What changed in this filing

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Item 1. Financial Statements

2026-08-06 compared with 2026-05-08 · 487 added, 341 removed, 1378 unchanged (38% of the section changed)

30 unchanged sentences

Preferred stock, par value $ 2.00 per share;

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

authorized 1,000,000 shares as of June 30, 2026 and December 31, 2025;

issued 0 as of June 30, 2026 and December 31, 2025

Common stock, par value $ 2.00 per share;

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

authorized 20,000,000 shares as of June 30, 2026 and December 31, 2025;

issued 6,554,012 as of June 30, 2026 and 6,503,746 as of December 31, 2025;

outstanding 6,322,401 as of June 30, 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 March 31, 2026 and December 31, 2025

Treasury stock, at cost, 231,611 shares as of June 30, 2026 and December 31, 2025

TOTAL STOCKHOLDERS’ EQUITY

5 unchanged sentences

Three Months Ended

Six Months Ended

INTEREST INCOME

19 unchanged sentences

Net gains on sales of mortgage loans

Net securities gains (losses)

Net securities gains

Gains from life insurance proceeds

22 unchanged sentences

Other comprehensive income:

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

Unrealized net holding gains on debt securities available-for-sale arising during the period, net of income taxes of $ 326 and $ 107 , respectively

Fair value adjustment on cash flow derivatives, net of income taxes of $( 153 ) and $ 350 , respectively

Total other comprehensive income (loss)

Total comprehensive income

(Dollars in thousands)

Six Months Ended

Other comprehensive income:

Unrealized net holding gains on debt securities available-for-sale arising during the period, net of income taxes of $ 283 and $ 534 , respectively

Fair value adjustment on cash flow derivatives, net of income taxes of $( 316 ) and $ 666 , respectively

Total other comprehensive income

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2026 AND 2025

SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Dollars in thousands, except

8 unchanged sentences

Balance at March 31, 2026

Other comprehensive income, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at June 30, 2026

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, 2025

See accompanying notes to consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2026 AND 2025

SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Dollars in thousands)

1 unchanged sentence

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

(Recovery of) provision for credit losses on loans

Provision for (recovery of) credit losses on unfunded commitments

(Release of) provision for credit losses on loans

Release of credit losses on unfunded commitments

Depreciation and amortization

Net (discount accretion) premium amortization on securities

Deferred income tax expense (benefit)

Deferred income tax expense

Net gains on sales of mortgage loans

1 unchanged sentence

Originations of mortgage loans originated for sale

Net securities (gains) losses

Decrease (increase) in accrued interest receivable

Net securities gains

Decrease in accrued interest receivable

Increase in cash surrender value of bank owned life insurance

Gain from bank-owned life insurance proceeds

Increase in other assets

Net losses on disposals of premises and equipment

(Increase) decrease in other assets

Amortization of investment in low-income housing partnerships

5 unchanged sentences

Purchases of debt securities available-for-sale

Net change in restricted investment in bank stocks

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

Net (increase) decrease in restricted investment in bank stocks

Net increase in loans originated as held for investment

Proceeds from bank-owned life insurance

Purchase of premises and equipment

Purchase of investment in real estate venture

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

NET CASH PROVIDED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Net decrease in deposits

Net (decrease) increase in short-term borrowings

Net increase in deposits

Net decrease in short-term borrowings

Dividends paid, net of reinvestment

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

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

Operating results for the three and six months ended June 30, 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 March 31, 2026 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 June 30, 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.

42 unchanged sentences

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

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

At June 30, 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 recorded as of March 31, 2026 and December 31, 2025;

There was no allowance for credit losses for Available-For-Sale debt securities recorded as of June 30, 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, 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)

March 31, 2026:

June 30, 2026:

Treasury securities

17 unchanged sentences

Corporate debt securities

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.

Debt securities Available-for-Sale with an aggregate fair value of $ 211,907,000 at June 30, 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 $ 170,111,000 at June 30, 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 June 30, 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.

March 31, 2026

June 30, 2026

Debt Securities Available-For-Sale

11 unchanged sentences

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

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.

At June 30, 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)

March 31, 2026:

June 30, 2026:

Sallie Mae Bank

6 unchanged sentences

Nelnet Student Loan Trust

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

There were no proceeds from sales of Debt Securities Available-For-Sale for the quarter ended June 30, 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 March 31, 2026 and December 31, 2025:

March 31, 2026

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 June 30, 2026 and December 31, 2025:

June 30, 2026

(Dollars in thousands)

23 unchanged sentences

Corporate debt securities

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 136 individual debt securities in an unrealized loss position as of June 30, 2026, with a combined decline in value representing 5.38 % 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.

7 unchanged sentences

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.

As of June 30, 2026 and December 31, 2025, there were no credit losses recorded in relation to available-for-sale debt securities.

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.

3 unchanged sentences

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 $ 2,086,000 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 reported as a component of accrued interest receivable on the Company’s consolidated balance sheet and totaled $ 2,056,000 as of June 30, 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 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.

All debt securities available for sale in an unrealized loss position, as of June 30, 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.

5 unchanged sentences

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

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:

At June 30, 2026 and December 31, 2025, the Company had $ 2,358,000 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 and six months ended June 30, 2026 and 2025:

(Dollars in thousands)

1 unchanged sentence

Three months ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

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

1 unchanged sentence

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

(Dollars in thousands)

Six months ended

June 30, 2026

June 30, 2025

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

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

7 unchanged sentences

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 March 31, 2026 or December 31, 2025.

Based on the factors described above, management did not consider any equity securities to be impaired at June 30, 2026 or December 31, 2025.

NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

6 unchanged sentences

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 sale amounted to $ 1,483,000 and $ 1,140,000 at June 30, 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.

29 unchanged sentences

Agricultural Lending

The Company originates agricultural loans to individuals in the farming industry for funding the production of crops or to purchase or refinance capital assets such as farmland, livestock, machinery, equipment, and farm real estate improvements.

improvements.

Agricultural loans are typically secured by collateral related to the farming activities.

4 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.

15 unchanged sentences

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

As of June 30, 2026, the Company's balance of GGLs was $ 3,708,000 , 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.

57 unchanged sentences

7) changes in the value of underlying collateral for collateral dependent loans;

8) the existence and effect of any concentrations of credit and changes in the level of such concentrations;

8) the existence and effect of any concentrations of credit and changes in the level of such

concentrations;

and 9) the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s existing loan portfolio.

28 unchanged sentences

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.

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

As of June 30, 2026 and December 31, 2025, the amount of the reserve for unfunded lending commitments was $ 85,000 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 $ 2,614,000 as of March 31, 2026 compared to $ 2,736,000 at December 31, 2025.

Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $ 2,594,000 as of June 30, 2026 compared to $ 2,736,000 at December 31, 2025.

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

6 unchanged sentences

Primary emphasis is placed on financial condition and trends.

The grade also reflects current economic and industry conditions;

The grade also reflects current

economic and industry conditions;

as well as other variables such as liquidity, cash flow, revenue/earnings trends, management strengths or weaknesses, quality of financial information, and credit history.

29 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 March 31, 2026 and December 31, 2025.

(Dollars in thousands)

5 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 March 31, 2026 and December 31, 2025.

March 31, 2026:

June 30, 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 $ 20,083,000 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.

State and Political Subdivision Loans include loans categorized as tax-free in the amount of $ 29,320,000 at June 30, 2026 and $ 20,132,000 at December 31, 2025.

Commercial and Industrial Loans include $ 3,708,000 of Government Guaranteed Loans (“GGLs”) as of June 30, 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 and six months ended June 30, 2026 and 2025 and the year ended December 31, 2025.

(Dollars in thousands)

and Industrial

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

As of and for the three months ended June 30, 2026:

Allowance for Credit Losses:

Beginning balance

(Release of) Provision for Credit Losses

Ending Balance

(Dollars in thousands)

and Industrial

As of and for the six months ended June 30, 2026:

Allowance for Credit Losses:

Beginning balance January 1, 2026

(Recovery of) Provision for Credit Losses

Provision for Credit Losses

Ending Balance

12 unchanged sentences

and Industrial

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

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

Allowance for Loan Losses:

Beginning balance

Provision for Credit Losses

Ending Balance

(Dollars in thousands)

and Industrial

As of and for the six months ended June 30, 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 three months ended March 31, 2026 and 2025 was as follows:

The Company's activity in the allowance for credit losses on unfunded commitments for the six months ended June 30, 2026 and 2025 was as follows:

(Dollars in thousands)

Balance at January 1

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.

Recovery of credit losses on unfunded commitments

Balance at June 30

During the six months ended June 30, 2026, there were six modifications granted on loans to borrowers experiencing financial difficulty which carried a combined post modification recorded investment of $ 4,083,000 .

The loan modifications granted during the six months ended June 30, 2026 consisted of one payment modification that allowed a full payment deferral for a period of six months , one payment modification that allowed a period of interest-only payments of six months , one payment modification that extended the interest-only draw period on the loan for an additional six months , one term modification that converted the loan from a time note to a term loan, one modification that extended the interest-only draw period on the loan for an additional six months and extended the maturity of the loan for an additional 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 .

During the six months ended June 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 six months ended June 30, 2025 was a payment modification that allowed a period of interest-only payments of eleven months .

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $ 5,300,000 at June 30, 2026 and $ 12,661,000 at December 31, 2025.

At June 30, 2026, there were unfunded commitments of $ 1,751,000 related to modified loans to borrowers experiencing financial difficulty, compared to December 31, 2025 when there were no unfunded commitments on modified loans to borrowers experiencing financial difficulty.

At June 30, 2026, there were two modifications of loans to borrowers experiencing financial difficulty carrying a combined outstanding recorded investment of $ 409,000 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 carrying a combined outstanding recorded investment of $ 439,000 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 June 30, 2026 and December 31, 2025.

(Dollars in thousands)

March 31, 2026

June 30, 2026

Modifications of Loans to Borrowers Experiencing Financial Difficulty:

10 unchanged sentences

Subtotal - Commercial and Industrial:

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.

Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding June 30, 2026, five loans experienced payment defaults during the six months ended June 30, 2026.

One loan carrying a balance of $ 299,000 experienced a payment default during the three months ended June 30, 2026 but was paid current as of June 30, 2026, one loan carrying a balance of $ 110,000 experienced a payment default during the six months ended June 30, 2026 and remained in past due status as of June 30, 2026, one loan carrying a balance of $ 330,000 experienced a payment default during the six months ended June 30, 2026 but was paid current as of June 30, 2026, one loan carrying a balance of $ 9,437,000 experienced a payment default during both the three and six months ended June 30, 2026 and remained in past due status as of June 30, 2026, and one loan that was subsequently paid off prior to June 30, 2026 had experienced a payment default during the six months ended June 30, 2026.

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

One loan carrying a balance of $ 120,000 experienced a payment default during the three and six months ended June 30, 2025 and remained in past due status as of June 30, 2025.

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

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

The following table presents information regarding modifications of loans to borrowers experiencing financial difficulty that were completed during the three and six months ended June 30, 2026 and 2025.

(Dollars in thousands)

For the Three Months Ended March 31, 2026

For the Three Months Ended June 30, 2026

Pre-Modification

Post-Modification

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:

Commercial and Industrial

(Dollars in thousands)

March 31, 2026

For the Six Months Ended June 30, 2026

Pre-Modification

Post-Modification

Commercial and Industrial

(Dollars in thousands)

For the Three Months Ended June 30, 2025

Pre-Modification

Post-Modification

(Dollars in thousands)

For the Six Months Ended June 30, 2025

Pre-Modification

Post-Modification

The following table provides detail regarding the types of loan modifications made for borrowers experiencing financial difficulty during the three and six months ended June 30, 2026 and 2025.

For the Three Months Ended June 30, 2026

Commercial and Industrial

The loan classified as an “Other” modification that was completed during the three months ended June 30, 2026 contained components of both a term and payment modification, extending the interest-only draw period on the loan for an additional six months and extending the maturity of the loan for an additional six months.

For the Six Months Ended June 30, 2026

Commercial and Industrial

Both loans classified as “Other” modifications that were completed during the six months ended June 30, 2026 contained components of both a term and payment modification, one modification allowing a period of interest-only payments of four months and extending the maturity of the loan by four months and one modification extending the interest-only draw period on the loan for an additional six months and extending the maturity of the loan for an additional six months.

For the Three Months Ended June 30, 2025

For the Six Months Ended June 30, 2025

The recorded investment, unpaid principal balance, and the related allowance of the Company’s non-accrual loans are summarized below at June 30, 2026 and December 31, 2025:

(Dollars in thousands)

June 30, 2026

Commercial & Industrial

4 unchanged sentences

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 March 31, 2026 and December 31, 2025.

The following table presents the Company’s individually evaluated, collateral-dependent loans by segment as of June 30, 2026 and December 31, 2025.

(Dollars in thousands)

March 31, 2026

June 30, 2026

Loan Segment/Collateral Type

19 unchanged sentences

Subtotal - Agricultural:

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:

At June 30, 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 June 30, 2026 and December 31, 2025 were as follows:

(Dollars in thousands)

5 unchanged sentences

Total non-performing assets

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

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 March 31, 2026 and December 31, 2025.

There were no foreclosed assets held for resale at June 30, 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 March 31, 2026 and December 31, 2025.

The following tables present the classes of the loan portfolio, including individually evaluated loans, summarized by past-due status at June 30, 2026 and December 31, 2025.

(Dollars in thousands)

March 31, 2026:

June 30, 2026:

Commercial and Industrial

5 unchanged sentences

NOTE 5 — DEPOSITS

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

Major classifications of deposits at June 30, 2026 and December 31, 2025 consisted of:

(Dollars in thousands)

4 unchanged sentences

Total deposits

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.

The following table represents scheduled maturities of the Company’s time deposits, that are greater than or equal to $250,000, by time remaining until maturity as of June 30, 2026.

(Dollars in thousands)

March 31, 2026

June 30, 2026

3 months or less

1 unchanged sentence

Greater than 12 months

Total time deposits equal to or greater than $250K

Total time deposits equal to or greater than $250,000

NOTE 6 — BORROWINGS

1 unchanged sentence

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 March 31, 2026 and December 31, 2025 are as follows:

Short-term borrowings and weighted–average interest rates at June 30, 2026 and December 31, 2025 are as follows:

(Dollars in thousands)

March 31, 2026

June 30, 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 March 31, 2026 and December 31, 2025.

The following table presents the repurchase agreements subject to enforceable master netting arrangements as of June 30, 2026 and December 31, 2025.

(Dollars in thousands)

3 unchanged sentences

Balance Sheet

March 31, 2026

June 30, 2026

Repurchase agreements (a)

1 unchanged sentence

Repurchase agreements (a)

(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:

(a) As of June 30, 2026 and December 31, 2025, the fair value of securities pledged in connection with repurchase agreements was $ 41,823,000 and $ 44,220,000 , respectively.

The following table presents the remaining contractual maturity of the master netting arrangement or repurchase agreements as of June 30, 2026:

(Dollars in thousands)

Remaining Contractual Maturity of the Agreements

March 31, 2026:

June 30, 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 March 31, 2026 and December 31, 2025, 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 June 30, 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 March 31, 2026 or December 31, 2025.

There were no irrevocable standby letters of credit which could be drawn on through the FHLB’s close of business on June 30, 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 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.

As of June 30, 2026, loans of $ 745,056,000 were pledged to the FHLB which resulted in a FHLB maximum borrowing capacity of $ 518,920,000 .

As of June 30, 2026, no securities were pledged as collateral to the FHLB to secure FHLB loans and letters of credit.

NOTE 7 — SUBORDINATED DEBT

11 unchanged sentences

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

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 June 30, 2026, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $ 1,304,000 and $ 1,847,000 , 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 three months ended March 31, 2026 and 2025 of $ 52,000 and $ 48,000 , respectively.

The Company recognized total operating lease costs for the six months ended June 30, 2026 and 2025 of $ 106,000 and $ 97,000 , respectively.

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

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

Cash payments totaled $ 98,000 and $ 89,000 , respectively, for the six months ended June 30, 2026 and 2025.

The Company currently has one finance lease for equipment.

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 June 30, 2026, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $ 44,000 and $ 29,000 , 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.

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 consolidated balance sheets.

Total finance lease costs that were recognized by the Company for the six months ended June 30, 2026 and 2025 were immaterial.

Cash payments totaled $ 4,000 and $ 2,000 for the six months ended June 30, 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 March 31, 2026 and December 31, 2025.

The following table displays the weighted-average term and discount rates for operating and finance leases outstanding as of June 30, 2026 and December 31, 2025.

Weighted-average term (years)

16 unchanged sentences

The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and cash payments principally related to specific assets and short-term wholesale funding positions.

The Company began utilizing swap contracts in the third quarter of 2023.

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 March 31, 2026 and December 31, 2025:

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 June 30, 2026 and December 31, 2025:

(Dollars in thousands)

March 31, 2026

June 30, 2026

Derivative Assets

10 unchanged sentences

Other Liabilities

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

The following table presents the derivative liabilities subject to an enforceable master netting arrangement as of June 30, 2026 and December 31, 2025:

Gross Amounts Not Offset in the Consolidated Balance Sheet

5 unchanged sentences

Balance Sheet

March 31, 2026

June 30, 2026

December 31, 2025

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

The following table presents the remaining contractual maturity of the master netting arrangements as of June 30, 2026:

Remaining Contractual Maturity of the Agreements

(Dollars in thousands)

March 31, 2026:

June 30, 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 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:

As of June 30, 2026, the Company had a total of four interest rate swaps with a combined notional amount of $ 94,320,000 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 June 30, 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)

11 unchanged sentences

Available-for-sale - MBS

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.

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 $( 207,000 ) for the six months ended June 30, 2026 and $ 347,000 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 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.

As of June 30, 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.

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 March 31, 2026 and 2025:

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)

5 unchanged sentences

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 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.

As of June 30, 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 June 30, 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 March 31, 2026 and December 31, 2025 were as follows:

The contract or notional amounts at June 30, 2026 and December 31, 2025 were as follows:

(Dollars in thousands)

March 31, 2026

June 30, 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 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.

At June 30, 2026, the Company had $ 845,218,000 in loans secured by real estate, which represented 89.1 % 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 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 of June 30, 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.

7 unchanged sentences

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.

15 unchanged sentences

Financial Assets Measured at Fair Value on a Recurring Basis

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:

At June 30, 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)

March 31, 2026

June 30, 2026

Debt Securities Available-for-Sale:

2 unchanged sentences

Government Agencies and Sponsored Agencies:

Mortgaged-backed

Mortgage-backed

Other mortgage backed debt securities

10 unchanged sentences

Government Agencies and Sponsored Agencies:

Mortgaged-backed

Mortgage-backed

Other mortgage backed debt securities

8 unchanged sentences

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.

9 unchanged sentences

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

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

Individually evaluated loans measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025 are as follows:

(Dollars in thousands)

Assets at March 31, 2026

Assets at June 30, 2026

Individually evaluated loans:

6 unchanged sentences

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 March 31, 2026 and December 31, 2025.

There were no foreclosed assets held for resale measured at fair value on a nonrecurring basis at June 30, 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.

4 unchanged sentences

Quantitative Information about Level 3 Fair Value Measurements

March 31, 2026

June 30, 2026

Valuation Technique

22 unchanged sentences

(Dollars in thousands)

Fair Value Measurements at March 31, 2026

Fair Value Measurements at June 30, 2026

FINANCIAL ASSETS:

41 unchanged sentences

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

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.

As of June 30, 2026 and December 31, 2025, the fair value of trust assets under management was $ 130,315,000 and $ 122,111,000 , respectively.

The costs of acquiring asset

10 unchanged sentences

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.

At June 30, 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.

3 unchanged sentences

Basic and diluted earnings per share

(In thousands, except earnings per share)

Six Months Ended

Weighted-average common shares outstanding

Basic and diluted earnings per share

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

2 unchanged sentences

Such forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "intends", "will", "should", "anticipates", or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy.

Forward-looking statements are subject to certain risks and uncertainties such as national, regional and local economic conditions, competitive factors, and regulatory limitations.

Forward-looking statements are subject to certain risks and

uncertainties such as national, regional and local economic conditions, competitive factors, and regulatory limitations.

Actual results may differ materially from those projected in the forward-looking statements.

5 unchanged sentences

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;

27 unchanged sentences

RESULTS OF OPERATIONS

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.

Quarter ended June 30, 2026 compared to quarter ended June 30, 2025

First Keystone Corporation realized earnings for the three months ended June 30, 2026 of $3,777,000, an increase of $863,000 from the second quarter of 2025.

The increase in net income for the three months ended June 30, 2026 was primarily due to increased interest on excess cash balances held at the Federal Reserve.

On a per share basis, for the three months ended June 30, 2026, net income was $0.60 compared to earnings of $0.47 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 June 30, 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.

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.

In the three months ended June 30, 2026, interest income amounted to $19,976,000, an increase of $1,092,000 or 5.8% from the three months ended June 30, 2025, while interest expense amounted to $9,660,000 in the three months ended June 30, 2026, an increase of $281,000 or 3.0% from the three months ended June 30, 2025.

As a result, net interest income increased $811,000 or 8.5% to $10,316,000 from $9,505,000 for the same period in 2025.

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 Company’s net interest margin for the three months ended June 30, 2026 was 2.77% compared to 2.78% 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 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.

The provision for credit losses for the three months ended June 30, 2026, carried a recovery balance of $299,000, compared to a recovery balance of $237,000 for the three months ended June 30, 2025.

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 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.

Charge-off and recovery activity in the allowance for credit losses resulted in net recoveries of $40,000 and net charge-offs of $69,000 for the three months ended June 30, 2026 and 2025, respectively.

The net recoveries realized for the three months ended June 30, 2026 mainly resulted from a recovery of $31,000 on a residential mortgage and a recovery of $25,000 on a loan to a manufacturer of hemp-based biodegradable plastic food containers.

See Allowance for Credit Losses on page 53 for further discussion.

NON-INTEREST INCOME

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.

Total non-interest income was $2,145,000 for the three months ended June 30, 2026, as compared to $1,798,000 for the same period in 2025, an increase of $347,000, or 19.3%.

Net securities gains increased $269,000 to a net gain of $374,000 for the three months ended June 30, 2026 as compared to net gains of $105,000 for the three months ended June 30, 2025.

The increase in net securities gains was the result of an increase in the mark-to-market adjustment on held equity securities during the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025.

Trust department income increased $15,000 or 5.4% to $295,000 for the three months ended June 30, 2026 as compared to the same period in 2025.

Service charges and fees income decreased $2,000 or 0.4% for the three months ended June 30, 2026 as compared to the same period in 2025.

Cash surrender value of life insurance increased $19,000 or 12.3% to $174,000 for the three months ended June 30, 2026.

Gains on sales of mortgage loans decreased $5,000 or 27.8% for the three months ended June 30, 2026.

There were no gains from life insurance proceeds realized during the three months ended June 30, 2026, compared to gains from life insurance proceeds of $20,000 that were recognized during the three months ended June 30, 2025 in relation to a death benefit.

Other non-interest income increased $48,000 or 57.1% to $132,000 for the three months ended June 30, 2026.

The increase was mainly the result of a recovery of funds related to a prior defalcation loss.

NON-INTEREST EXPENSE

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.

Total non-interest expense was $8,438,000 for the three months ended June 30, 2026, as compared to $8,261,000 for the three months ended June 30, 2025.

Salaries and employee benefits amounted to $4,228,000 or 50.1% of total non-interest expense for the three months ended June 30, 2026, as compared to $4,303,000 or 52.1% of total non-interest expense for the three months ended June 30, 2025.

The decrease was mainly the result of lower health care costs during the quarter ended June 30, 2026 as compared to the same period of 2025.

Net occupancy, furniture and equipment, and computer expense amounted to $1,286,000 for the three months ended June 30, 2026, an increase of $97,000 or 8.2% which was mainly due to an increase in expense related to various new software systems that were implemented throughout 2025 and the first half of 2026.

Expenses related to professional services increased $67,000 or 17.9% to $441,000 as of the quarter ended June 30, 2026 compared to the same quarter of 2025.

The increase was due to normal annual increases in accounting audit expenses and legal fees related to the Company’s subordinated debt holdings during the second quarter of 2026.

Pennsylvania shares tax expense amounted to $272,000 for the three months ended June 30, 2026, an increase of $5,000 or 1.9% as compared to the three months ended June 30, 2025.

Federal Deposit Insurance Corporation (“FDIC”) insurance expense amounted to $320,000 for the three months ended June 30, 2026, an increase of $16,000 or 5.3% 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 $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.

ATM and debit card fees expense amounted to $347,000 for the three months ended June 30, 2026, an increase of $41,000 or 13.4% as compared to the three months ended June 30, 2025.

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

Data processing expenses amounted to $422,000 for the three months ended June 30, 2026 as compared to $385,000 for the same period of 2025, an increase of $37,000 or 9.6% mainly due to increases in internet banking and core service fees.

Advertising expense amounted to $100,000 in the second quarter of 2026, a decrease of $38,000 or 27.5% as compared to the three months ended June 30, 2025 as the Company utilized less newspaper and digital advertising during the second quarter of 2026.

Other non-interest expense amounted to $1,022,000 for the three months ended June 30, 2026, an increase of $27,000 or 2.7% as compared to the three months ended June 30, 2025.

Income tax expense amounted to $545,000 for the three months ended June 30, 2026, as compared to income tax expense of $365,000 for the three months ended June 30, 2025, an increase of $180,000.

The effective total income tax rate was 12.6% for the three months ended June 30, 2026 as compared to 11.1% for the three months ended June 30, 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 $210,000 of tax credits from low-income housing partnerships during both the three months ended March 31, 2026 and 2025.

The Company recognized $210,000 of tax credits from low-income housing partnerships during both the three months ended June 30, 2026 and 2025.

Six months ended June 30, 2026 compared to six months ended June 30, 2025

First Keystone Corporation realized earnings for the six months ended June 30, 2026 of $5,736,000, an increase of $1,769,000 from the same period in 2025.

The increase in net income for the six months ended June 30, 2026 was primarily due to increased interest on excess cash balances held at the Federal Reserve and an increase in interest and fees on loans during the six months ended June 30, 2026, offset with an increase in interest on deposits during the same period.

On a per share basis, net income was $0.91 for the six months ended June 30, 2026 compared to $0.64 for the same period in 2025.

Cash dividends amounted to $0.56 per share for the six months ended June 30, 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 six months ended June 30, 2026, interest income amounted to $39,218,000, an increase of $2,124,000 or 5.7% from the six months ended June 30, 2025, while interest expense amounted to $19,771,000 in the six months ended June 30, 2026 an increase of $952,000 or 5.1% from the six months ended June 30, 2025.

As a result, net interest income increased $1,172,000 or 6.4% to $19,447,000 from $18,275,000 for the same period in 2025.

The increase was primarily due to growth in interest bearing deposits in other banks during the six months ended June 30, 2026, offset by increased interest on deposits and subordinated debt and 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 six months ended June 30, 2026 was 2.63% compared to 2.68% for same period in 2025.

The decrease in net interest margin was primarily a result of increases in interest on deposits and subordinated debt and a decrease in income related to taxable securities.

PROVISION FOR CREDIT LOSSES

The provision for credit losses for the six months ended June 30, 2026, carried a recovery balance of 689,000, compared to a provision balance of $514,000 for the six months ended June 30, 2025.

Charge-off and recovery activity in the allowance for credit losses resulted in net recoveries of $56,000 and net charge-offs of $424,000 for the six months ended June 30, 2026 and 2025, respectively.

The increased balance of net charge offs for the six months ended June 30, 2025 was mainly the result of charge-offs completed on two loans during the first six months of 2025.

Charge-offs of $162,000 were completed on a loan to a trucking transportation business and a charge off of $245,000 was completed on a loan to a manufacturer of hemp-based biodegradable plastic food containers.

See Allowance for Credit Losses on page 53 for further discussion.

NON-INTEREST INCOME

Total non-interest income was $3,958,000 for the six months ended June 30, 2026, as compared to $3,557,000 for the same period in 2025, an increase of $401,000, or 11.3%.

Trust department income was $581,000 for the six months ended June 30, 2026 an increase of $40,000 or 7.4% as compared to the same period in 2025.

Service charges and fee income decreased $7,000 or 0.6% for the six months ended June 30, 2026.

Cash surrender value of life insurance increased $24,000 or 7.5% to $344,000 for the six months ended June 30, 2026, as compared to $320,000 for the six months ended June 30, 2025.

ATM fees and debit card income increased $24,000 or 2.1% to $1,143,000 for the six months ended June 30, 2026.

Gains on sales of mortgage loans increased $21,000 or 55.3% due to more loans sold and at a higher average gain on individual loans sold in the first six months of 2026 as compared to the same period in 2025.

Net securities gains increased $529,000 to a net gain of $548,000 for the six months ended June 30, 2026 as compared to net gains of $19,000 for the six months ended June 30, 2025.

The increase in net securities gains was the result of an increase in the mark-to-market adjustment on held equity securities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Other non-interest income amounted to $184,000 for the six months ended June 30, 2026, an increase of $25,000 or 15.7% as compared to the same period of 2025.

The increase was mainly the result of a recovery of funds related to a prior defalcation loss.

NON-INTEREST EXPENSE

Total non-interest expense was $17,611,000 for the six months ended June 30, 2026, as compared to $16,910,000 for the six months ended June 30, 2025.

Non-interest expense increased $701,000 or 4.1%.

Salaries and employee benefits amounted to $9,195,000 or 52.2% of total non-interest expense for the six months ended June 30, 2026, as compared to $8,933,000 or 52.8% for the six months ended June 30, 2025.

The increase was mainly the result of normal employee merit increases during the first half of 2026.

Net occupancy, furniture and equipment, and computer expense amounted to $2,697,000 for the six months ended June 30, 2026, an increase of $293,000 or 12.2%.

The increase was mainly due to an increase in expense related to various new software systems that were implemented throughout 2025 and the first half of 2026.

Expenses related to professional services increased $152,000 or 20.2% to $904,000 for the six months ended June 30, 2026.

The increase was due to normal annual increases in accounting audit expenses and legal fees related to the Company’s subordinated debt holdings during the first half of 2026.

Pennsylvania shares tax expense amounted to $543,000 for the six months ended June 30, 2026, an increase of $55,000 or 11.3% as compared to the six months ended June 30, 2025.

FDIC insurance expense increased $30,000 or 4.9% for the six months ended June 30, 2026.

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 $609,000 for the six months ended June 30, 2026, an increase of $56,000 or 10.1% as compared to the six months ended June 30, 2025.

This increase was a result of higher electronic funds transfer expenses for the six months ended June 30, 2026, as compared to the same period in 2025.

Data processing expenses amounted to $813,000 for the six months ended June 30, 2026, an increase of $71,000 or 9.6% as compared to the six months ended June 30, 2025.

The increase was mainly the result of increased internet banking and core service fees.

Advertising expense decreased $61,000 or 25.1% during the six months ended June 30, 2026.

This decrease was mainly the result of the Company utilizing less newspaper and digital advertising during the first half of 2026 as compared to the first half of 2025.

Other non-interest expense amounted to $2,025,000 for the six months ended June 30, 2026, a decrease of $157,000 or 7.2% as compared to the six months ended June 30, 2025.

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

Income tax expense amounted to $747,000 for the six months ended June 30, 2026, as compared to income tax expense of $441,000 for the six months ended June 30, 2025, an increase of $306,000.

The effective total income tax rate was 11.5% for the six months ended June 30, 2026 as compared to 10.0% for the six months ended June 30, 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 $420,000 of tax credits from low-income housing partnerships during both the six months ended June 30, 2026 and 2025.

FINANCIAL CONDITION

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 increased to $1,574,315,000 as of June 30, 2026, an increase of $43,338,000 from year-end 2025.

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

Total cash and cash equivalents increased by $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.

Total cash and cash equivalents increased by $66,712,000 to $187,961,000 as of June 30, 2026 from $121,249,000 as of December 31, 2025.

The increase was mainly the result of an increase of $66,463,000 in interest-bearing deposits in other banks due to an increase in excess cash balances held at the Federal Reserve resulting from increased deposits and cashflows from investment portfolio runoff that was not reinvested.

Total debt securities available-for-sale decreased $25,142,000 or 6.4% to $369,084,000 as of June 30, 2026 from $394,226,000 at December 31, 2025 mainly due to $28,933,000 in maturities, paydowns, and calls completed during the six months ended June 30, 2026, offset by $4,000,000 in securities purchased during the same period.

Total net loans increased $2,359,000 or 0.3% to $941,552,000 as of June 30, 2026 from $939,013,000 as of December 31, 2025.

Real estate loans, the largest segment of the Company’s loan portfolio, decreased by $8,450,000 during the six months ended June 30, 2026, commercial and industrial loans, the second largest segment of the Company’s loan portfolio, increased by $1,101,000 during the six months ended June 30, 2026, and loans to state and political subdivisions, the third largest segment of the Company’s loan portfolio increased by $9,188,000 during the six months ended June 30, 2026.

The allowance for credit losses also decreased by $633,000 during the six months ended June 30, 2026.

Total deposits increased $42,473,000 or 3.7% to $1,179,910,000 from $1,137,437,000 as of December 31, 2025, mainly due to an increase of $24,065,000 in the balance of non-interest bearing deposits due to an increase of $18,368,000 in the balance of non-interest checking accounts.

Interest-bearing deposits also increased by $18,408,000 during the six months ended June 30, 2026 due to an increase of $20,402,000 in the balance of retail CDs and an increase of $27,943,000 in the balance of other interest-bearing deposit accounts, offset by a decrease of $29,938,000 in the balance of brokered CDs during the same period.

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 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.

Total borrowings decreased during the six months ended June 30, 2026 by $1,241,000 to $241,604,000 from $242,845,000 as of December 31, 2025.

The decrease in borrowings was the result of a decrease of $1,241,000 the balance of repurchase agreements.

Total stockholders’ equity amounted to $118,456,000 at June 30, 2026, an increase of $5,396,000 or 4.8% from December 31, 2025 mainly due to an improvement of $2,249,000 in accumulated other comprehensive loss and an increase of $2,217,000 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 95.7% at March 31, 2026 and 95.0% at March 31, 2025.

The earning asset ratio (average interest earning assets divided by average total assets) equaled 95.7% at June 30, 2026 and 95.0% at June 30, 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, decreased to $932,163,000 as of March 31, 2026, down $15,122,000 or 1.6% since year-end 2025.

The Company’s primary earning asset, the loans held for investment portfolio, increased to $948,848,000 as of June 30, 2026, up $1,563,000 or 0.2% since year-end 2025.

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

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.

Total non-performing assets were $20,123,000 as of June 30, 2026, a increase of $3,204,000 or 18.94% 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 43.63% as of June 30, 2026 and 55.63% at December 31, 2025.

See the Non-Performing Assets section on page 56 for more information.

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.

In addition to loans, another primary earning asset is our overall securities portfolio, which decreased in size from December 31, 2025 to June 30, 2026 mainly due to normal runoff in the securities portfolio which was not reinvested.

Debt securities available-for-sale amounted to $369,084,000 as of June 30, 2026, a decrease of $25,142,000 from year-end 2025.

The decrease in debt securities available-for-sale is mainly due to $28,933,000 in maturities, paydowns, and calls completed during the six months ended June 30, 2026, offset by $4,000,000 in securities purchased during the same period.

Interest-bearing deposits in other banks increased $66,463,000 as of June 30, 2026, to $178,957,000 from $112,494,000 at year-end 2025 mainly due to an increase in excess 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 six months ended June 30, 2026.

Total loans increased to $948,423,000 as of June 30, 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 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.

Total loans increased by $1,762,000 or 0.2%.

The Real Estate portfolio decreased $8,450,000 or 1.0% from $853,668,000 at December 31, 2025 to $845,218,000 at June 30, 2026.

The decrease in the Real Estate portfolio for the six months ended June 30, 2026 was mainly the result of $76,134,000 in new loan originations and an increase in utilization of existing real estate lines of credit of $21,500,000, offset by loan payoffs of $62,477,000 along with regular principal payments (which have significantly increased for the Company’s Real Estate portfolio for the six months ended June 30, 2026 as compared to prior periods) and other typical fluctuations in the Real Estate portfolio.

The Agricultural portfolio increased $257,000 or 26.1% from $984,000 at December 31, 2025 to $1,241,000 at June 30, 2026.

The increase in the Agricultural portfolio for the six months ended June 30, 2026 was mainly the result of an increase of $119,000 in utilization of existing agricultural lines of credit, along with three loans carrying an aggregate balance of $254,000 which were reclassed from the Real Estate portfolio to the Agricultural portfolio during the first two quarters of 2026, offset by regular principal payments and other typical fluctuations in the Agricultural portfolio.

The Commercial and Industrial portfolio increased $1,101,000 or 1.7% from $66,924,000 at December 31, 2025 to $68,025,000 at June 30, 2026.

The increase was attributable to $5,463,000 in new loan originations and an increase of $1,377,000 in utilization of existing commercial and industrial lines of credit, offset by loan payoffs of $1,779,000 and regular principal payments and other typical amortization in the Commercial and Industrial portfolio.

The Consumer portfolio decreased $334,000 or 6.7% from $4,953,000 at December 31, 2025 to $4,619,000 at June 30, 2026.

The decrease is mainly attributable to loan payoffs of $785,000 and a decrease in utilization of consumer lines of credit of $95,000, along with regular principal payments and other typical amortization in the Consumer portfolio, offset by new loan originations of $1,268,000.

The State and Political Subdivisions portfolio increased $9,188,000 or 45.6% from $20,132,000 at December 31, 2025 to $29,320,000 at June 30, 2026.

The increase was attributable to $8,900,000 in new loan originations and an increase in utilization of existing state and political subdivision lines of credit of $485,000, offset by regular principal payments on state and political subdivisions loans completed during the six months ended June 30, 2026.

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 $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.

Overall, non-pass grades increased $13,546,000 to $42,337,000 at June 30, 2026, as compared to $28,791,000 at December 31, 2025.

Real Estate non-pass grades increased $3,727,000 to $32,185,000 as of June 30, 2026 as compared to $28,458,000 as of December 31, 2025.

Commercial and Industrial non-pass grades increased $9,818,000 to $10,128,000 as of June 30, 2026 as compared to $310,000 as of December 31, 2025.

The increase in Commercial and Industrial non-pass grades during the six months ended June 30, 2026 was mainly the result of the downgrade of one loan relationship to Special Mention status which carried an aggregate balance of $9,755,000, related to a plastic injection molding company.

Consumer non-pass grades increased $1,000 to $24,000 as of June 30, 2026 as compared to $23,000 as of December 31, 2025.

There were no Agricultural or State and Political Subdivision non-pass grades at June 30, 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.

4 unchanged sentences

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

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.

As of June 30, 2026 the allowance for credit losses was $8,779,000 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.

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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 quarter of 2026.

The following table summarizes the qualitative factor adjustments made during the first and second quarters of 2026.

Quarter Ended March 31, 2026:

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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.

Quarter Ended June 30, 2026:

Qualitative Factor

Basis Point Increase (Decrease)

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

Delinquency Trends

Loans to finance agricultural production and other loans to farmers

Delinquency Trends

Other revolving credit plans

Delinquency Trends

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

Volume Trends

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

Volume Trends

Commercial and industrial loans

Volume Trends

Total past due loans increased by $9,459,000 during the six months ended June 30, 2026 from $12,616,000 at December 31, 2025 to $22,075,000 at June 30, 2026.

The increase in past due loans during the six months ended June 30, 2026 was mainly attributable to one non-accrual loan carrying a balance of $9,437,000 that was past due as of June 30, 2026.

The loan was individually evaluated for impairment due to its non-accrual status and had a specific allocation of $707,000 recorded under the allowance for credit losses as of June 30, 2026.

The loan was on non-accrual status as of December 31, 2025 but was paid current at that time.

As of December 31, 2025, the loan was individually evaluated for impairment and carried a specific allocation of $973,000.

The reduction of $266,000 in the specific allocation (and subsequently the allowance for credit losses overall) was due to payments made on the loan, bringing the loan balance closer to the appraised value of the underlying collateral.

Non-performing assets increased by $3,204,000 during the six months ended June 30, 2026 from $16,919,000 at December 31, 2025 to $20,123,000 at June 30, 2026.

The increase in non-performing assets for the six month period was mainly the result of an increase of $2,599,000 in the balance of non-accrual loans which increased from $16,763,000 at December 31, 2025 to $19,362,000 at June 30, 2026 mainly due to the addition of a loan relationship containing five loans to a real estate investor carrying an aggregate balance of $2,044,000.

None of the loans moved to non-accrual status during the six months ended June 30, 2026 were determined to require a specific allocation as a result of the individual evaluation analysis performed.

Despite increases in the balances of past due loans, non-performing assets, and non-accruals during the six months ended June 30, 2026, the overall balance of the allowance for credit losses decreased during the six month period mainly as a result of the following factors:

(1) a decrease in the calculated historical loss rate for loans secured by multifamily residential properties which reduced the allowance for credit losses by $199,000, (2) a decrease in the calculated historical loss rate for loans secured by other non-farm, non-residential properties which reduced the allowance for credit losses by $174,000 and (3) a reduction of $266,000 in the specific allocation on an individually evaluated loan due to payments made on the loan, bringing the loan balance closer to the appraised value of the underlying collateral.

The Analysis of Allowance for Credit Losses table contains an analysis of the allowance for credit losses indicating charge-offs and recoveries for the six months ended June 30, 2026 and 2025.

Net recoveries as a percentage of average loans was (0.01)% for the six months ended June 30, 2026, compared to net charge-offs of 0.04% for the six months ended June 30, 2025.

Net recoveries amounted to $56,000 for the six months ended June 30, 2026 and net charge-offs amounted to $424,000 for the six months ended June 30, 2025.

The increased balance of net charge offs for the six months ended June 30, 2025 was mainly the result of charge-offs completed on two loans during the first six months of 2025.

For the six months ended June 30, 2026, the provision for credit losses carried a recovery balance of $689,000, compared to the six months ended June 30, 2025, when the provision for credit losses was $514,000.

The provision, net of charge-offs and recoveries, resulted in the quarter end allowance for credit losses of $8,779,000, of which 93.46% was attributed to the Real Estate component, 0.03% attributed to the Agricultural component, 4.82% attributed to the Commercial and Industrial component, 0.88% attributed to the Consumer component, and 0.81% attributed to the State and Political Subdivisions component (refer to the activity in Note 4 – Loans and Allowance for Credit Losses on page 13).

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(Dollars in thousands)

As of and for the three months ended:

As of and for the six months ended:

Beginning Balance

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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 0.958% and 0.844% at March 31, 2026 and 2025, 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 0.93% and 0.81% at June 30, 2026 and 2025, respectively.

NON-PERFORMING ASSETS

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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 income.

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

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

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.

Total non-performing assets amounted to $20,123,000 as of June 30, 2026, as compared to $16,919,000 as of December 31, 2025.

The economic growth for the second 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%.

At 3.5% as of June 2026, the inflation rate has increased from 3.3% as of March 2026 and 2.7% as of 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.

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

Fuel prices were on the rise again during the second quarter of 2026 following the breakdown of the cease fire agreement between the US and Iran.

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

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

Layoffs from large corporations from the public sector have also continued through the first six months of 2026.

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

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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 conflict with Israel and Palestine has quieted, as has the conflict with the US and Venezuela and the contemplated conflict with the US and Cuba.

However, there is still much debate and concern regarding how these conflicts may fare in the coming months.

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

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

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.

Non-accrual loans totaled $19,362,000 as of June 30, 2026, as compared to $16,773,000 as of December 31, 2025.

There were no foreclosed assets held for resale as of June 30, 2026 and December 31, 2025.

There were three loans past-due 90 days or more and still accruing interest at June 30, 2026 which carried an aggregate balance of $761,000, 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.

Of the loans past-due 90 days or more and still accruing interest as of June 30, 2026, two loans were secured by commercial real estate and one loan was secured by commercial business assets.

All loans past-due 90 days or more and still accruing interest as of June 30, 2026 were well secured and in the process of collection.

Non-performing assets to total loans was 2.12% at June 30, 2026 and 1.79% at December 31, 2025.

Non-performing assets to total assets was 1.28% at June 30, 2026, compared to 1.11% at December 31, 2025.

The allowance for credit losses to total non-performing assets was 43.63% as of June 30, 2026 as compared to 55.63% as of December 31, 2025.

Additional detail can be found on page 60 in the Non-Performing Assets and Individually Evaluated Loans table and page 30 in the Non-Performing Assets table.

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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 $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.

Performing substandard loans not designated for individual evaluation amounted to $6,309,000 at June 30, 2026 and $7,668,000 at December 31, 2025.

Individually evaluated loans were $19,641,000 at June 30, 2026 compared to $17,052,000 at December 31, 2025.

The largest individually evaluated loan relationship at June 30, 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 $9,437,000 and a specific allocation of $707,000 as of June 30, 2026.

The second largest individually evaluated loan relationship at June 30, 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 $2,382,000 as of June 30, 2026, net of $2,000,000 that had been charged off to date.

The third largest individually evaluated loan relationship at June 30, 2026 consisted of five non-performing loans to a real estate investor which are all secured by commercial real estate.

At June 30, 2026, the loans carried an aggregate balance of $2,044,000.

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 $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.

Of the $19,641,000 in individually evaluated loans at June 30, 2026, none were located outside of the Company’s primary market area.

The loan modifications granted during the six months ended June 30, 2026 consisted of one payment modification that allowed a full payment deferral for a period of six months, one payment modification that allowed a period of interest-only payments of six months, one payment modification that extended the interest-only draw period on the loan for an additional six months, one term modification that converted the loan from a time note to a term loan, one modification that extended the interest-only draw period on the loan for an additional six months and extended the maturity of the loan for an additional 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.

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

The outstanding recorded investment of loans to borrowers experiencing financial difficulty was $5,300,000 at June 30, 2026 and $12,661,000 at December 31, 2025.

At June 30, 2026, there were unfunded commitments of $1,751,000 related to modified loans to borrowers experiencing financial difficulty, compared to December 31, 2025 when there were no unfunded commitments on modified loans to borrowers experiencing financial difficulty.

At June 30, 2026, there were two modifications of loans to borrowers experiencing financial difficulty carrying a combined outstanding recorded investment of $409,000 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 carrying a combined outstanding recorded investment of $439,000 that were not in compliance with the terms of their restructure.

As of June 30, 2026, there were unfunded commitments of $1,751,000 related to modified loans to borrowers experiencing financial difficulty, compared to December 31, 2025 when there were no unfunded commitments on modified loans to borrowers experiencing financial difficulty.

At June 30, 2026, there were two modifications of loans to borrowers experiencing financial difficulty carrying a combined post modification balance of $411,000 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 carrying a combined post modification balance of $436,000 that were not in compliance with the terms of their restructure.

One loan carrying a recorded investment of $299,000 experienced a payment default during the three months ended June 30, 2026 but was paid current prior to June 30, 2026, one loan carrying a recorded investment of $110,000 experienced a payment default during the six months ended June 30, 2026 and remained in past due status as of June 30, 2026, one loan carrying a recorded investment of $330,000 experienced a payment default during the six months ended June 30, 2026 but was paid current as of June 30, 2026, one loan carrying a recorded investment of $9,437,000 experienced a payment default during both the three and six months ended June 30, 2026 and remained in past due status as of June 30, 2026, and one loan that was subsequently paid off prior to June 30, 2026 had experienced a payment default during the six months ended June 30, 2026.

One loan carrying a recorded investment of $120,000 experienced a

payment default during the six months ended June 30, 2025 and remained in past due status as of June 30, 2025.

A loan carrying a recorded investment of $421,000 experienced a payment default during the three and six months ended June 30, 2025 and remained in past due status as of June 30, 2025.

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

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The economic climate remains unstable.

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 most recent conflict with Iran has heightened in intensity and 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.

Inflationary pressures remain elevated and have seen substantial increases in 2026 as compared to 2025.

The increase is tied directly to energy costs, most specifically the increased oil prices worldwide caused by the war with Iran.

Fiscal policies and Presidential referendums have only exacerbated the issue.

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

As of June 30, 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

20 unchanged sentences

Allowance for credit losses to total non-performing assets

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 comprise 89.1% of the loan portfolio as of June 30, 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 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.

Total deposits increased $42,473,000 to $1,179,910,000 as of June 30, 2026 as non-interest bearing deposits increased by $24,065,000 and interest bearing deposits increased by $18,408,000 from year-end 2025.

The overall increase in non-interest bearing deposits was mainly due to an increase of $18,368,000 in the balance of non-interest checking accounts.

The increase in interest-bearing deposits during the six months ended June 30, 2026 was due to an

increase of $20,402,000 in the balance of retail CDs and an increase of $27,943,000 in the balance of other interest-bearing deposit accounts, offset by a decrease of $29,938,000 in the balance of brokered CDs during the same period.

Total short-term and long-term borrowings decreased to $241,604,000 as of June 30, 2026, from $242,845,000 at year-end 2025, a decrease of $1,241,000 or 0.5%.

The decrease in borrowings during the six months ended June 30, 2026 was attributable to a decrease of $1,241,000 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”).

3 unchanged sentences

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

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

During the six months ended June 30, 2026, net income for the period, net of continued payment of dividends, increased capital by $2,217,000.

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 $19,003,000 at March 31, 2026, an improvement of $450,000.

Accumulated other comprehensive loss stood at $17,204,000 at June 30, 2026, an improvement of $2,249,000.

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 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:

The Company held 231,611 shares of common stock as treasury stock at June 30, 2026 and December 31, 2025, respectively.

This had an effect of reducing our total stockholders’ equity by $5,709,000 as of June 30, 2026 and December 31, 2025.

Total stockholders’ equity was $118,456,000 as of June 30, 2026, and $113,060,000 as of December 31, 2025.

At June 30, 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 June 30, 2026 and December 31, 2025:

Minimum Capital

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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 March 31, 2026, the Bank meets all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis.

As of June 30, 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 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);

At June 30, 2026, the Company had $518,920,000 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 $6,592,000.

2 unchanged sentences

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.

Securities sold under agreements to repurchase were $35,604,000 at June 30, 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 $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.

Net cash flows provided by operating activities were $4,908,000 for the six months ended June 30, 2026 and $5,729,000 for the six months ended June 30, 2025.

Net income amounted to $5,736,000 for the six months ended June 30, 2026, compared to $3,967,000 for the six months ended June 30, 2025.

During the six months ended June 30, 2026, the provision for credit losses amounted to a credit/recovery balance of $689,000 compared to a provision balance of $514,000 for the six months ended June 30, 2025.

The provision for credit losses on unfunded commitments used cash of $5,000 and $6,000 for the six months ended June 30, 2026 and 2025, respectively.

During the six months ended June 30, 2026, net discount accretion on securities amounted to $113,000 compared to net premium amortization of $104,000 for the six months ended June 30, 2025.

Deferred income taxes provided cash of $111,000 and $210,000 during the six months ended June 30, 2026 and 2025, respectively.

Net gains on sales of mortgage loans amounted to $59,000 for the six months ended June 30, 2026 and $38,000 for the six months ended June 30, 2025.

Originations of mortgage loans originated for sale exceeded proceeds (net of gains/losses) from sales of mortgage loans originated for sale by $290,000 for the six months ended June 30, 2026 and proceeds (net of gains/losses) from sales of mortgage loans originated for sale exceeded originations of mortgage loans originated for sale by $663,000 for the six months ended June 30, 2025.

Net securities gains amounted to $548,000 for the six months ended June 30, 2026, compared to net securities gains of $19,000 for the six months ended June 30, 2025.

Accrued interest receivable decreased by $333,000 for the six months ended June 30, 2026 and decreased by $39,000 for the six months ended June 30, 2025.

Accrued interest payable decreased by $218,000 for the six months ended June 30, 2026 and increased by $167,000 for the six months ended June 30, 2025.

Other assets increased by $188,000 for the six months ended June 30, 2026 and decreased by $516,000 during the six months ended June 30, 2025.

Other liabilities increased $105,000 during the six months ended June 30, 2026,

compared to a decrease of $833,000 during the six months ended June 30, 2025.

A gain from bank-owned life insurance proceeds of $255,000 was recognized during the six months ended June 30, 2025, compared to the six months ended June 30, 2026 when no gains were recognized in relation to bank-owned life insurance proceeds.

Investing activities provided cash of $23,183,000 and $13,029,000 for the six months ended June 30, 2026 and 2025, respectively.

Net activity in the available-for-sale securities portfolio (including proceeds from sale, maturities, and redemptions, net against purchases) provided cash of $24,933,000 and $24,387,000 during the six months ended June 30, 2026 and 2025, respectively.

Changes in restricted investment in bank stocks used cash of $35,000 for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 when changes in restricted investment in bank stocks provided cash of $40,000.

Net increase in loans originated as held for investment used cash of $1,501,000 and $12,368,000 during the six months ended June 30, 2026 and 2025, respectively.

Proceeds from bank-owned life insurance provided cash of $1,237,000 for the six months ended June 30, 2025, compared to the six months ended June 30, 2026 when there were no proceeds from bank-owned life insurance.

Purchases of premises and equipment used cash of $214,000 and $267,000 during the six months ended June 30, 2026 and 2025, respectively.

Financing activities provided cash of $38,621,000 and $3,041,000 during the six months ended June 30, 2026 and 2025, respectively.

Deposits increased by $42,473,000 and $11,398,000 during the six months ended June 30, 2026 and 2025, respectively.

Short-term borrowings decreased by $1,241,000 and $4,875,000 during the six months ended June 30, 2026 and 2025, respectively.

Dividends paid, net of reinvestment amounted to $2,611,000 for the six months ended June 30, 2026, compared to $3,482,000 for the six months ended June 30, 2025.

Managing liquidity remains an important segment of asset/liability management.

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Interest rate risk arises from the mismatches in the repricing of rates on assets and liabilities within a given time period, referred to as a rate sensitivity gap.

If more assets than liabilities mature or reprice within the time frame, the Company is asset sensitive.

If more assets than liabilities mature or reprice

within the time frame, the Company is asset sensitive.

This position would contribute positively to net interest income in a rising rate environment.

1 unchanged sentence

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 March 31, 2026.

The Company’s cumulative gap at one year indicates the Company is liability sensitive at June 30, 2026.

Earnings at Risk

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In addition, the earnings simulation model projects net interest income would decrease 5.71%, 12.29%, and 19.58% 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, aside from the down 300 basis point scenario at (22.32)% vs.

policy limit of (20.00)%.

All of the forecasts in the increasing and decreasing rate scenarios presented are within the Company’s policy guidelines.

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 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%.

However, the Company’s interest-sensitive assets are able to decline by these amounts.

For the six months ended June 30, 2026 the cost of interest-bearing liabilities averaged 3.29%, and the yield on interest-earning assets, on a fully taxable equivalent basis, averaged 5.29%.

Net Present Value Estimation

The net present value measures economic value at risk and is used for helping to determine levels of risk at a point in time present in the balance sheet that might not be taken into account in the earnings simulation model.

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 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.

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 June 30, 2026, net present value is projected to decrease 1.93%, 5.14%, and 9.10% 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 0.27%, 3.90%, and 12.84%.

3 unchanged sentences

Effect of Change in Interest Rates

March 31, 2026

June 30, 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