 U.S. GSE debt securities $ 12,000,000 $ 0 $ 1,036,485 $ 10,963,515 U.S. Government securities 27,579,709 0 824,566 26,755,143 Taxable Municipal securities 300,000 0 52,255 247,745 Tax-exempt Municipal securities 10,772,633 79,789 614,169 10,238,253 Agency MBS 119,522,274 130,900 17,396,937 102,256,237 ABS and OAS 2,098,461 0 140,696 1,957,765 CMO 6,899,002 0 93,467 6,805,535 Other investments 496,000 0 22,773 473,227 Total $ 179,668,079 $ 210,689 $ 20,181,348 $ 159,697,420 The Company had investments in Agency MBS exceeding 10 % of shareholders’ equity with a book value of $ 124.6 million and $ 119.5 million, respectively, and a fair value of $ 113.0 million and $ 102.3 million, respectively, as of September 30, 2025 and December 31, 2024. Investment securities pledged as collateral for repurchase agreements consisted of certain U.S. GSE debt securities, Agency MBS, ABS and OAS, and CMO. These repurchase agreements mature daily. The aggregate amortized cost and fair value of these pledged investments as of the balance sheet dates were as follows: Amortized Fair Cost Value September 30, 2025 $ 60,863,240 $ 54,368,265 December 31, 2024 61,463,021 52,603,659 Investment securities pledged as collateral for BTFP borrowings as of December 31, 2024, consisted of U.S. Government securities and U.S. GSE debt securities. The aggregate amortized cost and fair value of these pledged investments were as follows: Amortized Fair Cost Value December 31, 2024 $ 58,548,143 $ 52,695,867 There were no investment securities pledged as collateral for BTFP borrowings as of September 30, 2025, all of which matured and were repaid during the first quarter of 2025. There were no sales of debt securities during the first nine months of 2025 or 2024. The scheduled maturities of debt securities as of the balance sheet dates were as follows: Amortized Fair Cost Value September 30, 2025 Due in one year or less $ 12,924,270 $ 12,720,782 Due from one to five years 15,095,354 14,439,331 Due from five to ten years 2,345,326 2,123,425 Due after ten years 10,591,142 10,007,672 Agency MBS 124,624,532 112,957,109 Total $ 165,580,624 $ 152,248,319 13 Table of Contents Amortized Fair Cost Value December 31, 2024 Due in one year or less $ 20,265,651 $ 20,002,880 Due from one to five years 26,774,356 25,165,820 Due from five to ten years 1,300,000 1,070,473 Due after ten years 11,805,798 11,202,010 Agency MBS 119,522,274 102,256,237 Total $ 179,668,079 $ 159,697,420 Agency MBS are not due at a single maturity date and have not been allocated to maturity groupings for purposes of the maturity table. Debt securities with unrealized losses as of the balance sheet dates are presented in the table below. Less than 12 months 12 months or more Totals Fair Unrealized Fair Unrealized Number of Fair Unrealized Value Loss Value Loss Securities Value Loss September 30, 2025 U.S. GSE debt securities $ 0 $ 0 $ 11,351,947 $ 648,053 11 $ 11,351,947 $ 648,053 U.S. Government securities 0 0 13,242,730 289,382 25 13,242,730 289,382 Taxable Municipal securities 0 0 262,261 37,739 1 262,261 37,739 Tax-exempt Municipal securities 1,976,454 46,464 4,948,621 586,805 15 6,925,075 633,269 Agency MBS 4,565 13 88,448,418 12,097,989 115 88,452,983 12,098,002 ABS and OAS 0 0 1,673,696 71,883 4 1,673,696 71,883 CMO 0 0 2,137,549 17,115 4 2,137,549 17,115 Other investments 0 0 484,660 11,340 2 484,660 11,340 Total $ 1,981,019 $ 46,477 $ 122,549,882 $ 13,760,306 177 $ 124,530,901 $ 13,806,783 Less than 12 months 12 months or more Totals Fair Unrealized Fair Unrealized Number of Fair Unrealized Value Loss Value Loss Securities Value Loss December 31, 2024 U.S. GSE debt securities $ 0 $ 0 $ 10,963,515 $ 1,036,485 11 $ 10,963,515 $ 1,036,485 U.S. Government securities 0 0 26,755,143 824,566 41 26,755,143 824,566 Taxable Municipal securities 0 0 247,745 52,255 1 247,745 52,255 Tax-exempt Municipal securities 3,043,981 37,705 3,945,428 576,464 15 6,989,409 614,169 Agency MBS 2,480,313 27,200 91,208,171 17,369,737 118 93,688,484 17,396,937 ABS and OAS 0 0 1,957,765 140,696 4 1,957,765 140,696 CMO 0 0 6,805,535 93,467 7 6,805,535 93,467 Other investments 0 0 473,227 22,773 2 473,227 22,773 Total $ 5,524,294 $ 64,905 $ 142,356,529 $ 20,116,443 199 $ 147,880,823 $ 20,181,348 As of September 30, 2025 and December 31, 2024, the Company did not have the intent to sell, nor was it more likely than not that we would be required to sell any of the debt securities AFS in an unrealized loss position as of such dates prior to recovery. Management determined that no individual debt securities in an unrealized loss position represented credit losses that would require an allowance for credit losses, and that the unrealized losses as of the balance sheet dates were primarily attributed to increases in market interest rates since these securities were purchased under other market conditions. Accordingly, there was no ACL on AFS debt securities as of September 30, 2025, or December 31, 2024. Accrued interest receivable on AFS debt securities which totaled $ 436,867 and $ 509,429 on September 30, 2025, and December 31, 2024, respectively, was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses. 14 Table of Contents Note 5. Loans, Allowance for Credit Losses, Credit Quality and Off-Balance Sheet Credit Exposures The composition of net loans as of the balance sheet dates was as follows: September 30, 2025 December 31, 2024 Commercial & industrial $ 124,174,895 12.91 % $ 124,055,652 13.37 % Purchased (1) 10,769,907 1.12 % 7,808,877 0.84 % Commercial real estate 481,332,182 50.04 % 472,152,857 50.88 % Municipal 70,090,106 7.29 % 67,087,399 7.23 % Residential real estate - 1st lien 229,730,996 23.88 % 218,090,893 23.50 % Residential real estate - Jr lien 42,769,310 4.45 % 35,691,181 3.85 % Consumer 3,015,113 0.31 % 3,053,946 0.33 % Total loans 961,882,509 100.00 % 927,940,805 100.00 % ACL ( 10,769,269 ) ( 9,810,212 ) Deferred net loan costs 738,390 648,695 Net loans $ 951,851,630 $ 918,779,288 (1) As of September 30, 2025, purchased loans consisted of $ 3.2 million in commercial loans and $ 7.6 million in consumer loans, compared to $ 4.0 million and $ 3.8 million, respectively, as of December 31, 2024. The Company purchased a block of consumer loans totaling $ 4.9 million during the quarter ended June 30, 2025, which is reflected in the September 30, 2025 Purchased loan total in the table above and the related consumer loan total in the footnote. Accrued interest receivable on loans totaled $ 3.9 million and $ 3.8 million as of September 30, 2025, and December 31, 2024, respectively, and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses. Credit loss expense Three Months Ended September 30, 2025 2024 Credit loss expense - loans $ 198,264 $ 406,955 Credit loss expense - OBS credit exposure 60,489 53,790 Credit loss expense $ 258,753 $ 460,745 Nine Months Ended September 30, 2025 2024 Credit loss expense - loans $ 1,011,761 $ 1,076,676 Credit (reversal) loss expense - OBS credit exposure ( 20,908 ) 29,230 Credit loss expense $ 990,853 $ 1,105,906 15 Table of Contents The following tables present the activity in the ACL on loans for the periods presented. For the three months ended September 30, 2025 Balance Credit Loss Balance June 30, Expense September 30, 2025 Charge-offs Recoveries (Reversal) 2025 Commercial & Industrial $ 697,125 $ ( 7,645 ) $ 36,142 $ ( 73,813 ) $ 651,809 Purchased 32,580 0 0 416 32,996 Commercial Real Estate 6,760,034 0 0 23,032 6,783,066 Municipal 106,028 0 0 69,197 175,225 Residential Real Estate - 1st Lien 2,602,099 ( 13,490 ) 2,966 42,720 2,634,295 Residential Real Estate - Jr Lien 326,582 0 0 140,527 467,109 Consumer 25,083 ( 8,912 ) 12,413 ( 3,815 ) 24,769 Totals $ 10,549,531 $ ( 30,047 ) $ 51,521 $ 198,264 $ 10,769,269 For the nine months ended September 30, 2025 Balance Credit Loss Balance December 31, Expense September 30, 2024 Charge-offs Recoveries (Reversal) 2025 Commercial & Industrial $ 727,488 $ ( 46,517 ) $ 51,911 $ ( 81,073 ) $ 651,809 Purchased 22,415 0 0 10,581 32,996 Commercial Real Estate 6,487,700 0 0 295,366 6,783,066 Municipal 167,719 0 0 7,506 175,225 Residential Real Estate - 1st Lien 2,087,034 ( 13,757 ) 3,451 557,567 2,634,295 Residential Real Estate - Jr Lien 291,239 0 0 175,870 467,109 Consumer 26,617 ( 80,825 ) 33,033 45,944 24,769 Totals $ 9,810,212 $ ( 141,099 ) $ 88,395 $ 1,011,761 $ 10,769,269 For the year ended December 31, 2024 Balance Credit Loss Balance December 31, Expense December 31, 2023 Charge-offs Recoveries (Reversal) 2024 Commercial & Industrial $ 1,100,688 $ ( 1,263,015 ) $ 163,743 $ 726,072 $ 727,488 Purchased 37,065 0 0 ( 14,650 ) 22,415 Commercial Real Estate 5,522,082 ( 126,393 ) 13,718 1,078,293 6,487,700 Municipal 136,167 0 0 31,552 167,719 Residential Real Estate - 1st Lien 2,590,926 0 1,386 ( 505,278 ) 2,087,034 Residential Real Estate - Jr Lien 431,007 0 15,538 ( 155,306 ) 291,239 Consumer 24,790 ( 92,266 ) 19,169 74,924 26,617 Totals $ 9,842,725 $ ( 1,481,674 ) $ 213,554 $ 1,235,607 $ 9,810,212 16 Table of Contents For the three months ended September 30, 2024 Balance Credit Loss Balance June 30, Expense September 30, 2024 Charge-offs Recoveries (Reversal) 2024 Commercial & Industrial $ 1,087,079 $ ( 1,097,922 ) $ 1,731 $ 1,013,020 $ 1,003,908 Purchased 32,061 0 0 ( 6,444 ) 25,617 Commercial Real Estate 5,986,039 ( 81,000 ) 0 ( 339,428 ) 5,565,611 Municipal 85,253 0 0 78,505 163,758 Residential Real Estate - 1st Lien 2,694,655 0 0 ( 295,978 ) 2,398,677 Residential Real Estate - Jr Lien 425,623 0 13,122 ( 77,893 ) 360,852 Consumer 25,005 ( 45,512 ) 7,363 35,173 22,029 Totals $ 10,335,715 $ ( 1,224,434 ) $ 22,216 $ 406,955 $ 9,540,452 For the nine months ended September 30, 2024 Balance Credit Loss Balance December 31, Expense September 30, 2023 Charge-offs Recoveries (Reversal) 2024 Commercial & Industrial $ 1,100,688 $ ( 1,249,441 ) $ 45,800 $ 1,106,861 $ 1,003,908 Purchased 37,065 0 0 ( 11,448 ) 25,617 Commercial Real Estate 5,522,082 ( 126,393 ) 0 169,922 5,565,611 Municipal 136,167 0 0 27,591 163,758 Residential Real Estate - 1st Lien 2,590,926 0 0 ( 192,249 ) 2,398,677 Residential Real Estate - Jr Lien 431,007 0 15,537 ( 85,692 ) 360,852 Consumer 24,790 ( 79,021 ) 14,569 61,691 22,029 Totals $ 9,842,725 $ ( 1,454,855 ) $ 75,906 $ 1,076,676 $ 9,540,452 Credit Quality Grouping In developing the ACL, management uses credit quality groupings to help evaluate trends in credit quality. The Company groups credit risk into Groups A, B and C. The manner the Company utilizes to assign risk grouping is driven by loan purpose. Commercial purpose loans are individually risk graded while the retail portion of the portfolio is generally grouped by delinquency pool. Group A loans - Pass – are loans that are expected to perform as agreed under their respective terms. Such loans carry a normal level of risk that does not require management attention beyond that warranted by the loan or loan relationship characteristics, such as loan size or relationship size. Group A loans include commercial purpose loans that are individually risk rated and retail loans that are rated by pool. Group A retail loans include performing consumer and residential real estate loans. Residential real estate loans are loans to individuals secured by 1-4 family homes, including first mortgages, home equity and home improvement loans. Loan balances fully secured by deposit accounts or that are fully guaranteed by the federal government are considered acceptable risk. Group B loans – Special Mention - are loans that require greater attention than the acceptable risk loans in Group A. Characteristics of such loans may include, but are not limited to, borrowers that are experiencing negative operating trends such as reduced sales or margins, borrowers that have exposure to adverse market conditions such as increased competition or regulatory burden, or borrowers that have had unexpected or adverse changes in management. These loans have a greater likelihood of migrating to an unacceptable risk level if these characteristics are left unchecked. Group B is limited to commercial purpose loans that are individually risk rated. Group C loans – Substandard/Doubtful – are loans that have distinct shortcomings that require a greater degree of management attention. Examples of these shortcomings include a borrower's inadequate capacity to service debt, poor operating performance, or insolvency. These loans are more likely to result in repayment through collateral liquidation. Group C loans range from those that are likely to sustain some loss if the shortcomings are not corrected, to those for which loss is imminent and non-accrual treatment is warranted. Group C loans include individually rated commercial purpose loans and retail loans adversely rated in accordance with the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification Policy. Group C retail loans include 1-4 family residential real estate loans and home equity loans past due 90 days or more with loan-to-value ratios greater than 60%, home equity loans 90 days or more past due where the Bank does not hold first mortgage, irrespective of loan-to-value, loans in bankruptcy where repayment is likely but not yet established, and lastly consumer loans that are 90 days or more past due. Commercial purpose loan ratings are assigned by the commercial account officer; for larger and more complex commercial loans, the credit rating is a collaborative assignment by the lender and the credit analyst. The credit risk rating is based on the borrower's expected performance, i.e., the likelihood that the borrower will be able to service its obligations in accordance with the loan terms. Credit risk ratings are meant to measure risk versus simply record history. Assessment of expected future payment performance requires consideration of numerous factors. While past performance is part of the overall evaluation, expected performance is based on an analysis of the borrower's financial strength, and historical and projected factors such as size and financing alternatives, capacity and cash flow, balance sheet and income statement trends, the quality and timeliness of financial reporting, and the quality of the borrower’s management. Other factors influencing the credit risk rating to a lesser degree include collateral coverage and control, guarantor strength and commitment, documentation, structure and covenants and industry conditions. There are uncertainties inherent in this process. Credit risk ratings are dynamic and require updating whenever relevant information is received. Risk ratings are assessed on an ongoing basis and at various points, including at delinquency or at the time of other adverse events. For larger, more complex or adversely rated loans, risk ratings are also assessed at the time of annual or periodic review. Lenders are required to make immediate disclosure to the Senior Lender of any known increase in loan risk, even if considered temporary in nature. 17 Table of Contents The risk ratings within the loan portfolio by loan segment and origination year, were as follows: As of September 30, 2025 Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted 2025 2024 2023 2022 2021 Prior Cost Basis to Term Total (Dollars in Thousands) Commercial & Industrial: Pass $ 7,193 $ 19,334 $ 10,859 $ 12,390 $ 6,019 $ 5,445 $ 53,314 $ 0 $ 114,554 Special mention 0 0 0 81 107 0 1,006 0 1,194 Substandard/Doubtful 0 0 314 4,038 517 1,714 1,844 0 8,427 Total $ 7,193 $ 19,334 $ 11,173 $ 16,509 $ 6,643 $ 7,159 $ 56,164 $ 0 $ 124,175 Purchased: Pass $ 4,592 $ 0 $ 3,210 $ 71 $ 778 $ 2,119 $ 0 $ 0 $ 10,770 Total $ 4,592 $ 0 $ 3,210 $ 71 $ 778 $ 2,119 $ 0 $ 0 $ 10,770 Commercial real estate: Pass $ 29,626 $ 57,164 $ 76,479 $ 88,547 $ 32,291 $ 125,934 $ 53,441 $ 0 $ 463,482 Special mention 0 0 4,609 183 1,369 4,974 0 0 11,135 Substandard/Doubtful 225 0 42 323 551 5,574 0 0 6,715 Total $ 29,851 $ 57,164 $ 81,130 $ 89,053 $ 34,211 $ 136,482 $ 53,441 $ 0 $ 481,332 Municipal: Pass $ 30,400 $ 4,175 $ 138 $ 295 $ 2,621 $ 10,329 $ 20,866 $ 0 $ 68,824 Special mention 0 0 0 0 1,266 0 0 0 1,266 Total $ 30,400 $ 4,175 $ 138 $ 295 $ 3,887 $ 10,329 $ 20,866 $ 0 $ 70,090 Residential real estate - 1st lien: Pass $ 31,281 $ 27,167 $ 27,065 $ 31,992 $ 34,053 $ 72,139 $ 3,263 $ 0 $ 226,960 Special mention 0 0 155 185 233 161 0 0 734 Substandard/Doubtful 0 0 0 0 123 1,914 0 0 2,037 Total $ 31,281 $ 27,167 $ 27,220 $ 32,177 $ 34,409 $ 74,214 $ 3,263 $ 0 $ 229,731 Residential real estate - Jr lien: Pass $ 3,657 $ 3,179 $ 1,569 $ 1,453 $ 284 $ 1,223 $ 29,474 $ 1,779 $ 42,618 Special mention 0 69 0 0 0 64 0 0 133 Substandard/Doubtful 0 0 0 0 0 18 0 0 18 Total $ 3,657 $ 3,248 $ 1,569 $ 1,453 $ 284 $ 1,305 $ 29,474 $ 1,779 $ 42,769 Consumer: Pass $ 1,313 $ 793 $ 464 $ 217 $ 89 $ 139 $ 0 $ 0 $ 3,015 Total $ 1,313 $ 793 $ 464 $ 217 $ 89 $ 139 $ 0 $ 0 $ 3,015 Total Loans $ 108,287 $ 111,881 $ 124,904 $ 139,775 $ 80,301 $ 231,747 $ 163,208 $ 1,779 $ 961,882 As of September 30, 2025, there were (i) no Special mention loans or Substandard/Doubtful loans within the Purchased and Consumer loan segments, and (ii) no Substandard/Doubtful loans within the Municipal loan segment. 18 Table of Contents As of December 31, 2024 Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted 2024 2023 2022 2021 2020 Prior Cost Basis to Term Total (Dollars in Thousands) Commercial & Industrial: Pass $ 24,900 $ 12,876 $ 14,797 $ 9,402 $ 1,696 $ 6,016 $ 44,079 $ 0 $ 113,766 Special mention 0 50 34 148 0 0 1,302 0 1,534 Substandard/Doubtful 0 298 1,275 563 294 1,613 4,713 0 8,756 Total $ 24,900 $ 13,224 $ 16,106 $ 10,113 $ 1,990 $ 7,629 $ 50,094 $ 0 $ 124,056 Purchased: Pass $ 0 $ 4,100 $ 81 $ 900 $ 1,012 $ 1,716 $ 0 $ 0 $ 7,809 Total $ 0 $ 4,100 $ 81 $ 900 $ 1,012 $ 1,716 $ 0 $ 0 $ 7,809 Commercial real estate: Pass $ 54,938 $ 69,509 $ 90,849 $ 33,881 $ 36,087 $ 104,272 $ 70,076 $ 0 $ 459,612 Special mention 0 0 0 1,536 4,741 786 0 0 7,063 Substandard/Doubtful 0 0 0 603 2,896 1,979 0 0 5,478 Total $ 54,938 $ 69,509 $ 90,849 $ 36,020 $ 43,724 $ 107,037 $ 70,076 $ 0 $ 472,153 Municipal: Pass $ 34,769 $ 180 $ 458 $ 2,858 $ 3,696 $ 9,137 $ 15,989 $ 0 $ 67,087 Total $ 34,769 $ 180 $ 458 $ 2,858 $ 3,696 $ 9,137 $ 15,989 $ 0 $ 67,087 Residential real estate - 1st lien: Pass $ 28,738 $ 29,761 $ 35,389 $ 37,294 $ 29,691 $ 51,876 $ 2,593 $ 0 $ 215,342 Special mention 0 161 0 0 0 212 0 0 373 Substandard/Doubtful 0 0 299 123 1,774 180 0 0 2,376 Total $ 28,738 $ 29,922 $ 35,688 $ 37,417 $ 31,465 $ 52,268 $ 2,593 $ 0 $ 218,091 Residential real estate - Jr lien: Pass $ 3,990 $ 1,765 $ 1,845 $ 301 $ 526 $ 1,173 $ 24,556 $ 1,512 $ 35,668 Substandard/Doubtful 0 0 0 0 0 23 0 0 23 Total $ 3,990 $ 1,765 $ 1,845 $ 301 $ 526 $ 1,196 $ 24,556 $ 1,512 $ 35,691 Consumer: Pass $ 1,466 $ 764 $ 442 $ 188 $ 75 $ 119 $ 0 $ 0 $ 3,054 Total $ 1,466 $ 764 $ 442 $ 188 $ 75 $ 119 $ 0 $ 0 $ 3,054 Total Loans $ 148,801 $ 119,464 $ 145,469 $ 87,797 $ 82,488 $ 179,102 $ 163,308 $ 1,512 $ 927,941 As of December 31, 2024, there were (i) no Special mention loans within the Purchased, Municipal, Residential real estate Jr lien and Consumer loan segments, and (ii) no Substandard/Doubtful loans within the Purchased, Municipal and Consumer loan segments. 19 Table of Contents Gross charge-offs, by loan segment and origination year, were as follows: For the nine months ended September 30, 2025 Term Loans Amortized Cost Basis by Origination Year 2025 2024 2023 2022 2021 Prior Total (Dollars in Thousands) Current period gross charge-offs Commercial & Industrial $ 35 $ 0 $ 8 $ 0 $ 0 $ 4 $ 47 Residential real estate - 1st lien 0 0 0 13 0 0 13 Consumer 1 17 0 5 1 57 81 Total current period gross charge-offs $ 36 $ 17 $ 8 $ 18 $ 1 $ 61 $ 141 For the nine months ended September 30, 2025, there were no current period charge-offs within the Purchased, Municipal, CRE and Residential real estate Jr lien loan segments. For the year ended December 31, 2024 Term Loans Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Total (Dollars in Thousands) Current period gross charge-offs Commercial & Industrial $ 0 $ 14 $ 0 $ 5 $ 0 $ 1,244 $ 1,263 Commercial real estate 0 0 0 0 45 81 126 Consumer 1 30 3 3 0 56 93 Total current period gross charge-offs $ 1 $ 44 $ 3 $ 8 $ 45 $ 1,381 $ 1,482 For the year ended, December 31, 2024, there were no current period gross charge-offs within the Purchased, Municipal, Residential real estate 1 st lien and Residential real estate Jr lien loan segments. The following table presents the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more and still accruing as of the dates presented. There were no nonaccrual loans with an ACL as of September 30, 2025, or December 31, 2024. 90 Days or Total More and September 30, 2025 Nonaccrual Accruing Commercial & industrial $ 6,136,089 $ 0 Commercial real estate 1,606,918 0 Residential real estate - 1st lien 347,783 348,850 Residential real estate - Jr lien 17,591 155,442 Totals $ 8,108,381 $ 504,292 90 Days or Total More and December 31, 2024 Nonaccrual Accruing Commercial & industrial $ 6,365,276 $ 0 Commercial real estate 1,196,838 0 Residential real estate - 1st lien 752,850 806,325 Residential real estate - Jr lien 23,202 0 Totals $ 8,338,166 $ 806,325 20 Table of Contents The following is an age analysis of past due loans (including non-accrual) as of the balance sheet dates, by portfolio segment: 90 Days Total September 30, 2025 30-89 Days or More Past Due Current Total Loans Commercial & industrial $ 82,288 $ 1,286,921 $ 1,369,209 $ 122,805,686 $ 124,174,895 Purchased 0 0 0 10,769,907 10,769,907 Commercial real estate 1,099,541 0 1,099,541 480,232,641 481,332,182 Municipal 0 0 0 70,090,106 70,090,106 Residential real estate - 1st lien 331,537 518,454 849,991 228,881,005 229,730,996 Residential real estate - Jr lien 276,354 155,442 431,796 42,337,514 42,769,310 Consumer 69,941 0 69,941 2,945,172 3,015,113 Totals $ 1,859,661 $ 1,960,817 $ 3,820,478 $ 958,062,031 $ 961,882,509 90 Days Total December 31, 2024 30-89 Days or More Past Due Current Total Loans Commercial & industrial $ 249,577 $ 1,286,921 $ 1,536,498 $ 122,519,154 $ 124,055,652 Purchased 0 0 0 7,808,877 7,808,877 Commercial real estate 711,925 25,050 736,975 471,415,882 472,152,857 Municipal 0 0 0 67,087,399 67,087,399 Residential real estate - 1st lien 2,471,244 1,306,019 3,777,263 214,313,630 218,090,893 Residential real estate - Jr lien 88,514 0 88,514 35,602,667 35,691,181 Consumer 13,151 0 13,151 3,040,795 3,053,946 Totals $ 3,534,411 $ 2,617,990 $ 6,152,401 $ 921,788,404 $ 927,940,805 For all loan segments, loans over 30 days past due are considered delinquent. The following table presents the amortized cost basis of collateral-dependent loans (e.g. repayment expected through underlying collateral, no other expected sources of repayment) as of the balance sheet dates, by collateral type: Real Estate Total September 30, 2025 Residential real estate - 1st lien $ 169,604 $ 169,604 December 31, 2024 Residential real estate - 1st lien $ 593,678 $ 593,678 Residential real estate loans in process of foreclosure comprised one loan in the amount of $ 88,780 as of December 31, 2024. There were no residential real estate loans in process of foreclosure as of September 30, 2025. Allowance for credit losses Credit losses are charged against the allowance when management believes that future payments of a loan balance are unlikely. Subsequent recoveries, if any, are credited to the allowance. Unsecured loans are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy, are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on these loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. The value of the collateral is determined in accordance with the Company’s appraisal policy. The unsecured portion of a real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due. 21 Table of Contents As described below, the allowance consists of general and specific components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of general or specific components considered in determining the amount of the allowance. General component The general component of the ACL is based on methodologies, inputs, and assumptions utilized to estimate lifetime credit losses when applied to the following loan segments: commercial and industrial, purchased loans, CRE, municipal, residential real estate 1st lien, residential real estate Jr lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes. The Company utilizes a DCF approach to calculate the expected loss for each portfolio segment. Within the DCF model, probability of default (PD) and loss given default (LGD) assumptions are applied to calculate the expected loss for each segment. PD is management’s estimate of the probability the asset will default within a given timeframe and LGD is management’s estimate of the percentage of assets not expected to be collected due to default. The Company's PD and LGD assumptions may be derived from internal historical default and loss experience or from external data where there are not statistically meaningful loss events for a loan segment, or it does not have default and loss data that covers a full economic cycle. As of September 30, 2025, the primary macroeconomic drivers used within the DCF model included forecasts of civilian unemployment and changes in national gross domestic product (GDP). Management monitors and assesses its macroeconomic drivers at least annually (generally in the fourth quarter, or more frequently as circumstances warrant) to determine whether they continue to be the most predictive indicator of losses within the Company's loan portfolio, and these macroeconomic drivers may change from time to time. To determine its reasonable and supportable forecast, management may leverage macroeconomic forecasts obtained from various reputable sources, which may include, but are not limited to, the FOMC forecast and other publicly available forecasts from well recognized, leading economists or firms. The Company's reasonable and supportable forecast period generally ranges from one to three years, depending on the facts and circumstances of the current state of the economy, portfolio segment, and management's judgment of what can be reasonably supported. The model reversion period generally ranges from one to six years, and it also depends on the current state of the economy and management's judgments of such. Management monitors and assesses the forecast and reversion period at least annually, or more frequently as circumstances warrant. The Company used a one-year forecast and reversion period to calculate the ACL on loans as of September 30, 2025 and 2024. When the DCF method is used to determine the ACL, management does not adjust the effective interest rate used to discount expected cash flows to incorporate expected prepayments. Expected credit losses are estimated over the contractual term of the loans. For term loans, the contractual life is calculated based on the maturity date. For commercial revolving loans with no stated maturity date, the contractual life is calculated based on the internal review date. For all other revolving loans, the contractual life is based on either the estimated maturity date or a default date. The contractual term excludes expected extensions, renewals, and modifications. In calculating the ACL on loans, the contractual life of a loan must be adjusted for prepayments to arrive at expected cash flows. The Company models term loans using an annualized prepayment. When the Company has a specific expectation of differing payment behavior for a given loan, the loan may be evaluated individually. For revolving loans that do not have a principal payment schedule, a curtailment rate is factored into the expected cash flow. Management has elected to use loss rate methodologies appropriate for each loan segment. The DCF method was chosen for the commercial and industrial, CRE, residential real estate 1 st lien, residential real estate Jr Lien and consumer loans. The DCF model, being periodic in nature, allows for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. For the purchased loans segment, a long-term average loss rate is calculated and applied on a quarterly basis for the remaining life of the pool. Due to the lack of any historical loss data, a manual entry methodology was chosen for the municipal loans given the immaterial nature of the pool when considering prior loss history as well as the inability to reasonably forecast a PD or LGD for the pool. Qualitative factors are also applied to include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of CRE loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available. Management’s review of the ACL during the third quarter of 2025 resulted in an increase in the risk status of external factors in the purchased loan and residential Jr Lien segments to reflect uncertainty regarding the impact to customers from a recent government shutdown. The risk status of volume and terms was also increased in the residential Jr Lien segment to reflect an increase in loan volume in this segment, specifically home equity lines of credit. 22 Table of Contents The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows: Commercial & Industrial – Loans in this segment include commercial and industrial loans and to a lesser extent loans to finance agricultural production. Commercial loans are made to businesses and are generally secured by assets of the business, including trade assets and equipment. While not the primary collateral, in many cases these loans may also be secured by the real estate of the business. Repayment is expected from the cash flows of the business. A weakened economy, soft consumer spending, unfavorable foreign trade conditions and the rising cost of labor or raw materials are examples of issues that can impact credit quality in this segment. Purchased – Loans in this segment are loans purchased through a loan purchasing program with BHG. BHG originates commercial loans to medical professionals and consumer loans to other professionals nationwide and sells them individually to a secondary market, primarily banks, through a bid process. The Bank has established conservative credit parameters and expects a low risk of default in this portfolio. Commercial Real Estate – Loans in this segment are principally made to businesses and are generally secured by either owner-occupied, or non-owner occupied CRE. A relatively small portion of this segment includes farm loans secured by farmland and buildings. As with commercial and industrial loans, repayment of owner-occupied CRE loans is expected from the cash flows of the business and the segment would be impacted by the same risk factors as commercial and industrial loans. The non-owner occupied CRE portion includes both residential and commercial construction loans, vacant land and real estate development loans, multi-family dwelling loans and commercial rental property loans. Repayment of construction loans is expected from permanent financing takeout; the Company generally requires commitment or eligibility for the take-out financing prior to construction loan origination. Real estate development loans are generally repaid from the sale of the subject real property as the project progresses. Construction and development lending entail additional risks, including the project exceeding budget, not being constructed according to plans, not receiving permits, or the pre-leasing or occupancy rate not meeting expectations. Repayment of multi-family loans and commercial rental property loans is expected from the cash flow generated by rental payments received from the individuals or businesses occupying the real estate. CRE loans are impacted by factors such as competitive market forces, vacancy rates, cap rates, net operating incomes, lease renewals and overall economic demand. In addition, loans in the recreational and tourism sector can be affected by weather conditions, such as unseasonably low winter snowfalls. CRE lending also carries a higher degree of environmental risk than other real estate lending. Municipal – Loans in this segment are made to local municipalities, attributable to municipal financing transactions and backed by the full faith and credit of town governments or dedicated governmental revenue sources, with no historical losses recognized by the Company. Qualitative factors are not utilized in the manual entry method for municipal loans. Residential Real Estate - 1 st Lien – Loans in this segment are collateralized by first mortgages on 1 – 4 family owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. Residential Real Estate – Jr Lien – Loans in this segment are collateralized by junior lien mortgages on 1 – 4 family residential real estate and repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. Consumer – Loans in this segment are made to individuals for consumer and household purposes. This segment includes both loans secured by automobiles and other consumer goods, as well as loans that are unsecured. This segment also includes overdrafts, which are extensions of credit made to both individuals and businesses to cover temporary shortages in their deposit accounts and are generally unsecured. The Company maintains policies restricting the size and term of these extensions of credit. The overall health of the economy, including unemployment rates, has an impact on the credit quality of this segment. 23 Table of Contents Specific component Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are also not included in the collective evaluation. In general, loans individually evaluated for estimated credit losses include those (i) greater than $ 100,000 with a nonaccrual status or (ii) have other unique characteristics differing from the portfolio segment. Specific reserves are established when appropriate for such loans based on the present value of expected future cash flows of the loan. However, when management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Modifications of Loans A loan is considered modified if, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount. The Company is deemed to have granted such a concession if it has modified a loan in any of the following ways: · Reduced accrued interest; · Reduced the original contractual interest rate to a rate that is below the current market rate for the borrower; · Converted a variable-rate loan to a fixed-rate loan; · Extended the term of the loan beyond an insignificant delay; · Deferred or forgiven principal in an amount greater than three months of payments; · Performed a refinancing and deferred or forgiven principal on the original loan; · Capitalized protective advance to pay delinquent real estate taxes; or · Capitalized delinquent accrued interest. An insignificant delay or insignificant shortfall in the number of payments typically would not require the loan to be accounted for as modified. However, pursuant to regulatory guidance, any payment delays longer than three months is generally not considered insignificant. Management’s assessment of whether a concession has been granted also takes into consideration payments expected to be received from third parties, including third-party guarantors, provided the third party has the ability to perform on the guarantee. The Company’s modified loans are principally a result of extending loan repayment terms to relieve cash flow difficulties. The Company has only, on a limited basis, reduced accrued interest or reduced interest rates for borrowers below the current market rate for the borrower. The Company has not generally forgiven principal within the terms of original restructurings, nor converted variable rate terms to fixed rate terms. However, the Company evaluates each potential loan modification on its own merits and does not foreclose the granting of any particular type of concession. In connection with modifications, the Company considers applicable regulatory guidance, including a 2023 Interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts. The following table presents the amortized cost basis of loans as of September 30, 2025, that were both experiencing financial difficulty and modified during the nine months ended September 30, 2025, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below. Total Class Term of Financing Extension Receivable Commercial & Industrial $ 17,988 0.01 % As of September 30, 2025, the Company was not committed to lend additional amounts to borrowers experiencing financial difficulty whose loans were previously modified. 24 Table of Contents The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the nine months ended September 30, 2025. Weighted- Average Term Extension (months) Commercial & Industrial 84 The Company closely monitors the performance of loans to borrowers experiencing financial difficulty that have been modified to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified during the last twelve months. Past Due 30-89 Days 90 Days Current Past Due or More Commercial & Industrial $ 17,988 $ 0 $ 0 There were no loans to borrowers experiencing financial difficulty that were modified within the previous twelve months that had subsequently defaulted during the nine months ended September 30, 2025. Loans are considered defaulted at 90 days past due. Allowance for Credit Losses on OBS Credit Exposures In the ordinary course of business, the Company enters into commitments to extend credit, including commercial letters of credit and standby letters of credit. Such financial instruments are recorded as loans when they are funded. The Company estimates expected credit losses on OBS credit exposures over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on OBS credit exposures is adjusted through credit loss expense. To appropriately measure expected credit losses, management disaggregates the loan portfolio into similar risk characteristics, identical to those determined for the loan portfolio. An estimated funding rate is then applied to the qualifying unfunded loan commitments and letters of credit using the Company's own historical experience to estimate the expected funded amount for each loan segment as of the reporting date. Once the expected funded amount for each loan segment is determined, the loss rate, which is the calculated expected loan loss as a percentage of the amortized cost basis for each loan segment, is applied to calculate the ACL on OBS credit exposures as of the reporting date. The ACL on OBS credit exposures is presented within accrued interest and other liabilities on the consolidated balance sheets. As of September 30, 2025, and December 31, 2024, the ACL on OBS credit exposures totaled $ 683,068 and $ 703,975 , respectively. Note 6. Goodwill and Other Intangible Assets As a result of a merger with LyndonBank on December 31, 2007, the Company recorded goodwill amounting to $ 11,574,269 . Goodwill is not amortizable and is not deductible for tax purposes. As of December 31, 2024, the most recent evaluation, management concluded that no impairment existed. Management evaluates its goodwill intangible for impairment at least annually, or more frequently as circumstances warrant. Note 7. Loan Servicing The following table shows the changes in the carrying amount of the MSRs, included in other assets in the consolidated balance sheets, for the periods indicated: Nine Months Ended September 30, 2025 Balance at beginning of year $ 704,488 MSRs capitalized 26,229 MSRs amortized ( 92,226 ) Balance at end of period $ 638,491 25 Table of Contents Year Ended December 31, 2024 Balance at beginning of year $ 787,013 MSRs capitalized 42,551 MSRs amortized ( 125,076 ) Balance at end of year $ 704,488 Note 8. Fair Value Certain assets and liabilities are recorded at fair value to provide additional insight into the Company’s quality of earnings and comprehensive income. The fair values of some of these assets and liabilities are measured on a recurring basis while others are measured on a non-recurring basis, with the determination based upon applicable existing accounting pronouncements. For example, securities AFS are recorded at fair value on a recurring basis. Other assets, such as MSRs, loans held-for-sale, individually analyzed loans with a related allowance that are collateral dependent, and OREO are recorded at fair value on a non-recurring basis using the lower of cost or market methodology to determine impairment of individual assets. The Company groups assets and liabilities which are recorded at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement (with Level 1 considered highest and Level 3 considered lowest). A brief description of each level follows. Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasury and other U.S. Government debt securities that are highly liquid and are actively traded in over-the-counter markets. Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes MSRs, individually analyzed loans with a related allowance that are collateral dependent, loans held-for-sale, and OREO. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The following methods and assumptions were used by the Company in estimating its fair value measurements: Debt Securities AFS: Fair value measurement is based upon quoted prices for similar assets, if available. If quoted prices are not available, fair values are measured using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curves, prepayment speeds and default rates, net of any related credit allowance. Level 1 securities would include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. Level 2 securities include federal agency securities, municipal securities and other asset-backed securities. Individually analyzed loans: Individually analyzed loans are reported based on one of three measures: the present value of expected future cash flows discounted at the loan’s effective interest rate; the loan’s observable market price; or the fair value of the collateral if the loan is collateral dependent. If the fair value is less than an impaired loan’s recorded investment, an impairment loss is recognized as part of the ACL. Accordingly, certain individually analyzed loans may be subject to measurement at fair value on a non-recurring basis. Management has estimated the fair value of collateral-dependent loans using Level 2 inputs, such as the fair value of collateral based on independent third-party appraisals. Loans held-for-sale: The fair value of loans held-for-sale is based upon an actual purchase and sale agreement between the Company and an independent market participant. The sale is executed within a reasonable period following quarter-end at the stated fair value. MSRs: MSRs represent the value associated with servicing residential mortgage loans. Servicing assets and servicing liabilities are reported using the amortization method and compared to fair value for impairment. In evaluating the carrying values of MSRs, the Company obtains third party valuations based on loan level data including note rate, and the type and term of the underlying loans. The Company classifies MSRs as non-recurring Level 2. 26 Table of Contents Assets and Liabilities Recorded at Fair Value on a Recurring Basis Assets measured at fair value on a recurring basis and reflected in the consolidated balance sheets at the dates presented, segregated by fair value hierarchy, are summarized below. There were no Level 3 assets or liabilities measured on a recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between Levels during either of the periods presented for 2025 or 2024. September 30, December 31, Assets: (market approach) 2025 2024 Level 1 U.S. Government securities $ 13,242,730 $ 26,755,143 Level 2 U.S. GSE debt securities $ 11,351,947 $ 10,963,515 Taxable Municipal securities 262,261 247,745 Tax-exempt Municipal securities 10,138,367 10,238,253 Agency MBS 112,957,109 102,256,237 ABS and OAS 1,673,696 1,957,765 CMO 2,137,549 6,805,535 Other investments 484,660 473,227 Level 2 Total $ 139,005,589 $ 132,942,277 Grand Total $ 152,248,319 $ 159,697,420 Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis The following table includes assets measured at fair value on a non-recurring basis that have had a fair value adjustment since their initial recognition. Individually analyzed loans measured at fair value only include those loans with a partial write-down or with a related specific ACL and are presented net of the specific allowances as disclosed in Note 5. Assets measured at fair value on a non-recurring basis and reflected in the consolidated balance sheets at the dates presented, segregated by fair value hierarchy level, are summarized below. There were no Level 1 or Level 3 assets or liabilities measured on a non-recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between levels during either of the periods presented for 2025 or 2024. September 30, December 31, Level 2 2025 2024 Assets: (market approach) Loans held-for-sale $ 1,269,208 $ 0 MSRs (1) 638,491 704,488 OREO 319,019 0 (1) Represents MSRs at lower of cost or fair value. FASB ASC Topic 825, “Financial Instruments”, requires disclosure of fair value information about financial instruments, whether recognized in the balance sheet, if the fair values can be reasonably determined. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques using observable inputs when available. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, fair value estimates may not be realized in an immediate settlement of the instrument. Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. 27 Table of Contents The estimated fair values of commitments to extend credit and letters of credit were immaterial as of the dates presented in the tables below. The estimated fair values of the Company's financial instruments as of the balance sheet dates were as follows: September 30, 2025 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 60,866 $ 60,866 $ 0 $ 0 $ 60,866 Debt securities AFS 152,248 13,243 139,005 0 152,248 Restricted equity securities 3,257 0 3,257 0 3,257 Loans and loans held-for-sale, net of ACL Commercial & industrial 123,520 0 0 122,232 122,232 Purchased 10,737 0 0 10,570 10,570 Commercial real estate 474,530 0 0 460,189 460,189 Municipal 69,915 0 0 67,597 67,597 Residential real estate - 1st lien 229,127 0 0 217,399 217,399 Residential real estate - Jr lien 42,302 0 0 41,918 41,918 Consumer 2,990 0 0 3,020 3,020 MSRs (1) 638 0 1,137 0 1,137 Accrued interest receivable 4,460 0 4,460 0 4,460 Financial liabilities: Deposits Other deposits 971,673 0 970,839 0 970,839 Brokered deposits 36,627 0 37,544 0 37,544 Short-term advances 10,000 0 10,005 0 10,005 Long-term advances 36,275 0 36,318 0 36,318 Repurchase agreements 34,179 0 34,179 0 34,179 Operating lease obligations 731 0 731 0 731 Finance lease obligations 3,023 0 3,023 0 3,023 Subordinated debentures 12,887 0 12,764 0 12,764 Accrued interest payable 496 0 496 0 496 (1) Reported fair value represents all MSRs for loans serviced by the Company, regardless of carrying amount. 28 Table of Contents December 31, 2024 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 110,940 $ 110,940 $ 0 $ 0 $ 110,940 Debt securities AFS 159,697 26,755 132,942 0 159,697 Restricted equity securities 2,629 0 2,629 0 2,629 Loans and loans held-for-sale, net of ACL Commercial & industrial 123,320 0 0 120,746 120,746 Purchased 7,787 0 0 7,488 7,488 Commercial real estate 465,643 0 0 442,059 442,059 Municipal 66,919 0 0 64,702 64,702 Residential real estate - 1st lien 216,683 0 0 202,531 202,531 Residential real estate - Jr lien 35,400 0 0 34,923 34,923 Consumer 3,027 0 0 3,055 3,055 MSRs (1) 704 0 1,165 0 1,165 Accrued interest receivable 4,472 0 4,472 0 4,472 Financial liabilities: Deposits Other deposits 987,832 0 986,544 0 986,544 Brokered deposits 13,813 0 13,899 0 13,899 Short-term advances 41,500 0 41,505 0 41,505 Long-term advances 31,100 0 31,104 0 31,104 Repurchase agreements 48,944 0 48,944 0 48,944 Operating lease obligations 371 0 371 0 371 Finance lease obligations 3,198 0 3,198 0 3,198 Subordinated debentures 12,887 0 12,750 0 12,750 Accrued interest payable 2,409 0 2,409 0 2,409 (1) Reported fair value represents all MSRs for loans serviced by the Company, regardless of carrying amount. Note 9. Legal Proceedings In the normal course of business, the Company is involved in litigation that is considered incidental to its business. Management does not expect that any such litigation will be material to the Company's consolidated financial condition or results of operations. Note 10. Subsequent Events The Company has evaluated events and transactions through the date that the financial statements were issued for potential recognition or disclosure in these financial statements, as required by GAAP. On September 18, 2025, the Company’s Board declared a cash dividend of $ 0.25 per common share, payable November 1, 2025, to shareholders of record as of October 15, 2025. This dividend has been recorded in the Company’s consolidated financial statements as of the declaration date, including shares issuable under the DRIP. 29 Table of Contents