Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STEELE BANCORP, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, represents an overview of the financial condition and results of operations of Steele Bancorp, Inc. (the "Bancorp"). Please refer to the financial statements and other information in this report as well as the Company's 2025 Form 10-K for an understanding of the following discussion and analysis.

Subsequent events have been considered through the date of this filing on Form 10-Q.

The Bancorp is a bank holding company that, through its sole subsidiary Central Penn Bank & Trust (the "Bank"), (collectively, the "Company"), provides full-service banking to individual, municipality and corporate customers. The Bank operates twelve offices spanning the counties of Union, Snyder, Northumberland and Centre in Northcentral Pennsylvania. Gathering deposits and making loans are the major lines of business. The deposits are mainly deposits of individuals and small businesses and include various types of checking accounts, statement savings, money market accounts, interest checking accounts, individual retirement accounts, and certificates of deposit. Milestone Insurance Services, LLC ("Milestone") was formed in 2003 and is a wholly owned subsidiary of the Bank. Milestone is licensed to sell title insurance. The Company is supervised by the Board of Governors of the Federal Reserve System while the Bank is subject to regulation and supervision by the Federal Deposit Insurance Corporation and the Pennsylvania Department of Banking and Securities.

The Company's core strategy is to further its mission of being an independent bank which strives to be the community bank that bridges communities and builds your future by providing quality financial services to its customers, a rewarding work environment for its employees, exceptional long-term value for its shareholders and an unwavering commitment to community reinvestment.

The Company's revenues consist primarily of interest income it earns on loans and investments. Interest income is partially offset by interest expense incurred on deposits, borrowings and other interest-bearing liabilities. Net interest income is affected by the balances of interest-earning assets and interest-bearing liabilities and their relative interest rates. Net interest income is typically further reduced by the Company's provision for credit losses.

Non-interest income also contributes to the Company's operating results, consisting of service charges and fees, interchange fees, brokerage, and gains and losses on the sales of securities and loans. Non-interest expenses, which include salaries and employee benefits, occupancy and equipment costs, data processing, professional services, advertising and other general and administrative expenses, are the Company's primary expenditures incurred as a result of the Company's operations.

Financial institutions like the Company are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing and commercial real estate, competition among lenders, interest rate conditions, and funds availability. The Company's operations and lending are concentrated in Northcentral Pennsylvania in Union, Snyder, Northumberland, and Centre Counties, and the Company's operations are influenced by local economic conditions. Deposit balances and cost of funds are influenced by prevailing market rates on competing investments, customer preferences, and levels of personal income and savings in the Company's primary market area. Operations are also significantly impacted by government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact the Company.

To operate successfully, the Company must manage various types of risk, including but not limited to: interest rate risk, credit risk, liquidity risk, operational and information technology risk, reputation risk, and compliance risk.

Cautionary Note Regarding Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward -looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should" and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the other factors discussed in other reports the Company may file with the U.S. Securities and Exchange Commission (the "SEC") . We do not undertake and specifically disclaim any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, readers should not place undue reliance on forward-looking statements.

Market Conditions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to measure the Company's financial position and operating results primarily in terms of historic dollars. Changes in the relative value of money due to inflation or recession are generally not considered. The primary effect of inflation on the Company's operations is related to increases in operating expenses. Management considers changes in interest rates to impact our financial condition and results of operations to a far greater degree than changes in prices due to inflation. Although interest rates are influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. The Company manages interest rate risk in several ways. There can be no assurance that the Company will not be materially adversely affected by future changes in interest rates, as interest rates are highly sensitive to many factors that are beyond its control. Additionally, inflation may adversely impact the financial condition of the Company's borrowers and could impact their ability to repay their loans, which could negatively affect the Company's asset quality through higher delinquency rates and increased charge-offs. Management carefully considers the impact of inflation and rising interest rates on the Company's borrowers in managing credit risk related to the loan portfolio.

Critical Accounting Policies

Critical accounting policies are most important to the portrayal of the Company's financial condition or results of operations and require management's most difficult, subjective, and complex judgements about matters that are inherently uncertain. If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company's financial condition or results of operations may be materially impacted. The Company has designated the governing of the allowance for credit losses on loans and the fair value of loans acquired in a business combination as the critical accounting policies. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. The Company provides additional information on its critical accounting policies and estimates under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in Note 1 "Summary of Significant Accounting Policies" in its 2025 Form 10-K.

Non-GAAP Financial Measures

This report refers to certain financial measures that are computed under a basis other than GAAP ("non-GAAP"). The Company uses certain non-GAAP financial measures, including tax-equivalent net interest income and efficiency ratio, to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. Non-GAAP measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Merger with Northumberland Bancorp

The Company's merger with Northumberland Bancorp ("NUBC") was completed on August 1, 2025. NUBC was a Pennsylvania corporation that conducted its business primarily through its wholly owned subsidiary The Northumberland National Bank, which operated from a main office in Northumberland, Pennsylvania, and had six branches throughout Central Pennsylvania. NUBC's results are included in our financial statements from the acquisition date forward, impacting comparisons to the prior year first quarter, second quarter and third quarter.

At the effective time of the merger, NUBC's shareholders received a fixed exchange ratio of 1.185 shares of the Company's common stock for each NUBC common share they owned, except to the extent of cash received for fractional shares at $24.30 per share. Total purchase consideration was $40.45 million, including common stock with a fair value of $40.22 million and cash of $3 thousand paid for fractional shares, and cost of dissenter's shares of $229 thousand. Holders of NUBC common stock prior to the consummation of the merger held approximately 45.4% of the Corporation's common stock outstanding immediately following the merger.

Performance Summary

The following table presents the Company's key ratios and other performance data quarter-to-date as of the periods indicated.

($ in thousands, except per share data)		September 30, 2026				December 31, 2025				September 30, 2025
Operating Highlights:
Net income		$	5,462			$	5,585			$	13,677
Provision for credit losses			633				801				4,228
Bargain purchase gain			-				477				17,827
Noninterest income			1,719				2,476				19,032
Noninterest expense			8,122				8,516				10,886
Balance Sheet Highlights:
Total assets		$	1,275,233			$	1,261,457			$	1,253,576
Loans, net			900,785				908,267				891,098
Core deposit intangible, net			11,596				13,551				14,218
Total deposits
Noninterest-bearing			142,010				221,306				214,926
Savings			171,805				164,133				164,047
NOW			357,376				268,818				265,547
Money Market			109,736				107,050				108,157
Time Deposits			342,393				349,467				353,253
Total interest-bearing deposits			981,310				889,468				891,004
Core deposits (1)			780,927				761,307				752,677
Net Interest Margin (GAAP & Non-GAAP)
Net interest income (GAAP)		$	13,626			$	12,254			$	9,864
Tax equivalent adjustment			204				231				180
Net interest income (fully taxable equivalent) (Non-GAAP)			13,830				12,485				10,044
Annualized fully tax-equivalent net interest margin (Non-GAAP)			4.53	%			4.32	%			3.97	%
Annualized net interest margin (GAAP)			4.46	%			4.24	%			3.69	%
Selected Ratios:
Annualized return on average assets			1.69	%			1.77	%			3.07	%
Annualized return on average equity			17.15	%			18.60	%			32.66	%
Capital Ratios - Central Penn Bank & Trust:
Leverage ratio			9.47	%			8.56	%			9.93	%
Per Share Data:
Earnings per share		$	1.60			$	1.64			$	4.77
Dividend declared per share			-				0.75				-
Book Value			37.20				34.77				40.08
Common stock price:
Last trade			46.71				28.55				25.83
Weighted average common shares			3,405,061				3,405,061				2,867,124
Allowance for Loan Credit Losses on Loans:
Beginning balance		$	9,934			$	9,512			$	4,636
Merger adjustments			-				-				725
Provision for credit losses			625				361				4,228
Charge-Offs			(134	)			-				(81	)
Recoveries			6				31				4
Ending balance		$	10,431			$	9,904			$	9,512

(1) Core deposits are defined as total deposits less time deposits.

Comparison of Financial Condition at September 30, 2026 and December 31, 2025

Total assets at September 30, 2026, were $1.28 billion, an increase of $13.78 million, or 1.1 percent from $1.26 billion at December 31, 2025. The increase in total assets was primarily due to an increase in cash and cash equivalents of $19.64 million, an increase of $4.92 million in debt securities available for sale, offset by a decrease of $6.96 million in loans.

Total average assets increased 2.26 percent from $1.25 billion at December 31, 2025 to $1.28 billion at September 30, 2026. Average earning assets were $1.15 billion at December 31, 2025 and $1.21 billion at September 30, 2026. Average interest-bearing liabilities were $895.90 million at December 31, 2025 and $955.58 million at September 30, 2026.

Cash and cash equivalents increased $19.64 million or 40.1 percent from $49.01 million at December 31, 2025 to $68.65 million at September 30, 2026. The increase is primarily related to increased interest-bearing demand deposits and increased federal funds sold due to large loan payoffs.

Loans decreased $6.96 million to $911.22 million at September 30, 2026 from $918.17 million at December 31, 2025. The decrease is due to lack of loan growth and large loan payoffs.

Interest bearing deposits increased $91.84 million to $981.31 million at September 30, 2026 from $889.47 million at December 31, 2025. Noninterest-bearing deposits decreased 35.8 percent, or $79.30 million from $221.31 million at December 31, 2025 to $142.01 million at September 30, 2026. Management elected to modify approximately $81.27 million of demand deposit account structures during the core system conversion in the third quarter of 2026 for legacy NUBC customers from noninterest-bearing to interest bearing through a tiered balance system, thus causing the significant decrease in noninterest-bearing deposits. Total deposits increased $12.55 million to $1.12 billion at September 30, 2026 from $1.11 billion at December 31, 2025.

Total stockholders' equity increased by $8.28 million, or 7.0 percent, from $118.40 million at December 31, 2025, to $126.68 million at September 30, 2026. Accumulated other comprehensive loss increased from $1.14 million as of December 31, 2025 to $5.87 million as of September 30, 2026.

The loan-to-deposit ratio is a key measurement of liquidity and lending efficiency. Our loan-to-deposit ratio was 81.1% as of September 30, 2026 compared to 82.7% at December 31, 2025. The Company continues to have an optimal loan-to-deposit ratio, which indicates profitability and liquidity are balanced, the Company is able to earn interest on loans while maintaining sufficient funds to meet withdrawal demands.

Management believes that the asset/liability mix and the interest rate risk associated with the balance sheet are within manageable parameters. Constant monitoring using asset/liability reports and interest rate risk scenarios are in place along with quarterly asset/liability management meetings on the committee level by the Company's Board of Directors.

Investment Securities

Debt Securities - Available for Sale

Debt securities available-for-sale increased by $4.92 million to $225.73 million at September 30, 2026 from $220.81 million at December 31, 2025. Within the portfolio U.S. treasury securities increased by $1.23 million, U.S. government agencies decreased $8.78 million, U.S. government sponsored enterprise mortgage-backed securities increased $22.57 million, tax exempt state and municipal bonds decreased $6.56 million, and taxable state and municipal securities decreased $2.58 million. Gross unrealized losses increased from $2.96 million as of December 31, 2025 to $7.57 million as of September 30, 2026. The fair value of these securities was influenced by market interest rates, prepayment speeds on mortgage securities, bid to offer spreads in the market place and credit premiums for the various types of agency debt.

Loans

Gross loans receivable decreased $6.80 million from $919.24 million at December 31, 2025 to $912.44 million at September 30, 2026. Gross loans decreased primarily due to large loan payoffs. Commercial mortgages increased $10.74 million and other construction and land development loans decreased $20.34 million due to construction phases ending and loans converting to commercial mortgages. The percentage change and distribution of the loan portfolio is shown in the table below:

($ In Thousands)										Change
		2026				2025				Amount				%
Commercial		$	148,778			$	162,775			$	(13,997	)			(8.6	)%
Commercial real estate:
Commercial mortgages			237,201				226,465				10,736				4.7
Other construction and land development loans			17,758				38,102				(20,344	)			(53.4	)
Secured by farmland			87,310				90,177				(2,867	)			(3.2	)
Residential mortgage:
Multifamily			17,686				13,858				3,828				27.6
1-4 family residential mortgages			342,850				339,000				3,850				1.1
Construction			11,502				3,600				7,902				219.5
Home Equity			39,101				32,745				6,356				19.4
Consumer			10,255				12,515				(2,260	)			(18.1	)
Gross loans		$	912,441			$	919,237			$	(6,796	)			(0.7	)%

Allowance for Credit Losses on Loans ("ACLL")

The allowance for credit losses was $10.43 million at September 30, 2026, compared to $9.90 million at December 31, 2025. This allowance equaled 1.14 and 1.08 percent of total loans, net of unearned income, as of September 30, 2026 and December 31, 2025, respectively. The Company recorded a provision for credit losses of $633 thousand for the three months ended September 30, 2026. The Company recorded a provision for credit losses of $618 thousand for the nine months ended September 30, 2026. The credit loss reserve is analyzed quarterly and reviewed by the Company's Board of Directors. No concentration or pledged collateral was evident. Regular loan meetings with the Company's Board of Directors are held to review new loans. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies. Allowance for credit losses was considered adequate based on delinquency trends and actual loans written off as it relates to the loan portfolio.

Individually Evaluated Loans

Individually evaluated loans were $11.01 million as of September 30, 2026, an increase from $6.83 million as of December 31, 2025. As of September 30, 2026, there was a required reserve of $1.10 million for individually evaluated loans, as compared to the reserve of $615 thousand at December 31, 2025. Please see Note 5 within the Company's Notes to the Consolidated Financial Statements for more information regarding the Company's loan portfolio as of September 30, 2026 and December 31, 2025.

Collectively Evaluated Loans

Collectively evaluated loans totaled $901.43 million, with an ACL of $9.33 million as of September 30, 2026 and $912.41 million with an ACL of $9.29 million as of December 31, 2025.

Collectively evaluated loans are divided into pools based upon risk characteristics. Management has elected to use the FDIC call report loan codes to group loans. Utilizing a discounted cash flow (DCF) model, the Company calculates the sum of expected losses via a gross loss rate and recovery rate assumption based on call report loan codes to determine its allowance for credit losses. Management has elected to perform cash flow modeling without the present value component due to lack of loan loss history and simplification of the model. Call report loan codes are allocated additional loss estimates based upon Management's analysis of qualitative factors including changes in lending policies, procedures, and strategies, economic conditions, changes in nature and volume of portfolio, credit and lending staff, changes in delinquencies, changes in quality of the loan review system, trends in underlying collateral, concentration risk, and external factors.

The allowance for collectively evaluated loans increased $38 thousand when compared to December 31, 2025 primarily due to an update in the years captured in the loss driver analysis used when calculating the sum of expected losses, offset by a decrease in pooled loan balances.

Conclusion

Based upon the calculation, management's current judgements about the credit quality of the loan portfolio, and after considering all known relevant internal and external factors that affect loan collectability, management believes the level of ACLL is reasonable for the credit risk in the loan portfolio as of September 30, 2026 and December 31, 2025.

Deposits

The average balance and average rate paid on deposits year-to-date for the periods ending September 30, 2026 and December 31, 2025 are summarized as follows:

		September 30, 2026								December 31, 2025								Change
		Average				Average				Average				Average				Amount				%
($ In Thousands)		Balance				Rate				Balance				Rate
Non-interest bearing		$	209,729				-	%		$	141,121				-	%		$	68,608				48.6	%
Savings			167,918				0.21				106,177				0.19				61,741				58.1
Now deposits			280,536				1.78				220,181				1.83				60,355				27.4
Money market deposits			112,012				1.12				64,636				1.16				47,376				73.3
Time deposits			349,721				3.52				224,389				3.91				125,332				55.9
Total deposits		$	1,119,916				2.08	%		$	756,504				2.23	%		$	363,412				48.0	%

Borrowed Funds

The average balance of borrowed funds decreased $15.46 million to $15.51 million as of September 30, 2026 from $30.96 million as of December 31, 2025 due primarily to the following:

	●	Federal Home Loan Bank Advances average balance decreased $20.34 million to $4.77 million in 2026 from $25.12 million in 2025 due to borrowing payoffs post-merger.
	●	Senior Secured Debt average balance increased $3.28 million in 2026 due to a new debt issuance of $7.5 million on June 26, 2026.
	●	Subordinated Debt average balance increased $1.43 million to $5.61 million in 2026 from $4.18 million in 2025.

Total borrowed funds consisted of the following year-to-date at September 30, 2026 and December 31, 2025:

		September 30, 2026
		Ending				Average				Average
($ In Thousands)		Balance				Balance				Rate
Securities sold under agreements to repurchase		$	1,446			$	1,838				3.71	%
Federal funds purchased			-				8				0.00	%
Federal Home Loan Bank Advances			4,500				4,777				3.64	%
Senior Secured Debt			7,374				3,278				6.00	%
Subordinated Debt			-				5,606				4.50	%
Total Borrowed Funds		$	13,320			$	15,507				4.54	%

		December 31, 2025
		Ending				Average				Average
($ In Thousands)		Balance				Balance				Rate
Securities sold under agreements to repurchase		$	1,589			$	1,653				4.42	%
Federal funds purchased			-				14				7.14	%
Federal Home Loan Bank Advances			5,500				25,117				4.58	%
Subordinated Debt			9,892				4,178				4.50	%
Total Borrowed Funds		$	16,981			$	30,962				4.56	%

See Note 7 within the Company's Notes to the Consolidated Financial Statements for more information regarding the Company's borrowed funds as of September 30, 2026 and December 31, 2025.

Stockholders' Equity and Capital Adequacy

Details concerning capital ratios at September 30, 2026 and December 31, 2025 are presented in Note 9, "Regulatory Matters," to the consolidated financial statements for the three and nine months ended September 30, 2026 and year ended December 31, 2025 included elsewhere in this document. The Company meets the conditions of the Federal Reserve's small bank holding company policy statement and is therefore excluded from consolidated capital requirements. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company's financial statements. Management believes, as of September 30, 2026, that the Bank met all capital adequacy requirements to which it was subject.

Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, the Bank is subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. Further, although the Company is not subject to the specific consolidated capital requirements, its ability to pay dividends, repurchase stock or engage in other activities may be limited by the Federal Reserve if it fails to hold sufficient capital consistent with its overall risk profile.

The Bank's total Tier 1 Capital increased $13.89 million to $119.93 million at September 30, 2026 from $106.05 million at December 31, 2025. The Bank's resulting Tier 1 Leverage Ratio increased to 9.47% at September 30, 2026 from 8.56% at December 31, 2025.

Comparison of Earnings for the Three and Nine Months Ended September 30, 2026 and 2025

General: The 2026 results reflect the post-merger Company, while the comparative 2025 periods reflect the merger on August 1, 2025 and include one time income and expense amounts attributable to the merger. Accordingly, the year-over-year results are not directly comparable. Net income was $5.46 million for the three months ended September 30, 2026, or $1.60 per share, a decrease of $8.22 million, or 60.1 percent, compared to net income of $13.68 million, or $4.77 per share, for the three months ended September 30, 2025. Net income was $15.60 million for the nine months ended September 30, 2026, or $4.58 per share, a decrease of $1.71 million, or 9.9 percent, compared to net income of $17.30 million, or $7.87 per share, for the nine months ended September 30, 2025.

Interest Income: Interest income increased $4.03 million, or 27.9 percent, to $18.45 million for the three months ended September 30, 2026, compared with $14.42 million for the three months ended September 30, 2025. Interest income increased $23.65 million, or 80.1 percent, to $53.17 million for the nine months ended September 30, 2026, compared with $29.53 million for the nine months ended September 30, 2025. The increase is primarily due to higher interest and fees on loans and interest on taxable securities as result of the merger with NUBC.

The following tables illustrate the changes in interest income for the three and nine months ended September 30, 2026 and 2025:

($ In Thousands)		Three Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Interest and fees on loans		$	15,864				86.0	%		$	12,232				84.8	%		$	3,632				29.7	%
Interest-bearing deposits in banks and time deposits			319				1.7				316				2.2				3				0.9
Federal funds sold			87				0.5				45				0.3				42				93.3
Securities:
Taxable			1,482				8.0				1,224				8.5				258				21.1
Tax-exempt			587				3.2				501				3.5				86				17.2
Dividends			109				0.6				101				0.7				8				7.9
Total Interest and Dividend Income		$	18,448				100.0	%		$	14,419				100.0	%		$	4,029				27.9	%

($ In Thousands)		Nine Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Interest and fees on loans		$	45,532				85.6	%		$	25,372				85.9	%		$	20,160				79.5	%
Interest-bearing deposits in banks and time deposits			1,039				2.0				553				1.9				486				87.9
Federal funds sold			205				0.4				55				0.2				150				272.7
Securities:
Taxable			4,259				8.0				2,244				7.6				2,015				89.8
Tax-exempt			1,771				3.3				1,089				3.7				682				62.6
Dividends			367				0.7				215				0.7				152				70.7
Total Interest and Dividend Income		$	53,173				100.0	%		$	29,528				100.0	%		$	23,645				80.1	%

Interest Expense: Interest expense increased by $267 thousand or 5.9 percent to $4.82 million for the three months ended September 30, 2026, compared to $4.56 million for the three months ended September 30, 2025. Interest expense increased by $4.74 million or 47.7 percent to $14.67 million for the nine months ended September 30, 2026 compared to $9.94 million for the nine months ended September 30, 2025. The increase in interest expense for the three and nine months ended September 30, 2026 when compared to the same periods of 2025 is primarily due to an increase in expense on deposits due to higher balances and a rising rate environment and the merger with NUBC.

The following tables illustrate the changes in interest expense for the three and nine months ended September 30, 2026 and 2025:

($ In Thousands)		Three Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Deposits		$	4,664				96.7	%		$	4,222				92.7	%		$	442				10.5	%
Federal Home Loan Bank advances			42				0.9				258				5.7				(216	)			(83.7	)
Subordinated debt			-				-				75				1.6				(75	)			(100.0	)
Senior secured debt			116				2.4				-				-				116				100.0
Total Interest Expense		$	4,822				100.0	%		$	4,555				100.0	%		$	267				5.9	%

($ In Thousands)		Nine Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Deposits		$	14,197				96.8	%		$	8,781				88.4	%		$	5,416				61.7	%
Federal Home Loan Bank advances			130				0.9				1,078				10.8				(948	)			(87.9	)
Subordinated debt			225				1.5				76				0.8				149				2.0
Senior secured debt			121				0.8				-				0.0				121				100.0
Total Interest Expense		$	14,673				100.0	%		$	9,935				100.0	%		$	4,738				47.7	%

Net Interest Income: Net interest income before provision for credit losses increased by $3.76 million, or 38.1 percent, to $13.63 million for the three months ended September 30, 2026, compared to $9.86 million for the three months ended September 30, 2025. Net interest income before provision for credit losses increased by $18.91 million, or 96.5 percent, to $38.50 million for the nine months ended September 30, 2026, compared to $19.59 million for the nine months ended September 30, 2025.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

Three Months Ended September 30,

($ In Thousands)		For the Three Months Ended September 30,
		2026												2025
		(1)												(1)
		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
ASSETS :
Tax-exempt loans		$	28,518			$	222				3.09	%		$	30,166			$	222				2.92	%
All other loans			900,391				15,690				6.91	%			735,825				12,059				6.50	%
Total loans (2)(3)(4)			928,909				15,912				6.80	%			765,991				12,281				6.36	%
Taxable securities			143,115				1,482				4.11	%			114,730				1,224				4.23	%
Tax-exempt securities (3)			81,725				743				3.61	%			77,613				635				3.25	%
Other securities (7)			9,227				109				4.69	%			5,112				101				7.84	%
Total securities			234,067				2,334				3.96	%			197,455				1,960				3.94	%
Federal funds sold			9,752				87				3.54	%			3,994				45				4.47	%
Interest-bearing deposits			38,520				319				3.29	%			35,422				316				3.54	%
Total interest-earning assets			1,211,248				18,652				6.11	%			1,002,862				14,602				5.78	%
Other assets			69,313												43,191
TOTAL ASSETS		$	1,280,561											$	1,046,053
LIABILITIES :
Savings		$	173,029				107				0.25	%		$	132,720				61				0.18	%
NOW deposits			308,448				1,246				1.60	%			237,738				1,103				1.84	%
Money market deposits			113,512				308				1.08	%			83,388				242				1.15	%
Time deposits			347,244				2,990				3.42	%			282,205				2,800				3.94	%
Total deposits			942,233				4,651				1.96	%			736,051				4,206				2.27	%
Securities sold under repurchase agreement			1,471				13				3.51	%			1,411				16				4.50	%
Fed Funds purchased			-				-				0.00	%			2				-				0.00	%
Federal Home Loan Bank advances			4,500				42				3.70	%			20,345				258				5.03	%
Senior secured debt (8)			7,375				116				6.00	%			-				-				0.00	%
Subordinated debt			-				-				0.00	%			6,667				75				4.46	%
Total borrowings			13,346				171				5.08	%			28,425				349				4.87	%
Total interest-bearing liabilities			955,579				4,822				2.00	%			764,476				4,555				2.36	%
Demand deposits			184,191												176,336
Other liabilities			14,423												8,940
Stockholders' equity			126,368												96,301
TOTAL LIABILITIES AND STOCKHOLDERS ' EQUITY		$	1,280,561											$	1,046,053
Interest rate spread (6)											4.11	%											3.42	%
Net interest income/margin (5)						$	13,830				4.53	%						$	10,047				3.97	%

(1)	Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2)	Interest on loans includes loan fee income.

(3)	Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2026 and 2025.

(4)	Nonaccrual loans have been included with loans for the purpose of analysis. Nonaccrual loans totaled $7.22 million and $1.59 million as of September 30, 2026 and 2025, respectively.

(5)	Net interest margin (Non-GAAP) is computed by dividing tax-equivalent net interest income by total interest earning assets.

(6)	Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(7)	Average balance includes restricted investments in bank stock and money market funds.
(8)	The fixed interest rate of 6.00% for senior secured debt is used in lieu of average rate due to interest expense including other expenses such as issuance costs.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

Nine Months Ended September 30,

($ In Thousands)		For the Nine Months Ended September 30,
		2026												2025
		(1)												(1)
		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
ASSETS :
Tax-exempt loans		$	32,380			$	786				3.25	%		$	21,626			$	476				2.94	%
All other loans			889,920				44,912				6.75	%			534,859				25,000				6.25	%
Total loans (2)(3)(4)			922,300				45,698				6.62	%			556,485				25,476				6.12	%
Taxable securities			138,554				4,259				4.11	%			78,731				2,244				3.81	%
Tax-exempt securities (3)			83,439				2,242				3.59	%			62,463				1,378				2.95	%
Other securities (7)			10,262				367				4.78	%			4,638				215				6.20	%
Total securities			232,255				6,868				3.95	%			145,832				3,837				3.52	%
Federal funds sold			7,702				205				3.56	%			1,691				55				4.35	%
Interest-bearing deposits			40,698				1,039				3.41	%			19,846				553				3.73	%
Total interest-earning assets			1,202,955				53,810				5.98	%			723,854				29,921				5.53	%
Other assets			70,829												29,332
TOTAL ASSETS		$	1,273,784											$	753,186
LIABILITIES :
Savings		$	167,918				268				0.21	%		$	88,843				129				0.19	%
Now deposits			280,536				3,734				1.78	%			204,564				2,750				1.80	%
Money market deposits			112,012				942				1.12	%			50,298				439				1.17	%
Time deposits			349,721				9,202				3.52	%			182,327				5,411				3.97	%
Total deposits			910,187				14,146				2.08	%			526,032				8,729				2.22	%
Securities sold under repurchase agreement			1,838				51				3.71	%			1,530				52				4.54	%
Fed Funds purchased			8				-				0.00	%			19				1				7.04	%
Federal Home Loan Bank advances			4,777				130				3.64	%			31,089				1,078				4.64	%
Senior secured debt (8)			3,278				121				6.00	%			-				-				0.00	%
Subordinated debt (8)			5,606				225				4.50	%			2,222				75				4.51	%
Total borrowings			15,507				527				4.54	%			34,860				1,206				4.63	%
Total interest-bearing liabilities			925,694				14,673				2.12	%			560,892				9,935				2.37	%
Demand deposits			209,729												113,693
Other liabilities			14,808												7,768
Stockholders' equity			123,553												70,833
TOTAL LIABILITIES AND STOCKHOLDERS ' EQUITY		$	1,273,784											$	753,186
Interest rate spread (6)											3.86	%											3.16	%
Net interest income/margin (5)						$	39,137				4.35	%						$	19,986				3.69	%

(1)	Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2)	Interest on loans includes loan fee income.

(3)	Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2026 and 2025.

(4)	Nonaccrual loans have been included with loans for the purpose of analysis. Nonaccrual loans totaled $7.22 million and $1.59 million as of September 30, 2026 and 2025, respectively.

(5)	Net interest margin (Non-GAAP) is computed by dividing tax-equivalent net interest income by total interest earning assets.

(6)	Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(7)	Average balance includes restricted investments in bank stock and money market funds.
(8)	The fixed interest rate of 4.50% for subordinated debt and 6.00% for senior secured debt is used in lieu of the average rate due to interest expense including other expenses such as amortization expense of fair value adjustments and issuance costs.

Reconcilement of Taxable Equivalent Net Interest Income

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
($ In Thousands)		2026				2025				2026				2025
Total interest income (GAAP)		$	18,448			$	14,419			$	53,173			$	29,528
Total interest expense (GAAP)			4,822				4,555				14,673				9,935
Net interest income (GAAP)			13,626				9,864				38,500				19,593
Tax equivalent adjustment			204				183				637				393
Net interest income (fully taxable equivalent) (Non-GAAP)		$	13,830			$	10,047			$	39,137			$	19,986

Rate/Volume Analysis

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the balance sheet as it pertains to net interest income on a tax equivalent basis, the tables below reflects these changes for September 30, 2026 versus 2025:

($ In Thousands)		For the Three Months Ended September 30,												For the Nine Months Ended September 30,
		2026 vs 2025												2026 vs 2025
		Increase (Decrease)												Increase (Decrease)
		Due to												Due to
		Volume				Rate				Net				Volume				Rate				Net
Interest income:
Loans, tax-exempt		$	(12	)		$	12			$	-			$	249			$	61			$	310
Loans			2,782				849				3,631				17,259				2,653				19,912
Taxable investment securities			298				(40	)			258				1,772				243				2,015
Tax-exempt investment securities			36				72				108				513				351				864
Other securities			65				(57	)			8				231				(79	)			152
Federal funds sold			58				(16	)			42				178				(28	)			150
Interest bearing deposits			26				(23	)			3				557				(71	)			486
Total interest-earning assets			3,253				797				4,050				20,759				3,130				23,889
Interest expense:
Savings			22				24				46				118				21				139
NOW deposits			307				(164	)			143				1,019				(35	)			984
Money market deposits			85				(19	)			66				530				(27	)			503
Time deposits			603				(413	)			190				4,689				(898	)			3,791
Securities sold under repurchase agreements			1				(4	)			(3	)			9				(10	)			(1	)
Federal funds purchased			-				-				-				-				(1	)			(1	)
Federal Home Loan Bank advances			(174	)			(42	)			(216	)			(814	)			(134	)			(948	)
Senior secured debt			58				58				116				61				60				121
Subordinated debt			(92	)			17				(75	)			75				75				150
Total interest-bearing liabilities			810				(543	)			267				5,687				(949	)			4,738
Change in net interest income (fully taxable equivalent)		$	2,443			$	1,340			$	3,783			$	15,072			$	4,079			$	19,151

Provision for (Recovery of) Credit Losses: During the third quarter of 2026, the Company recorded a $625 thousand provision for the allowance for credit losses for loans. The Company recorded a provision for credit losses for off balance sheet credit exposures of $8 thousand for the three months ended September 30, 2026. As of the three months ended September 30, 2025 the Company recorded a $4.23 million provision for credit losses for loans. The Company recorded a provision for credit losses for loans of $703 thousand and a recovery of credit losses for off balance sheet credit exposures of $85 thousand for the nine months ended September 30, 2026, as compared to the $4.49 million provision for loan credit losses for loans and $100 thousand recovery of credit losses for off balance sheet credit exposures recorded for the nine months ended September 30, 2025. Included in the provision for credit losses during the three and nine months ended September 30, 2025 was a one-time $4.0 million provision for credit losses on loans for acquired non-PCD loans recorded for the merger with NUBC.

The Company completes a comprehensive quarterly evaluation to determine its (recovery of) provision for credit losses on loans. The evaluation reflected analyses of individual borrowers and historical loss experiences, and changes in net loan balances, supplemented as necessary by credit judgment that considers observable trends, conditions, and other relevant environmental and economic factors.

See Note 5 within the Company's Notes to the Consolidated Financial Statements for more information regarding the Company's provision for (recovery of) credit losses as of September 30, 2026.

Noninterest Income for the Three Months Ended: Noninterest income decreased by $17.31 million, or 91.0%, to $1.72 million for the three months ended September 30, 2026, from the $19.03 million recognized during the same period of 2025. Service charges on deposit accounts increased by $101 thousand to $326 thousand for the three months ended September 30, 2026, compared to $225 thousand recognized during the same period of 2025. ATM fees and debit card income increased by $99 thousand and trust fee income increased by $262 thousand to $386 thousand for the three months ended September 30, 2026 from $124 thousand for the three months ended September 30, 2025. For the three months ended September 30, 2025 a bargain purchase gain of $17.83 million was recognized in association with the merger with NUBC. Net marketable equity security gains decreased by $54 thousand for the three months ended September 30, 2026, from the $60 thousand gain recognized during the same period of 2025 due to a decrease in market value in the third quarter of 2026.

($ In Thousands)		Three Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Service charges on deposit accounts		$	326				19.0	%		$	225				1.2	%		$	101				44.9	%
ATM fees and debit card income			467				27.2				368				1.9				99				26.9
Mortgage banking revenue			206				12.0				134				0.7				72				53.7
Trust income			386				22.5				124				0.6				262				211.3
Investment fee income			81				4.7				5				0.0				76				1,520.0
(Loss) gain on disposal of premises			(20	)			(1.2	)			-				-				(20	)			100.0
Loss on sale of securities			-				0.0				(8	)			(0.0	)			8				(100.0	)
Net marketable equity security gains			6				0.3				60				0.3				(54	)			(90.0	)
Earnings on bank owned life insurance			164				9.5				130				0.7				34				26.2
Bargain purchase gain			-				0.0				17,827				93.7				(17,827	)			(100.0	)
Other			103				6.0				167				0.9				(64	)			(38.3	)
Total non-interest income		$	1,719				100.0	%		$	19,032				100.0	%		$	(17,313	)			(91.0	)%

Noninterest Income for the Nine Months Ended: Noninterest income decreased by $14.98 million, or 74.4%, to $5.17 million for the nine months ended September 30, 2026, from the $20.15 million recognized during the same period of 2025. Service charges on deposit accounts increased by $389 thousand to $875 thousand for the nine months ended September 30, 2026 compared to $486 thousand recognized during the same period of 2025. ATM fees and debit card income increased by $657 thousand and trust fee income increased by $998 thousand when compared to September 30, 2025. Both increases are the direct result of the merger with NUBC. A bargain purchase gain of $17.83 million was recognized in the third quarter of 2025 in association with the merger with NUBC. Net marketable equity security gains increased by $158 thousand for the nine months ended September 30, 2026, as compared to the $57 thousand gain recognized during the same period of 2025 due to an increase in market value in 2026.

($ In Thousands)		Nine Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Service charges on deposit accounts		$	875				16.9	%		$	486			2.4		%		$	389			80.0		%
ATM fees and debit card income			1,395				27.0				738			3.7					657			89.0
Mortgage banking revenue			582				11.3				243			1.2					339			139.5
Trust income			1,122				21.7				124			0.6					998			804.8
Investment fee income			249				4.8				83			0.4					166			200.0
(Loss) gain on disposal of premises			(27	)			(0.5	)			52			0.2					(79	)		(151.9		)
Loss on sale of securities			-				0.0				(8	)		(0.0		)			8			(100.0		)
Net marketable equity security gains			215				4.2				57			0.3					158			277.2
Earnings on bank owned life insurance			482				9.3				256			1.3					226			88.3
Bargain purchase gain			-				0.0				17,827			88.5					(17,827	)		(100.0		)
Other			273				5.3				287			1.4					(14	)		(4.9		)
Total non-interest income		$	5,166				100.0	%		$	20,145			100.0		%		$	(14,979	)		(74.4		)%

Noninterest Expense for the Three Months Ended: Noninterest expenses decreased by $2.76 million or 25.4 percent, from $10.89 million for the three months ended September 30, 2025, to $8.12 million for the three months ended September 30, 2026. The decrease was primarily due to the $3.87 million of merger expenses recognized for the three months ended September 30, 2025 for which there was no comparable expense in 2026. The decrease was offset by a $127 thousand increase in salaries and employee benefit expenses, an increase in amortization of core deposit intangible of $178 thousand, a $144 thousand increase in net occupancy and equipment expense and a $410 thousand increase in data processing fees.

($ In Thousands)		Three Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Salaries and employee benefits		$	4,437				54.6	%		$	4,310				39.6	%		$	127				2.9	%
Net occupancy and equipment expense			586				7.2				442				4.1				144				32.6
Amortization of core deposit intangible			622				7.7				444				4.1				178				40.1
Data processing fees			662				8.2				252				2.3				410				162.7
Pennsylvania shares tax			237				2.9				108				1.0				129				119.4
Professional fees			100				1.2				112				0.9				(12	)			(10.7	)
Advertising expense			148				1.8				67				0.6				81				120.9
FDIC deposit insurance			150				1.8				127				1.2				23				18.1
Other real estate owned expense (income), net			32				0.4				(24	)			(0.2	)			56				(233.3	)
Merger-related expenses			-				-				3,873				35.6				(3,873	)			(100.0	)
ATM expense			218				2.7				187				1.7				31				16.6
Other			930				11.5				988				9.1				(58	)			(5.9	)
Total non-interest expense		$	8,122				100.0	%		$	10,886				100.0	%		$	(2,764	)			(25.4	)%

Noninterest Expense for the Nine Months Ended: Noninterest expenses increased $6.99 million or 40.8 percent, from $17.11 million for the nine months ended September 30, 2025, to $24.10 million for the nine months ended September 30, 2026. The increase was largely due to an increase of $5.35 million in salaries and employee benefit expenses due to the merger with NUBC, an increase in amortization of core deposit intangible of $1.51 million, a $793 thousand increase in net occupancy and equipment expense, a $973 thousand increase in data processing fees and by a $1.11 million increase in other expenses, including but not limited to amortization expense of acquired assets and liabilities and software expense due to increased utilization and volume due to the merger. The increases in noninterest expenses for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025 were offset by $4.12 million of merger expenses recognized in 2025 for which there was no comparable expense in 2026.

($ In Thousands)		Nine Months Ended
		September 30, 2026								September 30, 2025								Change
		Amount				% Total				Amount				% Total				Amount				%
Salaries and employee benefits		$	13,345				55.4	%		$	7,997			46.7		%		$	5,348			66.9		%
Net occupancy and equipment expense			1,833				7.6				1,040			6.1					793			76.3
Amortization of core deposit intangible			1,955				8.1				444			2.6					1,511			340.3
Data processing fees			1,571				6.5				598			3.4					973			162.7
Pennsylvania shares tax			714				3.0				332			1.9					382			115.1
Professional fees			441				1.8				191			1.1					250			130.9
Advertising expense			274				1.1				141			0.8					133			94.3
FDIC deposit insurance			469				1.9				263			1.5					206			78.3
Other real estate owned expense (income), net			(2	)			(0.0	)			(14	)		(0.1		)			12			(85.7		)
Merger-related expenses			-				-				4,120			24.1					(4,120	)		(100.0		)
ATM expense			730				3.0				337			2.0					393			116.6
Other			2,770				11.5				1,664			9.7					1,106			66.5
Total non-interest expense		$	24,100				100.0	%		$	17,113			100.0		%		$	6,987			40.8		%

Provision for Income Taxes: The Company recorded an income tax provision of $1.13 million in the third quarter of 2026, an increase of $1.02 million, or 974.3 percent, compared to $105 thousand in the third quarter of 2025. The Company recorded income tax provision of $3.35 million for the nine months ended September 30, 2026, an increase of $2.42 million, or 259.5 percent, compared to $932 thousand for the nine months ended September 30, 2025. The increase in income tax provision for the three and nine months ended September 30, 2026 when compared to the same periods in 2025 is due to non-taxable income and nondeductible merger expenses recorded in the third quarter of 2025. Included in non-interest income for 2025 is the bargain purchase gain of $17.83 million, which is non-taxable as result of the tax-free exchange associated with the merger with NUBC. The Company's effective tax rate increased to 17.1% and 17.7% for the three and nine months ended September 30, 2026, compared to 0.8% and 5.1% for the three and nine months ended September 30, 2025.

Liquidity

The Company's liquidity, represented by cash and due from banks, is a product of its operating, investing and financing activities. The Company's primary source of funds are deposits, securities sold under agreements to repurchase, principal repayments of securities and outstanding loans, funds provided from operations, federal fund borrowings from Atlantic Community Bankers Bank and short and long term Federal Home Loan Bank ("FHLB") advances. In addition, the Company invests excess funds in short-term interest earning assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and repayments on loans and mortgage-backed securities.

The Company strives to maintain sufficient liquidity to fund operations, loan demand and to satisfy fluctuations in deposit levels. The Company is required to have enough investments to qualify as liquid assets in order to maintain sufficient liquidity to ensure safe and sound banking operations. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. The Company attempts to maintain adequate but not excessive liquidity, and liquidity management is both a daily and long-term function of its business management. The Company manages its liquidity in accordance with a board of directors-approved asset liability policy, which is administered by its asset-liability committee ("ALCO"). ALCO reports interest rate sensitivity, liquidity, capital and investment-related matters on a quarterly basis to the Company's board of directors.

The Company reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and saving withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At September 30, 2026, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $498.26 million.

Liquidity management is required to ensure that adequate funds will be available to meet anticipated and unanticipated deposit withdrawals, debt service payments, investment commitments, commercial and consumer loan demand, and ongoing operating expenses. Funding sources include principal repayments on loans, sale of assets, growth in time and core deposits, short and long-term borrowings, investment securities coming due, loan prepayments and repurchase agreements. Regular loan payments are a dependable source of funds, while the sale of investment securities, deposit growth and loan prepayments are significantly influenced by general economic conditions and the level of interest rates.

The Company manages liquidity on a daily basis. Management believes that the liquidity is sufficient to meet present and future financial obligations and commitments on a timely basis.

Interest Rate Risk Management

Interest rate risk is the risk to earnings or capital arising from movements in market interest rates. When interest-earning assets and interest-bearing liabilities reprice at different times or in different degrees or when call options are exercised, in response to change in market interest rates, future net interest income is impacted. When interest-earning assets mature or re-price more quickly than interest-bearing liabilities, the balance sheet is considered "asset sensitive". An asset sensitive position will produce relatively more net interest income when interest rates rise and less net interest income when rates decline. Conversely, when interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, the balance sheet is considered "liability sensitive". A liability sensitive position will produce relatively more net interest income when interest rates fall and less net interest income when rates increase. The Company considers interest rate risk to be a significant risk and manages its exposure through policies approved by its ALCO and Board of Directors. ALCO reviews periodic reports of the Company's interest rate risk position, including results of simulation analysis. Simulation analysis applies interest rate shocks, hypothetical immediate shifts in interest rates, to the Company's financial instruments and determines the impact to projected one-year net interest income and other key measures. The following table shows the results of rate shocks on net interest income projected for one year from the reporting date. For purposes of this analysis, noninterest income and expenses are assumed to be flat.

		Changes in Projected Net Interest Income
		as of September 30,
Rate Shift (basis points)		2026				2025
400			-1.68	%			-4.85	%
300			-0.76	%			-3.30	%
200			0.06	%			-1.77	%
100			46.00	%			-0.62	%
(-)100			-23.00	%			1.05	%
(-)200			-3.43	%			-0.31	%
(-)300			-8.79	%			-3.73	%
(-)400			-11.39	%			-4.54	%

Results of the net interest income simulation indicate that the Company is liability sensitive as of September 30, 2026 and September 30, 2025. The simulation process requires certain estimates and assumptions including, but not limited to, asset growth, the mix of assets and liabilities, the interest rate environment and local and national economic conditions. Asset growth and the mix of assets can, to a degree, be influenced by management. Other areas, such as the interest rate environment and economic factors, cannot be controlled. In addition, competitive pressures can make it difficult to price deposits and loans in a manner that optimally minimizes interest rate risk. Actual results will differ from simulated results due to the timing, magnitude, and frequency of interest rate changes; changes in market conditions and customer behavior; and changes in management strategies.

While the asset/liability management program is designed to protect the Company over the long term, it does not provide near-term protection from interest rate shocks, as interest rate sensitive assets and liabilities do not by their nature move up or down in tandem in response to changes in the overall rate environment. The Company's profitability in the near-term may be temporarily negatively affected in a period of rapidly rising or rapidly falling rates, because it takes some time for the Company's portfolio to reflect changes to offering rates in response to a new interest rate environment.