What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-08 compared with 2025-11-07 · 438 added, 611 removed, 1281 unchanged (45% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share data)

September 30,

Cash and due from banks

25 unchanged sentences

Preferred stock, par value $ 2.00 per share;

authorized 1,000,000 shares as of September 30, 2025 and December 31, 2024;

issued 0 as of September 30, 2025 and December 31, 2024

authorized 1,000,000 shares as of March 31, 2026 and December 31, 2025;

issued 0 as of March 31, 2026 and December 31, 2025

Common stock, par value $ 2.00 per share;

authorized 20,000,000 shares as of September 30, 2025 and December 31, 2024;

issued 6,477,768 as of September 30, 2025 and 6,450,392 as of December 31, 2024;

outstanding 6,246,157 as of September 30, 2025 and 6,218,781 as of December 31, 2024

authorized 20,000,000 shares as of March 31, 2026 and December 31, 2025;

issued 6,527,849 as of March 31, 2026 and 6,503,746 as of December 31, 2025;

outstanding 6,296,238 as of March 31, 2026 and 6,272,135 as of December 31, 2025

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost, 231,611 shares as of September 30, 2025 and December 31, 2024

Treasury stock, at cost, 231,611 shares as of March 31, 2026 and December 31, 2025

TOTAL STOCKHOLDERS’ EQUITY

2 unchanged sentences

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

INTEREST INCOME

11 unchanged sentences

Net interest income

Provision for credit losses

(Recovery of) provision for credit losses

Net interest income after provision for credit losses

18 unchanged sentences

Data processing fees

Goodwill impairment

Total non-interest expense

Income (loss) before income tax (benefit) expense

Income tax expense (benefit)

NET INCOME (LOSS)

Income before income tax expense

Income tax expense

PER SHARE DATA

Net income (loss) per share:

Net income per share:

Dividends per share

1 unchanged sentence

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Three Months Ended

September 30,

Other comprehensive income:

Unrealized net holding gain on debt securities available-for-sale arising during the period, net of income taxes of $ 1,019 and $ 2,670 , respectively

Fair value adjustment on derivatives, net of income taxes of $ 245 and $ 1,506 , respectively

Unrealized net holding (losses) gains on debt securities available-for-sale arising during the period, net of income taxes of $( 43 ) and $ 427 , respectively

Fair value adjustment on cash flow derivatives, net of income taxes of $( 163 ) and $( 316 ), respectively

Total other comprehensive income

Total comprehensive income

(Dollars in thousands)

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income:

Unrealized net holding gains on debt securities available-for-sale arising during the period, net of income taxes of $ 1,553 and $ 1,617 , respectively

Fair value adjustment on derivatives, net of income taxes of $ 911 and $ 753 , respectively

Total other comprehensive income

Total comprehensive income (loss)

_____________________________

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Dollars in thousands, except

8 unchanged sentences

Balance at March 31, 2026

Other comprehensive loss, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at June 30, 2025

Other comprehensive income, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at September 30, 2025

Balance at January 1, 2025

3 unchanged sentences

Balance at March 31, 2025

Other comprehensive loss, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at June 30, 2024

Other comprehensive loss, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at September 30, 2024

See accompanying notes to consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses on loans

(Release of) provision for credit losses on unfunded commitments

Goodwill impairment

(Recovery of) provision for credit losses on loans

Provision for (recovery of) credit losses on unfunded commitments

Depreciation and amortization

5 unchanged sentences

Net securities (gains) losses

Increase in accrued interest receivable

Decrease (increase) in accrued interest receivable

Increase in cash surrender value of bank owned life insurance

Gain from bank-owned life insurance proceeds

Net losses on disposals of premises and equipment

Increase in other assets

Amortization of investment in low-income housing partnerships

Increase (decrease) in accrued interest payable

(Decrease) increase in other liabilities

(Decrease) increase in accrued interest payable

Increase (decrease) in other liabilities

NET CASH PROVIDED BY OPERATING ACTIVITIES

3 unchanged sentences

Net change in restricted investment in bank stocks

Net increase in loans

Net decrease (increase) in loans originated as held for investment

Proceeds from bank-owned life insurance

1 unchanged sentence

Purchase of investment in real estate venture

NET CASH USED IN INVESTING ACTIVITIES

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in deposits

Net decrease in deposits

Net (decrease) increase in short-term borrowings

Repayment of long-term borrowings

Dividends paid, net of reinvestment

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

INCREASE IN CASH AND CASH EQUIVALENTS

17 unchanged sentences

In the opinion of management, all adjustments considered necessary for fair presentation have been included.

Operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results for the year ending December 31, 2025.

Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results for the year ending December 31, 2026.

For further information, refer to the consolidated financial statements and notes thereto included in First Keystone Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of September 30, 2025 for items that should potentially be recognized or disclosed in these consolidated financial statements.

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of March 31, 2026 for items that should potentially be recognized or disclosed in these consolidated financial statements.

The evaluation was conducted through the date these consolidated financial statements were issued.

1 unchanged sentence

Adopted ASUs:

In January of 2025, the Company adopted ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosure.

ASU 2023-09 was issued to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table, as well as income taxes paid disaggregated by jurisdiction.

The amendments in this update were effective for public business entities for annual reporting periods beginning after December 15, 2024.

The Company adopted the provisions of ASU 2023-09 effective January 1, 2025.

This ASU did not have a material effect on the Company’s financial statements.

In 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 required enhanced income tax disclosures related to the rate reconciliation and information related to income taxes paid.

This ASU was issued to enhance transparency and decision usefulness of income tax disclosures.

The standard required:

(1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid, net of refunds received, disaggregated by jurisdiction based on an established

The Company adopted the provisions of the ASU prospectively, being applied only to transactions for the

fiscal year ended December 31, 2025 and beyond.

This ASU did not have a material impact on the Corporation’s

consolidated financial statements.

Pending ASUs:

7 unchanged sentences

The Company is currently evaluating the impact that the new guidance will have on the Company’s financial statements.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting

Improvements .

This ASU amends certain aspects of the hedge accounting guidance to better reflect an entity’s risk

management activities.

The amendments in this update are effective for public business entities for annual and interim

reporting periods beginning after December 15, 2026.

The Company is currently evaluating the impact that the new

guidance will have on the Company’s consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Improvements .

This ASU clarifies the current interim disclosure requirements under US GAAP and incorporates a

disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an

entity has occurred since the previous year-end.

The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

NOTE 3 — SECURITIES

4 unchanged sentences

Securities classified as Held-to-Maturity are carried at cost adjusted for amortization of premium and accretion of discount to maturity.

At September 30, 2025 and December 31, 2024, all debt securities held were classified as available-for-sale.

At March 31, 2026 and December 31, 2025, all debt securities held were classified as available-for-sale.

Debt securities not classified as Held-to-Maturity are included in the Available-for-Sale category and are carried at fair value.

13 unchanged sentences

Corporate debt securities consist of senior debt and subordinated debt holdings.

There was no allowance for credit losses for Available-For-Sale debt securities as of September 30, 2025;

There was no allowance for credit losses for Available-For-Sale debt securities recorded as of March 31, 2026 and December 31, 2025;

therefore, it is not present in the table below.

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as Available-For-Sale were as follows at September 30, 2025 and December 31, 2024:

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as Available-For-Sale, along with the cumulative basis adjustments for fair value hedges, were as follows at March 31, 2026 and December 31, 2025:

Debt Securities Available-for-Sale

(Dollars in thousands)

September 30, 2025:

March 31, 2026:

Treasury securities

17 unchanged sentences

Corporate debt securities

Debt securities Available-for-Sale with an aggregate fair value of $ 258,895,000 at September 30, 2025 and $ 251,961,000 at December 31, 2024, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $ 219,124,000 at September 30, 2025 and $ 192,671,000 at December 31, 2024.

The amortized cost and estimated fair value of debt securities, by contractual maturity, are shown below at September 30, 2025.

Debt securities Available-for-Sale with an aggregate fair value of $ 223,351,000 at March 31, 2026 and $ 214,422,000 at December 31, 2025, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $ 163,333,000 at March 31, 2026 and $ 170,661,000 at December 31, 2025.

The amortized cost and estimated fair value of debt securities, by contractual maturity, are shown below at March 31, 2026.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

September 30, 2025

March 31, 2026

Debt Securities Available-For-Sale

11 unchanged sentences

Mortgage-backed securities are allocated for maturity reporting at their original maturity date.

At September 30, 2025 and December 31, 2024, the Corporation had holdings of securities from the following issuers in excess of ten percent of consolidated stockholders’ equity (excluding holdings of the U.S.

At March 31, 2026 and December 31, 2025, the Company had holdings of securities from the following issuers in excess of ten percent of consolidated stockholders’ equity (excluding holdings of the U.S.

Government and U.S.

1 unchanged sentence

(Dollars in thousands)

September 30, 2025:

March 31, 2026:

Sallie Mae Bank

6 unchanged sentences

Nelnet Student Loan Trust

Navient Student Loan Trust

There were no proceeds from sales of Debt Securities Available-For-Sale for the nine months ended September 30, 2025 and 2024.

There were no proceeds from sales of Debt Securities Available-For-Sale for the quarter ended March 31, 2026 and 2025.

Therefore, there were no gains or losses realized during these periods.

The summary below shows the gross unrealized losses and fair value of the Company’s debt securities.

Totals are aggregated by investment category where individual securities have been in a continuous loss position for less than 12 months or 12 months or more as of September 30, 2025 and December 31, 2024:

September 30, 2025

Totals are aggregated by investment category where individual securities have been in a continuous loss position for less than 12 months or 12 months or more as of March 31, 2026 and December 31, 2025:

March 31, 2026

(Dollars in thousands)

23 unchanged sentences

Corporate debt securities

There were 154 individual debt securities in an unrealized loss position as of September 30, 2025, with a combined decline in value representing 5.47 % of the debt securities portfolio.

There were 144 individual debt securities in an unrealized loss position as of March 31, 2026, with a combined decline in value representing 5.28 % of the debt securities portfolio.

There were 144 individual debt securities in an unrealized loss position as of December 31, 2025, with their combined decline in value representing 4.98 % of the debt securities portfolio.

1 unchanged sentence

Management evaluates debt securities for impairment where there has been a decline in fair value below the amortized cost basis of a debt security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the debt security.

The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses.

Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the Company’s intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values.

In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the debt securities.

Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the extent to which the fair value has been less than cost, (4) the Company’s intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, (5) credit ratings, (6) third party guarantees, and (7) collateral values.

In analyzing an issuer’s financial condition, management considers whether the debt securities are

issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the debt securities.

All issues of U.S.

1 unchanged sentence

All other debt securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value.

As of March 31, 2026 and December 31, 2025, there were no credit losses recorded in relation to available-for-sale debt securities.

The credit loss component would be recognized as a credit loss expense (or reversal) through the provision for credit losses and the creation of an allowance for credit losses.

Losses would be charged against the allowance if management believes the available-for-sale debt security to be uncollectible or when either criteria regarding the intent or requirement to sell are met (e.g.

the Company intends to sell or determines it is more-likely-than-not that it will be required to sell the security prior to recovering the security’s fair value).

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of debt securities available for sale.

Accrued interest receivable on debt securities available for sale is reported as a component of accrued interest receivable on the Company’s consolidated balance sheet and totaled $ 2,157,000 as of September 30, 2025 as compared to $ 2,142,000 as of December 31, 2024.

Accrued interest receivable on debt securities available for sale is reported as a component of accrued interest receivable on the Company’s consolidated balance sheet and totaled $ 2,086,000 as of March 31, 2026 as compared to $ 2,068,000 as of December 31, 2025.

Accrued interest receivable on debt securities available for sale is excluded from the estimate of credit losses.

All debt securities available for sale in an unrealized loss position, as of September 30, 2025, continue to perform as scheduled and the Company does not believe that there is a credit loss or that a provision for credit losses is necessary.

All debt securities available for sale in an unrealized loss position, as of March 31, 2026, continue to perform as scheduled and the Company does not believe that there is a credit loss or that a provision for credit losses is necessary.

Also, as part of the Company’s evaluation of its intent and ability to hold debt securities for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategies, cash flow needs, liquidity position, capital adequacy and interest rate risk position.

The Company does not currently intend to sell

the debt securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities.

The Company does not currently intend to sell the debt securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities.

Management continues to monitor all of the Company’s debt securities with a high degree of scrutiny.

1 unchanged sentence

Equity Securities

In accordance with ASC 321-10, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in income.

In accordance with ASC 321-10, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported on the consolidated statements of income.

Equity securities without readily determinable fair values are recorded at cost, adjusted for observable price changes and impairments, if any.

At September 30, 2025 and December 31, 2024, the Company had $ 1,715,000 and $ 1,587,000 , respectively, in equity securities recorded at fair value.

The following is a summary of realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2025 and 2024:

At March 31, 2026 and December 31, 2025, the Company had $ 1,984,000 and $ 1,810,000 , respectively, in equity securities recorded at fair value.

The following is a summary of realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2026 and 2025:

(Dollars in thousands)

1 unchanged sentence

Three months ended

September 30, 2025

September 30, 2024

Net gains (losses) from market value fluctuations recognized during the period on equity securities

Net gains recognized during the period on equity securities sold during the period

Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date

(Dollars in thousands)

Nine months ended

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Net gains (losses) from market value fluctuations recognized during the period on equity securities

2 unchanged sentences

Management evaluates equity securities for impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

Equity securities without readily determinable fair values are generally evaluated for impairment under FASB ASC 321, Equity Securities.

In determining impairment under the FASB ASC 321 model, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the equity security or more likely than not will be required to sell the equity security before its anticipated recovery.

Equity securities without readily determinable fair values are measured at fair value with changes in fair value recognized as earnings.

Equity securities without readily determinable fair values are measured at cost less any determined impairment, plus or minus any observable price changes in orderly transactions for the same or similar securities in accordance with ASC 321, Equity Securities.

Management evaluates equity securities without readily determinable fair values for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

In determining impairment under the ASC 321 model, management considers many factors, including (1) an offer to purchase the security at a fair value that is less than the cost/carrying value, (2) the financial condition and near-term prospects of the issuer, (3) any adverse changes in the issuer’s industry, operating environment, or macroeconomic conditions, and (4) whether the entity has the intent to sell the equity security or more likely than not will be required to sell the equity security before its anticipated recovery.

The assessment of whether an impairment exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

If an impairment loss on an equity security is considered to exist, a loss in the amount of the difference between the cost and fair value of the security is recognized.

Once the impairment is recorded, this becomes the new cost basis of the equity security and cannot be adjusted upward if there is a subsequent recovery in the fair value of the security.

If an impairment loss on an equity security is considered to exist, an impairment loss equal to the amount by which the carrying value exceeds the estimated fair value is recorded.

Once the impairment is recorded, the new carrying value becomes the new cost basis of the equity security and cannot be adjusted upward if there is a subsequent recovery in the fair value of the security.

The Company monitors the equity securities portfolio monthly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months.

Based on the factors described above, management did not consider any equity securities to be impaired at September 30, 2025 or December 31, 2024.

Based on the factors described above, management did not consider any equity securities to be impaired at March 31, 2026 or December 31, 2025.

NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

Net loans are stated at their outstanding recorded investment, net of deferred fees and costs, unearned income and the allowance for credit losses.

The Company’s loan portfolio is segmented into two categories:

Loans Held for Sale and Loans Held for Investment, as presented in the Company’s consolidated balance sheets.

Loans held for sale consist of residential real estate loans originated for sale in the secondary market.

Credit risk associated with such loans is mitigated by entering into sales commitments with third-party investors to purchase the loans upon origination.

Residential mortgage loans held for sale are carried at the lower of cost or market on an aggregate basis determined by independent pricing from appropriate federal or state agency investors.

These loans are sold without recourse.

The Company retains the right to service these loans after they are sold.

Loans held for sale amounted to $ 452,000 and $ 1,140,000 at March 31, 2026 and December 31, 2025, respectively.

Loans held for investment represent loans that the Company has the intent and ability to hold until maturity or payoff or for the foreseeable future.

These loans are reported at their stated outstanding recorded investment, net of deferred fees and costs, unearned income and the allowance for credit losses.

Interest on loans is recognized as income over the term of each loan, generally, by the accrual method.

22 unchanged sentences

The ability and willingness to repay is assessed based upon the borrower’s employment history, current financial conditions and credit background.

A majority of the properties securing residential real estate loans made by the

Company are appraised by independent appraisers.

A majority of the properties securing residential real estate loans made by the Company are appraised by independent appraisers.

The Company generally requires mortgage loan borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance, including flood insurance, if applicable.

1 unchanged sentence

Risk is increased when the Company is in a subordinate position, especially to another lender, for the loan collateral.

Residential mortgage loans held for sale are carried at the lower of cost or market on an aggregate basis determined by independent pricing from appropriate federal or state agency investors.

These loans are sold without recourse.

Loans held for sale amounted to $ 103,000 and $ 737,000 at September 30, 2025 and December 31, 2024, respectively.

Agricultural Lending

6 unchanged sentences

The Company originates commercial and industrial loans principally to businesses located in its primary market area and surrounding areas.

These loans are used for various business purposes, which include short-term loans and lines of credit to finance machinery and equipment, inventory and accounts receivable.

These loans are used for various business purposes, which include short-term loans and lines

of credit to finance machinery and equipment, inventory and accounts receivable.

Generally, the maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment.

12 unchanged sentences

The originating bank retains the unguaranteed portion of the loan.

The loans are sponsored by one of the various government agencies including the SBA, United States

Department of Agriculture (“USDA”), and the Farm Service Agency (“FSA”).

The loans are sponsored by one of the various government agencies including the SBA, United States Department of Agriculture (“USDA”), and the Farm Service Agency (“FSA”).

Government Guaranteed Loans ("GGLs") carry no credit risk due to an unconditional and irrevocable guarantee (which is supported by the full faith and credit of the U.S.

Government) on all principal and the balance of interest accruing through ninety days beyond the date that demand is made to the originating bank for repurchase of the loan.

As of September 30, 2025, the Company's balance of GGLs was $ 3,939,000 , compared to $ 4,306,000 at December 31, 2024.

As of March 31, 2026, the Company's balance of GGLs was $ 3,766,000 , compared to $ 3,902,000 at December 31, 2025.

Consumer Lending

11 unchanged sentences

These loans may be either taxable or tax-free.

These loans may be issued for the purpose of land improvement, infrastructure changes, bond refinances, or the purchase of equipment.

These loans may be

issued for the purpose of land improvement, infrastructure changes, bond refinances, or the purchase of equipment.

State and political loans are typically secured by the taxing power of the borrowing entity.

4 unchanged sentences

Repayment is based on the full faith, credit, and ability of the borrowing entity to tax and then collect the payments.

Delinquency or loss on these types of loans is de minimus.

Delinquency or loss on these types of loans is de minimis.

Delinquent Loans

4 unchanged sentences

Commercial and industrial loans and real estate loans issued for commercial purpose are charged off in whole or in part when they become sufficiently delinquent based upon the terms of the underlying loan contract and when a collateral deficiency exists.

Because all or part of the contractual cash flows are not expected to be collected, the loan is designated for individual evaluation to determine expected credit losses based on an analysis of the cash flows or collateral estimated at fair value less cost to sell.

Because all or part of the contractual cash flows are not expected to be collected, the loan is considered to require an individual evaluation based on the Company’s analysis of the cash flows or collateral estimated at fair value less cost to sell to determine if a specific allocation is required for the loan under the allowance for credit losses and/or if a charge-off is required.

Should a GGL default, demand is made to the originating bank for repurchase of the loan.

21 unchanged sentences

This evaluation is inherently subjective as it requires material estimates based on management’s judgment regarding the projection of expected credit losses over the contractual lifetime of the loans.

Modeling of the ACL uses sophisticated statistical techniques to arrive at reasonable and supportable forecasts of expected losses.

The Company has contracted with a third-party vendor to assist in developing models for the ACL related to the Company’s loan portfolio under ASC 326.

The Company has contracted with a third-party vendor to assist in developing models for the ACL related to the Company’s loan portfolio under ASC 326 Financial Instruments – Credit Losses .

The Company has opted to utilize the Weighted Average Remaining Maturity (“WARM”) method to calculate the ACL which uses an average annual charge-off rate.

4 unchanged sentences

These forecasts may include data from internal sources, external sources, or a combination of both.

When the contractual term of a loan extends beyond the reasonable and supportable period, ASC Topic 326 requires reverting to historical loss information, or an appropriate proxy, for those periods beyond the reasonable and supportable forecast period (often referred to as the reversion period).

When the contractual term of a loan extends beyond the reasonable and supportable period, ASC 326 requires reverting to historical loss information, or an appropriate proxy, for those periods beyond the reasonable and supportable forecast period (often referred to as the reversion period).

The Company may revert to historical loss information for each individual forecast input or based on the entire estimate of loss.

Reversion to historical loss

information may be immediate, occur on a straight-line basis, or use any systematic/rational method.

Reversion to historical loss information may be immediate, occur on a straight-line basis, or use any systematic/rational method.

Management may apply different reversion techniques depending on the economic environment or applicable loan portfolio.

40 unchanged sentences

Loans individually evaluated for expected credit losses may have zero specific allocation if the evaluation/analysis shows that no collateral deficiency exists for the loan and no loss is expected.

ASC 326-20, Loan Modifications Experiencing Financial Difficulty, eliminated the accounting guidance for Troubled Debt Restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

In accordance with the new guidance, the Company no longer evaluates loans with modifications made to borrowers experiencing financial difficulty individually for impairment, nor establishes a related specific reserve for such loans, but rather these loans are included in their respective portfolio segment and evaluated collectively for impairment to establish an allowance for credit losses.

Enhanced disclosure requirements are required for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty under ASC 326-20, Loan Modifications Experiencing Financial Difficulty .

In accordance with ASC 326-20, the Company no longer evaluates loans with modifications made to borrowers experiencing financial difficulty individually for impairment, nor establishes a related specific reserve for such loans, but rather these loans are included in their respective portfolio segment and evaluated collectively for impairment to establish an allowance for credit losses.

Any modifications of loans to borrowers experiencing financial difficulty that are classified as non-accrual or are otherwise designated as collateral dependent are individually evaluated for determination of expected credit losses.

16 unchanged sentences

The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and, if necessary, is recorded in other liabilities on the consolidated balance sheets.

As of September 30, 2025 and December 31, 2024, the amount of the reserve for unfunded lending commitments was $ 90,000 and $ 102,000 , respectively.

As of March 31, 2026 and December 31, 2025, the amount of the reserve for unfunded lending commitments was $ 144,000 and $ 90,000 , respectively.

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of loans.

Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $ 2,638,000 as of September 30, 2025 compared to $ 2,575,000 at December 31, 2024.

Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $ 2,614,000 as of March 31, 2026 compared to $ 2,736,000 at December 31, 2025.

Accrued interest receivable on loans is excluded from the estimate of credit losses.

38 unchanged sentences

Loans are graded doubtful if they contain weaknesses so serious that collection or liquidation in full is questionable.

The following table presents outstanding loan balances by loan class prior to allocation of net deferred fees and costs, as well as the balance of total loans held for investment after allocation of net deferred fees and costs and net loans after allocation of the allowance for credit losses as of September 30, 2025 and December 31, 2024.

(Dollars in thousands)

September 30,

Commercial and Industrial

4 unchanged sentences

Allowance for Credit Losses

The following tables present the classes of the loan portfolio summarized by risk rating and year of origination and year-to-date gross charge-offs by loan portfolio summarized by year of origination as of September 30, 2025 and December 31, 2024.

September 30, 2025:

March 31, 2026:

(Dollars in thousands)

51 unchanged sentences

Total Gross Charge Offs

State and Political Subdivision Loans include loans categorized as tax-free in the amount of $ 20,362,000 at September 30, 2025 and $ 22,138,000 at December 31, 2024.

Commercial and Industrial Loans include $ 3,939,000 of GGLs as of September 30, 2025 and $ 4,306,000 of GGLs as of December 31, 2024.

The activity in the allowance for credit losses by loan class is summarized below for the three and nine months ended September 30, 2025 and 2024 and the year ended December 31, 2024.

(Dollars in thousands)

and Industrial

As of and for the three months ended September 30, 2025:

Allowance for Credit Losses:

Beginning balance

(Release of) Provision for Credit Losses

Ending Balance

State and Political Subdivision Loans include loans categorized as tax-free in the amount of $ 20,083,000 at March 31, 2026 and $ 20,083,000 at December 31, 2025.

Commercial and Industrial Loans include $ 3,766,000 of GGLs as of March 31, 2026 and $ 3,902,000 of GGLs as of December 31, 2025.

The activity in the allowance for credit losses by loan class is summarized below for the three months ended March 31, 2026 and 2025 and the year ended December 31, 2025.

(Dollars in thousands)

and Industrial

As of and for the nine months ended September 30, 2025:

As of and for the three months ended March 31, 2026:

Allowance for Credit Losses:

Beginning balance January 1, 2026

Provision for Credit Losses

(Recovery of) Provision for Credit Losses

Ending Balance

12 unchanged sentences

and Industrial

As of and for the three months ended September 30, 2024:

Allowance for Loan Losses:

Beginning balance

Provision (release of provision) for Credit Losses

Ending Balance

(Dollars in thousands)

and Industrial

As of and for the nine months ended September 30, 2024:

As of and for the three months ended March 31, 2025:

Allowance for Credit Losses:

31 unchanged sentences

evaluated for impairment

The Company's activity in the allowance for credit losses on unfunded commitments for the nine months ended September 30, 2025 and 2024 was as follows:

The Company's activity in the allowance for credit losses on unfunded commitments for the three months ended March 31, 2026 and 2025 was as follows:

(Dollars in thousands)

Balance at January 1

(Release of) provision for credit losses on unfunded commitments

Balance at September 30

During the nine months ended September 30, 2025, there was one modification granted on a loan to a borrower experiencing financial difficulty which carried a post modification recorded investment of $ 107,000 .

The loan modification granted during the nine months ended September 30, 2025 was a payment modification that allowed a period of interest-only payments of eleven months .

There were two loan modification granted on loans to borrowers experiencing financial difficulty during the nine months ended September 30, 2024 which carried a post modification recorded investment of $ 9,575,000 .

One modification on a loan carrying a post modification recorded investment of $ 120,000 was granted to extend the maturity date of the loan by ten months and one modification was a payment modification granting a period of interest-only payments of six months on a loan carrying a post modification recorded investment of $ 9,455,000 .

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $ 107,000 at September 30, 2025 and $ 10,193,000 at December 31, 2024.

There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of September 30, 2025 or December 31, 2024.

At September 30, 2025, the modification of the loan to a borrower experiencing financial difficulty with an outstanding recorded investment of $ 107,000 was not in compliance with the terms of its restructure.

At December 31, 2024, there were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure.

The following tables present the outstanding recorded investment and number of modifications of loans to borrowers experiencing financial difficulty at September 30, 2025 and December 31, 2024.

Provision for (recovery of) credit losses on unfunded commitments

Balance at March 31

During the three months ended March 31, 2026, there were two modifications granted on loans to borrowers experiencing financial difficulty which carried a combined post modification recorded investment of $ 640,000 .

The loan modifications granted during the three months ended March 31, 2026 consisted of one payment modification that allowed a period of interest-only payments of six months and one modification that allowed a period of interest-only payments of four months and extended the maturity of the loan by an additional four months .

There were no loan modifications granted on loans to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $ 640,000 at March 31, 2026 and $ 12,661,000 at December 31, 2025.

There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of March 31, 2026 or December 31, 2025.

At March 31, 2026, there were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure, compared to December 31, 2025, when there were two modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure.

The following tables present the outstanding recorded investment and number of modifications of loans to borrowers experiencing financial difficulty at March 31, 2026 and December 31, 2025.

(Dollars in thousands)

September 30, 2025

March 31, 2026

Modifications of Loans to Borrowers Experiencing Financial Difficulty:

1 unchanged sentence

Subtotal - Real Estate:

Commercial and Industrial:

Subtotal - Commercial and Industrial:

(Dollars in thousands)

5 unchanged sentences

Subtotal - Commercial and Industrial:

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding September 30, 2025, two loans experienced payment defaults during the nine months ended September 30, 2025.

One loan carrying a balance of $ 421,000 experienced a payment default during the three and nine months ended September 30, 2025 and remained in past due status as of September 30, 2025.

One loan carrying a balance of $ 107,000 experienced a payment default during the three and nine months ended September 30, 2025 and remained in past due status as of September 30, 2025.

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding September 30, 2024, one loan carrying a balance of $ 9,427,000 experienced a payment default during the nine months ended September 30, 2024 but the loan was paid current by the customer as of September 30, 2024.

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the nine months ended September 30, 2025 and the three and nine months ended September 30, 2024.

There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended September 30, 2025.

(Dollars in thousands)

For the Nine Months Ended September 30, 2025

Pre-Modification

Post-Modification

(Dollars in thousands)

For the Three Months Ended September 30, 2024

Pre-Modification

Post-Modification

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding March 31, 2026, three loans experienced payment defaults during the three months ended March 31, 2026.

One loan carrying a balance of $ 311,000 experienced a payment default during the three months ended March 31, 2026 but was paid current prior to March 31, 2026, one loan carrying a balance of $ 9,571,000 experienced a payment default during the three months ended March 31, 2026 and remained greater than 30 days past due at March 31, 2026, and one loan that was subsequently paid off prior to March 31, 2026 had experienced a payment default during the three months ended March 31, 2026.

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding March 31, 2025, two loans experienced payment defaults during the three months ended March 31, 2025.

One loan carrying a balance of $ 120,000 experienced a payment default during the three months ended March 31, 2025 but the loan was paid off by the customer as of March 31, 2025.

A loan carrying a balance of $ 425,000 experienced a payment default during the three months ended March 31, 2025 and remained in past due status as of March 31, 2025.

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the three months ended March 31, 2026.

There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended March 31, 2025.

(Dollars in thousands)

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2026

Pre-Modification

Post-Modification

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the nine months ended September 30, 2025 and the three and nine months ended Septmber 30, 2024.

There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended September 30, 2025.

For the Nine Months Ended September 30, 2025

For the Three Months Ended September 30, 2024

For the Nine Months Ended September 30, 2024

The recorded investment, unpaid principal balance, and the related allowance of the Company’s non-accrual loans are summarized below at September 30, 2025 and December 31, 2024:

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the three months ended March 31, 2026.

There were no modifications of loans to borrowers experiencing financial difficulty completed during the three months ended March 31, 2025.

For the Three Months Ended March 31, 2026

“ Other” modification completed during the three months ended March 31, 2026 contained components of both a term and payment modification, allowing a period of interest-only payments of four months and extending the maturity of the loan by four months .

The recorded investment, unpaid principal balance, and the related allowance of the Company’s non-accrual loans are summarized below at March 31, 2026 and December 31, 2025:

(Dollars in thousands)

September 30, 2025

March 31, 2026

Commercial & Industrial

(Dollars in thousands)

December 31, 2025

Commercial & Industrial

The recorded investment represents the loan balance reflected on the consolidated balance sheets net of any charge-offs.

The unpaid balance is equal to the gross amount due on the loan.

The following table presents the Company’s individually evaluated, collateral-dependent loans by segment as of September 30, 2025 and December 31, 2024.

The following table presents the Company’s individually evaluated, collateral-dependent loans by segment as of March 31, 2026 and December 31, 2025.

(Dollars in thousands)

September 30, 2025

March 31, 2026

Loan Segment/Collateral Type

1 unchanged sentence

Multifamily Real Estate

Non-owner Occupied, Non-Farm, Non-Residential Real Estate

Owner Occupied, Non-Farm, Non-Residential Real Estate

7 unchanged sentences

Multifamily Real Estate

Non-owner Occupied, Non-Farm, Non-Residential Real Estate

Owner Occupied, Non-Farm, Non-Residential Real Estate

Subtotal - Real Estate:

Commercial and Industrial:

Commercial Motor Vehicle

Subtotal - Commercial and Industrial:

Agricultural:

Subtotal - Agricultural:

At September 30, 2025 and December 31, 2024, there were no commitments to lend additional funds with respect to individually evaluated loans.

Total non-performing assets (which includes loans held for investment on non-accrual status, foreclosed assets held for resale and loans past-due 90 days or more and still accruing interest) as of September 30, 2025 and December 31, 2024 were as follows:

At March 31, 2026 and December 31, 2025, there were no commitments to lend additional funds with respect to individually evaluated loans.

Total non-performing assets (which includes loans held for investment on non-accrual status, foreclosed assets held for resale and loans past-due 90 days or more and still accruing interest) as of March 31, 2026 and December 31, 2025 were as follows:

(Dollars in thousands)

September 30,

Commercial and Industrial

4 unchanged sentences

Total non-performing assets

There were no foreclosed assets held for resale at September 30, 2025 or December 31, 2024.

Consumer mortgage loans secured by residential real estate for which the Company has entered into formal foreclosure proceedings but for which physical possession has yet to be obtained amounted to $ 0 at September 30, 2025 and December 31, 2024.

There were no foreclosed assets held for resale at March 31, 2026 or December 31, 2025.

When applicable, consumer mortgage loans secured by residential real estate for which the Company has entered into formal foreclosure proceedings but for which physical possession has yet to be obtained are not included in foreclosed asset balances.

The following tables present the classes of the loan portfolio, including individually evaluated loans, summarized by past-due status at September 30, 2025 and December 31, 2024.

The following tables present the classes of the loan portfolio, including individually evaluated loans, summarized by past-due status at March 31, 2026 and December 31, 2025.

(Dollars in thousands)

September 30, 2025:

March 31, 2026:

Commercial and Industrial

5 unchanged sentences

NOTE 5 — DEPOSITS

Major classifications of deposits at September 30, 2025 and December 31, 2024 consisted of:

Major classifications of deposits at March 31, 2026 and December 31, 2025 consisted of:

(Dollars in thousands)

September 30,

Non-interest bearing demand

3 unchanged sentences

Total deposits

The following table represents scheduled maturities of the Company’s time deposits, that are greater than or equal to $100K, by time remaining until maturity as of September 30, 2025.

The following table represents scheduled maturities of the Company’s time deposits, that are greater than or equal to $250K, by time remaining until maturity as of March 31, 2026.

(Dollars in thousands)

September 30, 2025

March 31, 2026

3 months or less

5 unchanged sentences

Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, the Federal Discount Window, and Federal Home Loan Bank of Pittsburgh (“FHLB”) advances, which generally represent overnight or less than 30-day borrowings.

Short-term borrowings and weighted–average interest rates at September 30, 2025 and December 31, 2024 are as follows:

Short-term borrowings and weighted–average interest rates at March 31, 2026 and December 31, 2025 are as follows:

(Dollars in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

13 unchanged sentences

The counterparty has the right to sell or repledge the investment securities.

The following table presents the repurchase agreements subject to enforceable master netting arrangements as of September 30, 2025 and December 31, 2024.

The following table presents the repurchase agreements subject to enforceable master netting arrangements as of March 31, 2026 and December 31, 2025.

(Dollars in thousands)

3 unchanged sentences

Balance Sheet

September 30, 2025

March 31, 2026

Repurchase agreements (a)

1 unchanged sentence

Repurchase agreements (a)

(a) As of September 30, 2025 and December 31, 2024, the fair value of securities pledged in connection with repurchase agreements was $ 34,092,000 and $ 36,216,000 , respectively.

The following table presents the remaining contractual maturity of the master netting arrangement or repurchase agreements as of September 30, 2025:

(a) As of March 31, 2026 and December 31, 2025, the fair value of securities pledged in connection with repurchase agreements was $ 43,011,000 and $ 44,220,000 , respectively.

The following table presents the remaining contractual maturity of the master netting arrangement or repurchase agreements as of March 31, 2026:

(Dollars in thousands)

Remaining Contractual Maturity of the Agreements

September 30, 2025:

March 31, 2026:

Repurchase agreements and repurchase-to-maturity transactions:

4 unchanged sentences

Upon any default, under the terms of a master agreement, the FHLB may declare all indebtedness of the Company immediately due.

In addition, the FHLB shall not be required to fund advances under any outstanding commitments.

As of September 30, 2025 and December 31, 2024, the Company had $ 106,000,000 in long-term borrowings outstanding with the FHLB.

In addition, the FHLB shall not be required to fund advances under

any outstanding commitments.

As of March 31, 2026 and December 31, 2025, the Company had $ 106,000,000 in long-term borrowings outstanding with the FHLB.

Irrevocable standby letters of credit may be issued to a customer/beneficiary by the FHLB on the Company’s behalf in order to secure public/municipal unit deposits, provide credit enhancement to certain transaction types, or to support payment obligations to third parties.

These irrevocable standby letters of credit are supported by an irrevocable and independent guarantee by the FHLB for the Company’s pledging obligation to secure public/municipal unit deposits which eliminates the need for the Company to pledge collateral in the amount necessary to secure these funds.

There were no irrevocable standby letters of credit which could be drawn on through the FHLB’s close of business on September 30, 2025 or December 31, 2024.

There were no irrevocable standby letters of credit which could be drawn on through the FHLB’s close of business on March 31, 2026 or December 31, 2025.

Any irrevocable standby letters of credit are issued as necessary in an amount appropriate to secure specific public/municipal unit deposits.

1 unchanged sentence

Principal qualifying assets are certain real estate mortgages and investment securities.

As of September 30, 2025, loans of $ 772,448,000 were pledged to the FHLB which resulted in a FHLB maximum borrowing capacity of $ 539,461,000 .

As of September 30, 2025, no securities were pledged as collateral to the FHLB to secure FHLB loans and letters of credit.

As of March 31, 2026, loans of $ 759,924,000 were pledged to the FHLB which resulted in a FHLB maximum borrowing capacity of $ 529,750,000 .

As of March 31, 2026, no securities were pledged as collateral to the FHLB to secure FHLB loans and letters of credit.

NOTE 7 — SUBORDINATED DEBT

2 unchanged sentences

The Company utilized the net proceeds it received from the sale of the 2020 Notes to support organic growth and for general corporate purposes.

The 2020 Notes bear a fixed interest rate of 4.375 % per year for the first five years and then float based on a benchmark rate (as defined).

Interest is payable semi-annually in arrears on June 30 and December 31 of each year, which began on June 30, 2021, for the first five years after issuance and will be payable quarterly in arrears thereafter on March 31, June 30, September 30 and December 31.

The 2020 Notes will mature on December 31, 2030 and are redeemable in whole or in part, without premium or penalty, at any time on or after December 31, 2025 and prior to December 31, 2030.

The 2020 Notes carry a variable interest rate which floats based on a benchmark rate (as defined).

Interest is payable quarterly in arrears on March 31, June 30, September 30 and December 31.

The 2020 Notes will mature on December 31, 2030 and are redeemable in whole or in part, without premium or penalty, at any time after December 31, 2025 and prior to December 31, 2030.

Additionally, if all or any portion of the 2020 Notes cease to be deemed Tier 2 capital, the Corporation may redeem, in whole and not in part, at any time upon giving not less than ten days ’ notice, an amount equal to one hundred percent ( 100 %) of the principal amount outstanding plus accrued but unpaid interest to but excluding the date fixed for redemption.

4 unchanged sentences

The Company currently leases two branch banking facilities and one parcel of land under operating leases.

At September 30, 2025, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $ 1,353,000 and $ 1,885,000 , respectively.

At March 31, 2026, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $ 1,332,000 and $ 1,871,000 , respectively.

At December 31, 2025, right-of-use assets and lease liabilities stood at $ 1,326,000 and $ 1,862,000 , respectively, in the consolidated balance sheets.

The Company recognized total operating lease costs for the nine months ended September 30, 2025 and 2024 of $ 151,000 and $ 142,000 , respectively.

The Company recognized total operating lease costs for the three months ended March 31, 2026 and 2025 of $ 52,000 and $ 48,000 , respectively.

Operating lease costs are included in occupancy, net in the accompanying statements of income.

Cash payments totaled $ 139,000 and $ 132,000 , respectively, for the nine months ended September 30, 2025 and 2024.

Cash payments totaled $ 48,000 and $ 44,000 , respectively, for the three months ended March 31, 2026 and 2025.

The Company currently has one finance lease for equipment.

At September 30, 2025, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $ 44,000 and $ 35,000 , respectively.

At December 31, 2024, right-of-use assets and lease liabilities stood at $ 0 .

Amounts recognized as right-of-use assets and lease liabilities related to finance leases are included in premises and equipment, net and other liabilities, respectively, in the accompanying balance sheet.

Total finance lease costs that were recognized by the Company for the nine months ended September 30, 2025 and 2024 were immaterial.

Cash payments totaled $ 5,000 and $ 0 for the nine months ended September 30, 2025 and 2024, respectively.

At March 31, 2026, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $ 44,000 and $ 31,000 , respectively.

At December 31, 2025, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $ 29,000 and $ 33,000 .

recognized as right-of-use assets and lease liabilities related to finance leases are included in premises and equipment, net and other liabilities, respectively, in the accompanying consolidated balance sheets.

Total finance lease costs that were recognized by the Company for the three months ended March 31, 2026 and 2025 were immaterial.

Cash payments totaled $ 2,000 and $ 0 for the three months ended March 31, 2026 and 2025, respectively.

Options to extend or terminate a lease may be included in the Company’s lease agreements.

3 unchanged sentences

therefore, the Company’s incremental borrowing rate was used for each of the leases.

The following table displays the weighted-average term and discount rates for operating and finance leases outstanding as of September 30, 2025 and December 31, 2024.

September 30,

The following table displays the weighted-average term and discount rates for operating and finance leases outstanding as of March 31, 2026 and December 31, 2025.

Weighted-average term (years)

2 unchanged sentences

(Dollars in thousands)

September 30,

Minimum Lease Payments due:

14 unchanged sentences

Net Fair Values of Derivative Instruments on the Statement of Financial Condition

The tables below present the net fair value of the Company’s derivative financial instruments as well as the classification on the Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024:

The tables below present the net fair value of the Company’s derivative financial instruments as well as the classification on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025:

(Dollars in thousands)

September 30, 2025

March 31, 2026

Derivative Assets

10 unchanged sentences

Other Liabilities

The following table presents the derivative liabilities subject to an enforceable master netting arrangement as of September 30, 2025 and December 31, 2024:

The following table presents the derivative liabilities subject to an enforceable master netting arrangement as of March 31, 2026 and December 31, 2025:

Gross Amounts Not Offset in the Consolidated Balance Sheet

5 unchanged sentences

Balance Sheet

September 30, 2025

March 31, 2026

December 31, 2025

The following table presents the remaining contractual maturity of the master netting arrangements as of September 30, 2025:

The following table presents the remaining contractual maturity of the master netting arrangements as of March 31, 2026:

Remaining Contractual Maturity of the Agreements

(Dollars in thousands)

September 30, 2025:

March 31, 2026:

Derivative Assets

6 unchanged sentences

Such derivatives are used to hedge the changes in fair value of certain of its pools of fixed rate assets.

As of September 30, 2025, the Company had a total of four interest rate swaps with a combined notional amount of $ 97,760,000 hedging fixed-rate available-for-sale debt securities and one interest rate swap with a notional amount of $ 75,000,000 hedging fixed-rate loans.

As of September 30, 2025 and December 31, 2024, the following amounts were recorded on the balance sheet related to the cumulative basis adjustment for fair value hedges:

As of March 31, 2026, the Company had a total of four interest rate swaps with a combined notional amount of $ 95,519,000 hedging fixed-rate available-for-sale debt securities and one interest rate swap with a notional amount of $ 75,000,000 hedging fixed-rate loans.

As of December 31, 2025, the Company had a total of four interest rate swaps with a combined notional amount

of $ 96,646,000 hedging fixed-rate debt securities available-for-sale and one interest rate swap with a notional amount of $ 75,000,000 hedging fixed rate loans.

As of March 31, 2026 and December 31, 2025, the following amounts were recorded on the balance sheet related to the cumulative basis adjustment for fair value hedges:

(Dollars in thousands)

September 30,

Carrying amount of hedged assets:

6 unchanged sentences

(Dollars in thousands)

September 30,

Cumulative amount of fair value hedging adjustment included in the carrying amount of assets:

2 unchanged sentences

Available-for-sale - MBS

The table below presents the pre-tax effects of the Company’s derivative instruments designated as fair value hedges on the Consolidated Statements of Income for the year-to-date periods ended September 30, 2025 and 2024:

(Dollars in thousands)

September 30,

Amount of loss recognized in other comprehensive loss

Amount of gain, net of fair value re-measurements, included in interest income

The amount of (loss) gain, net of fair value re-measurements, included in interest income on the Company’s consolidated statements of income for derivative instruments designated as fair value hedges was $( 114,000 ) for the three months ended March 31, 2026 and $ 164,000 for the same period in 2025.

Cash Flow Hedges of Interest Rate Risk

2 unchanged sentences

These interest rate products are designated as cash flow hedges.

As of September 30, 2025, the Company had a total of two interest rate swaps with a combined notional amount of $ 100,000,000 hedging specific short-term wholesale funding positions.

As of March 31, 2026 and December 31, 2025, the Company had a total of two interest rate swaps with a combined notional amount of $ 100,000,000 hedging specific short-term wholesale funding positions.

For derivatives designated as cash flow hedges, the gain or loss on the derivatives is recorded in other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

1 unchanged sentence

Interest rate swaps designated as cash flow hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.

For cash flow hedges on the Company's short-term wholesale funding positions, amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s hedged variable rate short-term wholesale funding positions.

During the year-to-date period ended September 30, 2025, the Company reclassified $ 1,000 as a reduction in interest expense.

The table below presents the pre-tax effects of the Company’s derivative instruments designated as cash flow hedges on the Consolidated Statements of Income for the year-to-date periods ended September 30, 2025 and 2024:

For cash flow hedges on the Company's short-term wholesale funding positions,

amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s hedged variable rate short-term wholesale funding positions.

(Dollars in thousands)

September 30,

Amount of loss recognized in other comprehensive loss

Amount of gain reclassified from accumulated other comprehensive loss to interest expense

Amount of loss recognized in accumulated other comprehensive loss

Amount of (loss) gain reclassified from accumulated other comprehensive loss to interest expense

Interest rate swaps notional amount

1 unchanged sentence

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty.

The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the

counterparty.

As of September 30, 2025 and December 31, 2024, the Company’s derivatives were in a net liability position resulting in the Company having collateral in the amount of $ 6,570,000 posted with the counterparty at September 30, 2025 and December 31, 2024.

As of March 31, 2026 and December 31, 2025, the Company’s derivatives were in a net liability position resulting in the Company having collateral in the amount of $ 6,570,000 posted with the counterparty at March 31, 2026 and December 31, 2025.

NOTE 10 — FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK

8 unchanged sentences

The Company may require collateral or other security to support financial instruments with off-balance sheet credit risk.

The contract or notional amounts at September 30, 2025 and December 31, 2024 were as follows:

The contract or notional amounts at March 31, 2026 and December 31, 2025 were as follows:

(Dollars in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

15 unchanged sentences

The ability of the majority of the Company’s customers to honor their contractual loan obligations is dependent on the economy and real estate market in this area.

At September 30, 2025, the Company had $ 866,145,000 in loans secured by real estate, which represented 90.5 % of total loans.

At March 31, 2026, the Company had $ 839,239,000 in loans secured by real estate, which represented 90.1 % of total loans, compared to December 31, 2025 when the Company had $ 853,668,000 in loans secured by real estate, which represented 90.2 % of total loans.

The real estate loan portfolio is largely secured by lessors of residential buildings and dwellings, lessors of non-residential buildings, and lessors of hotels/motels.

As of September 30, 2025 and December 31, 2024, management is of the opinion that there were no concentrations exceeding 10% of total loans with regard to loans to borrowers who were engaged in similar activities that were similarly impacted by economic or other conditions.

As of March 31, 2026 and December 31, 2025, management is of the opinion that there were no concentrations exceeding 10% of total loans with regard to loans to borrowers who were engaged in similar activities that were similarly impacted by economic or other conditions.

As all financial instruments are subject to some level of credit risk, the Company requires collateral and/or guarantees for all loans.

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Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability.

When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance.

When the reporting entity concludes there has been a

significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance.

This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly.

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Financial Assets Measured at Fair Value on a Recurring Basis

At September 30, 2025 and December 31, 2024, securities measured at fair value on a recurring basis and the valuation methods used are as follows:

At March 31, 2026 and December 31, 2025, securities measured at fair value on a recurring basis and the valuation methods used are as follows:

(Dollars in thousands)

September 30, 2025

March 31, 2026

Debt Securities Available-for-Sale:

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Marketable equity securities

Total recurring fair value measurements

(Dollars in thousands)

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Marketable equity securities

Total recurring fair value measurements

The estimated fair values of equity securities and US Treasury debt securities classified as Level 1 are derived from quoted market prices in active markets;

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The estimated fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds.

The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (observable inputs), and are therefore classified as Level 2 within the fair value hierarchy.

The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (observable inputs), and are therefore classified as Level

2 within the fair value hierarchy.

The Company does not have any Level 3 inputs for securities.

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There were no transfers between valuation levels in 2026 and 2025.

Individually evaluated loans measured at fair value on a nonrecurring basis as of September 30, 2025 and December 31, 2024 are as follows:

Individually evaluated loans measured at fair value on a nonrecurring basis as of March 31, 2026 and December 31, 2025 are as follows:

(Dollars in thousands)

Assets at September 30, 2025

Assets at March 31, 2026

Individually evaluated loans:

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Individually evaluated loans:

Commercial and Industrial

Total individually evaluated loans

Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis

There were no foreclosed assets held for resale measured at fair value on a nonrecurring basis at September 30, 2025 and December 31, 2024.

There were no foreclosed assets held for resale measured at fair value on a nonrecurring basis at March 31, 2026 and December 31, 2025.

The Company’s foreclosed asset valuation procedure requires an appraisal or a Certificate of Inspection, which considers the sales prices of similar properties in the proximate vicinity, to be completed periodically with the exception of those cases in which the Bank has obtained a sales agreement.

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Quantitative Information about Level 3 Fair Value Measurements

September 30, 2025

March 31, 2026

Valuation Technique

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(Dollars in thousands)

Fair Value Measurements at September 30, 2025

Fair Value Measurements at March 31, 2026

FINANCIAL ASSETS:

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Accrued interest payable

Derivative liabilities

(Dollars in thousands)

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Accrued interest payable

Derivative liabilities

NOTE 12 — REVENUE RECOGNITION

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Wealth/Asset/Trust Management Fees

Wealth management services are delivered to individuals, corporations and retirement funds located primarily within our geographic markets.

Wealth management services are delivered to individuals, corporations and retirement funds located primarily within the Company’s geographic markets.

The Trust Department of the Company conducts the wealth management operations, which provides a broad range of personal and corporate fiduciary services, including the administration of estates.

Assets held in a fiduciary capacity by the Trust Department are not assets of the Company and, therefore, are not included in our consolidated financial statements.

Wealth management fees, which are contractually agreed with each customer, are earned each month and recognized on a cash basis based on average fair value of the trust assets under management.

Assets held in a fiduciary capacity by the Trust Department are not assets of the Company and, therefore, are not included in the Company’s consolidated financial statements.

Wealth management fees, which are contractually agreed with each customer, are earned each month and recognized on a monthly basis based on average fair value of the trust assets under management.

The services provided under such a contract are considered a single performance obligation under ASC 606 because they embody a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer.

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Wealth management fees are included within non-interest income in the consolidated statements of income.

As of September 30, 2025 and December 31, 2024, the fair value of trust assets under management was $ 120,725,000 and $ 120,857,000 , respectively.

As of March 31, 2026 and December 31, 2025, the fair value of trust assets under management was $ 121,442,000 and $ 122,111,000 , respectively.

The costs of acquiring asset

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All expenses related to the settlement of debit card transactions (both point-of-sale and ATM) are recognized on a monthly basis and included in non-interest expense on the consolidated statements of income.

NOTE 13 — EARNINGS (LOSSES) PER SHARE

Basic earnings (losses) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period.

Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Corporation.

At September 30, 2025 and 2024, there were no potential dilutive common shares outstanding.

The following table sets forth the computation of basic and diluted earnings (losses) per share.

NOTE 13 — EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Corporation.

At March 31, 2026 and 2025, there were no potential dilutive common shares outstanding.

The following table sets forth the computation of basic and diluted earnings per share.

(In thousands, except earnings per share)

Three Months Ended

September 30,

Weighted-average common shares outstanding

Basic and diluted earnings per share

(In thousands, except earnings per share)

Nine Months Ended

September 30,

Net income (loss)

Weighted-average common shares outstanding

Basic and diluted earnings (losses) per share

NOTE 14 — GOODWILL

Goodwill resulted from the acquisition of the Pocono Community Bank in November 2007 and of certain fixed and operating assets acquired and deposit liabilities assumed of the branch of another financial institution in Danville, Pennsylvania, in January 2004.

Such goodwill represents the excess cost of the acquired assets relative to the assets’ fair value at the dates of acquisition.

In accordance with current accounting standards, goodwill is not amortized.

Goodwill totaled $ 0 at September 30, 2025 and December 31, 2024.

When applicable, impairment testing is performed on an annual basis, using either a qualitative or quantitative approach.

The assumptions used in the impairment test of goodwill are susceptible to change based on changes in economic conditions and other factors, including our stock price.

Any change in the assumptions utilized to determine the carrying value of goodwill could adversely affect our results of operations.

Goodwill was evaluated for impairment using a qualitative impairment test at December 31, 2023, and it was determined that goodwill was not impaired.

Due primarily to the decrease in the Company’s stock price during the first quarter of 2024 as a triggering event, management evaluated the need for an interim goodwill impairment analysis.

decrease prompted the Company to assess its goodwill utilizing a quantitative impairment test and determined it was more likely than not the fair value of the Company was less than the carrying amount as of March 31, 2024.

Based on the results of the impairment test, the Company recorded a goodwill impairment charge of $ 19,133,000 effective March 31, 2024.

First Keystone Corporation Management’s Discussion and Analysis of Financial Condition and Results of Operation

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effects of new laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which the Company and its subsidiaries must comply;

impacts of the capital and liquidity requirements of the Basel III standards or any similar standards;

impacts of the capital and liquidity requirements of the Basel

III standards or any similar standards;

effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;

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The Company does not revise or update these forward-looking statements to reflect events or changed circumstances.

Please carefully review the risk

factors described in other documents the Company files from time to time with the SEC, including the Annual Reports on Form 10-K and the Quarterly Reports on Form 10-Q.

Please carefully review the risk factors described in other documents the Company files from time to time with the SEC, including the Annual Reports on Form 10-K and the Quarterly Reports on Form 10-Q.

Please also carefully review any Current Reports on Form 8-K filed by the Company with the SEC.

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RESULTS OF OPERATIONS

Quarter ended September 30, 2025 compared to quarter ended September 30, 2024

First Keystone Corporation realized earnings for the three months ended September 30, 2025 of $2,808,000, an increase of $1,301,000 from the third quarter of 2024.

The increase in net income for the three months ended September 30, 2025 was primarily due to increased interest and fees on loans related to growth in commercial real estate loans.

On a per share basis, for the three months ended September 30, 2025, net income was $0.45 compared to earnings of $0.25 per share for the same three month period of 2024.

Quarterly regular cash dividends amounted to $0.28 per share for the three months ended September 30, 2025 and 2024.

NET INTEREST INCOME

The major source of operating income for the Company is net interest income, defined as interest and loan fee income less interest expense.

In the three months ended September 30, 2025, interest income amounted to $19,760,000, an increase of $1,518,000 or 8.3% from the three months ended September 30, 2024, while interest expense amounted to $10,256,000 in the three months ended September 30, 2025, an increase of $168,000 or 1.7% from the three months ended September 30, 2024.

As a result, net interest income increased $1,350,000 or 16.6% to $9,504,000 from $8,154,000 for the same period in 2024.

The Company’s net interest margin for the three months ended September 30, 2025 was 2.64% compared to 2.42% for the same period in 2024.

The increase in net interest margin was primarily a result of increased interest and fees on loans.

PROVISION FOR CREDIT LOSSES

The provision for credit losses for the three months ended September 30, 2025 and 2024 was $255,000 and $718,000, respectively.

The decrease in the provision for credit losses resulted from the Company’s analysis of the current loan portfolio, including historic losses, past-due trends, current economic conditions, loan portfolio growth, and other relevant factors.

Charge-off and recovery activity in the allowance for credit losses resulted in net charge-offs of $17,000 and $748,000 for the three months ended September 30, 2025 and 2024, respectively.

The decrease in net charge-offs for the three months ended September 30, 2025 was mainly the result of $741,000 in aggregate charge-offs completed on four loans during the third quarter of 2024 for a plastic processing company focused on non-post-consumer recycling.

See Allowance for Credit Losses on page 52 for further discussion.

NON-INTEREST INCOME

Total non-interest income was $1,906,000 for the three months ended September 30, 2025, as compared to $1,860,000 for the same period in 2024, an increase of $46,000, or 2.5%.

Net securities gains decreased $37,000 to $109,000 for the three months ended September 30, 2025 as compared to $146,000 for the three months ended September 30, 2024.

The decrease in net securities gains was the result of an decrease in the mark-to-market adjustment on held equity securities during the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024.

Trust department income increased $19,000 or 7.9% to $259,000 for the three months ended September 30, 2025 as compared to the same period in 2024.

Service charges and fees income increased $57,000 or 9.6% for the three months ended September 30, 2025 as compared to the same period in 2024.

ATM fees and debit card income increased $3,000 or 0.5% to $577,000 for the three months ended September 30, 2025.

Gains on sales of mortgage loans increased $19,000 or 47.5% for the three months ended September 30, 2025.

The increase was due to more loans sold during the third quarter of 2025 as compared to the same period of 2024.

Other non-interest income decreased $15,000 or 15.8% to $80,000 for the three months ended September 30, 2025.

NON-INTEREST EXPENSE

Total non-interest expense was $8,002,000 for the three months ended September 30, 2025, as compared to $7,820,000 for the three months ended September 30, 2024.

Salaries and employee benefits amounted to $4,073,000 or 50.9% of total non-interest expense for the three months ended September 30, 2025, as compared to $4,375,000 or 55.9% of total non-interest expense for the three months ended September 30, 2024.

The decrease was mainly due to decreased employee health insurance costs in the third quarter of 2025 as compared to the same period in 2024.

Net occupancy, furniture and equipment, and computer expense amounted to $1,203,000 for the three months ended September 30, 2025, an increase of $155,000 or 14.8% which was mainly due to an increase in expense related to various new software systems that were implemented in 2025.

Professional services increased $61,000 or 17.6% to $407,000 as of the quarter ended September 30, 2025 compared to the same quarter of 2024.

The increase was due to normal annual increases in accounting audit expenses in the third quarter of 2025 as related to the same period in 2024.

Pennsylvania shares tax expense amounted to $352,000 for the three months ended September 30, 2025, an increase of $38,000 or 12.1% as compared to the three months ended September 30, 2024.

Federal Deposit Insurance Corporation (“FDIC”) insurance expense amounted to $303,000 for the three months ended September 30, 2025, an increase of $32,000 or 11.8% as compared to the same period in 2024.

FDIC insurance expense varies with changes in net asset size, risk ratings, and FDIC derived assessment rates.

ATM and debit card fees expense amounted to $321,000 for the three months ended September 30, 2025, an increase of $76,000 or 31.0% as compared to the three months ended September 30, 2024.

The increase was mainly due to increased electronic funds transfer fees in the third quarter of 2025.

Data processing expenses amounted to $366,000 for the three months ended September 30, 2025 as compared to $232,000 for the same period of 2024, an increase of $134,000 or 57.8% mainly due to increases in internet banking and core service fees.

Advertising expense amounted to $97,000 in the third quarter of 2025, a decrease of $58,000 or 37.4% as compared to the three months ended September 30, 2024.

Other non-interest expense amounted to $880,000 for the three months ended September 30, 2025, an increase of $46,000 or 5.5% as compared to the three months ended September 30, 2024.

Income tax expense amounted to $345,000 for the three months ended September 30, 2025, as compared to income tax benefit of $31,000 for the three months ended September 30, 2024, an increase of $376,000.

The effective total income tax rate was 10.9% for the three months ended September 30, 2025 as compared to (2.1)% for the three months ended September 30, 2024.

The increase in the effective tax rate was mainly due to higher overall operating

income, with minimal change to tax-exempt income.

The Company recognized $210,000 of tax credits from low-income housing partnerships during both the three months ended September 30, 2025 and 2024.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

First Keystone Corporation realized earnings for the nine months ended September 30, 2025 of $6,775,000, an increase of $22,265,000 from the same period in 2024.

The increase in net income for the nine months ended September 30, 2025 was primarily due to the Company recognizing goodwill impairment expense of $19,133,000 during the first quarter of 2024 as well as increased interest and fees on loans related to growth in commercial real estate loans recognized during the nine months ended September 30, 2025.

On a per share basis, net income was $1.09 for the nine months ended September 30, 2025 versus net losses of $2.52 for the same period in 2024.

Cash dividends amounted to $0.84 per share for the nine months ended September 30, 2025 and 2024.

Quarter ended March 31, 2026 compared to quarter ended March 31, 2025

First Keystone Corporation realized earnings for the three months ended March 31, 2026 of $1,959,000, an increase of $906,000 from the first quarter of 2025.

The increase in net income for the three months ended March 31, 2026 was primarily due to increased interest on excess cash balances held at the Federal Reserve and an increase interest and fees on loans.

On a per share basis, for the three months ended March 31, 2026, net income was $0.31 compared to earnings of $0.17 per share for the same three month period of 2025.

Quarterly regular cash dividends amounted to $0.28 per share for the three months ended March 31, 2026 and 2025.

NET INTEREST INCOME

The major source of operating income for the Company is net interest income, defined as interest and loan fee income less interest expense.

For the nine months ended September 30, 2025, interest income amounted to $56,854,000, an increase of $4,073,000 or 7.7% from the nine months ended September 30, 2024, while interest expense amounted to $29,075,000 in the nine months ended September 30, 2025 a decrease of $76,000 or 0.3% from the nine months ended September 30, 2024.

In the three months ended March 31, 2026, interest income amounted to $19,242,000, an increase of $1,032,000 or 5.7% from the three months ended March 31, 2025, while interest expense amounted to

$10,111,000 in the three months ended March 31, 2026, an increase of $671,000 or 7.1% from the three months ended March 31, 2025.

As a result, net interest income increased $361,000 or 4.1% to $9,131,000 from $8,770,000 for the same period in 2025.

The increase was primarily due to growth in commercial real estate loans and interest bearing deposits in banks during the nine months ended September 30, 2025, offset by decreases in the balance of taxable securities due to run-off of principal and interest without replacement.

The Company’s net interest margin for the nine months ended September 30, 2025 was 2.67% compared to 2.35% for same period in 2024.

The increase in net interest margin was primarily a result of increased interest and fees on loans.

The Company’s net interest margin for the three months ended March 31, 2026 was 2.49% compared to 2.58% for the same period in 2025.

The decrease in net interest margin was primarily a result of increased interest on deposits and subordinated debt.

PROVISION FOR CREDIT LOSSES

The provision for credit losses for the nine months ended September 30, 2025 and 2024 was $769,000 and $1,492,000, respectively.

The provision for credit losses for the three months ended March 31, 2026, carried a recovery balance of $390,000, compared to a provision balance of $751,000 for the three months ended March 31, 2025.

Charge-off and recovery activity in the allowance for credit losses resulted in net charge-offs of $441,000 and $760,000 for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in net charge-offs for the nine months ended September 30, 2025 was mainly the result of $741,000 in aggregate charge-offs completed on four loans during the third quarter of 2024 for a plastic processing company focused on non-post-consumer recycling, offset with charge-offs totaling $182,000 completed on a loan to a trucking transportation business and a charge-off of $245,000 completed on a loan to a manufacturer of hemp-based biodegradable food containers during the nine months ended September 30, 2025.

Charge-off and recovery activity in the allowance for credit losses resulted in net recoveries of $16,000 and net charge-offs of $355,000 for the three months ended March 31, 2026 and 2025, respectively.

The increased level of net charge-offs for the three months ended March 31, 2025 was mainly the result of a charge-off of $116,000 completed on a loan to a trucking transportation business and $245,000 charged-off on a loan to a manufacturer of hemp-based biodegradable plastic food containers.

See Allowance for Credit Losses on page 50 for further discussion.

NON-INTEREST INCOME

Total non-interest income was $5,463,000 for the nine months ended September 30, 2025, as compared to $4,825,000 for the same period in 2024, an increase of $638,000, or 13.2%.

ATM fees and debit card income increased $40,000 or 2.4% to $1,696,000 for the nine months ended September 30, 2025.

Service charges and fee income increased $70,000 or 4.2% for the nine months ended September 30, 2025.

Gains on sales of mortgage loans increased $29,000 or 42.6% due to more loans sold and at a higher average gain on individual loans sold in the first nine months of 2025 as compared to the same period in 2024.

Trust department income was $800,000 for the nine months ended September 30, 2025 an increase of $62,000 or 8.4% as compared to the same period in 2024.

Net securities gains (losses) increased $176,000 or 366.7% to net gains of $128,000 for the nine months ended September 30, 2025 as compared to net losses of $48,000 for the nine months ended September 30, 2024.

The increase in securities gains (losses) was due to an improvement in the mark-to-market valuation on the Company’s held equity securities during the nine months ended September 30, 2025.

Total non-interest income was $1,813,000 for the three months ended March 31, 2026, as compared to $1,759,000 for the same period in 2025, an increase of $54,000, or 3.1%.

Net securities gains (losses) increased $260,000 to a net gain of $174,000 for the three months ended March 31, 2026 as compared to net losses of $86,000 for the three months ended March 31, 2025.

The increase in net securities gains (losses) was the result of an increase in the mark-to-market adjustment on held equity securities during the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025.

Trust department income increased $25,000 or 9.6% to $286,000 for the three months ended March 31, 2026 as compared to the same period in 2025.

Service charges and fees income decreased $5,000 or 0.9% for the three months ended March 31, 2026 as compared to the same period in 2025.

Cash surrender value of life insurance increased $5,000 or 3.0% to $170,000 for the three months ended March 31, 2026.

Gains on sales of mortgage loans increased $26,000 or 130.0% for the three months ended March 31, 2026.

The increase was due to more loans sold during the first quarter of 2026 as compared to the same period of 2025.

There were no gains from life insurance proceeds realized during the three months ended March 31, 2026, compared to gains from life insurance proceeds of $235,000 that were recognized during the three months ended March 31, 2025 in relation to a death benefit.

Other non-interest income decreased $23,000 or 30.7% to $52,000 for the three months ended March 31, 2026.

NON-INTEREST EXPENSE

Total non-interest expense was $24,912,000 for the nine months ended September 30, 2025, as compared to $42,631,000 for the nine months ended September 30, 2024.

Non-interest expense decreased $17,719,000 or 41.6%.

The significant decrease in total non-interest expense for the nine months ended September 30, 2025 was mainly the result of the full, one-time, goodwill impairment charge of $19,133,000 that was recorded during the first quarter of 2024.

Salaries and employee benefits amounted to $13,006,000 or 52.2% of total non-interest expense for the nine months ended September 30, 2025, as compared to $13,082,000 or 30.7% for the nine months ended September 30, 2024.

The decrease was mainly due to decreased costs associated with employee health insurance which were $163,000 less for the nine months ended September 30, 2025, compared to the same period in 2024.

Net occupancy, furniture and equipment, and computer expense amounted to $3,607,000 for the nine months ended September 30, 2025, an increase of $447,000 or 14.1%.

The increase was mainly due to increased depreciation on furniture and equipment resulting from the replacement of the Bank’s ATM fleet, an increase in disaster recovery expense as the Bank put new disaster recovery systems in place in late 2024, and an increase in expense related to various new software systems that were implemented in 2025.

Professional services decreased $86,000 or 6.9% to $1,159,000 for the nine months ended September 30, 2025.

The decrease in 2025 was mainly the result of increased audit fees and expenses relating to the adoption of CECL and the goodwill impairment analysis in 2024.

Pennsylvania shares tax expense amounted to $840,000 for the nine months ended September 30, 2025, an increase of $76,000 or 9.9% as compared to the nine months ended September 30, 2024.

FDIC insurance expense increased $239,000 or 35.3% for the nine months ended September 30, 2025.

Total non-interest expense was $9,173,000 for the three months ended March 31, 2026, as compared to $8,649,000 for the three months ended March 31, 2025.

Salaries and employee benefits amounted to $4,967,000 or 54.1% of total non-interest expense for the three months ended March 31, 2026, as compared to $4,630,000 or 53.5% of total non-interest expense for the three months ended March 31, 2025.

The increase was mainly due to normal employee merit increases and increased employee health insurance costs in the first quarter of 2026 as compared to the same period in 2025.

Net occupancy, furniture and equipment, and computer expense amounted to $1,411,000 for the three months ended March 31, 2026, an increase of $196,000 or 16.1% which was mainly due to an increase in expense related to various new software systems that were implemented in 2025.

Professional services increased $85,000 or 22.5% to $463,000 as of the quarter ended March 31, 2026 compared to the same quarter of 2025.

The increase was due to normal

annual increases in accounting audit expenses in the first quarter of 2026 as related to the same period in 2025.

Pennsylvania shares tax expense amounted to $271,000 for the three months ended March 31, 2026, an increase of $50,000 or 22.6% as compared to the three months ended March 31, 2025.

Federal Deposit Insurance Corporation (“FDIC”) insurance expense amounted to $323,000 for the three months ended March 31, 2026, an increase of $14,000 or 4.5% as compared to the same period in 2025.

FDIC insurance expense varies with changes in net asset size, risk ratings, and FDIC derived assessment rates.

ATM and debit card fees expense amounted to $874,000 for the nine months ended September 30, 2025, an increase of $149,000 or 20.6% as compared to the nine months ended September 30, 2024.

This increase was a result of higher electronic funds transfer expenses for the nine months ended September 30, 2025, as compared to the same period in 2024, as vendor relationship credits resulting from contract negotiations were applied against billings in 2024 which were fully utilized and no longer available in 2025.

Data processing expenses amounted to $1,108,000 for the nine months ended September 30, 2025, an increase of $352,000 or 46.6% as compared to the nine months ended September 30, 2024.

The increase was the result of increased internet banking expenses and core system fees due to vendor relationship credits that were applied against billings in 2024 which were fully utilized and no longer available in 2025.

Advertising expense decreased $82,000 or 19.4% during the nine months ended September 30, 2025.

This decrease was mainly the result of the Company utilizing less television and radio advertising during the nine months ended September 30, 2025, as compared to the same period in 2024.

The Company recognized a full, one-time, goodwill impairment in the amount of $19,133,000 during the first quarter of 2024.

This was the result of goodwill impairment testing performed due to the decrease of the Company’s stock price during the first quarter of 2024 as a triggering event.

The goodwill impairment has no impact on regulatory capital ratios, liquidity or the Company’s cash balances.

Other non-interest expense amounted to $3,062,000 for the nine months ended September 30, 2025, an increase of $395,000 or 14.8% as compared to the nine months ended September 30, 2024.

The increase was mainly the result of a customer-related fraud write-off of $307,000 during the first quarter of 2025.

Management of the Company believes that investors’ understanding of the Company’s performance is enhanced by disclosing non-GAAP financial measures without the effects of the impairment as a reasonable basis for comparison of the Corporation’s ongoing results of operations.

These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results.

Our non-GAAP measures may not be comparable to non-GAAP measures of other companies.

The following Non-GAAP Reconciliation Schedule provides a reconciliation of these non-GAAP financial measures to the most closely analogous measure determined in accordance with GAAP.

NON-GAAP RECONCILIATION SCHEDULE

FIRST KEYSTONE CORPORATION AND SUBSIDIARY

Nine Months Ended

(Dollars in thousands)

September 30,

Net interest income after provision for credit losses

Total non-interest income

Total non-interest expense

Income tax (expense) benefit

Net income (loss)

Other expense:

Goodwill impairment

Income tax (expense) benefit

After tax adjustment to GAAP

Adjusted net income

Income tax expense amounted to $786,000 for the nine months ended September 30, 2025, as compared to income tax benefit of $178,000 for the nine months ended September 30, 2024, an increase of $964,000.

The effective total income tax rate was 10.4% for the nine months ended September 30, 2025 as compared to 1.1% for the nine months ended September 30, 2024.

ATM and debit card fees expense amounted to $262,000 for the three months ended March 31, 2026, an increase of $15,000 or 6.1% as compared to the three months ended March 31, 2025.

The increase was mainly due to increased electronic funds transfer fees in the first quarter of 2026.

Data processing expenses amounted to $391,000 for the three months ended March 31, 2026 as compared to $357,000 for the same period of 2025, an increase of $34,000 or 9.5% mainly due to increases in internet banking and core service fees.

Advertising expense amounted to $82,000 in the first quarter of 2026, a decrease of $23,000 or 21.9% as compared to the three months ended March 31, 2025 as the Company utilized less newspaper and digital advertising during the first quarter of 2026.

Other non-interest expense amounted to $1,003,000 for the three months ended March 31, 2026, a decrease of $184,000 or 15.5% as compared to the three months ended March 31, 2025.

The decrease was mainly the result of $307,000 in expense related to a fraud write-off that was recognized during the first quarter of 2025.

Income tax expense amounted to $202,000 for the three months ended March 31, 2026, as compared to income tax expense of $76,000 for the three months ended March 31, 2025, an increase of $126,000.

The effective total income tax rate was 9.3% for the three months ended March 31, 2026 as compared to 6.7% for the three months ended March 31, 2025.

The increase in the effective tax rate was mainly due to higher overall operating income, with minimal change to tax-exempt income.

The Company recognized $630,000 of tax credits from low-income housing partnerships during both the nine months ended September 30, 2025 and 2024.

The Company recognized $210,000 of tax credits from low-income housing partnerships during both the three months ended March 31, 2026 and 2025.

FINANCIAL CONDITION

Total assets increased to $1,582,377,000 as of September 30, 2025, an increase of $153,794,000 from year-end 2024.

Total assets decreased to $1,524,919,000 as of March 31, 2026, a decrease of $6,058,000 from year-end 2025.

Total assets as of December 31, 2025 amounted to $1,530,977,000.

Total cash and cash equivalents increased by $130,001,000 to $147,255,000 as of September 30, 2025 from $17,254,000 as of December 31, 2024.

The increase was mainly the result of excess cash balances resulting from increased deposit balances and excess cashflows from activity in the debt securities available-for-sale portfolio which were not reinvested during the nine months ended September 30, 2025.

Total debt securities available-for-sale increased $17,482,000 or 4.5% to $407,770,000 as of September 30, 2025 from $390,288,000 at December 31, 2024 mainly due to $41,836,000 in maturities, paydowns, and calls completed during the nine months ended September 30, 2025, offset by $51,918,000 in securities purchased and an improvement of $7,395,000 in unrealized loss on securities during the same period.

Total net loans increased $8,954,000 or 1.0% to $949,733,000 as of September 30, 2025 from $940,779,000 as of December 31, 2024.

Real estate loans, the largest segment of the Company’s loan portfolio, increased by $15,489,000 during the nine months ended September 30, 2025 and commercial and industrial loans, the second largest segment of the Company’s loan portfolio, decreased by $2,718,000 during the nine months ended September 30, 2025.

Total deposits increased $146,614,000 or 14.0% to $1,192,494,000 as of September 30, 2025 from $1,045,880,000 as of December 31, 2024, mainly due to an increase of $135,031,000 in the balance of interest bearing deposits, driven by an increase of $111,919,000 in the balance of retail CDs and an increase of $35,137,000 in brokered CDs.

Total cash and cash equivalents increased by $15,590,000 to $136,839,000 as of March 31, 2026 from $121,249,000 as of December 31, 2025.

The increase was mainly the result of excess cash balances resulting from cashflows from activity in the debt securities available-for-sale portfolio which were not reinvested during the three months ended March 31, 2026, along with a decrease in the loans held for investment portfolio during the first quarter of 2026.

Total debt securities available-for-sale decreased $7,362,000 or 1.9% to $386,864,000 as of March 31, 2026 from $394,226,000 at December 31, 2025 mainly due to $10,543,000 in maturities, paydowns, and calls completed during the three months ended March 31, 2026 and an increase of $867,000 in unrealized loss on securities, offset by $4,000,000 in securities purchased during the same period.

Total net loans decreased $15,436,000 or 1.6% to $923,577,000 as of March 31, 2026 from $939,013,000 as of December 31, 2025.

Real estate loans, the largest segment of the Company’s loan portfolio, decreased by $14,429,000 during the three months ended March 31, 2026 and commercial and industrial loans, the second largest segment of the Company’s loan portfolio, decreased by $737,000 during the three months ended March 31, 2026.

Total deposits decreased $6,148,000 or 0.5% to $1,131,289,000 as of March 31, 2026 from $1,137,437,000 as of December 31, 2025, mainly due to a decrease of $16,679,000 in the balance of interest bearing deposits, driven by a decrease of $29,938,000 in the balance of brokered CDs, offset by an increase of $10,040,000 in the balance of retail CDs and an increase of $3,218,000 in the balance of other interest bearing deposit accounts.

Non-interest bearing deposits increased by $10,531,000 during the three months ended March 31, 2026.

The Company continues to maintain and manage its asset growth.

The Company’s strong equity capital position provides an opportunity to further leverage its asset growth.

Total borrowings decreased in the nine months ended September 30, 2025 by $1,570,000 to $238,856,000 from $240,426,000 as of December 31, 2024.

The decrease in borrowings was mainly the result of a decrease of $1,494,000 in the balance of short-term borrowings held at the FHLB.

Total stockholders’ equity amounted to $112,252,000 at September 30, 2025, an increase of $5,470,000 or 5.1% from December 31, 2024 mainly due to an increase in retained earnings of $1,552,000 and an improvement of $3,452,000 in accumulated other comprehensive loss.

Total borrowings decreased during the three months ended March 31, 2026 by $761,000 to $242,084,000 from $242,845,000 as of December 31, 2025.

The decrease in borrowings was the result of a decrease of $761,000 in the balance of repurchase agreements.

Total stockholders’ equity amounted to $114,175,000 at March 31, 2026, an increase of $1,115,000 or 1.0% from December 31, 2025 mainly due to an increase of $414,000 in common stock surplus, an improvement of $415,000 in accumulated other comprehensive loss, and an increase of $203,000 in retained earnings.

SEGMENT REPORTING

3 unchanged sentences

By maintaining a healthy asset utilization rate, i.e., the volume of earning assets as a percentage of total assets, the Company maximizes income.

The earning asset ratio (average interest earning assets divided by average total assets) equaled 95.1% at September 30, 2025 and 94.4% at September 30, 2024.

The earning asset ratio (average interest earning assets divided by average total assets) equaled 95.7% at March 31, 2026 and 95.0% at March 31, 2025.

This indicates that the management of earning assets is a priority and non-earning assets, primarily cash and due from banks, fixed assets and other assets, are maintained at minimal levels.

The primary earning assets are loans and securities.

The Company’s primary earning asset, the loans held for investment portfolio, increased to $957,630,000 as of September 30, 2025, up $9,916,000 or 1.0% since year-end 2024.

The Company’s primary earning asset, the loans held for investment portfolio, decreased to $932,163,000 as of March 31, 2026, down $15,122,000 or 1.6% since year-end 2025.

The loan portfolio continues to be well diversified and asset quality has remained consistent.

Total non-performing assets were $6,580,000 as of September 30, 2025, an increase of $1,610,000, or 32.4% from $4,970,000 reported in non-performing assets as of December 31, 2024.

Total allowance for credit losses to total non-performing assets was 121.58% as of September 30, 2025 and 154.37% at December 31, 2024.

Total non-performing assets were $16,886,000 as of March 31, 2026, a decrease of $33,000 or 0.2% from $16,919,000 reported in non-performing assets as of December 31, 2025.

Total allowance for credit losses to total non-performing assets was 53.5% as of March 31, 2026 and 55.6% at December 31, 2025.

See the Non-Performing Assets section on page 52 for more information.

In addition to loans, another primary earning asset is our overall securities portfolio, which increased in size from December 31, 2024 to September 30, 2025 mainly due to a purchase strategy completed during the three months ended September 30, 2025, along with other normal activity in the securities portfolio.

Debt securities available-for-sale amounted to $407,770,000 as of September 30, 2025, an increase of $17,482,000 from year-end 2024.

The increase in debt securities available-for-sale is mainly due to $41,836,000 in maturities, paydowns, and calls completed during the nine months ended September 30, 2025, offset by $51,918,000 in securities purchased and an improvement of $7,395,000 in unrealized loss on securities during the same period.

Interest-bearing deposits in other banks increased $126,918,000 as of September 30, 2025, to $134,239,000 from $7,321,000 at year-end 2024 mainly due to an increase in cash balances held at the Federal Reserve as a result of increased deposit balances and excess cashflows from activity in the debt securities available-for-sale portfolio which were not reinvested during the nine months ended September 30, 2025.

Total loans increased to $957,012,000 as of September 30, 2025 as compared to $946,826,000 as of December 31, 2024.

In addition to loans, another primary earning asset is our overall securities portfolio, which decreased in size from December 31, 2025 to March 31, 2026 mainly due to normal runoff in the securities portfolio which was not reinvested.

Debt securities available-for-sale amounted to $386,864,000 as of March 31, 2026, a decrease of $7,362,000 from year-end 2025.

The decrease in debt securities available-for-sale is mainly due to $10,543,000 in maturities, paydowns, and calls completed during the three months ended March 31, 2026 and an increase of $867,000 in unrealized loss on securities, offset by $4,000,000 in securities purchased during the same period.

Interest-bearing deposits in other banks increased $15,338,000 as of March 31, 2026, to $127,832,000 from $112,494,000 at year-end 2025 mainly due to an increase in cash balances held at the Federal Reserve as a result of increased deposit balances, excess cashflows from activity in the debt securities available-for-sale portfolio which were not reinvested during the three months ended March 31, 2026, and a decrease in the loans held for investment portfolio during the first quarter of 2026.

Total loans decreased to $931,620,000 as of March 31, 2026 as compared to $946,661,000 as of December 31, 2025.

The table on page 21 provides data relating to the composition of the Company’s loan portfolio on the dates indicated.

Total loans increased by $10,186,000 or 1.1%.

The Real Estate portfolio increased $15,489,000 or 1.8% from $850,656,000 at December 31, 2024 to $866,145,000 at September 30 2025.

The increase in the Real Estate portfolio for the nine months ended September 30, 2025 was mainly the result of an increase of $87,752,000 in new loan originations, which were offset by a decrease in utilization of existing real estate lines of credit of $21,243,000 and loan payoffs of $45,135,000, along with regular principal payments and other typical fluctuations in the Real Estate portfolio.

The Agricultural portfolio increased $135,000 or 14.4% from $936,000 at December 31, 2024 to $1,071,000 at September 30, 2025.

The increase in the Agricultural portfolio for the nine months ended September 30, 2025 was mainly the result of new loan originations in the amount of $30,000 and two loans totaling $219,000 that were reclassed from the Commercial and Industrial portfolio to the Agricultural portfolio during the nine months ended September 30, 2025, along with an increase of $1,000 in utilization of existing agricultural lines of credit, offset by regular principal payments and other typical fluctuations in the Agricultural portfolio.

The Commercial and Industrial portfolio decreased $2,718,000 or 4.1% from $66,706,000 at December 31, 2024 to $63,988,000 at September 30, 2025.

The decrease was attributable to $7,893,000 in new loan originations and an increase of $4,357,000 in utilization of existing commercial and industrial lines of credit, offset by loan payoffs of $6,104,000 and regular principal payments and other typical amortization in the Commercial and Industrial portfolio.

The Consumer portfolio decreased $944,000 or 14.8% from $6,390,000 at December 31, 2024 to $5,446,000 at September 30, 2025.

The decrease is mainly attributable to new loan originations of $1,513,000 and an increase of $3,000 in utilization of existing consumer lines of credit, offset by loan payoffs of $1,236,000 and regular principal payments.

The State and Political Subdivisions portfolio decreased $1,776,000 or 8.0% from $22,138,000 at December 31, 2024 to $20,362,000 at September 30, 2025.

The decrease is mainly the result of new loan originations totaling $2,615,000, offset by loan payoffs of $2,595,000 and regular principal payments on state and political subdivisions loans completed during the nine months ended September 30, 2025.

Total loans decreased by $15,041,000 or 1.6%.

The Real Estate portfolio decreased $14,429,000 or 1.7% from $853,668,000 at December 31, 2025 to $839,239,000 at March 31, 2026.

The decrease in the Real Estate portfolio for the three months ended March 31, 2026 was mainly the result of a decrease in utilization of existing real estate lines of credit of $3,136,000 and loan payoffs of $24,779,000 along with regular principal payments and other typical fluctuations in the Real Estate portfolio, offset by $24,634,000 in new loan originations.

The Agricultural portfolio increased $246,000 or 25.0% from $984,000 at December 31, 2025 to $1,230,000 at March 31, 2026.

The increase in the Agricultural portfolio for the three months ended March 31, 2026 was mainly the result of an increase of $88,000 in utilization of existing agricultural lines of credit, along with three loans carrying an aggregate balance of $243,000 which were reclassed from the Real Estate portfolio to the Agricultural portfolio during the first quarter of 2026, offset by regular principal payments and other typical fluctuations in the Agricultural portfolio.

The Commercial and Industrial portfolio decreased $737,000 or 1.1% from $66,924,000 at December 31, 2025 to $66,187,000 at March 31, 2026.

The decrease was attributable to loan payoffs of $663,000 and regular principal payments and other typical amortization in the Commercial and Industrial portfolio, offset by $1,753,000 in new loan originations and an increase of $508,000 in utilization of existing commercial and industrial lines of credit.

The Consumer portfolio decreased $72,000 or 1.5% from $4,953,000 at December 31, 2025 to $4,881,000 at March 31, 2026.

The decrease is mainly attributable to loan payoffs of $307,000 and a decrease in utilization of existing real estate lines of credit of $83,000, along with regular principal payments and other typical amortization in the Consumer portfolio, offset by new loan originations of $640,000.

The State and Political Subdivisions portfolio decreased $49,000 or 0.2% from $20,132,000 at December 31, 2025 to $20,083,000 at March 31, 2026.

The decrease is mainly the result of regular principal payments on state and political subdivisions loans completed during the three months ended March 31, 2026, offset by an increase in utilization of existing real estate lines of credit of $40,000.

The Company continues to originate and sell certain long-term fixed rate residential mortgage loans, which conform to secondary market requirements, when the market pricing is favorable.

8 unchanged sentences

See Note 4 — Loans and Allowance for Credit Losses for risk grading tables.

Overall, non-pass grades increased $3,984,000 to $31,818,000 at September 30, 2025, as compared to $27,834,000 at December 31, 2024.

Real Estate non-pass grades increased $4,090,000 to $31,461,000 as of September 30, 2025 as compared to $27,371,000 as of December 31, 2024.

Commercial and Industrial non-pass grades decreased $139,000 to $318,000 as of September 30, 2025 as compared to $457,000 as of December 31, 2024.

Consumer non-pass grades increased $33,000 to $39,000 as of September 30, 2025 as compared to $6,000 as of December 31, 2024.

There were no Agricultural or State and Political Subdivision non-pass grades at September 30, 2025 or December 31, 2024.

Overall, non-pass grades increased $9,717,000 to $38,508,000 at March 31, 2026, as compared to $28,791,000 at December 31, 2025.

Real Estate non-pass grades increased $1,037,000 to $29,495,000 as of March 31, 2026 as compared to $28,458,000 as of December 31, 2025.

Commercial and Industrial non-pass grades increased $8,693,000 to $9,003,000 as of March 31, 2026 as compared to $310,000 as of December 31, 2025.

The increase in Commercial and Industrial non-pass grades during the three months ended March 31, 2026 was mainly the result of the downgrade of one loan relationship to Special Mention status which carried an aggregate balance of $8,694,000, related to a plastic injection molding company.

Consumer non-pass grades decreased $13,000 to $10,000 as of March 31, 2026 as compared to $23,000 as of December 31, 2025.

There were no Agricultural or State and Political Subdivision non-pass grades at March 31, 2026 or December 31, 2025.

The Company continues to internally underwrite each of its loans to comply with prescribed policies and approval levels established by its Board of Directors.

(Dollars in thousands)

September 30,

Commercial and Industrial

2 unchanged sentences

The allowance for credit losses constitutes the amount available to absorb losses within the loan portfolio.

As of September 30, 2025, the allowance for credit losses was $8,000,000 as compared to $7,672,000 as of December 31, 2024.

As of March 31, 2026 the allowance for credit losses was $9,038,000 as compared to $9,412,000 as of December 31, 2025.

The allowance for credit losses is established through a provision for credit losses charged to expenses.

9 unchanged sentences

On a quarterly basis, management evaluates the qualitative factors utilized in the calculation of the Company’s allowance for credit losses and various adjustments are made to these factors as deemed necessary at the time of evaluation.

The following table summarizes the qualitative factor adjustments made during the first three quarters of 2025.

The following table summarizes the qualitative factor adjustments made during the first quarter of 2026.

Quarter Ended March 31, 2026:

1 unchanged sentence

Basis Point Increase (Decrease)

Loans secured by first liens

Delinquency Trends

Loans secured by owner occupied, non-farm, non-residential properties

Delinquency Trends

Loans secured by other non-farm, non-residential properties

Delinquency Trends

Commercial and industrial loans

Delinquency Trends

Other revolving credit plans

Delinquency Trends

Automobile loans

Delinquency Trends

Other revolving credit plans

Volume Trends

Obligations of states and political subdivisions

Volume Trends

Quarter Ended June 30, 2025:

Qualitative Factor

Basis Point Increase (Decrease)

Loans secured by first liens

Delinquency Trends

Loans secured by multifamily properties

Delinquency Trends

Loans secured by owner occupied, non-farm, non-residential properties

Delinquency Trends

Loans secured by other non-farm, non-residential properties

Delinquency Trends

Other revolving credit plans

Delinquency Trends

Automobile loans

Delinquency Trends

Loans secured by multifamily properties

Volume Trends

Loans to finance agricultural production and other loans to farmers

Volume Trends

Other consumer loans

Volume Trends

Quarter Ended September 30, 2025:

Qualitative Factor

Basis Point Increase (Decrease)

Loans secured by revolving, open-end 1-4 family residential properties

Loans to finance construction, land development, and other land loans

Delinquency Trends

5 unchanged sentences

Delinquency Trends

Loans secured by owner occupied, non-farm, non-residential properties

Delinquency Trends

Loans secured by other non-farm, non-residential properties

Loans to finance agricultural production and other loans to farmers

Delinquency Trends

Other revolving credit plans

Other consumer loans

Delinquency Trends

Commercial and industrial loans

Loans secured by owner occupied, non-farm, non-residential properties

Volume Trends

The Analysis of Allowance for Credit Losses table contains an analysis of the allowance for credit losses indicating charge-offs and recoveries for the nine months ended September 30, 2025 and 2024.

Net charge-offs as a percentage of average loans was 0.05% and 0.08% for the nine months ended September 30, 2025 and 2024, respectively.

Net charge-offs amounted to $441,000 for the nine months ended September 30, 2025 and $760,000 for the nine months ended September 30, 2024.

The decrease in net charge-offs for the nine months ended September 30, 2025 was mainly the result of $741,000 in aggregate charge-offs completed during the third quarter of 2024 on four loans to a plastic processing company focused on non-post-consumer recycling, offset with charge-offs totaling $182,000 completed on a loan to a trucking transportation business and a charge-off of $245,000 completed on a loan to a manufacturer of hemp-based biodegradable food containers during the nine months ended September 30, 2025.

For the nine months ended September 30, 2025, the provision for credit losses was $769,000, compared to the nine months ended September 30, 2024, when the provision for credit losses was $1,492,000.

Loans to finance agricultural production and other loans to farmers

Volume Trends

The Analysis of Allowance for Credit Losses table contains an analysis of the allowance for credit losses indicating charge-offs and recoveries for the three months ended March 31, 2026 and 2025.

Net recoveries as a percentage of average loans was (0.002)% for the three months ended March 31, 2026, compared to net charge-offs of 0.037% for the three months ended March 31, 2025.

Net recoveries amounted to $16,000 for the three months ended March 31, 2026 and net charge-offs amounted to $355,000 for the three months ended March 31, 2025.

The increased

level of net charge-offs for the three months ended March 31, 2025 was mainly the result of two charge-offs, one in the amount of $116,000 on a loan to a trucking transportation business and $245,000 on a loan to a manufacturer of hemp-based biodegradable plastic food containers.

For the three months ended March 31, 2026, the provision for credit losses carried a recovery balance of $390,000, compared to the three months ended March 31, 2025, when the provision for credit losses was $751,000.

The provision, net of charge-offs and recoveries, resulted in the quarter end allowance for credit losses of $9,038,000, of which 93.6% was attributed to the Real Estate component, 0.1% attributed to the Agricultural component, 4.9% attributed to the Commercial and Industrial component, 0.9% attributed to the Consumer component, and 0.5% attributed to the State and Political Subdivisions component (refer to the activity in Note 4 – Loans and Allowance for Credit Losses on page 13).

1 unchanged sentence

(Dollars in thousands)

September 30,

As of and for the nine months ended:

As of and for the three months ended:

Beginning Balance

3 unchanged sentences

State and Political Subdivisions

Net charge-offs

Provision charged to operations

Net (recoveries) charge-offs

(Recovery of) provision expense charged to operations

Balance at end of period

Ratio of net charge-offs during the period to average loans outstanding during the period

Ratio of net (recoveries) charge-offs during the period to average loans outstanding during the period

Allowance for credit losses to average loans outstanding during the period

4 unchanged sentences

A detailed quarterly analysis to determine the adequacy of the Company’s allowance for credit losses is reviewed by the Board of Directors.

With the Bank’s manageable level of net charge-offs and recoveries along with the additions to the reserve from the provision out of operations, the allowance for credit losses as a percentage of year-to-date average loans amounted to 0.83% and 0.84% at September 30, 2025 and 2024, respectively.

With the Bank’s manageable level of net charge-offs and recoveries along with the additions to the reserve from the provision out of operations, the allowance for credit losses as a percentage of year-to-date average loans amounted to 0.958% and 0.844% at March 31, 2026 and 2025, respectively.

NON-PERFORMING ASSETS

2 unchanged sentences

A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured.

When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against current period

When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against current period income.

Foreclosed assets held for resale represent property acquired through foreclosure, or considered to be an in-substance foreclosure.

Total non-performing assets amounted to $6,580,000 as of September 30, 2025, as compared to $4,970,000 as of December 31, 2024.

The economic growth for the third quarter of 2025 has remained relativey stagnant from the higher-than-expected growth in the first quarter of 2025.

Consumer spending remains at high levels.

The inflation rate increased from 2.4% in March 2025 to 3.0% in September 2025, above the Federal Reserve Board’s desired rate of 2.0%.

Inflation has been on the rise in the second and third quarters of 2025, with currently imposed tariffs and threat of higher tariffs leading to the surge and potentially pushing inflation even higher.

Total non-performing assets amounted to $16,886,000 as of March 31, 2026, as compared to $16,919,000 as of December 31, 2025.

The economic growth for the first quarter of 2026 has remained stagnant compared to year-end 2025.

Consumer spending is slowing as inflation remains high and has increased due to the current war with Iran.

At 3.3% as of March 2026, the inflation rate has increased from the past four quarters which was 2.4% in March 2025, 2.7% in June 2025, 3.0% in September 2025, and 2.7% in December 2025, all above the Federal Reserve Board’s desired rate of 2.0%.

Inflation had been on the rise in 2025 due in large part to the imposition and threat of tariffs.

Inflation soared during the first quarter of 2026 due to the war with Iran creating much instability in the energy market, causing fuel prices to skyrocket.

Additionally, mass layoffs from the federal government increased unemployment levels.

Layoffs from large corporations from the public sector have also had an effect.

Many economists and influential thinkers still believe that the economy is moving forward in spite of certain forecasts and predictors.

The concern of a recession, although lessened this year, is still being discussed.

Inflation had been receding in the middle of 2024, although it has seen a slow but steady rise in the last few quarters.

Many economists and influential thinkers still believe that the economy is moving forward despite certain forecasts and predictors.

The concern of a recession is still being discussed in relation to various countries.

This has the Federal Reserve looking very cautiously at their next move.

This will all depend on which direction inflation and unemployment rates are trending.

The war between Ukraine and Russia continues to deeply pierce the landscape of the world.

The heightened conflict with Israel and Palestine has caused much hostility throughout the world.

The continuing dispute over whether to continue US support of Ukraine and Israel in ongoing efforts has been a strain on the economy.

This will depend heavily on which direction inflation and unemployment levels are trending.

The new Federal Reserve Chairman will have a very difficult landscape to navigate.

The war between Ukraine and Russia continues to deeply pierce the landscape of the world as well.

The conflict with Israel and Palestine rages on and the conflict with the US and Venezuela and the contemplated conflict with the US and Cuba has caused much hostility throughout the world.

The continuing dispute over whether to continue US support of Ukraine and Israel in ongoing war efforts has been a strain on the economy.

Values of new and used homes and automobiles have remained high.

Although, there would seem to be a dynamic shift in the automobile industry where inventories are increasing and sales are slowing, this may lead to a reduced profit margin.

Although, there would seem to be a dynamic shift in the automobile industry where inventories are increasing and sales are slowing which may lead to a reduced profit margin.

Higher interest rates have added to the curtailed borrowing.

1 unchanged sentence

Supply chains are back up and running efficiently in many areas.

Labor continues to remain costly and unpredictable.

Labor continues to be costly and unpredictable.

These forces have had a direct effect on the Company’s non-performing assets.

The Company is closely monitoring all segments of its loan portfolio because of the current uncertain economic environment.

Non-accrual loans totaled $4,165,000 as of September 30, 2025, as compared to $4,214,000 as of December 31, 2024.

There were no foreclosed assets held for resale as of September 30, 2025 and December 31, 2024.

There were eight loans past-due 90 days or more and still accruing interest at September 30, 2025 that carried an aggregate balance of $2,415,000, compared to December 31, 2024 when there were six loans past-due 90 days or more and still accruing interest which carried an aggregate balance of $756,000.

The loans past-due 90 days or more and still accruing interest as of September 30, 2025 were secured by commercial real estate and residential real estate, all of which were well secured and in the process of collection.

Non-performing assets to total loans was 0.69% at September 30, 2025 and 0.52% at December 31, 2024.

Non-performing assets to total assets was 0.42% at September 30, 2025 and 0.35% at December 31, 2024.

The allowance for credit losses to total non-performing assets was 121.58% as of September 30, 2025 as compared to 154.37% as of December 31, 2024.

Non-accrual loans totaled $16,886,000 as of March 31, 2026, as compared to $16,773,000 as of December 31, 2025.

There were no foreclosed assets held for resale as of March 31, 2026 and December 31, 2025.

There were no loans past-due 90 days or more and still accruing interest at March 31, 2026, compared to December 31, 2025 when there was one loan past-due 90 days or more and still accruing interest which carried a balance of $146,000.

Non-performing assets to total loans was 1.81% at March 31, 2026 and 1.79% at December 31, 2025.

Non-performing assets to total assets was 1.11% at both March 31, 2026 and December 31, 2025.

The allowance for credit losses to total non-performing assets was 53.52% as of March 31, 2026 as compared to 55.63% as of December 31, 2025.

Additional detail can be found on page 55 in the Non-Performing Assets and Individually Evaluated Loans table and page 30 in the Non-Performing Assets table.

1 unchanged sentence

Performing substandard loans, which have not been designated for individual evaluation to determine expected credit losses, have characteristics that cause management to have doubts regarding the ability of the borrower to perform under present loan repayment terms and which may result in reporting these loans as non-performing loans in the future.

Performing substandard loans not designated for individual evaluation amounted to $21,694,000 at September 30, 2025 and $20,080,000 at December 31, 2024.

Individually evaluated loans were $4,474,000 at September 30, 2025, compared to $4,523,000 at December 31, 2024.

The largest individually evaluated loan relationship at September 30, 2025 consisted of a non-performing loan to a student housing holding company which is secured by commercial real estate.

At September 30, 2025, the loan carried a balance of $1,603,000, net of $1,989,000 that had been charged off to date.

The second largest individually evaluated loan relationship at September 30, 2025 consisted of two non-performing loans granted to an individual for the purpose of renovating a multi-use property slated to be converted into apartments and a retail storefront.

Both loans are secured by commercial real estate, and carried an aggregate balance of $1,441,000 at September 30, 2025.

The third largest individually evaluated loan relationship at September 30, 2025 consisted of a non-performing loan to a manufacturer of

hemp-based biodegradable plastic food containers and utensils.

As of September 30, 2025, the loan carried a balance of $537,000.

Performing substandard loans not designated for individual evaluation amounted to $9,273,000 at March 31, 2026 and $7,668,000 at December 31, 2025.

Individually evaluated loans were $17,165,000 at March 31, 2026 compared to $17,052,000 at December 31, 2025.

The largest individually evaluated loan relationship at March 31, 2026 consisted of a non-performing loan to a borrower engaged in the hotel operations business.

The loan is secured by commercial real estate and carried a balance of $9,571,000 and a specific allocation of $841,000 as of March 31, 2026.

The second largest individually evaluated loan relationship at March 31, 2026 consisted of a non-performing loan granted to a real estate developer for the purpose of renovating the property into luxury residential rentals.

The loan is secured by commercial real estate and carried a balance of $2,412,000 as of March 31, 2026, net of $2,000,000 that had been charged off to date.

The third largest individually evaluated loan relationship at March 31, 2026 consisted of a non-performing loan to a student housing holding company which is secured by commercial real estate.

At March 31, 2026, the loan carried a balance of $1,603,000, net of $1,989,000 that had been charged off to date.

The Company determines the need for individual evaluation of loans based on its analysis of the cash flows or collateral estimated at fair value less cost to sell.

For collateral dependent loans, the estimated appraisal or other qualitative adjustments and cost to sell percentages are determined based on the market area in which the real estate securing the loan is located, among other factors, and therefore, can differ from one loan to another.

Of the $4,474,000 in individually evaluated loans at September 30, 2025, none were located outside of the Company’s primary market area.

The outstanding recorded investment of modified loans to borrowers experiencing financial difficulty was $107,000 at September 30, 2025, which consisted on one loan classified in the Real Estate portfolio.

The outstanding recorded investment of modified loans to borrowers experiencing financial difficulty as of December 31, 2024 amounted to $10,193,000, with $10,019,000 classified in the Real Estate portfolio and $174,000 classified in the Commercial and Industrial portfolio.

The modification of a loan to a borrower experiencing financial difficulty as of September 30, 2025 was a payment modification that allowed a period of interest-only payments of eleven months and the modifications of loans to borrowers experiencing financial difficulty as of December 31, 2024 consisted of term modifications on two loans which allowed an extension of the maturity date for each respective loan, one payment modification which allowed a period of interest-only payments on the loan, and one loan experienced a release of a piece of collateral securing the loan.

There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of September 30, 2025 or December 31, 2024.

At September 30, 2025, the modified loan to a borrower experiencing financial difficulty was not in compliance with the terms of its restructure, compared to December 31, 2024 when there were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure.

One loan carrying a balance of $421,000 experienced a payment default during the three and nine months ended September 30, 2025 and remained in past due status as of September 30, 2025.

One loan carrying a balance of $107,000 experienced a payment default during the three and nine months ended September 30, 2025 and remained in past due status as of September 30, 2025.

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding September 30, 2024, one loan carrying a balance of $9,427,000 experienced a payment default during the nine months ended September 30, 2024, but the loan was paid current by the customer as of September 30, 2024.

Of the $17,165,000 in individually evaluated loans at March 31, 2026, none were located outside of the Company’s primary market area.

The post modification outstanding recorded investment of modified loans to borrowers experiencing financial difficulty was $640,000 at March 31, 2026 which consisted of two loans classified in the Real Estate portfolio.

The post modification outstanding recorded investment of modified loans to borrowers experiencing financial difficulty as of December 31, 2025 amounted to $12,671,000, with $12,664,000 classified in the Real Estate portfolio and $7,000 classified in the Commercial and Industrial portfolio.

The modifications of loans to borrowers experiencing financial difficulty as of March 31, 2026 consisted of one payment modification on a loan carrying a post modification outstanding recorded investment of $529,000 that allowed a period of interest-only payments of six months and one modification on a loan carrying a post modification outstanding recorded investment of $111,000 that allowed a period of interest-only payments of four months and extended the maturity of the loan by an additional four months.

The modifications of loans to borrowers experiencing financial difficulty as of December 31, 2025 consisted of a modification to allow a full payment deferral period of three months on a loan carrying a post modification outstanding recorded investment of $1,983,000, a modification to allow a period of interest-only payments of six months on a loan carrying a post modification outstanding recorded investment of $7,000, a modification on a loan carrying a post modification outstanding recorded investment of $9,716,000 which allowed taxes to be paid by the Company on behalf of the borrower and the amount appended on to the principal amount outstanding on the loan, a modification on a loan carrying a post modification outstanding recorded investment of $529,000 which allowed a period of interest-only payments for six months, a modification on a loan carrying a post modification outstanding recorded investment of $107,000 which allowed a period of interest-only payments of eleven months, and a modification on a loan carrying a post modification outstanding recorded investment of $329,000 which allowed a period of interest-only payments of twelve months.

There were no unfunded commitments on modified loans to borrowers experiencing financial difficulty as of March 31, 2026 or December 31, 2025.

At March 31, 2026, there were no modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure, compared to December 31, 2025 when there were two modifications of loans to borrowers experiencing financial difficulty that were not in compliance with the terms of their restructure.

One loan carrying a balance of $311,000 experienced a payment default during the three months ended March 31, 2026 but was paid current prior to March 31, 2026, one loan carrying a balance of $9,571,000 experienced a payment default during the three months ended March 31, 2026 and remained greater than 30 days past due at March 31, 2026, and one loan that was subsequently paid off prior to March 31, 2026 had experienced a payment default during the three months ended March 31, 2026.

One loan carrying a balance of $120,000 experienced a payment default during the

three months ended March 31, 2025 but the loan was paid off by the customer as of March 31, 2025.

A loan carrying a balance of $425,000 experienced a payment default during the three months ended March 31, 2025 and remained in past due status as of March 31, 2025.

The Company’s non-accrual loan valuation procedure for any loans greater than $250,000 requires an appraisal to be obtained and reviewed annually at year end, unless the Board of Directors waives such requirement for a specific loan, in favor of obtaining a Certificate of Inspection instead, defined as an internal evaluation completed by the Company.

7 unchanged sentences

The economic climate remains unstable.

The war between Ukraine and Russia continues into its fourth year and the Israeli conflict in the Gaza strip has moved to exploring yet another cease fire attempt.

Inflationary pressures remain elevated and have seen an increase in the last few months, exacerbated by recently enacted presidential policies.

This continues to create much debate, speculation, and concern regarding the appropriate actions to be taken to overcome the effects of monetary policy adjustments, tariffs, federal government shutdown, and continuing large federal layoffs, that have been and will be made to affect the change.

The most recent conflict with Iran coming off the heels of a conflict with Venezuela has created much havoc with various countries’ economic outlooks.

The war between Ukraine and Russia continues into its fifth year with little hope of a long-term resolution.

Inflationary pressures remain elevated and have seen a substantial increase in March 2026.

The increase is tied directly to energy costs, exacerbated by recently enacted presidential policies.

This fuels much debate, speculation, and concern regarding the appropriate actions to be taken to overcome the effects of monetary policy adjustments, tariffs, federal government shutdown, and continuing large federal layoffs that have occurred.

Intense political turmoil, commodity prices remaining high, gas prices fluctuating widely from week to week, small businesses closing, larger corporations cutting jobs, unprecedented weather conditions seen around the world, and the uncertainty of where the Federal Reserve may go from here in regard to rates have all exacerbated the difficulties in the national and state economy.

6 unchanged sentences

A concentration of credit exists when the total amount of loans to borrowers, who are engaged in similar activities that are similarly impacted by economic or other conditions, exceed 10% of total loans.

As of September 30, 2025 and December 31, 2024, management is of the opinion that there were no loan concentrations exceeding 10% of total loans.

As of March 31, 2026 and December 31, 2025, management is of the opinion that there were no loan concentrations exceeding 10% of total loans.

Non-Performing Assets and Individually Evaluated Loans

(Dollars in thousands)

September 30,

Non-performing assets

18 unchanged sentences

Allowance for credit losses to total non-performing assets

Real estate mortgages comprise 90.5% of the loan portfolio as of September 30, 2025, as compared to 89.8% as of December 31, 2024.

Real estate mortgages comprise 90.1% of the loan portfolio as of March 31, 2026, as compared to 90.2% as of December 31, 2025.

Real estate mortgages consist of both loans secured by residential and commercial real estate.

10 unchanged sentences

The Company regularly reviews competing financial institutions’ interest rates, especially when establishing interest rates on certificates of deposit and municipal deposits.

Total deposits increased $146,614,000 to $1,192,494,000 as of September 30, 2025 as non-interest bearing deposits increased by $11,583,000 and interest bearing deposits increased by $135,031,000 from year-end 2024.

The overall increase in interest bearing deposits was mainly the result of an increase of $111,919,000 in the balance of retail CDs resulting from new higher rate CD promotions offered during the throughout 2025 along with an increase in brokered CDs of $35,137,000 in 2025.

These were offset by a decrease of $12,025,000 in the balance of other interest bearing retail deposit accounts.

Total short-term and long-term borrowings decreased to $238,856,000 as of September 30, 2025, from $240,426,000 at year-end 2024, a decrease of $1,570,000 or 0.7%.

The decrease in borrowings during the nine months ended September 30, 2025 was mainly attributable to a decrease of $1,494,000 in short-term borrowings from the Federal Home Loan Bank.

Total deposits decreased $6,148,000 to $1,131,289,000 as of March 31, 2026 as non-interest bearing deposits increased by $10,531,000 and interest bearing deposits decreased by $16,679,000 from year-end 2025.

The overall decrease in interest bearing deposits was mainly the result of a decrease of $29,938,000 in the balance of brokered CDs offset by an increase of $10,040,000 in the balance of retail CDs resulting from new higher rate CD promotions offered throughout 2025.

Total short-term and long-term borrowings decreased to $242,084,000 as of March 31, 2026, from $242,845,000 at year-end 2025, a decrease of $761,000 or 0.3%.

The decrease in borrowings during the three months ended March 31, 2026 was attributable to a decrease of $761,000 in the balance of repurchase agreements.

On December 10, 2020, the Corporation issued $25,000,000 aggregate principal amount of Subordinated Notes due December 31, 2030 (the “2020 Notes”).

The 2020 Notes are intended to be treated as Tier 2 capital for regulatory capital purposes.

The 2020 Notes bear a fixed interest rate of 4.375% per year for the first five years and then float based on a benchmark rate (as defined).

The 2020 Notes carry a variable interest rate which floats based on a benchmark rate (as defined).

CAPITAL STRENGTH

Normal increases in capital are generated by net income, less dividends paid out.

During the nine months ended September 30, 2025, net income for the period, net of continued payment of dividends, increased capital by $1,552,000.

During the three months ended March 31, 2026, net income for the period, net of continued payment of dividends, increased capital by $203,000.

Accumulated other comprehensive loss derived from net unrealized gains on debt securities available-for-sale and interest rate derivatives also impacts capital.

At December 31, 2025 accumulated other comprehensive loss was $19,453,000.

Accumulated other comprehensive loss stood at $22,178,000 at September 30, 2025, an improvement of $3,452,000.

Accumulated other comprehensive loss stood at $19,003,000 at March 31, 2026, an improvement of $450,000.

Fluctuations in interest rates have regularly impacted the gain/loss position in the Bank’s securities portfolio, as well as its decision to sell securities at a gain or loss.

The fluctuations from net unrealized gains on debt securities available-for-sale and derivatives do not affect regulatory capital, as the Bank elected to opt-out of the inclusion of this item with the filing of the March 31, 2015 Call Report.

The Company held 231,611 shares of common stock as treasury stock at September 30, 2025 and December 31, 2024, respectively.

This had an effect of reducing our total stockholders’ equity by $5,709,000 as of September 30, 2025 and December 31, 2024.

Total stockholders’ equity was $112,252,000 as of September 30, 2025, and $106,782,000 as of December 31, 2024.

At September 30, 2025 the Bank met the definition of a “well-capitalized” institution under the regulatory framework for prompt corrective action and the minimum capital requirements under Basel III.

The following table presents the Bank’s capital ratios as of September 30, 2025 and December 31, 2024:

The Company held 231,611 shares of common stock as treasury stock at March 31, 2026 and December 31, 2025, respectively.

This had an effect of reducing our total stockholders’ equity by $5,709,000 as of March 31, 2026 and December 31, 2025.

Total stockholders’ equity was $114,175,000 as of March 31, 2026, and $113,060,000 as of December 31, 2025.

At March 31, 2026 the Bank met the definition of a “well-capitalized” institution under the regulatory framework for prompt corrective action and the minimum capital requirements under Basel III.

The following table presents the Bank’s capital ratios as of March 31, 2026 and December 31, 2025:

Minimum Capital

September 30,

Adequacy with

8 unchanged sentences

The capital buffer requirement effectively raises the minimum required common equity Tier 1 capital ratio to 7.0%, the Tier 1 capital ratio to 8.5%, and the total capital ratio to 10.5% on a fully phased-in basis as of January 1, 2019.

As of September 30, 2025, the Bank meets all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis.

As of March 31, 2026, the Bank meets all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis.

The Corporation’s capital ratios are not materially different than those of the Bank.

8 unchanged sentences

● Brokered CDs.

At September 30, 2025, the Company had $539,461,000 in maximum borrowing capacity at FHLB (inclusive of the outstanding balances of FHLB long-term notes, FHLB short-term borrowings, and irrevocable standby letters of credit issued by FHLB);

At March 31, 2026, the Company had $529,750,000 in maximum borrowing capacity at FHLB (inclusive of the outstanding balances of FHLB long-term notes, FHLB short-term borrowings, and irrevocable standby letters of credit issued by FHLB);

the maximum borrowing capacity at ACBB was $15,000,000 and the maximum borrowing capacity of the Federal Discount Window was $7,659,000.

1 unchanged sentence

Because the agreement both entitles and obligates the Company to repurchase the assets, the Company may transfer legal control of the securities while still retaining effective control.

As a result, the repurchase agreements are accounted for as collateralized financing agreements (secured borrowings) and

act as an additional source of liquidity.

Securities sold under agreements to repurchase were $32,856,000 at September 30, 2025.

As a result, the repurchase agreements are accounted for as collateralized financing agreements (secured borrowings) and act as an additional source of liquidity.

Securities sold under agreements to repurchase were $36,084,000 at March 31, 2026.

Asset liquidity is provided by securities maturing in one year or less, other short-term investments, federal funds sold, and cash and due from banks.

2 unchanged sentences

Also, short-term borrowings provide funds to meet liquidity needs.

Net cash flows provided by operating activities were $9,195,000 for the nine months ended September 30, 2025 and $6,564,000 for the nine months ended September 30, 2024.

Net income amounted to $6,775,000 for the nine months ended September 30, 2025, compared to a net loss of $15,490,000 for the nine months ended September 30, 2024.

The goodwill impairment recorded during the first quarter of 2024 was a non-cash charge and amounted to $19,133,000 for the nine months ended September 30, 2024;

therefore, it had no effect on liquidity.

For the nine months ended September 30, 2025, there was no goodwill impairment.

During the nine months ended September 30, 2025, net discount accretion on securities amounted to $5,000 compared to net premium amortization of $276,000 for the nine months ended September 30, 2024.

Net gains on sales of mortgage loans amounted to $97,000 for the nine months ended September 30, 2025 and $68,000 for the nine months ended September 30, 2024.

Proceeds (net of gains/losses) from sales of mortgage loans originated for sale exceeded originations of mortgage loans originated for resale by $721,000 for the nine months ended September 30, 2025 and originations of mortgage loans originated for resale exceeded proceeds (net of gains/losses) from sales of mortgage loans originated for sale by $146,000 for the nine months ended September 30, 2024.

Net securities gains amounted to $128,000 for the nine months ended September 30, 2025, compared to net securities losses of $48,000 for the nine months ended September 30, 2024.

Accrued interest receivable increased by $82,000 and $58,000 for the nine months ended September 30, 2025 and 2024, respectively.

Accrued interest payable increased by $1,023,000 for the nine months ended September 30, 2025 and decreased by $233,000 for the nine months ended September 30, 2024.

Amortization of investment in low-income housing partnerships amounted to $614,000 for both the nine months ended September 30, 2025 and 2024, respectively.

Other assets increased by $94,000 and $277,000 during the nine months ended September 30, 2025 and 2024, respectively.

Other liabilities decreased $749,000 during the nine months ended September 30, 2025, compared to an increase of $1,079,000 during the nine months ended September 30, 2024.

A gain from bank-owned life insurance proceeds of $255,000 was recognized during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 when no gains were recognized in relation to bank-owned life insurance proceeds.

Investing activities used cash of $19,481,000 and $30,071,000 during the nine months ended September 30, 2025 and 2024, respectively.

Net activity in the available-for-sale securities portfolio (including proceeds from sale, maturities, and redemptions, net against purchases) used cash of $10,082,000 and $4,690,000 during the nine months ended September 30, 2025 and 2024, respectively.

Changes in restricted investment in bank stocks provided cash of $40,000 during the nine months ended September 30, 2025 and provided cash of $120,000 during the nine months ended September 30, 2024.

Net cash used to originate loans amounted to $10,347,000 for the nine months ended September 30, 2025, compared $24,067,000 for the nine months ended September 30, 2024.

Proceeds from bank-owned life insurance provided cash of $1,237,000 for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 when there were no proceeds from bank-owned life insurance.

Purchases of premises and equipment used cash of $329,000 and $1,424,000 during the nine months ended September 30, 2025 and 2024, respectively.

Purchase of investment in real estate ventures used cash of $0 and $10,000 during the nine months ended September 30, 2025 and 2024, respectively.

Financing activities provided cash of $140,287,000 and $30,518,000 during the nine months ended September 30, 2025 and 2024, respectively.

Deposits increased by $146,614,000 during the nine months ended September 30, 2025 and increased by $39,470,000 during the nine months ended September 30, 2024.

Short-term borrowings decreased by $1,570,000 during the nine months ended September 30, 2025 and increased by $14,007,000 during the nine months ended September 30, 2024.

Dividends paid, net of reinvestment amounted to $4,757,000 for the nine months ended September 30, 2025, compared to $2,959,000 for the nine months ended September 30, 2024.

Net cash flows provided by operating activities were $2,195,000 for the three months ended March 31, 2026 and $308,000 for the three months ended March 31, 2025.

Net income amounted to $1,959,000 for the three months ended March 31, 2026, compared to $1,053,000 for the three months ended March 31, 2025.

During the three months ended March 31, 2026, the provision for credit losses amounted to a credit/recovery balance of $390,000 compared to a provision balance of $751,000 for the three months ended March 31, 2025.

The provision for credit losses on unfunded commitments provided cash of $53,000 for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 when the provision for credit losses used cash of $13,000.

During the three months ended March 31, 2026, net discount accretion on securities amounted to $48,000 compared to net premium amortization of $50,000 for the three months ended March 31, 2025.

Deferred income taxes provided cash of $34,000 during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 when deferred income taxes used cash of $105,000.

Net gains on sales of mortgage loans amounted to $46,000 for the three months ended March 31, 2026 and $20,000 for the three months ended March 31, 2025.

Proceeds (net of gains/losses) from sales of mortgage loans originated for sale exceeded originations of mortgage loans originated for resale by $733,000 for the three months ended March 31, 2026 and $192,000 for the three months ended March 31, 2025.

Net securities gains amounted to $174,000 for the three months ended March 31, 2026, compared to net securities losses of $86,000 for the three months ended March 31, 2025.

Accrued interest receivable decreased by $153,000 for the three months ended March 31, 2026 and increased by $76,000 for the three months ended March 31, 2025.

Accrued interest payable decreased by $55,000 for the three months ended March 31, 2026 and increased by $386,000 for the three months ended March 31, 2025.

Amortization of investment in low-income housing partnerships amounted to $204,000 for the three months ended

March 31, 2026 and $214,000 for the three months ended March 31, 2025.

Other assets increased by $1,583,000 and $1,734,000 during the three months ended March 31, 2026 and 2025, respectively.

Other liabilities increased $1,177,000 during the three months ended March 31, 2026, compared to a decrease of $345,000 during the three months ended March 31, 2025.

A gain from bank-owned life insurance proceeds of $235,000 was recognized during the three months ended March 31, 2025, compared to the three months ended March 31, 2026 when no gains were recognized in relation to bank-owned life insurance proceeds.

Investing activities provided cash of $21,598,000 for the three months ended March 31, 2026 and used cash of $2,404,000 for the three months ended March 31, 2025.

Net activity in the available-for-sale securities portfolio (including proceeds from sale, maturities, and redemptions, net against purchases) provided cash of $6,543,000 and $13,126,000 during the three months ended March 31, 2026 and 2025, respectively.

Changes in restricted investment in bank stocks used cash of $351,000 for the three months ended March 31, 2025 compared to the three months ended March 31, 2026 when changes in restricted investment in bank stocks had no impact on cash.

Decreases in loan balances during the three months ended March 31, 2026 provided cash of $15,139,000 compared to the three months ended March 31, 2025 when net cash used to originate loans amounted to $16,257,000.

Proceeds from bank-owned life insurance provided cash of $1,229,000 for the three months ended March 31, 2025, compared to the three months ended March 31, 2026 when there were no proceeds from bank-owned life insurance.

Purchases of premises and equipment used cash of $84,000 and $141,000 during the three months ended March 31, 2026 and 2025, respectively.

Purchase of investment in real estate ventures used cash of $0 and $10,000 during the three months ended March 31, 2026 and 2025, respectively.

Financing activities used cash of $8,203,000 during the three months ended March 31, 2026 and provided cash of $3,634,000 during the three months ended March 31, 2025.

Deposits decreased by $6,148,000 and $487,000 during the three months ended March 31, 2026 and 2025, respectively.

Short-term borrowings decreased by $761,000 during the three months ended March 31, 2026 and increased by $5,862,000 during the three months ended March 31, 2025.

Dividends paid, net of reinvestment amounted to $1,294,000 for the three months ended March 31, 2026, compared to $1,741,000 for the three months ended March 31, 2025.

Managing liquidity remains an important segment of asset/liability management.

22 unchanged sentences

This position would contribute positively to net interest income in a falling rate environment.

The Company’s cumulative gap at one year indicates the Company is liability sensitive at September 30, 2025.

The Company’s cumulative gap at one year indicates the Company is liability sensitive at March 31, 2026.

Earnings at Risk

18 unchanged sentences

In addition, the earnings simulation model projects net interest income would decrease 6.95%, 15.01%, and 22.32% in the 100, 200 and 300 basis point decreasing rate scenarios presented.

All of the forecasts in the increasing and decreasing rate scenarios presented are within the Company’s policy guidelines.

All of the forecasts in the increasing and decreasing rate scenarios presented are within the Company’s policy guidelines, aside from the down 300 basis point scenario at (22.32)% vs.

policy limit of (20.00)%.

The analysis and model used to quantify the sensitivity of net interest income becomes less reliable in a decreasing rate scenario given the current interest rate environment with federal funds trading in the 300-375 basis point range and many deposit accounts still lagging at markedly lower rates.

Results of the decreasing basis point declining scenarios are affected by the fact that many of the Company’s interest-bearing liabilities are at rates below 1% and therefore likely may not decline 100 or more basis points.

However, the Company’s interest-sensitive assets are able to decline by these amounts.

For the nine months ended September 30, 2025 the cost of interest-bearing liabilities averaged 3.40%, and the yield on interest-earning assets, on a fully taxable equivalent basis, averaged 5.45%.

However, the Company’s interest-sensitive assets are able to

decline by these amounts.

For the three months ended March 31, 2026 the cost of interest-bearing liabilities averaged 3.37%, and the yield on interest-earning assets, on a fully taxable equivalent basis, averaged 5.23%.

Net Present Value Estimation

1 unchanged sentence

The net present value of the balance sheet is defined as the discounted present value of asset cash flows minus the discounted present value of liability cash flows.

At September 30, 2025, net present value is projected to decrease 0.50%, 2.45%, and 5.21% in the 100, 200, and 300 basis point immediate increase scenarios, respectively.

At March 31, 2026, net present value is projected to decrease 1.57%, 4.51%, and 8.27% in the 100, 200, and 300 basis point immediate increase scenarios, respectively.

Additionally, the 100, 200 and 300 basis point immediate decreases in rates are estimated to affect net present value with decreases of 0.63%, 5.00%, and 14.58%.

3 unchanged sentences

Effect of Change in Interest Rates

September 30, 2025:

March 31, 2026

Projected Change

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements