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 March 31 December 31, Consolidated Balance Sheets 2026 2025 (Unaudited) Assets Cash and due from banks $ 9,512,920 $ 11,802,391 Federal funds sold and overnight deposits 55,086,179 116,259,370 Total cash and cash equivalents 64,599,099 128,061,761 Securities available-for-sale (amortized cost $ 150,158,141 and $ 156,694,754 at 03/31/26 and 12/31/25, respectively) 137,784,382 144,528,758 Restricted equity securities, at cost 2,902,450 2,933,050 Loans held-for-sale 300,000 138,000 Loans 983,876,487 965,285,662 Allowance for credit losses ( 11,280,241 ) ( 10,864,983 ) Deferred net loan costs 852,511 786,604 Net loans 973,448,757 955,207,283 Bank premises and equipment, net 12,035,404 12,090,886 Accrued interest receivable 5,298,063 4,607,975 Bank owned life insurance 5,416,653 5,398,085 Goodwill 11,574,269 11,574,269 Other real estate owned 0 319,019 Other assets 21,925,695 22,699,860 Total assets $ 1,235,284,772 $ 1,287,558,946 Liabilities and Shareholders' Equity Liabilities Deposits: Demand, non-interest bearing $ 199,316,812 $ 218,842,543 Interest-bearing transaction accounts 291,067,383 299,636,739 Money market funds 148,980,329 187,132,921 Savings 147,941,226 142,543,291 Time deposits, $ 250,000 and over 166,165,700 46,913,997 Other time deposits 64,295,307 175,598,510 Total deposits $ 1,017,766,757 $ 1,070,668,001 Repurchase agreements 40,086,527 41,498,171 Borrowed funds 35,975,022 35,975,022 Junior subordinated debentures 12,887,000 12,887,000 Accrued interest and other liabilities 11,726,716 12,843,774 Total liabilities $ 1,118,442,022 $ 1,173,871,968 Shareholders' Equity Common stock - $ 2.50 par value; 15,000,000 shares authorized, 5,896,981 shares issued at 03/31/26 and 5,882,266 shares issued at 12/31/25 14,742,453 14,705,665 Additional paid-in capital 40,410,499 40,076,561 Retained earnings 75,997,719 73,021,908 Accumulated other comprehensive loss ( 9,775,269 ) ( 9,611,137 ) Less: treasury stock, at cost; 300,409 shares at 03/31/26 and 299,339 shares at 12/31/25 ( 4,532,652 ) ( 4,506,019 ) Total shareholders' equity 116,842,750 113,686,978 Total liabilities and shareholders' equity $ 1,235,284,772 $ 1,287,558,946 Book value per common share outstanding $ 20.88 $ 20.36 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 March 31 Consolidated Statements of Income 2026 2025 (Unaudited) Interest income Interest and fees on loans $ 14,432,621 $ 13,215,032 Interest on taxable debt securities 804,751 859,231 Interest on tax-exempt debt securities 80,411 80,411 Dividends 51,958 47,890 Interest on federal funds sold and overnight deposits 657,098 321,948 Total interest income 16,026,839 14,524,512 Interest expense Interest on deposits 4,176,632 4,185,907 Interest on borrowed funds 385,950 370,977 Interest on repurchase agreements 293,730 285,959 Interest on junior subordinated debentures 222,647 243,345 Total interest expense 5,078,959 5,086,188 Net interest income 10,947,880 9,438,324 Credit loss expense 391,505 325,054 Net interest income after credit loss expense 10,556,375 9,113,270 Non-interest income Service fees 936,477 886,782 Income from sold loans 69,546 69,377 Other income from loans 350,194 270,167 Income from investment in CFS Partners 242,438 249,350 Other income 146,685 102,933 Total non-interest income 1,745,340 1,578,609 Non-interest expense Salaries and wages 2,578,836 2,320,066 Employee benefits 1,111,276 1,017,974 Occupancy expenses, net 774,981 781,856 Other expenses 2,592,267 2,383,716 Total non-interest expense 7,057,360 6,503,612 Income before income taxes 5,244,355 4,188,267 Income tax expense 875,253 662,812 Net income $ 4,369,102 $ 3,525,455 Earnings per common share $ 0.78 $ 0.62 Weighted average number of common shares used in computing earnings per share 5,586,133 5,605,278 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 Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31 2026 2025 Net income $ 4,369,102 $ 3,525,455 Other comprehensive income Unrealized (loss) gain on securities AFS arising during the period ( 207,764 ) 3,006,141 Tax effect 43,632 ( 631,290 ) Other comprehensive (loss) income, net of tax ( 164,132 ) 2,374,851 Total comprehensive income $ 4,204,970 $ 5,900,306 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 Changes in Shareholders' Equity (Unaudited) Three Months Ended March 31, 2026 Additional Total Common Preferred paid-in Retained Treasury shareholders' Stock Stock capital earnings AOCI* stock equity January 1, 2026 $ 14,705,665 $ 0 $ 40,076,561 $ 73,021,908 ($ 9,611,137 ) ($ 4,506,019 ) $ 113,686,978 Issuance of common stock 36,788 333,938 370,726 Cash dividends declared Common stock ( 1,393,291 ) ( 1,393,291 ) Shares purchased through stock buyback plan ( 26,633 ) ( 26,633 ) Comprehensive income Net income 4,369,102 4,369,102 Other comprehensive loss ( 164,132 ) ( 164,132 ) March 31, 2026 $ 14,742,453 $ 0 $ 40,410,499 $ 75,997,719 ($ 9,775,269 ) ($ 4,532,652 ) $ 116,842,750 Community Bancorp. and Subsidiary Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Three Months Ended March 31, 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 *Accumulated other comprehensive loss 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 Cash Flows (Unaudited) Three Months Ended March 31 2026 2025 Cash Flows from Operating Activities: Net income $ 4,369,102 $ 3,525,455 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, bank premises and equipment 249,913 256,686 Credit loss expense 391,505 325,054 Deferred income tax benefit ( 109,277 ) ( 102,112 ) Gain on sale of loans ( 15,214 ) ( 13,258 ) (Gain) loss on sale of bank premises and equipment ( 18,486 ) 7,839 Gain on sale of OREO ( 37,318 ) 0 Income from CFS Partners ( 242,438 ) ( 249,350 ) Amortization of bond premium, net 4,479 29,528 Proceeds from sales of loans held for sale 767,231 417,133 Originations of loans held for sale ( 914,017 ) ( 896,375 ) Increase in taxes payable 727,097 552,056 Increase in interest receivable ( 690,088 ) ( 1,003,374 ) Decrease in mortgage servicing rights 22,296 28,432 Decrease in right-of-use assets 55,486 51,245 Decrease in operating lease liabilities ( 52,654 ) ( 45,563 ) Decrease in other assets 162,683 189,101 Increase in cash surrender value of BOLI ( 18,568 ) ( 20,275 ) Amortization of limited partnerships 513,349 212,868 Change in net deferred loan fees and costs ( 65,907 ) ( 28,950 ) Increase (decrease) in interest payable 9,845 ( 1,915,911 ) Decrease in accrued expenses ( 854,034 ) ( 969,079 ) (Decrease) increase in other liabilities ( 199,178 ) 31,374 Net cash provided by operating activities 4,055,807 382,524 Cash Flows from Investing Activities: Investments - AFS Maturities, calls, pay downs and sales 6,532,133 9,359,512 Purchases 0 ( 14,971,773 ) Proceeds from redemption of restricted equity securities 117,700 301,200 Purchases of restricted equity securities ( 87,100 ) ( 441,700 ) Investments in limited liability entities ( 255,916 ) 0 Increase in loans, net ( 18,644,242 ) ( 12,400,654 ) Capital expenditures net of proceeds from sales of bank premises and equipment ( 160,112 ) ( 274,509 ) Proceeds from sales of OREO 356,337 0 Recoveries of loans charged off 41,690 12,098 Net cash used in investing activities ( 12,099,510 ) ( 18,415,826 ) 7 Table of Contents 2026 2025 Cash Flows from Financing Activities: Net decrease in demand and interest-bearing transaction accounts ( 28,095,087 ) ( 18,117,210 ) Net decrease in money market and savings accounts ( 32,754,657 ) ( 6,390,829 ) Net increase in time deposits 7,948,500 2,519,243 Net decrease in repurchase agreements ( 1,411,644 ) ( 4,511,453 ) Net decrease in short-term borrowings 0 ( 41,500,000 ) Proceeds from long-term borrowings 0 5,000,000 Decrease in finance lease obligations ( 59,861 ) ( 58,018 ) Shares purchased through stock buyback program ( 26,633 ) ( 35,380 ) Dividends paid on preferred stock 0 ( 28,125 ) Dividends paid on common stock ( 1,019,578 ) ( 973,406 ) Net cash used in financing activities ( 55,418,960 ) ( 64,095,178 ) Net decrease in cash and cash equivalents ( 63,462,662 ) ( 82,128,480 ) Cash and cash equivalents: Beginning 128,061,761 110,940,202 Ending $ 64,599,099 $ 28,811,722 Supplemental Schedule of Cash Paid During the Period: Interest $ 5,069,114 $ 7,002,099 Supplemental Schedule of Noncash Investing and Financing Activities: Change in unrealized (loss) gain on securities AFS ($ 207,764 ) $ 3,006,141 Additions to operating lease liabilities $ 71,318 $ 115,204 Investment in limited partnerships, not yet paid $ 4,356,000 $ 4,356,000 Common Shares Dividends Paid: Dividends declared $ 1,393,291 $ 1,343,515 Increase in dividends payable attributable to dividends declared ( 2,987 ) ( 6,570 ) Dividends reinvested ( 370,726 ) ( 363,539 ) Total dividends paid $ 1,019,578 $ 973,406 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 8 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, 2025, 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, 2026. 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 9 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 that was outstanding during the first quarter of 2025: Three Months Ended March 31 2026 2025 Net income, as reported $ 4,369,102 $ 3,525,455 Less: dividends to preferred shareholders 0 28,125 Net income available to common shareholders $ 4,369,102 $ 3,497,330 Weighted average number of common shares used in calculating earnings per share 5,586,133 5,605,278 Earnings per common share $ 0.78 $ 0.62 10 Table of Contents 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 March 31, 2026 U.S. GSE debt securities $ 12,000,000 $ 0 $ 551,864 $ 11,448,136 U.S. Government securities 9,513,457 0 129,090 9,384,367 Taxable Municipal securities 300,000 0 36,986 263,014 Tax-exempt Municipal securities 10,697,807 52,743 566,939 10,183,611 Agency MBS 114,966,030 233,518 11,291,824 103,907,724 ABS and OAS 1,496,844 0 71,364 1,425,480 CMO 688,003 0 6,983 681,020 Other investments 496,000 0 4,970 491,030 Total $ 150,158,141 $ 286,261 $ 12,660,020 $ 137,784,382 December 31, 2025 U.S. GSE debt securities $ 12,000,000 $ 0 $ 556,223 $ 11,443,777 U.S. Government securities 11,521,640 0 185,660 11,335,980 Taxable Municipal securities 300,000 0 34,437 265,563 Tax-exempt Municipal securities 10,712,772 105,694 494,815 10,323,651 Agency MBS 118,162,360 443,634 11,344,758 107,261,236 ABS and OAS 1,745,851 0 78,970 1,666,881 CMO 1,756,131 0 12,327 1,743,804 Other investments 496,000 0 8,134 487,866 Total $ 156,694,754 $ 549,328 $ 12,715,324 $ 144,528,758 The Company had investments in Agency MBS exceeding 10 % of shareholders’ equity with a book value of $ 114.9 million and $ 118.1 million, respectively, and a fair value of $ 103.9 million and $ 107.3 million, respectively, as of March 31, 2026 and December 31, 2025. 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 March 31, 2026 $ 57,771,094 $ 51,785,688 December 31, 2025 59,380,136 53,294,329 There were no sales of debt securities during the first three months of 2026 or 2025. 11 Table of Contents The scheduled maturities of debt securities as of the balance sheet dates were as follows: Amortized Fair Cost Value March 31, 2026 Due in one year or less $ 13,570,463 $ 13,383,373 Due from one to five years $ 8,779,817 8,382,987 Due from five to ten years 3,400,302 3,080,039 Due after ten years 9,441,529 9,030,259 Agency MBS 114,966,030 103,907,724 Total $ 150,158,141 $ 137,784,382 December 31, 2025 Due in one year or less $ 14,556,482 $ 14,347,722 Due from one to five years 11,054,063 10,602,542 Due from five to ten years 2,853,838 2,638,068 Due after ten years 10,068,011 9,679,190 Agency MBS 118,162,360 107,261,236 Total $ 156,694,754 $ 144,528,758 Agency MBS are not due at a single maturity date and have not been allocated to maturity groupings for purposes of the maturity table. 12 Table of Contents 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 March 31, 2026 U.S. GSE debt securities $ 0 $ 0 $ 11,448,136 $ 551,864 11 $ 11,448,136 $ 551,864 U.S. Government securities 0 0 9,384,367 129,090 17 9,384,367 129,090 Taxable Municipal securities 0 0 263,014 36,986 1 263,014 36,986 Tax-exempt Municipal securities 2,982,471 41,502 4,482,014 525,437 16 7,464,485 566,939 Agency MBS 2,938,188 10,438 81,355,199 11,281,386 116 84,293,387 11,291,824 ABS and OAS 0 0 1,425,480 71,364 4 1,425,480 71,364 CMO 0 0 681,020 6,983 3 681,020 6,983 Other investments 0 0 491,030 4,970 2 491,030 4,970 Total $ 5,920,659 $ 51,940 $ 109,530,260 $ 12,608,080 170 $ 115,450,919 $ 12,660,020 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, 2025 U.S. GSE debt securities $ 0 $ 0 $ 11,443,777 $ 556,223 11 $ 11,443,777 $ 556,223 U.S. Government securities 0 0 11,335,980 185,660 21 11,335,980 185,660 Taxable Municipal securities 0 0 265,563 34,437 1 265,563 34,437 Tax-exempt Municipal securities 980,268 3,766 5,553,783 491,049 14 6,534,051 494,815 Agency MBS 0 0 83,695,677 11,344,758 112 83,695,677 11,344,758 ABS and OAS 0 0 1,666,881 78,970 4 1,666,881 78,970 CMO 0 0 1,743,804 12,327 4 1,743,804 12,327 Other investments 0 0 487,866 8,134 2 487,866 8,134 Total $ 980,268 $ 3,766 $ 116,193,331 $ 12,711,558 169 $ 117,173,599 $ 12,715,324 As of March 31, 2026 and December 31, 2025, 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 March 31, 2026, or December 31, 2025. Accrued interest receivable on AFS debt securities which totaled $ 402,670 and $ 449,020 on March 31, 2026, and December 31, 2025, respectively, was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses. 13 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: The composition of net loans follows: March 31, 2026 December 31, 2025 Commercial & industrial $ 114,432,291 11.64 % $ 107,458,746 11.13 % Purchased (1) 9,172,762 0.93 % 10,010,347 1.04 % Commercial real estate 505,658,932 51.39 % 499,647,904 51.76 % Municipal 64,105,885 6.52 % 62,078,419 6.43 % Residential real estate - 1st lien 241,750,077 24.57 % 236,556,346 24.51 % Residential real estate - Jr lien 45,601,568 4.63 % 46,472,047 4.81 % Consumer 3,154,972 0.32 % 3,061,853 0.32 % Total loans 983,876,487 100.00 % 965,285,662 100.00 % ACL ( 11,280,241 ) ( 10,864,983 ) Deferred net loan costs 852,511 786,604 Net loans $ 973,448,757 $ 955,207,283 (1) As of March 31, 2026, purchased loans consisted of $ 2.8 million in commercial loans and $ 6.4 million in consumer loans, compared to $ 3.0 million and $ 7.0 million, respectively, as of December 31, 2025. Accrued interest receivable on loans totaled $ 4.7 million and $ 3.9 million as of March 31, 2026, and December 31, 2025, 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 March 31 2026 2025 Credit loss expense - loans $ 426,984 $ 418,874 Credit loss reversal - OBS credit exposure ( 35,479 ) ( 93,820 ) Credit loss expense $ 391,505 $ 325,054 14 Table of Contents The following tables present the activity in the ACL on loans for the periods presented. For the three months ended March 31, 2026 Balance Credit Loss Balance December 31, Expense March 31, 2025 Charge-offs Recoveries (Reversal) 2026 Commercial & Industrial $ 627,062 $ ( 29,396 ) $ 29,554 $ 32,672 $ 659,892 Purchased 30,221 0 0 ( 2,374 ) 27,847 Commercial Real Estate 6,303,378 0 0 338,437 6,641,815 Municipal 155,196 0 0 5,069 160,265 Residential Real Estate - 1st Lien 3,120,462 0 3,822 46,331 3,170,615 Residential Real Estate - Jr Lien 600,940 0 0 ( 9,430 ) 591,510 Consumer 27,724 ( 24,020 ) 8,314 16,279 28,297 Totals $ 10,864,983 $ ( 53,416 ) $ 41,690 $ 426,984 $ 11,280,241 For the year ended December 31, 2025 Balance Credit Loss Balance December 31, Expense December 31, 2024 Charge-offs Recoveries (Reversal) 2025 Commercial & Industrial $ 727,488 $ ( 393,439 ) $ 56,006 $ 237,007 $ 627,062 Purchased 22,415 0 0 7,806 30,221 Commercial Real Estate 6,487,700 0 0 ( 184,322 ) 6,303,378 Municipal 167,719 0 0 ( 12,523 ) 155,196 Residential Real Estate - 1st Lien 2,087,034 ( 13,757 ) 14,367 1,032,818 3,120,462 Residential Real Estate - Jr Lien 291,239 0 0 309,701 600,940 Consumer 26,617 ( 93,021 ) 35,633 58,495 27,724 Totals $ 9,810,212 $ ( 500,217 ) $ 106,006 $ 1,448,982 $ 10,864,983 For the three months ended March 31, 2025 Balance Credit Loss Balance December 31, Expense March 31, 2024 Charge-offs Recoveries (Reversal) 2025 Commercial & Industrial $ 727,488 $ ( 38,872 ) $ 8,291 $ 6,329 $ 703,236 Purchased 22,415 0 0 ( 1,880 ) 20,535 Commercial Real Estate 6,487,700 0 0 ( 78,197 ) 6,409,503 Municipal 167,719 0 0 8,390 176,109 Residential Real Estate - 1st Lien 2,087,034 ( 266 ) 0 438,102 2,524,870 Residential Real Estate - Jr Lien 291,239 0 0 22,337 313,576 Consumer 26,617 ( 28,120 ) 3,807 23,793 26,097 Totals $ 9,810,212 $ ( 67,258 ) $ 12,098 $ 418,874 $ 10,173,926 15 Table of Contents 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. 16 Table of Contents The risk ratings within the loan portfolio by loan segment and origination year, were as follows: As of March 31, 2026 Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted 2026 2025 2024 2023 2022 Prior Cost Basis to Term Total (Dollars in Thousands) Commercial & Industrial: Pass $ 4,652 $ 11,403 $ 16,543 $ 8,886 $ 9,946 $ 6,271 $ 41,691 $ 0 $ 99,392 Special mention 29 9 19 6 1,017 18 5,456 0 6,554 Substandard/Doubtful 0 0 0 515 3,848 1,758 2,365 0 8,486 Total $ 4,681 $ 11,412 $ 16,562 $ 9,407 $ 14,811 $ 8,047 $ 49,512 $ 0 $ 114,432 Purchased: Pass $ 3,932 $ 0 $ 0 $ 2,661 $ 64 $ 2,516 $ 0 $ 0 $ 9,173 Total $ 3,932 $ 0 $ 0 $ 2,661 $ 64 $ 2,516 $ 0 $ 0 $ 9,173 Commercial real estate: Pass $ 11,769 $ 59,018 $ 53,951 $ 79,749 $ 83,279 $ 146,881 $ 49,104 $ 0 $ 483,751 Special mention 0 0 0 5,178 2,875 7,863 0 0 15,916 Substandard/Doubtful 0 214 1,200 0 0 4,578 0 0 5,992 Total $ 11,769 $ 59,232 $ 55,151 $ 84,927 $ 86,154 $ 159,322 $ 49,104 $ 0 $ 505,659 Municipal: Pass $ 3,335 $ 26,127 $ 4,048 $ 135 $ 230 $ 11,884 $ 17,133 $ 0 $ 62,892 Special mention 0 0 0 0 0 1,214 0 0 1,214 Total $ 3,335 $ 26,127 $ 4,048 $ 135 $ 230 $ 13,098 $ 17,133 $ 0 $ 64,106 Residential real estate - 1st lien: Pass $ 10,177 $ 45,059 $ 26,219 $ 24,692 $ 29,856 $ 97,490 $ 4,404 $ 0 $ 237,897 Special mention 0 0 0 352 480 371 0 0 1,203 Substandard/Doubtful 2,423 0 0 40 0 187 0 0 2,650 Total $ 12,600 $ 45,059 $ 26,219 $ 25,084 $ 30,336 $ 98,048 $ 4,404 $ 0 $ 241,750 Residential real estate - Jr lien: Pass $ 807 $ 5,829 $ 3,854 $ 1,402 $ 1,382 $ 1,234 $ 29,381 $ 1,573 $ 45,462 Special mention 0 0 67 0 0 58 0 0 125 Substandard/Doubtful 0 0 0 0 0 15 0 0 15 Total $ 807 $ 5,829 $ 3,921 $ 1,402 $ 1,382 $ 1,307 $ 29,381 $ 1,573 $ 45,602 Consumer: Pass $ 959 $ 990 $ 603 $ 325 $ 137 $ 141 $ 0 $ 0 $ 3,155 Total $ 959 $ 990 $ 603 $ 325 $ 137 $ 141 $ 0 $ 0 $ 3,155 Total Loans $ 38,083 $ 148,649 $ 106,504 $ 123,941 $ 133,114 $ 282,479 $ 149,534 $ 1,573 $ 983,877 As of March 31, 2026, 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. 17 Table of Contents As of December 31, 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 $ 11,960 $ 17,660 $ 9,792 $ 11,597 $ 3,493 $ 3,673 $ 39,322 $ 0 $ 97,497 Special mention 0 0 7 91 $ 29 0 1,102 0 1,229 Substandard/Doubtful 0 0 545 3,948 497 1,374 2,369 0 8,733 Total $ 11,960 $ 17,660 $ 10,344 $ 15,636 $ 4,019 $ 5,047 $ 42,793 $ 0 $ 107,459 Purchased: Pass $ 4,213 $ 0 $ 3,046 $ 67 $ 733 $ 1,951 $ 0 $ 0 $ 10,010 Total $ 4,213 $ 0 $ 3,046 $ 67 $ 733 $ 1,951 $ 0 $ 0 $ 10,010 Commercial real estate: Pass $ 59,936 $ 55,850 $ 81,591 $ 88,236 $ 32,288 $ 118,864 $ 44,536 $ 0 $ 481,301 Special mention 0 0 4,605 176 0 7,034 0 0 11,815 Substandard/Doubtful 220 1,217 0 0 0 5,095 0 0 6,532 Total $ 60,156 $ 57,067 $ 86,196 $ 88,412 $ 32,288 $ 130,993 $ 44,536 $ 0 $ 499,648 Municipal: Pass $ 26,477 $ 4,074 $ 136 $ 236 $ 2,579 $ 9,469 $ 17,870 $ 0 $ 60,841 Special mention 0 0 0 0 0 1,238 0 0 1,238 Total $ 26,477 $ 4,074 $ 136 $ 236 $ 2,579 $ 10,707 $ 17,870 $ 0 $ 62,079 Residential real estate - 1st lien: Pass $ 44,262 $ 26,622 $ 25,994 $ 31,186 $ 32,717 $ 68,611 $ 4,445 $ 0 $ 233,837 Special mention 0 0 154 183 224 158 0 0 719 Substandard/Doubtful 0 0 41 0 107 1,852 0 0 2,000 Total $ 44,262 $ 26,622 $ 26,189 $ 31,369 $ 33,048 $ 70,621 $ 4,445 $ 0 $ 236,556 Residential real estate - Jr lien: Pass $ 6,149 $ 3,005 1,490 $ 1,425 $ 279 $ 1,030 $ 31,264 $ 1,686 $ 46,328 Special mention 0 68 0 0 0 61 0 0 129 Substandard/Doubtful 0 0 0 0 0 15 0 0 15 Total $ 6,149 $ 3,073 $ 1,490 $ 1,425 $ 279 $ 1,106 $ 31,264 $ 1,686 $ 46,472 Consumer: Pass $ 1,583 $ 695 $ 395 $ 182 $ 73 $ 134 $ 0 $ 0 $ 3,062 Total $ 1,583 $ 695 $ 395 $ 182 $ 73 $ 134 $ 0 $ 0 $ 3,062 Total Loans $ 154,800 $ 109,191 $ 127,796 $ 137,327 $ 73,019 $ 220,559 $ 140,908 $ 1,686 $ 965,286 As of December 31, 2025, there were (i) no Substandard/Doubtful loans within the Municipal loan segment and (ii) no Special mention or Substandard/Doubtful loans within the Purchased or Consumer loan segments. 18 Table of Contents Gross charge-offs, by loan segment and origination year, were as follows: For the three months ended March 31, 2026 Term Loans Amortized Cost Basis by Origination Year 2026 2025 2024 2023 2022 Prior Total (Dollars in Thousands) Current period gross charge-offs Commercial & Industrial $ 0 $ 0 $ 0 $ 18 $ 11 $ 0 $ 29 Consumer 0 10 0 0 0 14 24 Total current period gross charge-offs $ 0 $ 10 $ 0 $ 18 $ 11 $ 14 $ 53 For the three months ended March 31, 2026, there were no current period charge-offs within the Purchased, Commercial real estate, Municipal, Residential real estate 1 st lien, and Residential real estate Jr lien loan segments. For the year ended December 31, 2025 Term Loans and Charge Offs by Origination Year 2025 2024 2023 2022 2021 Prior Total (Dollars in Thousands) Current period gross charge-offs Commercial & Industrial $ 83 $ 0 $ 8 $ 0 $ 0 $ 303 $ 394 Residential real estate - 1st lien 0 0 0 13 0 0 13 Consumer 1 17 5 5 1 64 93 Total current period gross charge-offs $ 84 $ 17 $ 13 $ 18 $ 1 $ 367 $ 500 For the year ended, December 31, 2025, there were no current period gross charge-offs within the Purchased, Commercial real estate, Municipal, or 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 March 31, 2026, or December 31, 2025. 90 Days or Total More and March 31, 2026 Nonaccrual Accruing Commercial & industrial $ 6,403,347 $ 0 Commercial real estate 542,720 0 Residential real estate - 1st lien 220,583 535,537 Residential real estate - Jr lien 14,524 100,983 Totals $ 7,181,174 $ 636,520 90 Days or Total More and December 31, 2025 Nonaccrual Accruing Commercial & industrial $ 5,720,577 $ 0 Commercial real estate 1,020,249 0 Residential real estate - 1st lien 253,064 253,055 Residential real estate - Jr lien 15,741 225,568 Totals $ 7,009,631 $ 478,623 19 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 March 31, 2026 30-89 Days or More Past Due Current Total Loans Commercial & industrial $ 726,035 $ 944,206 $ 1,670,241 $ 112,762,050 $ 114,432,291 Purchased 0 0 0 9,172,762 9,172,762 Commercial real estate 541,861 13,556 555,417 505,103,515 505,658,932 Municipal 0 0 0 64,105,885 64,105,885 Residential real estate - 1st lien 2,465,116 563,746 3,028,862 238,721,215 241,750,077 Residential real estate - Jr lien 320,585 100,983 421,568 45,180,000 45,601,568 Consumer 232,318 0 232,318 2,922,654 3,154,972 Totals $ 4,285,915 $ 1,622,491 $ 5,908,406 $ 977,968,081 $ 983,876,487 90 Days Total December 31, 2025 30-89 Days or More Past Due Current Total Loans Commercial & industrial $ 11,044 $ 987,634 $ 998,678 $ 106,460,068 $ 107,458,746 Purchased 0 0 0 10,010,347 10,010,347 Commercial real estate 356,541 17,548 374,089 499,273,815 499,647,904 Municipal 0 0 0 62,078,419 62,078,419 Residential real estate - 1st lien 1,563,753 299,793 1,863,546 234,692,800 236,556,346 Residential real estate - Jr lien 402,645 225,568 628,213 45,843,834 46,472,047 Consumer 31,542 0 31,542 3,030,311 3,061,853 Totals $ 2,365,525 $ 1,530,543 $ 3,896,068 $ 961,389,594 $ 965,285,662 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 (i.e. repayment expected through underlying collateral, no other expected sources of repayment) as of the balance sheet dates, by collateral type: Real Estate March 31, 2026 Commercial real estate $ 1,356 Totals $ 1,356 December 31, 2025 Commercial real estate $ 1,755 Residential real estate - 1st lien 153,661 Totals $ 155,416 Residential real estate loans in process of foreclosure consisted of two loans in the amounts of $ 296,742 and $ 273,031 , as of March 31, 2026, and December 31, 2025, respectively. 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. 20 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 March 31, 2026, 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 March 31, 2026 and 2025. 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 first quarter of 2026 resulted in an increase in the qualitative factor for the risk status of criticized & classified in the commercial and CRE segments to reflect increases in criticized loans in each of the segments. 21 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. 22 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) that 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 charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is reduced 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 March 31, 2026, that were both experiencing financial difficulty and modified during the three months ended March 31, 2026, 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 $ 19,150 0.0167 % Commercial Real Estate 70,529 0.0139 % Total $ 89,679 0.0307 % As of March 31, 2026, the Company was not committed to lend additional amounts to borrowers experiencing financial difficulty whose loans were previously modified. 23 Table of Contents The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2026. Weighted- Average Term Extension (months/years) Commercial & Industrial 3 Commercial Real Estate 3 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 90 Days Current or More Commercial & Industrial $ 45,113 $ 0 Commercial Real Estate 70,529 87,931 Total $ 115,642 $ 87,931 There was one loan to a borrower experiencing financial difficulty that was modified within the previous twelve months that had subsequently defaulted during the three months ended March 31, 2026. 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 March 31, 2026, and December 31, 2025, the ACL on OBS credit exposures totaled $ 593,175 and $ 628,655 , 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, 2025, 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. 24 Table of Contents 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: Three Months Ended March 31 2026 Balance at beginning of year $ 626,827 MSRs capitalized 8,208 MSRs amortized ( 30,504 ) Balance at end of period $ 604,531 Year Ended December 31, 2025 Balance at beginning of year $ 704,488 MSRs capitalized 48,112 MSRs amortized ( 125,773 ) Balance at end of year $ 626,827 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. 25 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 2026 or 2025. March 31, December 31, Assets: (market approach) 2026 2025 Level 1 U.S. Government securities $ 9,384,367 $ 11,335,980 Level 2 U.S. GSE debt securities $ 11,448,136 $ 11,443,777 Taxable Municipal securities 263,014 265,563 Tax-exempt Municipal securities 10,183,611 10,323,651 Agency MBS 103,907,724 107,261,236 ABS and OAS 1,425,480 1,666,881 CMO 681,020 1,743,804 Other investments 491,030 487,866 Level 2 Total $ 128,400,015 $ 133,192,778 Grand Total $ 137,784,382 $ 144,528,758 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 2026 or 2025. March 31, December 31, Level 2 2026 2025 Assets: (market approach) Loans held-for-sale $ 300,000 $ 138,000 MSRs (1) 604,531 626,827 OREO 0 319,019 (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. 26 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: March 31, 2026 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 $ 64,599 $ 64,599 $ 0 $ 0 $ 64,599 Debt securities AFS 137,784 9,384 128,400 0 137,784 Restricted equity securities 2,902 0 2,902 0 2,902 Loans and loans held-for-sale, net of ACL Commercial & industrial 113,771 0 0 113,345 113,345 Purchased 9,145 0 0 9,058 9,058 Commercial real estate 499,002 0 0 490,780 490,780 Municipal 63,947 0 0 63,189 63,189 Residential real estate - 1st lien 239,747 0 0 230,273 230,273 Residential real estate - Jr lien 45,010 0 0 44,781 44,781 Consumer 3,127 0 0 3,163 3,163 MSRs (1) 605 0 995 0 995 Accrued interest receivable 5,298 0 5,298 0 5,298 Financial liabilities: Deposits Other deposits 988,003 0 987,574 0 987,574 Brokered deposits 29,764 0 30,192 0 30,192 Overnight borrowings 0 0 0 0 0 Short-term advances 0 0 0 0 0 Long-term advances 35,975 0 35,945 0 35,945 Repurchase agreements 40,087 0 40,087 0 40,087 Operating lease obligations 710 0 710 0 710 Finance lease obligations 2,904 0 2,904 0 2,904 Subordinated debentures 12,887 0 12,764 0 12,764 Accrued interest payable 495 0 495 0 495 (1) Reported fair value represents all MSRs for loans serviced by the Company, regardless of carrying amount. 27 Table of Contents December 31, 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 $ 128,062 $ 128,062 $ 0 $ 0 $ 128,062 Debt securities AFS 144,529 11,336 133,193 0 144,529 Restricted equity securities 2,933 0 2,933 0 2,933 Loans and loans held-for-sale, net of ACL Commercial & industrial 106,831 0 0 105,985 105,985 Purchased 9,980 0 0 9,857 9,857 Commercial real estate 493,328 0 0 482,275 482,275 Municipal 61,923 0 0 61,007 61,007 Residential real estate - 1st lien 234,378 0 0 224,115 224,115 Residential real estate - Jr lien 45,871 0 0 45,530 45,530 Consumer 3,034 0 0 3,068 3,068 MSRs (1) 627 0 1,025 0 1,025 Accrued interest receivable 4,608 0 4,608 0 4,608 Financial liabilities: Deposits Other deposits 1,040,158 0 1,039,494 0 1,039,494 Brokered deposits 30,510 0 31,229 0 31,229 Long-term advances 35,975 0 36,030 0 36,030 Repurchase agreements 41,498 0 41,498 0 41,498 Operating lease obligations 692 0 692 0 692 Finance lease obligations 2,964 0 2,964 0 2,964 Subordinated debentures 12,887 0 12,766 0 12,766 Accrued interest payable 485 0 485 0 485 (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 March 18, 2026, the Company’s Board declared a cash dividend of $ 0.25 per common share, payable May 1, 2026, to shareholders of record as of April 26, 2026 (as revised by vote of the Board subsequent to March 18, 2026). This dividend has been recorded in the Company’s consolidated financial statements as of the declaration date, including shares issuable under the DRIP. 28 Table of Contents