What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 527 added, 427 removed, 887 unchanged (52% of the section changed)

Financial Statements

Financial Group, Inc.

Consolidated Balance Sheets

SB Financial Group, Inc.

Condensed Consolidated Balance Sheets

in thousands)

December 2024

Cash and due from banks

27 unchanged sentences

2025 - 0 shares outstanding, 2024 - 0 shares outstanding

Common stock, no par value;2025 - 10,500,000 shares authorized, 8,525,375 shares issued;

Common stock, no par value;

2025 - 10,500,000 shares authorized, 8,525,375 shares issued;

2024 - 10,500,000 shares authorized, 8,525,375 shares issued

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Treasury stock, at cost;(2025 - 1,994,729 common shares;

Treasury stock, at cost;

(2025 - 2,122,874 common shares;

2024 - 1,977,538 common shares)

Total shareholders’ equity

Total liabilities and shareholders’ equity

notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

See notes to condensed consolidated financial statements (unaudited)

SB Financial Group, Inc.

Consolidated Statements of Income (unaudited)

in thousands, except per share data)

Three Months Ended March 31,

Months Ended June 30,

Interest Income

38 unchanged sentences

Average common shares outstanding (in thousands):

notes to condensed consolidated financial statements (unaudited)

See notes to condensed consolidated

financial statements (unaudited)

Financial Group, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

Months Ended March 31,

($ in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive income (loss)

4 unchanged sentences

Total comprehensive income

notes to condensed consolidated financial statements (unaudited)

See notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

1 unchanged sentence

Accumulated Other Comprehensive

($ in thousands,

except per share data)

($ in thousands, except per share data)

Balance, January 1, 2025

5 unchanged sentences

Balance, March 31, 2025

Other comprehensive income

Cash dividends on common, $ 0.15 per share

Repurchased stock ( 124,495 shares)

Stock based compensation expense

Balance, June 30, 2025

Accumulated Other Comprehensive

($ in thousands,

except per share data)

($ in thousands, except per share data)

Balance, January 1, 2024

5 unchanged sentences

Balance, March 31, 2024

notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

Consolidated Statements of Cash Flows (unaudited)

Other comprehensive loss

Cash dividends on common, $ 0.14 per share

Repurchased stock ( 26,791 shares)

Stock based compensation expense

Balance, June 30, 2024

See notes to condensed consolidated financial statements (unaudited)

SB Financial Group, Inc.

Condensed Consolidated Statements of Cash

Flows (unaudited)

($ in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

12 unchanged sentences

Interest payable & other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Investing Activities

Purchases of available-for-sale securities

Purchases of interest bearing time deposits

Proceeds from maturities of interest bearing time deposits

10 unchanged sentences

Financing Activities

Net increase in demand deposits, money market, interest

checking & savings accounts

Net (decrease) increase in time deposits

Net increase (decrease) in securities sold under agreements to repurchase

Net increase in demand deposits, money market, interest checking & savings accounts

Net increase in time deposits

Net increase in securities sold under agreements to repurchase

Proceeds from Federal Home Loan Bank advances

2 unchanged sentences

Cash dividends on common shares

Net cash provided (used in) by financing activities

Increase in cash and cash equivalents

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

9 unchanged sentences

Liabilities assumed

See notes to condensed consolidated financial statements (unaudited)

SB FINANCIAL GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FINANCIAL GROUP, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1—BASIS OF PRESENTATION

Financial Group, Inc., an Ohio corporation (“SBFG”), is a financial holding company whose principal activity is the ownership

and management of its wholly-owned subsidiaries, including The State Bank and Trust Company (“State Bank”), SBFG Title, LLC

(“SBFG Title”), and SB Captive, Inc.

NOTE 1—BASIS OF PRESENTATION

SB Financial Group, Inc., an Ohio corporation

(“SBFG”), is a financial holding company whose principal activity is the ownership and management of its wholly-owned subsidiaries,

including The State Bank and Trust Company (“State Bank”), SBFG Title, LLC (“SBFG Title”), and SB Captive, Inc.

(“SB Captive”).

State Bank owns all of the outstanding stock of State Bank

Insurance, LLC (“SBI”).

In December 2024, SBFG completed the dissolution of four of its inactive subsidiaries – RFCBC,

Inc., Rurbanc Data Services, Inc., Rurban Mortgage Company and SBFG Mortgage, LLC.

consolidated financial statements include the accounts of SBFG, State Bank, SBFG Title, SB Captive and SBI (collectively, the “Company”).

All significant intercompany accounts and transactions have been eliminated in consolidation.

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting

principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q.

Accordingly, they do not include

all of the information and footnotes required by GAAP for complete financial statements.

The financial statements reflect all adjustments

that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows of the

Those adjustments consist only of normal recurring adjustments.

Results of operations for the three-months ended March 31, 2025,

are not necessarily indicative of results for the complete year.

condensed consolidated balance sheet of the Company as of December 31, 2024, has been derived from the audited consolidated balance sheet

of the Company as of that date.

further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form

10-K for the year ended December 31, 2024.

of New Accounting Standards:

Standards Update (“ASU”) No.

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform

on Financial Reporting (Topic 848)

guidance provides temporary options to ease the potential burden in accounting for reference rate reform.

It is intended to help stakeholders

during the global market-wide reference rate transition period.

State Bank owns all of the outstanding stock of State Bank Insurance, LLC (“SBI”).

2024, SBFG completed the dissolution of four of its inactive subsidiaries – RFCBC, Inc., Rurbanc Data Services, Inc., Rurban Mortgage

Company and SBFG Mortgage, LLC.

The consolidated financial statements include

the accounts of SBFG, State Bank, SBFG Title, SB Captive and SBI (collectively, the “Company”).

All significant intercompany

accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated

financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim

financial information and with the instructions for Form 10-Q.

Accordingly, they do not include all of the information and footnotes

required by GAAP for complete financial statements.

The financial statements reflect all adjustments that are, in the opinion of management,

necessary to fairly present the financial position, results of operations and cash flows of the Company.

Those adjustments consist only

of normal recurring adjustments.

Results of operations for the six-months ended June 30, 2025, are not necessarily indicative of results

for the complete year.

The condensed consolidated balance sheet of the

Company as of December 31, 2024, has been derived from the audited consolidated balance sheet of the Company as of that date.

For further information, refer to the consolidated

financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Adoption of New Accounting Standards:

Accounting Standards Update (“ASU”)

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

This guidance provides temporary options to ease

the potential burden in accounting for reference rate reform.

It is intended to help stakeholders during the global market-wide reference

rate transition period.

The guidance was initially effective as of March 12, 2020, through December 31, 2022.

However, a deferral of the implementation of the Reference Rate Reform was issued in December of 2022, which extended the implementation

through December 31, 2024.

The Company has implemented a replacement for the reference rate and has determined that the changes did not

have a material impact on the Company’s consolidated financial statements.

Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures

ASU expands operating segment disclosures and requires all segment disclosures to be reported in both annual and interim periods.

new standard requires disclosure of the following:

significant segment expenses that are regularly provided to the chief operating decision

maker (“CODM”) for reportable segments;

the title and position of the CODM as well as how the CODM uses the reported measure(s)

of profit and loss to assess segment performance;

and “other segment items” by reportable segment and a description of its

The Company adopted the standard on January 1, 2024, and its adoption did not have a material effect on our financial statements.

Standards not yet adopted:

However, a deferral of

the implementation of the Reference Rate Reform was issued in December of 2022, which extended the implementation through December 31,

The Company has implemented a replacement for the reference rate and has determined that the changes did not have a material impact

on the Company’s consolidated financial statements.

Segment Reporting (Topic 280) Improvements to

Reportable Segment Disclosures

This ASU expands operating segment disclosures

and requires all segment disclosures to be reported in both annual and interim periods.

The new standard requires disclosure of the following:

significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) for reportable segments;

the title and position of the CODM as well as how the CODM uses the reported measure(s) of profit and loss to assess segment performance;

and “other segment items” by reportable segment and a description of its composition.

The Company adopted the standard on

January 1, 2024, and its adoption did not have a material effect on our financial statements.

Accounting Standards not yet adopted:

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

December 2023, the Financial Accounting Standards Bord (“FASB”) issued ASU 2023-09:

Income Taxes (Topic 740) Improvements

to Income Tax Disclosures.

The amendments in this ASU address investor requests for more transparency about income tax information through

improvements to income tax disclosures, primarily related to effective tax rate reconciliation and information related to income taxes

paid, among certain other amendments to improve the effectiveness of such disclosures.

The amendments in this ASU are effective for annual

periods beginning after December 15, 2024, and are to be applied on a prospective basis.

Adoption of this ASU is not expected to have

a material impact on the Company’s consolidated financial statements.

2 - EARNINGS PER SHARE

per share (“EPS”) have been computed based on the weighted average number of common shares outstanding during the periods

The average number of common shares used in the computation of basic and diluted earnings per share are set forth in the table

There were no anti-dilutive shares in 2025 or 2024.

Participating securities in the table reflect nonvested restricted shares

that participate in dividends declared and paid by the Company on its common shares prior to vesting of the restricted shares.

Three Months Ended March 31,

In December 2023, the Financial Accounting Standards

Board (“FASB”) issued ASU 2023-09:

Income Taxes (Topic 740) Improvements to Income Tax Disclosures.

The amendments in this

ASU address investor requests for more transparency about income tax information through improvements to income tax disclosures, primarily

related to effective tax rate reconciliation and information related to income taxes paid, among certain other amendments to improve

the effectiveness of such disclosures.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024,

and are to be applied on a prospective basis.

Adoption of this ASU is not expected to have a material impact on the Company’s consolidated

financial statements.

Income Statement –

Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03,

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income

Statement Expenses.

The new standard requires tabular disclosure of certain costs and expenses including more detailed disclosures of

certain categories of expenses such as employee compensation, depreciation and intangible asset amortization that are components of existing

expense captions presented on the face of the income statement.

The ASU should be applied prospectively for annual reporting periods

beginning after December 15, 2026, with retrospective application and early adoption permitted.

The Company is currently evaluating the

impacts of this guidance on the Company’s Consolidated Financial Statements.

NOTE 2 - EARNINGS PER SHARE

Earnings per share (“EPS”) have been

computed based on the weighted average number of common shares outstanding during the periods presented.

The average number of common

shares used in the computation of basic and diluted earnings per share are set forth in the table below.

There were no anti-dilutive

shares in 2025 or 2024.

Participating securities in the table reflect nonvested restricted shares that participate in dividends declared

and paid by the Company on its common shares prior to vesting of the restricted shares.

Three Months Ended June 30,

($ and outstanding shares in thousands - except per share data)

9 unchanged sentences

Diluted earnings per common share

3 – BUSINESS COMBINATION

January 17, 2025, the Company acquired all of the outstanding common shares of Marblehead Bancorp and its subsidiary The Marblehead Bank

of Marblehead, Ohio (collectively, “Marblehead”).

Six Months Ended June 30,

($ and outstanding shares in thousands - except per share data)

Distributed earnings allocated to common shares

Undistributed earnings allocated to common shares

Net earnings allocated to common shares

Net earnings allocated to participating securities

Net Income allocated to common shares and participating securities

Weighted average shares outstanding for basic earnings per share

Dilutive effect of stock compensation

Weighted average shares outstanding for diluted earnings per share

Basic earnings per common share

Diluted earnings per common share

NOTE 3 – BUSINESS COMBINATION

Effective January 17, 2025, the Company acquired

all of the outstanding common shares of Marblehead Bancorp and its subsidiary The Marblehead Bank of Marblehead, Ohio (collectively,

“Marblehead”).

Marblehead was headquartered in Marblehead, Ohio and had two retail offices.

At closing, Marblehead Bancorp was merged with and into SBFG, with SBFG surviving, and immediately thereafter, The Marblehead Bank was

merged with and into State Bank, with State Bank surviving.

Under the terms of the merger agreement, shareholders of Marblehead received

fixed consideration of $ 196.31 in cash for each share of Marblehead common stock for total consideration of $ 5.0 million.

accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and liabilities were recorded

at fair value at the date of acquisition.

accordance with ASC 805, the Company expensed approximately $ 0.7 million of direct acquisition costs during the three months ended

March 31, 2025.

The $ 0.7 million in merger expense is split between data processing and professional fees expense.

As a result of

the acquisition, the Company recorded $ 3.9 million of goodwill and $ 1.7 million of intangible assets in the first quarter of 2025.

Loans acquired with deteriorated credit quality (“PCD loans”) since origination were not material.

The acquisition of

Marblehead enabled the Company to increase both its deposit and loan base and acquire new households in a new market.

It is expected

that this transaction will result in business synergies and economies of scale.

The acquisition was consistent with the

Company’s strategy to expand its presence in Northwest Ohio and to increase profitability by introducing existing products and

services to the acquired customer base.

The intangible assets are related to core deposits, which are being amortized over 10 years

on a straight-line basis.

At closing, Marblehead Bancorp

was merged with and into SBFG, with SBFG surviving, and immediately thereafter, The Marblehead Bank was merged with and into State Bank,

with State Bank surviving.

Under the terms of the merger agreement, shareholders of Marblehead received fixed consideration of $ 196.31

in cash for each share of Marblehead common stock for total consideration of $ 5.0 million.

The acquisition of Marblehead enabled the

Company to increase both its deposit and loan base and acquire new households in a new market.

It is expected that this transaction will

result in business synergies and economies of scale.

The acquisition was consistent with the Company’s strategy to expand its presence

in Northwest Ohio and to increase profitability by introducing existing products and services to the acquired customer base.

The Company accounted for the transaction under

the acquisition method of accounting, which means that the acquired assets and liabilities were recorded at fair value at the date of

In accordance with ASC 805, the Company expensed

approximately $ 0.7 million of direct acquisition costs during the six months ended June 30, 2025.

The $ 0.7 million in merger expense

is split between data processing and professional fees expense.

As a result of the acquisition, the Company recorded $ 3.9 million of

goodwill and $ 1.7 million of intangible assets in the first quarter of 2025.

The intangible assets are related to core deposits, which

are being amortized over 10 years on a straight-line basis.

Loans acquired with deteriorated credit quality (“PCD loans”)

since origination were not material.

For tax purposes, goodwill is non-deductible but will be evaluated annually for impairment.

following table summarizes the fair value of the total consideration transferred as part of the acquisition as well as the fair value

of identifiable assets and liabilities assumed as of the effective date of the transaction based on assumptions that are subject to change

as management continues to evaluate as relevant information becomes available.

If, prior to the end of the one-year measurement period

for finalizing the purchase price allocation, relevant information becomes available which would indicate adjustments are required to

the purchase price allocation, such adjustments will be recorded in the reporting period in which the adjustment amounts are determined.

Potential adjustments, if any, will be related to assets that have may have changes to valuation amounts that were not readily determinable

at acquisition date.

The following table summarizes the fair value

of the total consideration transferred as part of the acquisition as well as the fair value of identifiable assets and liabilities assumed

as of the effective date of the transaction based on assumptions that are subject to change as management continues to evaluate as relevant

information becomes available.

If, prior to the end of the one-year measurement period for finalizing the purchase price allocation,

relevant information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments

will be recorded in the reporting period in which the adjustment amounts are determined.

Potential adjustments, if any, will be related

to assets that may have changes to valuation amounts that were not readily determinable at the acquisition date.

($ in thousands)

11 unchanged sentences

Total purchase price (cash)

Forma Financial Information

results of operations of Marblehead have been included in the Company’s consolidated financial statements since the acquisition

date of January 17, 2025.

The following schedule includes the pro forma results for the three months ended March 31, 2025, and 2024,

as if the Marblehead acquisition had occurred as of the beginning of the reporting periods presented.

The acquisition added less than

$ 0.3 million in revenue to the Company for the three months ended March 31, 2025.

Three Months Ended

Summary of Operations ($ in thousands)

Pro Forma Financial Information

The results of operations of Marblehead have

been included in the Company’s consolidated financial statements since the acquisition date of January 17, 2025.

The following

schedule includes the pro forma results for the three and six months ended June 30, 2025, and 2024, as if the Marblehead acquisition

had occurred as of the beginning of the reporting periods presented.

The acquisition added $ 0.4 million and $ 0.7 million in revenue to

the Company for the three and six months ended June 30, 2025.

of Operations ($ in thousands)

Net interest income

8 unchanged sentences

Diluted earnngs per share

* Income tax expense for Marblehead calculated using a 21 % statuatory

* Income tax expense for Marblehead calculated using a 21 % statutory

of Operations ($ in thousands)

Net interest income

Provision for loan losses

Net interest income after provision

Non interest income

Non interest expense

Income before income taxes

Income tax expense*

Net income to common shareholders

Basic earnings per share

Diluted earnngs per share

* Income tax expense for Marblehead calculated using a 21 % statutory

4 – AVAILABLE-FOR-SALE Securities

amortized cost and appropriate fair values, together with gross unrealized gains and losses, of securities at March 31, 2025, and December

31, 2024, were as follows:

The amortized cost and appropriate fair values,

together with gross unrealized gains and losses, of securities at June 30, 2025, and December 31, 2024, were as follows:

($ in thousands)

March 31, 2025

Treasury and Government agencies

June 30, 2025

Government agencies

Mortgage-backed securities

2 unchanged sentences

December 31, 2024

Treasury and Government agencies

Government agencies

Mortgage-backed securities

1 unchanged sentence

Other corporate securities

amortized cost and fair value of securities available-for-sale at March 31, 2025, by contractual maturity, are shown below.

maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call

or prepayment penalties.

The amortized cost and fair value of securities

available-for-sale at June 30, 2025, by contractual maturity, are shown below.

Expected maturities will differ from contractual maturities

because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

($ in thousands)

5 unchanged sentences

The fair value of securities pledged as collateral,

to secure public deposits and for other purposes, was $ 134.1 million at March 31, 2025, and $ 115.5 million at December 31, 2024.

value of securities delivered for repurchase agreements was $ 13.7 million at March 31, 2025, and $ 17.3 million at December 31, 2024.

to secure public deposits and for other purposes, was $ 137.7 million at June 30, 2025, and $ 115.5 million at December 31, 2024.

value of securities delivered for repurchase agreements was $ 19.3 million at June 30, 2025, and $ 17.3 million at December 31, 2024.

There were no realized gains or losses from sales

of available-for-sale securities for the three months ended March 31, 2025, or March 31, 2024.

of available-for-sale securities for the three and six months ended June 30, 2025, or June 30, 2024.

Certain investments in debt securities are reported

1 unchanged sentence

Total fair value of these investments was $ 195.6

million at March 31, 2025, and $ 201.3 million at December 31, 2024, which consisted of 134 securities, or approximately 93 percent, and

million at June 30, 2025, and $ 201.3 million at December 31, 2024, which consisted of 133 securities, or approximately 94 percent, and

138 securities, or approximately 99 percent, respectively, of the Company’s available-for-sale investment portfolio at such dates.

2 unchanged sentences

Securities with unrealized losses, aggregated

by investment class and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2025,

and December 31, 2024, are as follows:

by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2025,

and at December 31, 2024, are as follows:

($ in thousands)

1 unchanged sentence

12 Months or Longer

March 31, 2025

June 30, 2025

Treasury and Government agencies

5 unchanged sentences

December 31, 2024

Number of Securities

Unrealized Losses

Treasury and Government agencies

7 unchanged sentences

if any security has a fair value less than its amortized cost.

Once these securities are identified, management determines whether a decline

in fair value resulted from a credit loss or other factors.

In making the assessment, the Company may consider various factors including

the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the

security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically

related to the security.

If the assessment indicates that a credit loss exists, a provision is recorded to the allowance for credit losses

Changes in the ACL are recorded as provision for

(or reversal of) credit losses.

Once these securities are identified, management determines whether a

decline in fair value resulted from a credit loss or other factors.

In making the assessment, the Company may consider various factors

including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings

of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions

specifically related to the security.

If the assessment indicates that a credit loss exists, a provision is recorded to the allowance

for credit losses (the “ACL”).

Changes in the ACL are recorded as provision

for (or reversal of) credit losses.

Available-for-sale securities are charged-off against the allowance or, in the absence of any allowance,

1 unchanged sentence

requirement to sell is met.

At March 31, 2025, and December 31, 2024, no ACL on available-for-sale securities was recorded.

At June 30, 2025, and December 31, 2024, no ACL on available-for-sale securities was recorded.

Management has made the accounting policy election

1 unchanged sentence

Accrued interest receivable

on available-for-sale debt securities totaled $ 0.6 million at March 31, 2025 and $ 0.6 million at December 31, 2024.

on available-for-sale debt securities totaled $ 0.6 million at June 30, 2025, and $ 0.6 million at December 31, 2024.

Should the decline

9 unchanged sentences

and in the process of collection.

All interest accrued, but not collected, for loans that are placed on nonaccrual or charged-off is reversed

against interest income.

The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for

return to accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current

and future payments are reasonably assured.

All interest accrued, but not collected, for loans that are placed on nonaccrual or charged-off is

reversed against interest income.

The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying

for return to accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought

current and future payments are reasonably assured.

The following table summarizes the composition of the loan portfolio:

7 unchanged sentences

The totals shown above are net of accretable

discounts on acquired loans and deferred loan fees and costs, which totaled $ 0.67 million in net fees at March 31, 2025, and $ 0.15

million in net costs at December 31, 2024.

discounts on acquired loans and deferred loan fees and costs, which totaled $ 0.59 million in net fees at June 30, 2025, and $ 0.15 million

in net costs at December 31, 2024.

The risk characteristics of each loan portfolio segment are as follows:

18 unchanged sentences

real estate markets or in the general economy.

The characteristics of properties securing the Company’s commercial real estate portfolio

are diverse, but with geographic location almost entirely in the Company’s market area.

Management monitors and evaluates commercial

real estate loans based on collateral, geography and risk grade criteria.

In general, the Company avoids financing single purpose projects

unless other underwriting factors are present to help mitigate risk.

In addition, management tracks the level of owner-occupied versus

non-owner-occupied commercial real estate loans.

The characteristics of properties securing the Company’s commercial real estate

portfolio are diverse, but with geographic location almost entirely in the Company’s market area.

Management monitors and evaluates

commercial real estate loans based on collateral, geography and risk grade criteria.

In general, the Company avoids financing single

purpose projects unless other underwriting factors are present to help mitigate risk.

In addition, management tracks the level of owner-occupied

versus non-owner-occupied commercial real estate loans.

Construction loans are underwritten utilizing

36 unchanged sentences

Adjustments to historical loss information

are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency

level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant

Accrued interest receivable related to loans totaled

$ 3.4 million at March 31, 2025, and $ 3.3 million at December 31, 2024, and is excluded from the estimate of credit losses.

are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix,

delinquency level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or

other relevant factors.

Accrued interest receivable related to loans

totaled $ 3.8 million at June 30, 2025, and $ 3.3 million at December 31, 2024, and is excluded from the estimate of credit losses.

The Company measures expected credit losses for

1 unchanged sentence

The Company has identified the following portfolio segments:

● Commercial & Industrial - Commercial

& industrial loans consist of loans or lines of credit to finance accounts receivable, inventory or other general business needs,

and lease financing agreements for equipment, vehicles, or other assets.

The primary risk associated with commercial & industrial

loans and lease financing agreements is the ability of borrowers to achieve business results consistent with those projected at origination.

Failure to achieve these projections presents risk the borrower will be unable to service the debt consistent with the contractual terms

of the loan or lease.

● Commercial Real Estate - Owner Occupied

- Owner occupied commercial real estate loans consist of loans to purchase, construct, or refinance owner occupied nonresidential properties.

& Industrial - Commercial & industrial loans consist of loans or lines of credit to finance accounts receivable, inventory

or other general business needs, and lease financing agreements for equipment, vehicles, or other assets.

The primary risk associated

with commercial & industrial loans and lease financing agreements is the ability of borrowers to achieve business results consistent

with those projected at origination.

Failure to achieve these projections presents risk the borrower will be unable to service the debt

consistent with the contractual terms of the loan or lease.

Real Estate - Owner Occupied - Owner occupied commercial real estate loans consist of loans to purchase, construct, or refinance

owner occupied nonresidential properties.

This includes office buildings and other commercial facilities.

Commercial mortgages secured by owner occupied properties are primarily

dependent on the ability of borrowers to achieve business results consistent with those projected at loan origination.

While these loans

are collateralized by real property in an effort to mitigate risk, it is possible the liquidation of collateral will not fully satisfy

the obligation as the commercial real estate collateral may be more adversely affected by conditions in the real estate markets or in

the general economy.

● Commercial Real Estate – Nonowner Occupied

- Nonowner occupied commercial real estate loans consist of loans to purchase, construct, or refinance investment nonresidential properties.

This includes office buildings and other facilities rented or leased to unrelated parties, as well as multifamily properties.

risk associated with nonowner occupied commercial real estate loans is the ability of the income-producing property that collateralizes

the loan to produce adequate cash flow to service the debt.

While these loans are collateralized by real property in an effort to mitigate

risk, it is possible the liquidation of collateral will not fully satisfy the obligation as the commercial real estate collateral may

be more adversely affected by conditions in the real estate markets or in the general economy.

● Agricultural - Agricultural loans consist

of loans or lines of credit to finance farmland, equipment, and general business needs or other assets.

The primary risk associated with

agricultural loans is the ability of borrowers to achieve business results consistent with those projected at origination.

achieve these projections presents risk the borrower will be unable to service the debt consistent with the contractual terms of the loan.

● Residential Real Estate – Residential

real estate mortgage loans consist of loans to purchase, construct, or refinance the borrower’s primary dwelling, second residence

or vacation home and are often secured by 1-4 family residential property.

Significant and rapid declines in real estate values can result

in borrowers having debt levels in excess of the current market value of the collateral.

● Home Equity Line of Credit (HELOCs) -

Home equity loans consist of HELOCs and other lines of credit secured by first or second liens on the borrower’s primary residence.

These loans are secured by both senior and junior liens on the residential real estate and are particularly susceptible to declining collateral

This risk is elevated for loans secured by junior liens as a substantial decline in value could render the junior lien position

Commercial mortgages secured

by owner occupied properties are primarily dependent on the ability of borrowers to achieve business results consistent with those projected

at loan origination.

While these loans are collateralized by real property in an effort to mitigate risk, it is possible the liquidation

of collateral will not fully satisfy the obligation as the commercial real estate collateral may be more adversely affected by conditions

in the real estate markets or in the general economy.

Real Estate – Nonowner Occupied - Nonowner occupied commercial real estate loans

consist of loans to purchase, construct, or refinance investment nonresidential properties.

This includes office buildings and other facilities rented or leased to unrelated parties,

as well as multifamily properties.

The primary risk associated with nonowner occupied commercial

real estate loans is the ability of the income-producing property that collateralizes the

loan to produce adequate cash flow to service the debt.

While these loans are collateralized

by real property in an effort to mitigate risk, it is possible the liquidation of collateral

will not fully satisfy the obligation as the commercial real estate collateral may be more

adversely affected by conditions in the real estate markets or in the general economy.

● Agricultural

- Agricultural loans consist of loans or lines of credit to finance farmland, equipment,

and general business needs or other assets.

The primary risk associated with agricultural

loans is the ability of borrowers to achieve business results consistent with those projected

at origination.

Failure to achieve these projections presents risk the borrower will be unable

to service the debt consistent with the contractual terms of the loan.

● Residential

Real Estate – Residential real estate mortgage loans consist of loans to purchase,

construct, or refinance the borrower’s primary dwelling, second residence or vacation

home and are often secured by 1-4 family residential property.

Significant and rapid declines

in real estate values can result in borrowers having debt levels in excess of the current

market value of the collateral.

Equity Line of Credit (HELOCs) - Home equity loans consist of HELOCs and other lines

of credit secured by first or second liens on the borrower’s primary residence.

loans are secured by both senior and junior liens on the residential real estate and are

particularly susceptible to declining collateral values.

This risk is elevated for loans

secured by junior liens as a substantial decline in value could render the junior lien position

effectively unsecured.

● Consumer - Consumer loans consist of loans

to finance unsecured home improvements, personal assets, such as automobiles or recreational vehicles, and revolving lines of credit that

can be secured or unsecured.

Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted

by economic conditions in their market areas.

The value of the underlying collateral within this class is at risk of potential rapid depreciation

- Consumer loans consist of loans to finance unsecured home improvements, personal assets,

such as automobiles or recreational vehicles, and revolving lines of credit that can be secured

or unsecured.

Repayment of these loans is primarily dependent on the personal income of the

borrowers, which can be impacted by economic conditions in their market areas.

of the underlying collateral within this class is at risk of potential rapid depreciation

which could result in unpaid balances in excess of the collateral.

The Company utilizes a Discounted Cash Flow (“DCF”)

method to estimate the quantitative portion of the ACL for all loan pools evaluated on a collective pooled basis, with the exception of

the credit card and consumer loan portfolios, which were estimated using the Remaining Life Method.

For each segment, a Loss Driver Analysis

(“LDA”) was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash

The LDA utilized the Company’s own Federal Financial Institutions Examination Council’s (“FFIEC”) Call Report

data, as well as peer institution data.

method to estimate the quantitative portion of the ACL for all loan pools evaluated on a collective pooled basis, with the exception

of the credit card and consumer loan portfolios, which are estimated using the Remaining Life Method.

For each segment, a Loss Driver

Analysis (“LDA”) is performed in order to identify appropriate loss drivers and create a regression model for use in forecasting

The LDA utilizes the Company’s own Federal Financial Institutions Examination Council’s (“FFIEC”) Call

Report data, as well as peer institution data.

In creating the DCF model, the Company has established

a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average.

Company’s own loan-level loss data from January 2016 through March 31, 2025, contained within the model was supplemented with peer

Company’s own loan-level loss data from January 2016 through June 30, 2025, contained within the model was supplemented with peer

data in most loan pools as there was not sufficient loan-level detail from prior cycles reflecting similar economic conditions as the

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The resulting qualitative adjustments are applied to the relevant collectively evaluated loan pools.

The qualitative analysis

increases or decreases the allowance allocation for each loan pool based on the assessment of factors described above.

During each reporting

period, management also considers the need to adjust the baseline lifetime loss rates for factors that may cause expected losses to differ

from those experienced in the historical loss periods.

Loans that do not share risk characteristics are

evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial difficulty,

the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate.

The qualitative

analysis increases or decreases the allowance allocation for each loan pool based on the assessment of factors described above.

each reporting period, management also considers the need to adjust the baseline lifetime loss rates for factors that may cause expected

losses to differ from those experienced in the historical loss periods.

Loans that do not share risk characteristics

are evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial

difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as

The Company is also required to consider expected

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and is increased or decreased through a provision for credit loss expense on the Company’s consolidated statement of income.

calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be

funded over their estimated lives.

calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to

be funded over their estimated lives.

The allowance is calculated using the same methodology, inputs and assumptions as the funded portion

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During the first quarter of 2025, the Company

completed the acquisition of Marblehead, in Marblehead, Ohio.

The Company performed an analysis of the acquired non-PCD loan portfolio

as part of the acquisition process and recorded a provision for credit losses of $ 0.23 million subsequent to the date of acquisition.

The following tables summarize the activity related to the ACL for the three months ended March 31, 2025, and March 31, 2024, and for

the twelve months ended December 31, 2024.

completed the acquisition of Marblehead.

The Company performed an analysis of the acquired non-PCD loan portfolio as part of the acquisition

process and recorded a provision for credit losses of $ 0.23 million subsequent to the date of acquisition.

The following tables summarize

the activity related to the ACL for the three and six months ended June 30, 2025, and June 30, 2024, and for the twelve months ended

December 31, 2024.

($ in thousands)

For the three months ended

March 31, 2025

June 30, 2025

Balance, beginning of period

allowance for

credit losses

Provision for Credit Losses

Balance, end of period

Commercial & industrial

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($ in thousands)

For the six months ended

June 30, 2025

Balance, beginning of period

allowance for

credit losses

Provision for Credit Losses

Commercial & industrial

Commercial real estate - owner occupied

Commercial real estate - nonowner occupied

Residential real estate

($ in thousands)

For the three months ended

March 31, 2024

June 30, 2024

Balance, beginning of period

Provision for Credit Losses

Balance, end of period

Commercial & industrial

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($ in thousands)

For the six months ended

June 30, 2024

Balance, beginning of period

Provision for Credit Losses

Commercial & industrial

Commercial real estate - owner occupied

Commercial real estate - nonowner occupied

Residential real estate

($ in thousands)

For the twelve months ended

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Provision for Credit Losses

Balance, end of period

Commercial & industrial

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The following table presents an analysis of collateral-dependent

loans of the Company as of March 31, 2025, and December 31, 2024.

loans of the Company as of June 30, 2025, and December 31, 2024.

($ in thousands)

Collateral Type

March 31, 2025

June 30, 2025

Commercial & industrial

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Under the current expected credit loss (“CECL”)

model, for collateral dependent loans, the Company has adopted the practical expedient to measure the ACL based on the fair value of collateral.

The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which

is adjusted for liquidation costs/discounts, and amortized cost.

If the fair value of the collateral exceeds the amortized cost, no allowance

model, for collateral dependent loans, the Company has adopted the practical expedient to measure the ACL based on the fair value of

The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral,

which is adjusted for liquidation costs/discounts, and amortized cost.

If the fair value of the collateral exceeds the amortized cost,

no allowance is required.

Credit Risk Profile

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This analysis is performed on a quarterly basis.

uses the following definitions for risk ratings:

Company uses the following definitions for risk ratings:

Pass (grades 1 – 4):

which management has determined to be performing as expected and in agreement with the terms established at the time of loan origination.

Loans which management has determined to be performing as expected and in agreement with the terms established at the time of loan origination.

Special Mention (5):

potential weaknesses that deserve management’s close attention.

If left uncorrected, these potential weaknesses may result in deterioration

of the repayment prospects for the loan or in the Company’s credit position at some future date.

Special mention loans are not adversely

classified and do not expose the Company to sufficient risk to warrant adverse classification.

Ordinarily, special mention credits have

characteristics which corrective management action would remedy.

have potential weaknesses that deserve management’s close attention.

If left uncorrected, these potential weaknesses may result

in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date.

Special mention

loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Ordinarily, special

mention credits have characteristics which corrective management action would remedy.

Substandard (6):

Loans are inadequately

protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified must

have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified

must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility

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The following table presents loan balances by credit quality

indicators and gross chargeoffs by loan category and year of origination as of March 31, 2025.

indicators and gross chargeoffs by loan category and year of origination as of June 30, 2025.

in thousands)

Loans by Year of Origination

Term Loans by Year of Origination

Loans Converted

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in thousands)

Loans by Year of Origination

Term Loans by Year of Origination

Loans Converted

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The following tables present the Company’s

loan portfolio aging analysis as of March 31, 2025, and December 31, 2024.

loan portfolio aging analysis as of June 30, 2025, and December 31, 2024.

($ in thousands)

March 31, 2025

90 Days or Greater

June 30, 2025

Commercial & industrial

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Residential real estate

90 Days or Greater

December 31, 2024

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The categories of nonaccrual

loans as of March 31, 2025, and December 31, 2024, are presented in the following tables.

March 31, 2025

loans as of June 30, 2025, and December 31, 2024, are presented in the following tables.

June 30, 2025

($ in thousands)

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Nonaccrual loans with an allowance

nonaccrual loans

Commercial & industrial

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($ in thousands)

Nonaccrual loans with no allowance

Nonaccrual loans with an allowance

nonaccrual loans

loans with no

loans with an

Total nonaccrual

Commercial & industrial

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adjustments, principal reductions, and amortization and maturity date extensions.

These modifications allow the borrowers short-term cash

relief to allow them to improve their financial condition.

These modifications allow the borrowers short-term

cash relief to allow them to improve their financial condition.

If a loan modification is determined to be made to a borrower experiencing

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for Credit Losses section of this note.

For the three months ended March 31, 2025, and March 31, 2024, the Company did not modify any

loans made to borrowers experiencing financial difficulty.

For the six months ended June 30, 2025, and June 30, 2024, the Company did not modify any loans

made to borrowers experiencing financial difficulty.

The Company had no commitments to lend to borrowers

experiencing financial difficulty for which the Company had modified an existing loan as of March 31, 2025, and March 31, 2024.

experiencing financial difficulty for which the Company had modified an existing loan as of June 30, 2025, and June 30, 2024.

monitors loan payments on an ongoing basis to determine if a loan is considered to have a payment default.

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involves analyzing the economic conditions that exist for each customer and its ability to generate positive cash flows during the loan

For the three months ended March 31, 2025, and March 31, 2024, the Company had no loan modifications made to borrowers experiencing

For the six months ended June 30, 2025, and June 30, 2024, the Company had no loan modifications made to borrowers experiencing

financial difficulty for which there was a payment default within the 12 months following the modification date.

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funded over its estimated life, which are the same loss rates that are used in computing the ACL for loans.

The allowance for credit losses

for unfunded loan commitments of $ 1.4 million at March 31, 2025, is classified on the balance sheet within Other liabilities.

The following table presents the balance and activity

in the ACL for unfunded loan commitments for the three months ended March 31, 2025, and March 31, 2024.

Three Months Ended March 31,

The allowance for credit

losses for unfunded loan commitments of $ 1.7 million at June 30, 2025, is classified on the balance sheet within Other liabilities.

The following table presents the balance and

activity in the ACL for unfunded loan commitments for the three and six months ended June 30, 2025, and June 30, 2024.

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

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NOTE 6 – GOODWILL

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

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Ending balance

Goodwill is not amortized, but is evaluated for

impairment annually as of December 31, or more frequently if events occur or circumstances change that indicate an impairment may exist.

As of March 31, 2025, and December 31, 2024, the carrying amount of goodwill was $ 27.2 and $ 23.2 million respectively.

The acquisition

of Marblehead Bank on January 17, 2025 resulted in the acquisition of approximately $ 3.9 million in goodwill.

Goodwill is not amortized, but is evaluated

for impairment annually as of December 31, or more frequently if events occur or circumstances change that indicate an impairment

As of June 30, 2025, and December 31, 2024, the carrying amount of goodwill was $ 27.2 million and $ 23.2 million,

respectively.

The acquisition of Marblehead on January 17, 2025, resulted in the acquisition of approximately $ 3.9 million in

When assessing goodwill for impairment, first,

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Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.

Goodwill was assessed for impairment using a quantitative

test performed as of March 31,2025.

The estimated fair value of the reporting unit exceeded the net carrying value, and therefore no goodwill

impairment existed as of that date.

No events or circumstances since the March 31, 2025, impairment test were noted that would indicate

it was more likely than not a goodwill impairment exists.

Goodwill was assessed for impairment using a

quantitative test performed as of June 30, 2025.

The estimated fair value of the reporting unit exceeded the net carrying value, and

therefore no goodwill impairment existed as of that date.

No events or circumstances since the June 30, 2025 impairment test were noted

that would indicate it was more likely than not a goodwill impairment exists.

NOTE 7 – MORTGAGE SERVICING RIGHTS

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The unpaid principal balance of mortgage loans serviced for others approximated $ 1.46

billion at March 31, 2025, and December 31, 2024.

Contractually specified servicing fees of $ 0.9 million were included in mortgage loan

servicing fees in the consolidated income statement for the three months ended March 31, 2025, and 2024.

billion at June 30, 2025, and $ 1.43 billion at December 31, 2024.

Contractually specified servicing fees of $ 0.9 million and $ 1.8 million

were included in mortgage loan servicing fees in the consolidated income statement for the three and six months ended June 30, 2025,

respectively.

Servicing fees of $ 0.9 million and $ 1.7 million were included for the three and six months ended June 30, 2024, respectively.

The following table summarizes mortgage servicing

rights capitalized and related amortization, along with activity in the related valuation allowance:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

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activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest

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 payments principally related to certain variable-rate assets.

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 payments principally related to certain variable-rate assets.

Non-designated Hedges

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Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.

Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such

that the Company minimizes its net risk exposure resulting from such transactions.

As the interest rate swaps associated with this program

do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are

recognized directly in earnings.

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management

Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third

party, such that the Company minimizes its net risk exposure resulting from such transactions.

As the interest rate swaps associated

with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the

offsetting swaps are recognized directly in earnings.

Additionally, the Company enters into forward

1 unchanged sentence

with potential borrowers to fund specific mortgage loans that will be sold into the secondary market.

The forward contracts that are entered

into, economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans.

IRLCs and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected

The forward contracts that are

entered into, economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans.

The IRLCs and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected

in noninterest income on the consolidated statements of income.

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fair value are reported in accrued expenses and included in Other liabilities in the consolidated balance sheets.

The table below presents the notional amount and

fair value of the Company’s interest rate swaps, IRLCs and forward contracts utilized as of March 31, 2025, and December 31, 2024.

March 31, 2025

The table below presents the notional amount

and fair value of the Company’s interest rate swaps, IRLCs and forward contracts utilized as of June 30, 2025, and December 31,

June 30, 2025

December 31, 2024

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The following table presents the amounts included

in the consolidated statements of income for non-hedging derivative financial instruments for the three months ended March 31, 2025, and

in the consolidated statements of income for non-hedging derivative financial instruments for the three and six months ended June 30,

2025, and 2024.

Three Months Ended

June 30, Six Months Ended

($ in thousands) Statement of income classification 2025 2024 2025 2024

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Forward contracts Gain on sale of mortgage loans & OMSR 71 69 27 77

The following table shows the offsetting of financial assets and derivative assets at March 31, 2025, and at December 31, 2024.

Gross amounts

Net amounts of assets

Gross amounts not offset in the

consolidated balance sheet

The following table shows the offsetting of financial assets and derivative

assets at June 30, 2025, and at December 31, 2024.

offset in the

amounts of assets

amounts not offset in the consolidated balance sheet

in thousands)

Gross amounts of recognized assets

offset in the consolidated balance sheet

presented in the consolidated balance sheet

Financial instruments

Cash collateral received

March 31, 2025

Interest rate swaps

balance sheet

December 31, 2024

Interest rate swaps

The following table shows the offsetting of financial liabilities and derivative liabilities at March 31, 2025, and at December 31, 2024.

Gross amounts

Net amounts of liabilities

Gross amounts not offset in the consolidated balance sheet

The following table shows the offsetting of financial liabilities

and derivative liabilities at June 30, 2025, and at December 31, 2024.

offset in the

amounts of liabilities

amounts not offset in the consolidated balance sheet

in thousands)

Gross amounts of recognized liabilities

offset in the consolidated balance sheet

presented in the consolidated balance sheet

Financial instruments

Cash collateral pledged

March 31, 2025

Interest rate swaps

balance sheet

June 30, 2025

December 31, 2024

Interest rate swaps

NOTE 9 – DEPOSITS

Major classification of deposits at March 31,

Major classification of deposits at June 30,

2025, and at December 31, 2024, were as follows:

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Total Deposits

Included in time deposits at March 31, 2025, and

at December 31, 2024, were $ 56.9 million and $ 58.2 million, respectively, of deposits which were obtained through the Certificate of Deposit

Account Registry Service (CDARS).

Included in time deposits at June 30, 2025, and

at December 31, 2024, were $ 54.6 million and $ 58.2 million, respectively, of deposits which were obtained through the Certificate of

Deposit Account Registry Service (CDARS).

NOTE 10 – SHORT-TERM BORROWINGS

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from 2025 through 2051.

As of March 31, 2025, these REPO agreements were secured by securities with a fair value totaling $ 13.7 million.

As of June 30, 2025, these REPO agreements were secured by securities with a fair value totaling $ 19.3 million.

The maximum amount of outstanding agreements at any month end during the periods ending June 30, 2025, and December 31, 2024, was $ 16.7

million and $ 26.9 million, respectively.

The monthly average of such agreements totaled $ 11.8 million and $ 14.3 million, respectively.

The REPO agreements mature within one month .

1 unchanged sentence

Federal Reserve Discount Window (“Discount Window”) by pledging either securities or loans as collateral.

As of March 31,

As of June 30,

2025, there were no borrowings drawn or securities pledged at the Discount Window.

At both March 31, 2025, and December 31, 2024,

At both June 30, 2025, and December 31, 2024,

the Company had $ 41.0 million in federal funds lines, of which none was drawn.

1 unchanged sentence

The Company’s FHLB advances were secured

by $ 323.0 million in mortgage loans at March 31, 2025.

by $ 320.1 million in mortgage loans at June 30, 2025.

Advances consisted of fixed interest rates from 3.75 to 4.61 percent.

advances are subject to restrictions or penalties in the event of prepayment.

Aggregate annual maturities of FHLB advances at March 31,

Aggregate annual maturities of FHLB advances at June 30,

($ in thousands)

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included in interest expense in the consolidated financial statements.

These securities may be included in Tier 1 capital and may be prepaid

at any time without penalty (with certain limitations applicable) under current regulatory guidelines and interpretations.

of the Capital Securities as of both March 31, 2025, and December 31, 2024, was $ 10.3 million, with a maturity date of September 15, 2035 .

These securities may be included in Tier 1 capital and may be

prepaid at any time without penalty (with certain limitations applicable) under current regulatory guidelines and interpretations.

balance of the Capital Securities as of both June 30, 2025, and December 31, 2024, was $ 10.3 million, with a maturity date of September

NOTE 13 – SUBORDINATED DEBT

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activity and that are significant to the fair value of the assets or liabilities

The following is a description of the valuation methodologies

and inputs used for assets measured at fair value on a recurring basis, recognized in the accompanying consolidated balance sheets, as

well as the general classifications of such assets pursuant to the valuation hierarchy.

The following is a description of the valuation

methodologies and inputs used for assets measured at fair value on a recurring basis, recognized in the accompanying consolidated balance

sheets, as well as the general classifications of such assets pursuant to the valuation hierarchy.

Available-for-Sale Securities

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Interest Rate Lock Commitments (IRLCs)

The fair value of IRLCs are determined using the

projected sale price of individual loans based on changes in the market interest rates, projected “pull-through” rates (the

probability that an IRLC will ultimately result in an originated loan), the reduction in the value of the applicant’s option due

to the passage of time, and the remaining origination costs to be incurred based on management’s estimate of market costs (Level

The fair value of IRLCs are determined using

the projected sale price of individual loans based on changes in the market interest rates, projected “pull-through” rates

(the probability that an IRLC will ultimately result in an originated loan), the reduction in the value of the applicant’s option

due to the passage of time, and the remaining origination costs to be incurred based on management’s estimate of market costs (Level

The following tables present the fair value measurements

of assets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements

fell at March 31, 2025, and at December 31, 2024.

fell at June 30, 2025, and at December 31, 2024.

($ in thousands)

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Level 3 - significant unobservable inputs

The following table reconciles the beginning and

ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable

(Level 3) inputs for the three months ended March 31, 2025, and 2024.

The following table reconciles the beginning

and ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant

unobservable (Level 3) inputs for the six months ended June 30, 2025, and 2024.

for the Three Months Ended

for the Six Months Ended

($ in thousands)

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the collateral, which is reviewed for accuracy and consistency by management.

Appraisers are selected from an approved list which is maintained

by management.

The appraised values are reduced by applying a discount factor to the value based on the Company’s loan review policy.

All individually evaluated loans held by the Company were collateral dependent at March 31, 2025, and at December 31, 2024.

Appraisers are selected from an approved list which is

maintained by management.

The appraised values are reduced by applying a discount factor to the value based on the Company’s loan

review policy.

All individually evaluated loans held by the Company were collateral dependent at June 30, 2025, and at December 31, 2024.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active,

open market with readily observable prices.

Accordingly, fair value is estimated using discounted cash flow models associated with the

servicing rights and discounting the cash flows using discount market rates, prepayment speeds and default rates.

The servicing portfolio

has been valued using all relevant positive and negative cash flows including servicing fees;

Mortgage servicing rights do not trade in an

active, open market with readily observable prices.

Accordingly, fair value is estimated using discounted cash flow models associated

with the servicing rights and discounting the cash flows using discount market rates, prepayment speeds and default rates.

The servicing

portfolio has been valued using all relevant positive and negative cash flows including servicing fees;

miscellaneous income and float;

costs of servicing;

marginal costs of servicing;

the cost of carry of advances;

and foreclosure losses;

and applying certain prevailing assumptions used in the marketplace.

and applying certain prevailing assumptions used

in the marketplace.

Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

These mortgage servicing

rights are tested for impairment on a quarterly basis.

These mortgage servicing rights are tested for impairment on a quarterly basis.

($ in thousands)

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Fair value at

($ in thousands) March 31,

2025 Valuation

technique Unobservable inputs Range (weighted-

June 30, Valuation Range

($ in thousands) 2025 technique Unobservable inputs average)

Collateral-dependent individually evaluated loans $ 845 Market comparable properties Comparability adjustments (%) 1 - 28% (14%)

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Fair value at

($ in thousands) December 31,

2024 Valuation

technique Unobservable inputs Range (weighted-

December 31, Valuation Range

($ in thousands) 2024 technique Unobservable inputs average)

Collateral-dependent impaired loans $ 1,167 Market comparable properties Comparability adjustments (%) 24 - 404% (84%)

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There were no changes in the inputs or methodologies

used to determine fair value at March 31, 2025, as compared to December 31, 2024.

used to determine fair value at June 30, 2025, as compared to December 31, 2024.

The following methods were used to estimate the

fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value.

Cash and Due From Banks, Interest Bearing Time

Deposits, Federal Reserve and Federal Home Loan Bank Stock, and Accrued Interest Receivable and Payable

Cash and Due From Banks, Interest Bearing

Time Deposits, Federal Reserve and Federal Home Loan Bank Stock, and Accrued Interest Receivable and Payable

The carrying amount approximates the fair value.

7 unchanged sentences

credit, liquidity, and marketability factors.

Deposits, Short-Term Borrowings, and FHLB Advances

Deposits, Short-Term Borrowings, and FHLB

Deposits include demand deposits, savings accounts,

4 unchanged sentences

The estimated fair value for fixed-maturity time deposits and FHLB advances are based on estimates

of the rate State Bank could pay on similar instruments with similar terms and maturities at March 31, 2025, and at December 31, 2024.

of the rate State Bank could pay on similar instruments with similar terms and maturities at June 30, 2025, and at December 31, 2024.

Loan Commitments

The fair value of loan commitments is estimated

using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present

creditworthiness of the counterparties.

The estimated fair values for other financial instruments and off-balance-sheet loan commitments

approximate cost at March 31, 2025, and at December 31, 2024, and are not considered significant to this presentation.

using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the

present creditworthiness of the counterparties.

The estimated fair values for other financial instruments and off-balance-sheet loan

commitments approximate cost at June 30, 2025, and at December 31, 2024, and are not considered significant to this presentation.

Trust Preferred Securities

6 unchanged sentences

of the Company’s other financial instruments carried at other than fair value.

The fair values of certain of these instruments were

calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties.

Fair value is the

estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than

in a forced or liquidation sale.

Because no market exists for certain of these financial instruments, and because management does not

intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the

respective financial instruments could be sold individually or in the aggregate.

The fair values of certain of these instruments

were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties.

is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties,

other than in a forced or liquidation sale.

Because no market exists for certain of these financial instruments, and because management

does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at

which the respective financial instruments could be sold individually or in the aggregate.

($ in thousands)

Fair value measurements using

March 31, 2025

June 30, 2025

Financial assets

36 unchanged sentences

A total of 500,000 common shares of the Company

are available for grants or awards under the 2017 Plan, of which 205,743 shares had been granted under the plan as of March 31, 2025.

are available for grants or awards under the 2017 Plan, of which 202,093 shares had been granted under the plan as of June 30, 2025.

The 2017 Plan is intended to advance the interests

2 unchanged sentences

The 2017 Plan permits

equity-based awards to be used to attract, motivate, reward and retain highly competent individuals upon whose judgment, initiative, leadership

and efforts are key to the success of the Company by encouraging those individuals to become shareholders of the Company.

equity-based awards to be used to attract, motivate, reward and retain highly competent individuals upon whose judgment, initiative,

leadership and efforts are key to the success of the Company by encouraging those individuals to become shareholders of the Company.

Stock option awards are granted with an exercise

3 unchanged sentences

Black-Scholes valuation model.

As of March 31, 2025, there were no stock options outstanding, and no unrecognized compensation cost related

As of June 30, 2025, there were no stock options outstanding, and no unrecognized compensation cost related

to stock option awards.

No stock options were granted in the first three months of 2025.

No stock options were granted in the first six months of 2025.

On February 5, 2013, the Company adopted a Long

1 unchanged sentence

These restricted stock awards vest over a four-year period and are intended to assist the Company in retention of key executives.

compensation cost charged against income for awards under the LTI Plan for the three months ended March 31, 2025 and March 31, 2024 was

$ 0.2 million and $ 0.2 million, respectively.

As of March 31, 2025, there was $ 0.8 million of

compensation cost charged against income for awards under the LTI Plan for the three and six months ended June 30, 2025, was $ 0.2 million

and $ 0.3 million, respectively, and for the three and six months ended June 30, 2024, was $ 0.2 million and $ 0.4 million, respectively.

As of June 30, 2025, there was $ 0.6 million of

total unrecognized compensation cost related to non-vested share-based compensation arrangements related to the restricted stock awards

3 unchanged sentences

The table below is a summary of restricted stock

activity under the Company’s 2017 Plan for the three months ended March 31, 2025.

activity under the Company’s 2017 Plan for the six months ended June 30, 2025.

Average Value

Nonvested, January 1, 2025

Nonvested, March 31, 2025

Nonvested, June 30, 2025

NOTE 16 – OPERATING SEGMENTS

2 unchanged sentences

wealth management and brokerage services, and other financial services primarily to individuals, businesses, and municipalities.

the Company’s business activities are dependent and assessed based on the manner in which it supports the other activities of the

of the Company’s business activities are dependent and assessed based on the manner in which it supports the other activities of

The chief operating decision maker (“CODM”)

16 unchanged sentences

Information reported internally

for performance assessment by the chief operating decision maker is identical to that which is shown in the Consolidated Statements of

All revenues were derived from banking operations for the three months ended March 31, 2025, and March 31, 2024, and there was

no customer that accounted for more than 10% of the Company’s consolidated revenue.

17 – GENERAL LITIGATION

Company is subject to claims and lawsuits that arise primarily in the ordinary course of business.

Additionally, the Company is subject

to periodic examinations by various regulatory agencies.

It is the opinion of management that the disposition or ultimate resolution

of any such claims, lawsuits and examinations pending at March 31, 2025, will not have a material adverse effect on the consolidated

financial position, results of operations and cash flow of the Company.

for performance assessment by the CODM is identical to that which is shown in the Consolidated Statements of Income.

All revenues were

derived from banking operations for the six months ended June 30, 2025, and June 30, 2024, and there was no customer that accounted for

more than 10% of the Company’s consolidated revenue.

NOTE 17 – GENERAL LITIGATION

The Company is subject to claims and lawsuits

that arise primarily in the ordinary course of business.

Additionally, the Company is subject to periodic examinations by various regulatory

It is the opinion of management that the disposition or ultimate resolution of any such claims, lawsuits and examinations pending

at June 30, 2025, will not have a material adverse effect on the consolidated financial position, results of operations and cash flow

of the Company.

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