CCFN 10-K & 10-Q changes, risk factors and insider trading

The Corporation’s business is directly impacted by factors such as economic, political and market conditions, broad trends in industry and finance, legislative and and regulatory changes, changes in government monetary and fiscal policies and inflation, including, without limitation, the impacts of tariffs, sanctions and other trade policies of the United States, a deterioration of the credit rating for United States long-term sovereign debt or the impact of uncertain or changing political conditions, including federal government shutdowns and uncertainty regarding United States fiscal debt, deficit and budget matters, all of which are beyond the Corporation’s control. Any deterioration in economic conditions, whether caused by national or local concerns, and in particular in Pennsylvania, could result in the following consequences, any of which could hurt the Corporation’s businessbusiness, profitability and asset quality materially: loan delinquencies may increase; problem assets and foreclosures may increase; demand for the Corporation’s products and services may decrease; low cost or noninterest bearing deposits may decrease; and collateral for loans made by the Corporation, especially real estate, may decline in value, reducing customers’ borrowing power and reducing the value of assets and collateral associated with the Corporation’s existing loans.

The Corporation is a customer-focused and relationship-driven organization. The Corporation expects its future growth to be driven in a large part by the relationships maintained with its customers by its chief executive officer and by other senior officers. The unexpected loss of any of the Corporation’s key employees could have a material adverse effect on its business and operations, which would have an adverse effect on its business, results of operations, financial condition, and the value of its securities. While the Corporation’s and the Bank’s Executive Chairman recently retired from active day-to-day service as a member of senior management of the Corporation and the Bank, because he will continue on as Chairman of the boards of directors of both the Corporation and the Bank, the Corporation does not anticipate that his retirement will have an adverse effect on business, operations, financial condition or the value of the Corporation’s securities.

The Corporation Corporation is in the business of providing customary retail, commercial banking and financial services to individuals, businesses and local governments through its 22 branch offices operated by Journey Bank, the Corporation’s wholly-owned subsidiary. The Corporation’s 22 branch offices are operated in Clinton, Columbia, Lycoming, Montour and Northumberland counties in centralNorthcentral Pennsylvania.

The following discussion and analysis analysis should be read in conjunction with the detailed information and consolidated financial statements, including notes thereto, included elsewhere elsewhere in this report. Our consolidated financial condition and results of operations are essentially those of our subsidiary, theJourney Bank. Bank. Therefore, the analysis that follows is directed to the performance of the Bank.

The Corporation defines its critical accounting policies,policies in accordance with U.S. GAAP. U.S. GAAP requires the Corporation to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which those principles are applied. Application of assumptions different than those used by the Corporation could result in material changes in the Corporation’s financial position or results of operations. The Corporation believes its policies governing the determination of the allowance for credit losses, the fair value of available-for-sale debt securities and the fair values of assets acquired and liabilities assumed in business combinations are critical accounting policies. The Corporation’s management has reviewed and approved these critical accounting policies and has discussed these policies with its Audit Committee. The Corporation believes the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments are as follows:

Allowance for Credit Losses Losses (ACL) -– Loans

AsFinancial ofAccounting JanuaryStandards 1,Board 2023, the Corporation adopted(“FASB”) Accounting Standards UpdateCodification (“ASUASC”) 2016-13,326, Financial Instruments – – Credit LossesLosses, (Topicprovides 326): “Measurement of Credit Lossesguidance on Financial Instruments,” which replaced the current lossaccounting impairment methodology under U.S. GAAP with a methodology that reflects expectedfor credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASC 326 requires consideration of a broader broad range of reasonable and supportable information to form credit loss estimates in an effort to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13, commonlyCommonly referred to as Current Expected Credit Losses (“CECL”), ASC 326 requires a financial asset (or a group of financial assets) to be measured at an amortized cost basis and presented at the net amount expected to be collected. TheASC amendments326 inaffects this update affect financial assets and net investment in leases that are not accounted for at fair value through net income, including such financial assets as loans, debt securities, trade receivables, net investments in leases, off-balance-sheetoff-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Upon adoption of ASU 2016-13 on January 1, 2023, the Corporation recorded an incremental decrease in the ACL through a cumulative effect adjustment to equity, net of tax, with subsequent adjustments charged to earnings through a provision for credit losses.

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 20242025 to December 31, 2024,2025, the level of the ACL increased from $9.3$9.9 million to $9.9$10.0 million and the ACL to total loans increased decreased from 0.87%0.88% to 0.88%. 0.85%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 1, “Summary of Significant Accounting Policies” and Note 54 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Consolidated Financial Statements which are included in Part II of this Annual Report on Form 10-K for additional qualitative and quantitative information about the Corporation’s ACL.

Total assets at December 31, 2024,2025 amounted wereto $1.596$1.673 billion, aan decreaseincrease of $43.8$77.2 million, or 2.7%4.8% from $1.640$1.596 billion at December 31, 2023.2024. The change in total assets assets primarily reflected decreasesincreases in cash and cash equivalents, available-for-sale debt securities, restrictedand investmentloans receivable, partially offset by a decrease in bank stocks and deferred tax assets, net,net. partiallyCash offsetand bycash anequivalents increaseincreased in$31.2 loansmillion, receivable. Available-for-saleavailable-for-sale debt securities decreased $90.1 million,increased restricted investment in bank stocks decreased $3.3$4.0 million and deferredloans receivable, not held for sale, increased by $51.6 million. Deferred tax assets, net, decreased $2.6 million. Gross loans receivable increased $57.5$4.0 million. Total liabilities at December 31, 2024,2025, were $1.430$1.481 billion, aan decreaseincrease of $56.4$51.1 million, or 3.8% 3.6% from $1.486$1.430 billion at December 31, 2023. 2024. Deposit balances increased by $141.8$120.3 million, short-term borrowings decreased $184.1 $55.9 million and long-term borrowings decreased $14.9$15.0 million since December 31, 2023.2024.

Total average assets increased 51.3%2.0% from $1.053 billion for the year ended December 31, 2023, to $1.593 billion for the year ended December 31, 2024, primarilyto related to$1.625 billion for the MBFyear merger.ended December 31, 2025. Average earning assets were $1.517 billion for the year ended December 31, 2025 and $1.491 billion for the year ended December 31, 2024 and $1.009 billion for the year ended December 31, 2023.2024. Average interest-bearing liabilities were $1.159 billion for each of the yearyears ended December 31, 20242025 and $763.4 million for the year ended December 31, 2023.2024.

GrossCash loansand notcash heldequivalents forincreased $31.2 sale increasedmillion 5.4%or to179.3% $1.126from billion$17.4 million at December 31, 2024 fromto $1.068$48.5 billionmillion at December 31, 2023.2025. This increase is primarily related to toincreased correspondent bank balances resulting from cash flows from available-for-sale debt securities as well as strong loandeposit growth demand during the year ended December 31, 2024.2025.

Long-termGross borrowingsloans werenot held for sale $55.5increased million4.6% to $1.178 billion at December 31, 20242025 comparedfrom to$1.126 $70.5 millionbillion at December 31, 2023.2024. This decreaseincrease is primarily related to $15.2strong millionloan in long-term borrowing maturitiesdemand during the year ended December 31, 2024.2025.

TotalDeferred stockholder’stax assets, net, decreased equity$4.0 increasedmillion byto $12.6 million, or 8.2%, from $153.8$6.0 million at December 31, 2023,2025 tofrom $166.4$10.0 million at December 31, 2024. TheThis increase decrease is primarily attributablerelated to earnings, net of cash dividends, along with a decrease decreases in accumulateddeferred othertax comprehensiveassets loss duerelated to changes inunrealized thelosses fair values ofon available-for-sale debt securities. Accumulated other comprehensive loss amounted to $13.9 million as of December 31, 2024securities and $15.0purchase millionaccounting asadjustments of December 31, 2023. These increases were partially offset by an increase in treasury stock of $1.5 million related to a repurchase duringfor the year ended December 31, 2024.2025.

At December 31, 20242025, and December 31, 2023,2024, the Corporation held $1.4 and $1.3 million, respectively,million in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the years ended December 31, 20242025 and 2023 2024:

As of December 31, 2024,2025, commercial real estate loans totaled $371.7$403.6 million or 33.0%34.3% of total gross loans. Of this amount commercial mortgage loans represented $325.9$355.6 million or 28.9%30.2% of total gross loans and student housing loans represented $45.8$48.0 million or 4.1% of total gross loans. The following table presents the distribution of commercial mortgagereal estate loans and related percentage of the total loan portfolio as of December December 31, 20242025 and December 31, 20232024:

Total non-performing assets amounted amountedto $12.0 million, or 0.72% of total assets at December 31, 2025, as compared to $10,117,000,$10.1 million, or 0.63% of total assets at December 31, 2024, as compared to $4,476,000, or 0.27% of total assets at December 31, 2023.2024. For the year ended December 31, 2024,2025, the Corporation experienced increases in non-accrual loans in all majormultiple loan classifications, however, the most significant increasesincrease werewas in commercial real estate and residential real estate loans which increased $1,415,000$1.3 and $3,785,000, respectively.million.

Increases in residentialResidential real estate non-accrual loans wereare generally applicablerelated to a homogenous population of well secured loans collateralized by 1-4 family residential properties. With respect to commercial real estate non-accrual loans, the Corporation has experienced a limited number of large commercial relationships relationships that have required significant monitoring and workout efforts. As a result, these relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period.

See NoteNotes 1 and 54 within the Corporation’s Corporation’s Notes to the Consolidated Financial Statements which are included in this Annual Report on Form 10-K for more information regarding the Corporation’s allowance for credit losses as of December 31, 2024.2025.

The Corporation believes its deposit deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the years ended December 31, 2024,2025, and 2023,2024, was 2.30%2.22% and 0.91%,2.30%, respectively. The increaseddecreased cost was primarily attributable to thedecreased increases inmarket rates during 2024 and increased pricing competition.2025.

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 10.3%2.4% and 25.9%10.3% of total interest-bearing liabilities for the years ended December 31, 20242025 and 2023,2024, respectively. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 as discussed above.2025.

Net income in 20242025 amounted to $24.2 million, or $6.85 per share, an increase of $5.2 million compared to $19.0 million, or $5.33 per share, anin 2024. The increase of $15.6 million compared to $3.4 million, or $1.49 per share, in 2023. The increase in net income for 20242025 compared to 20232024 was primarily attributable to a significant increase in net interest incomeincome, partially alongoffset withby nonrecurring expenses associated with the MBF mergerincreases in 2023.non-interest Pretaxexpense merger-relatedand expensesincome recorded in 2023 were $3.0 million, compared to $241,000 in 2024. Also, during the fourth quarter 2023, the Corporation recorded a one-time pretaxtax provision for credit losses of $2.9 million for acquired non-PCD loans.expense.

The annual annualized return on average assets was 1.19%1.49% in 20242025 compared to 0.32%1.19% in 2023.2024. The annualized return on average equity was 13.57% wasin 2025 compared to 11.88% in 2024 compared to 3.48% in 2023.2024. The Corporation declared and paid dividends to holders of common stock of $1.76$2.30 per share share in 20242025 and $1.71$1.76 per share in 2023.2024.

Tax-equivalent net interest income increased $28.0$10.2 million, or 119.0%,19.7%, to $61.8 million in 2025 compared to $51.6 million in 2024 compared to $23.6 million in2024. 2023. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, partiallyalong offsetwith bya an increasedecrease in interest expense which resulted primarily from ana increasesignificant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing deposits and increased cost of funds.liabilities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 11262 basis points to 3.46%4.08% in 20242025 compared to 2.34%3.46% in 2023,2024, which was largely caused by increases in yields on earning assets outpacingalong thewith increasea decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 10166 basis points to 2.86%3.52% in 20242025 compared to 1.85%2.86% in 2023.2024.

Tax-equivalent interest income increased $44.2$6.3 million, or 114.4%,7.6%, to $89.2 million for the year ended December 31, 2025 from $82.9 million infor the 2024same from $38.7 millionperiod in 2023,2024, which was largely caused by significant growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $482.1$25.1 million, or 47.8%,1.7%, to $1.5$1.517 billion infor 2024year ended December 31, 2025 from $1.0$1.491 billion for the same period in 2023,2024, resulting in a corresponding increase to tax-equivalent interest income of $27.1$3.4 million. Specifically, average loans increased $493.7$50.2 million, or 79.3%,4.5%, to $1.1$1.166 billion for the year ended December 31, 2025 from $1.116 billion for the same period in 2024 from $622.5 million in 2023,2024, which reflected the MBF merger as well as strong organic loan growth. TaxableTotal investment securities averaged $291.0 $331.6 million infor 2024,the year ended December 31, 2025, a decrease of $63.5$38.3 million, or 17.9%,10.3%, compared to $354.4$369.9 million infor 2023,the and tax-exemptsame securities averaged $78.9 millionperiod in 2024, anwhich increasecontributed to a net decrease of $55.4 million, or 235.9%, compared to $23.5 million in 2023, which contributed to an increase of $1.5$0.7 million in tax-equivalent interest income. The tax-equivalent yield on earning assets increased 173 basis points to 5.56% in 2024 from 3.83% in 2023, which resulted in a corresponding increase in tax-equivalent interest income of $17.1 million. The Corporation’s tax-equivalent yield on loans increased 14432 basis points to 6.58%5.88% for the year ended December 31, 2025 from 5.56% for the same period in 20242024, comparedwhich to 5.14% in 2023, resultingresulted in a corresponding increase in tax-equivalent interest income of $15.7$2.9 million. The Corporation's tax-equivalent yield on loans increased 11 basis points to 6.69% for the year ended December 31, 2025 compared to 6.58% for the same period in 2024, resulting in a corresponding increase in tax-equivalent interest income of $1.2 million, due primarily to netthe accretionorigination of loannew fairloans valueat adjustments recordedhigher inyields conjunction with the MBF merger as well asand the continued repricing of existing variable rate loans in the Corporation’s portfolio. Meanwhile, the tax-equivalent yield on investment securities increased 7967 basis points to 3.16% for the year ended December 31, 2025 from 2.49% for the same period in 2024 from 1.70% in 2023 and caused a corresponding increase to tax-equivalent interest income of $1.3$1.9 million.

Interest expense increaseddecreased $16.2$3.9 million, or 107.3%,12.3%, to $27.4 million for the year ended December 31, 2025 from $31.3 million for the same period in 2024 from $15.1 million in 2023,2024, which was primarily from ana increase significant decrease in fundingaverage costs,borrowings, coupled with ana increaselower inoverall averagecost depositsof resulting from the MBF merger.funds. Average borrowed funds, which is largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $184.5$75.0 million infor 2024,the year ended December 31, 2025, a decrease of $35.9 $109.6 million from $220.4$184.5 million for the same period in 2023.2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $1.7$5.3 million. Total average interest-bearing deposits increased $431.1 $110.1 million, or 79.4%,11.3%, to $1.084 billion for the year ended December 31, 2025, compared to $974.1 million for the same period in 2024, compared to $543.0 million for 2023, which resulted in a corresponding increase in interest expense of $5.6$2.7 million. The Corporation experienced higher funding costs in 2023 and 2024 as a result of rising market rates and increased competition. For the year ended December 31, 2024,2025, the Corporation’s Corporation's cost of funds increaseddecreased 7233 basis points to 2.70%2.37% from 1.98%2.70% for the same period in 2024. The average rate paid on total borrowings decreased 40 basis points to 4.41% for the year ended December 31, 2023,2025 from 4.81% for the same period in 2024. The average rate paid on total interest-bearing deposits decreased 8 basis points to 2.22% for the year ended December 31, 2025 from 2.30% for the same period in 2024, which resulted resulted in a corresponding increasedecrease in interest expense of $12.3$1.0 million.

YEARSYEAR ENDED DECEMBER 31,

Provision for Credit Losses - Loans

ForThe provision amounts for the year years ended December 31, 2024,2025 the Corporation recorded a $847,000 provision for credit losses on loans compared to $2.6 million for the year ended December 31, 2023. The provision forand 2024 primarily reflectsreflect an increase in volume in the loan portfolioportfolio, alongincreases within non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staffstaff, and changes in lending policies and procedures.procedures Theand provisionforecasted economic for 2023 was primarily as a result of a $2.9 million one-time provision related to purchased non-PCD loans acquired as part of the MBF merger, as well as a net credit due to other factors.conditions.

See NoteNotes 1 and 54 within the Corporation’s Corporation’s Notes to the Consolidated Financial Statements which are included in this Annual Report on Form 10-K for more information regarding the Corporation’s allowance for credit losses as of December 31, 2024.2025.

TheLiquidity Bank’sis liquidity,the ability to quickly represented byraise cash and due from banks, isat a productreasonable ofcost. itsAn operating,adequate investingliquidity position permits the Bank to pay creditors, compensate for unforeseen deposit fluctuations and financingfund activities.unexpected loan demand. The Bank’s primary sources of funds are deposits, securities sold under agreements to repurchase, principal repayments of securities and outstanding loans, funds provided from operations, and day-to-day FHLB – Pittsburgh borrowings. In addition, the Bank 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 statement statement of cash flows presents the change in cash and cash equivalents from operating, investing and financing activities. Cash and due from banks and interest-bearing deposits in other banks, which comprise cash and cash equivalents, are the Corporation’s most liquid assets. Cash and cash equivalents totaled $17.4$48.5 million at December 31, 2024,2025, aan decreaseincrease of $1.0$31.2 million, or 5.4%,million from $18.4$17.4 million at December 31, 2023,2024, as net cash inflows reported from operating and investingfinancing activities were less thanoutpaced net cash outflows from financinginvesting activities.activities for the year ended December 31, 2025.

Net cash inflowsoutflows from investing activities providedused $48.5$33.1 million of cash and cash equivalents during the year ended December 31, 2024.2025. Accounting Accounting for the majority of the net cash inflowsoutflows was $107.1a net increase in loans of $43.1 million relatedwhich towas partially offset by a net cash inflow from purchases, proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities. This was partially offset by purchases of available-for-sale debt securities of $14.9$9.4 million and a net increase in loans and leases of $47.4 million, which reflected strong loan demand.million. Financing activities usedprovided $66.4$40.9 million in net cash, which resulted primarily from a decrease in short-term borrowings, consisting of customer repurchase agreements and short-term FHLB borrowings, of $184.1$55.9 million along with a repayment of long-term borrowings of $15.2 million. These outflows were offset by a $140.6$120.0 million increase in deposits. These changes were primarily related to a strategic initiative to reposition customer repurchase agreements into core deposit accounts. Operating activities include net income, adjusted for the effects of non-cash transactions including, among others, depreciation and amortization and the provision for credit losses, and is the primary source of cash flows from operations. For the year ended December 31, 2024,2025, operating activities provided the Corporation with $16.9$23.3 million in net cash, which primarily reflected net income of $19.0$24.2 million.

The Corporation Corporation regularly analyzes its ability to generate adequate amounts of cash to meet its short and long-term cash requirements and plans. As part of its quarterly asset liability management procedures, the Corporation performs liquidity cash flow forecasts in various base level and stress scenarios to monitor future cash needs. As of December 31, 2024, the Corporation is expected to maintain a level cash balance over the next 12 months. The Corporation has not identified any known demands, commitments, events or uncertainties that that would result or that are reasonably likely to result in its liquidity position materially increasing or decreasing over the next 12 months. The Corporation’s long-term cash needs are regularly analyzed through its strategic planning process, which includes a detailed review of liquidity and funding needs.

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2026 to MarchJune 31,30, 2026, the level of the ACL remainedincreased consistent atfrom $10.0 million to $10.3 million and the ACL to total loans decreasedremained from 0.85%consistent toat 0.84%.0.85%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

The Corporation’s other intangible assets consist primarily of core deposit intangibles. The calculation of core deposit intangibles are based on significant judgements. Core deposit intangibles are calculated using a discounted cash flow model based on various factors including discount rate, attrition rate, interest rate, cost of alternative funds and net maintenance costs. Core deposit intangibles are amortized over the expected life of each acquired core deposit type, discounted at a long-term market oriented after-tax rate of return. Core deposit intangibles are reviewed for impairment when indicators of impairment are present. Indicators of impairment may include significant runoff or attrition. Management is not aware of any indicators of impairment related to core deposit intangibles as of MarchJune 31,30, 2026 or December 31, 2025.

Total assets at MarchJune 31, 30, 2026, were $1.717$1.672 billion, ana increasedecrease of $44.1$0.9 million, or 2.6%0.1% from $1.673 billion at December 31, 2025. The change in total assets primarily reflects increasesa decrease in cash and cash equivalents,equivalents available-for-saleoffset debtby securitiesan andincrease in loans receivable. Cash and cash equivalents increased $11.9decreased million, available-for-sale debt securities increased $27.9$28.4 million and gross loans receivable increased $3.9$28.6 million. Total liabilities at MarchJune 31,30, 2026, were $1.525$1.474 billion, ana increasedecrease of $44.6$7.0 million, or 3.0%0.5% from $1.481 billion at December 31, 2025. Deposit balances increased by $40.8$20.8 million, short-term borrowings increased by $11.8 million and long-term borrowings decreased by $40.6 million since December 31, 2025.

Total average assets increased 5.4% 5.1% from $1.601$1.605 billion for the threesix months ended MarchJune 31,30, 2025, to $1.688$1.687 billion for the threesix months ended MarchJune 31,30, 2026. Average earning assets were $1.571$1.570 billion for the threesix months ended MarchJune 31,30, 2026 and $1.499$1.500 billion for the threesix months ended MarchJune 31,30, 2025. Average interest-bearing liabilities were $1.197$1.194 billion for the threesix months ended MarchJune 31,30, 2026 and $1.154$1.150 billion for the threesix months ended MarchJune 31,30, 2025.

Cash and cash equivalents increased $11.9decreased $28.4 million or 24.5%58.5% from $48.5 million at December 31, 2025 to $60.4$20.1 million at MarchJune 31,30, 2026. This increasedecrease is primarily directly related to increasedthe correspondentprepayment bankof balanceslong-term resulting from strong deposit growthborrowings during the threesix months ended MarchJune 31,30, 2026.2026, which is discussed in further detail below.

Gross loans receivable held for investment increased $3.9$28.6 million or 0.3%2.4% to $1.182$1.206 billion at MarchJune 31,30, 2026 from $1.178 billion at December 31, 2025. New loan originations for the threesix months ended MarchJune 31,30, 2026 totaled $11.8$34.4 million. Partially offsetting this increase was the sale of approximately $9.8 million in mortgage loans for the threesix months ended MarchJune 31,30, 2026. On January 28, 2026, the Bank entered into an Asset Purchase and Interim Servicing Agreement pursuant to which the Bank agreed to sell a portfolio of 82 individual delinquent, nonperforming or reperforming 1-4 family residential mortgage loans. The outstanding principal balance of the loans was approximately $9.8 million. The sale resulted in reductions in past-due and nonaccrual residential real estate loans comparing respective MarchJune 31,30, 2026 and December 31, 2025 amounts.

Interest-bearing deposits increased $34.6$20.5 million to $1.170$1.156 billion at MarchJune 31,30, 2026 from $1.136 billion at December 31, 2025. Noninterest-bearing deposits increased 2.2% 0.1% from $277.0 million at December 31, 2025 to $283.2$277.4 million at MarchJune 31,30, 2026. The increase in total deposits during the threesix months ended MarchJune 31,30, 2026 was a result of strong organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

Total stockholder’s equity decreasedincreased by $0.5$6.1 million, or 0.3%,3.2%, from $192.5 million at December 31, 2025, to $192.1$198.7 million at MarchJune 31,30, 2026. This decrease increase is primarily attributable to earnings, net of cash dividends, offset by an increase in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $6.6$5.5 million as of MarchJune 31, 30, 2026 and $4.0 million as of December 31, 2025.

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreasedincreased from 82.6% as of December 31, 2025 to 80.6%83.4% as of MarchJune 31,30, 2026 due to the asset/liability mix changes noted above, and remains within internal policy limits.

The Corporation’s investment securities portfolio provides a source of liquidity needed to meet expected loan demand and interest income to increase profitability. Additionally, the investment securities portfolio is used to meet pledging requirements to secure public deposits, customer repurchase agreements and for other purposes. Debt securities are classified as either available-for-sale or held-to-maturity at the time of purchase based on management's intent. Available-for-sale securities are carried at fair value, with unrealized holding gains and losses reported as a component of stockholders’ equity in accumulated other comprehensive income (loss), net of tax, while held-to-maturity securities are carried at amortized cost. At MarchJune 31,30, 2026 and December 31, 2025, all debt securities were classified as available-for-sale. Equity securities with readily determinable fair values are carried at fair value, with gains and losses due to fluctuations in market value included in the Consolidated Statements of Income. Securities with limited marketability and/or restrictions, such as FHLB of Pittsburgh stock, are carried at cost. Decisions to purchase or sell investment securities are based upon management’s current assessment of long and short-term economic and financial conditions, including the interest rate environment and asset/liability management, liquidity and tax-planning strategies.

At March 31,June 30, 2026, the investment portfolio was comprised principally of available-for-sale debt securities including, fixed-rate, taxable and tax-exempt obligations of state and political subdivisions and fixed-rate and floating-rate securities issued by U.S. government or U.S. government-sponsored agencies, which include agencies, mortgage-backed securities and collateralized mortgage obligations, or CMOs. Additionally, the Corporation holds equity investments in the stock of certain publicly traded bank holding companies. Except for U.S. government and government-sponsored agencies, there were no securities of any individual issuer that exceeded 10.0% of stockholders’ equity as of MarchJune 31,30, 2026.

The majority of the Corporation's debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security's value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder's equity, net of deferred income taxes. At MarchJune 31,30, 2026, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $6.6$5.5 million, net of deferred income taxes of $1.7 $1.5 million, an increase of $2.5$1.5 million compared to the net unrealized holding loss of $4.0 million, net of deferred income taxes of $1.1 million, at December 31, 2025. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation's regulatory capital ratios.

The following table presents the carrying value of available-for-sale debt securities, at fair value at MarchJune 31,30, 2026 and December 31, 2025:

The following table presents the weighted-average yields on available-for-sale debt securities by major category and maturity period at MarchJune 31,30, 2026. Yields are calculated on the basis of the amortized cost and weighted for the scheduled maturity of each security. Because mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity date, they are not included in the maturity categories in the following summary.

At MarchJune 31,30, 2026 and December 31, 2025, the Corporation held $1.5$1.6 million and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended March 31,June 30, 2026 and 2025:

See Note 2 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding Corporation’s investment portfolio as of MarchJune 31,30, 2026.

Gross loans receivable increased 0.3% 2.4% from $1.178 billion at December 31, 2025 to $1.182$1.206 billion at MarchJune 31,30, 2026. The percentage distribution in the loan portfolio is shown in the tables below:

Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Our lending activity is heavily concentrated in the geographic market areas we serve. This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management and are monitored on an ongoing basis. As of MarchJune 31,30, 2026 and December 31, 2025, there were no concentrations of loans exceeding 10% of total loans other than the categories of loans disclosed in the table above. We believe our loan portfolio is diversified relative to industry concentrations across the various loan portfolio categories.

Banking regulators have established guidelines of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending that management monitors as part of the risk management process. The construction concentration ratio is a percentage of the outstanding construction and land development loans to total tier 1 capital plus allowance for credit losses. The commercial real estate concentration ratio is a percentage of the outstanding balance of non-owner occupied commercial real estate, multifamily, and construction and land development loans to tier 1 capital plus allowance for credit losses. At March 31,June 30, 2026 and December 31, 2025, the Bank’s exposure to commercial real estate was well below these guidelines.

As of MarchJune 31,30, 2026, commercial real estate loans totaled $417.7$435.7 million or 35.4%36.1% of total gross loans. Of this amount commercial mortgage loans represented $368.1$386.1 million or 31.2%32.0% of total gross loans and student housing loans represented $49.6$49.7 million or 4.2%4.1% of total gross loans. The following table presents the distribution of commercial real estate loans and related percentage of the total loan portfolio as of March 31,June 30, 2026 and December 31, 2025:

The following table presents the maturity distribution and interest rate information of the loan portfolio by major category as of March 31,June 30, 2026:

See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s loan portfolio as of MarchJune 31,30, 2026.

The following table presents information about non-performing assets, as of MarchJune 31,30, 2026 and December 31, 2025:

Total non-performing assets amounted to $9,360,000,$8,881,000, or 0.55%0.53% of total assets at MarchJune 31,30, 2026, as compared to $11,978,000, or 0.72% of total assets at December 31, 2025. For the threesix months ended MarchJune 31,30, 2026, the Corporation experienced decreasesa significant decrease in non-accrualnonaccrual loansloans, in all major loan classifications, however, the most significant decreaseswhich was inlargely driven by nonaccrual residential real estate loans which decreased $2.3$3.0 million, primarily related to the loan sale mentioned above.previously.

Management believes it has been conservative in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the allowances calculated as of MarchJune 31,30, 2026. Management continues to closely monitor its loan relationships for credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

The allowance for credit losses was $10.3 million and $10.0 million at bothJune March 31,30, 2026 and December 31, 2025.2025, respectively. The allowance equaled 0.84%0.85% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at MarchJune 31,30, 2026 as compared to 0.85% atand December 31, 2025. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies.

The following tables present the allocation of the allowance for credit losses as of MarchJune 31,30, 2026 and December 31, 2025:

There were no material changes to the allowance for credit losses in total or on an individual segment basis from December 31, 2025 to MarchJune 31,30, 2026. The largest changes on an individual segment basis from December 31, 2025 to MarchJune 31,30, 2026 include a decrease in commercial and industrial loans from $1,037,000, or 10.4% of the total allowance, at December 31, 2025 to $895,000,$765,000, or 9.0%7.1% of the total allowance, at MarchJune 31,30, 2026, as well as an increase in commercial real estate loans from $6,148,000, or 61.7% of the total allowance, at December 31, 2025 to $6,323,000,$6,528,000, or 63.4%63.6% of the total allowance, at MarchJune 31,30, 2026. The decrease for commercial and industrial loans is primarily related to the impact of decreases in non-accrual loans, which impacted probability of default calculations, as well as a reduction in total loan volume. The increase for commercial real estate loans is primarily related to increases in loan volume and changes in qualitative factors, partially offset by the impact of lower individually evaluated allowances related to student housing loans due to a decrease in loan balances.

See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s allowance for credit losses as of MarchJune 31,30, 2026.

Deposits are the primary source of funds for the Corporation’s lending and investing activities. The Corporation provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts and time deposits. These accounts generally earn interest at rates the Corporation establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Corporation’s primary focus is on establishing customer relationships to attract core deposits, at times, the Corporation may use brokered deposits and other wholesale deposits to supplement its funding sources. As of MarchJune 31,30, 2026, the Corporation held no brokered deposits.

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively:

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three and six months ended MarchJune 31,30, 2026 was 2.08% and 2.09%, respectively. The average cost of interest-bearing deposits for the three and six months ended June 30, 2025 was 2.09%2.26% and 2.25%, respectively.

At March 31,June 30, 2026, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $417.0$396.9 million. Of this amount, $149.2$152.8 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $109.9$111.0 million at MarchJune 31,30, 2026.

See Note 4 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s deposits as of MarchJune 31,30, 2026.

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 1.1% of total average interest-bearing liabilities for both the three and 4.7%six months ended June 30, 2026. Average short-term borrowings amounted to 2.2% and 3.4% of total average interest-bearing liabilities for the three and six months ended MarchJune 31, 2026 and30, 2025, respectively. This reduction was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2025 and 2026.

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $821.3$833.5 million at MarchJune 31, 30, 2026. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $592.2$600.8 million at MarchJune 31,30, 2026. The unused portion of these lines of credit was $545.0$577.0 million at March 31,June 30, 2026.

See Note 5 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s borrowings as of MarchJune 31,30, 2026.

Management believes, as of MarchJune 31,30, 2026, that Journey Bank meets all capital adequacy requirements to which it is subject. Management annually performs stress testing on its regulatory capital levels and expects Journey Bank to maintain capital levels that exceed the regulatory standards for well-capitalized institutions for the next 12 months and for the foreseeable future.

The following table reflects the Bank’s actual capital amounts and ratios at MarchJune 31,30, 2026 and December 31, 2025:

Net income for the three months ended MarchJune 31,30, 2026 was $7.2 million, or $2.02$0.67 per share, compared to $4.3$5.8 million, or $1.23$0.54 per share, for the three months ended March 31,June 30, 2025. Net income for the six months ended June 30, 2026 was $14.3 million, or $1.35 per share, compared to $10.1 million, or $0.95 per share, for the six months ended June 30, 2025. The increase in net income for the three and six months ended MarchJune 31,30, 2026, compared to the same period in 2025, was primarily attributable to a significant increase in net interest income as well as a decrease in non-interest expense.income.

Net interest income increased $2.6 $2.0 million, or 18.6%13.2% to $16.4$16.8 million for the three months ended MarchJune 31,30, 2026, from $13.9$14.8 million for the same period in 2025. Non-interest income was $2.5$2.6 million for the three months ended MarchJune 31,30, 2026, an increase of $0.1$0.3 million, or 1.8%, 14.4%, from $2.4$2.2 million for the same period in 2025, which primarily reflected a decreaseincreases in (loss) gain on salesettlement of loansbank-owned offsetlife byinsurance increases in gains (losses) on marketable equity securitiesclaims and other non-interest income.income offset by increases in realized losses on available-for-sale debt securities. Non-interest expense was $10.2$10.4 million for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of $0.9$0.6 million, or 8.1%,5.7%, from $11.1$9.9 million for the same period in 2025, which was primarily related to decreasesincreases in salaries and employee benefits and automated teller machine and interchange expenses partially offset by ana increase decrease in professionaldata fees.processing and telecommunications.

For the three and six months ended MarchJune 31,30, 2026, the annualized return on average assets was 1.72%,1.70% and 1.71%, respectively, compared to 1.10%1.44% and 1.27%, respectively for the comparable period periods of 2025. The annualized return on average equity was 14.83%14.65% and 14.74%, respectively, for the three and six months ended MarchJune 31,30, 2026, compared to 10.33%13.33% and 11.85%, respectively, for the comparable periodperiods of 2025. For the three months ended MarchJune 31,30, 2026 thetotal Corporation declaredcash dividends to holders of common stock of $1.46$0.155 per share,share whichwere includes the impact of a special one-time cash dividend of $1.00 per share,declared as compared to $0.45$0.317 for the same period of 2025. For the six months ended June 30, 2026, total cash dividends of $0.642 per share were declared as compared to $0.467 for the same period of 2025, which included the impact of special one-time dividends of $0.333 per share and $0.167 per share for the six months ended June 30, 2026 and 2025, respectively.

Tax-equivalent net interest income increased $2.6$2.0 million, or 18.2%,13.0%, to $16.8$17.1 million for the three months ended MarchJune 31,30, 2026 compared to $14.2$15.1 million for the same period in 2025. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, along with a decrease in interest expense which resulted primarily from a significant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing liabilities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 5033 basis points to 4.33%4.37% for the three months ended MarchJune 31,30, 2026 compared to 3.83%4.04% for the same period of 2025, which was largely caused by increases in yields on earning assets along with a decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 5436 basis points to 3.81%3.83% for the three months ended MarchJune 31,30, 2026 compared to 3.27%3.47% for the same period in 2025.

Tax-equivalent interest income increased $2.1$1.7 million, or 9.8%,7.9%, to $23.2$23.7 million for the three months ended MarchJune 31,30, 2026 from $21.1$22.0 million for the same period in 2025, which was largely caused by growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $72.0$67.0 million, or 4.8%,4.5%, to $1.571$1.568 billion for the three months ended MarchJune 31,30, 2026 from $1.499$1.501 billion for the same period in 2025, resulting in a corresponding increase to tax-equivalent interest income of $1.0$0.7 million. Specifically, average loans increased $37.8$29.0 million, or 3.3%,2.5%, to $1.187$1.190 billion for the three months ended March 31,June 30, 2026 from $1.149$1.161 billion for the same period in 2025, which reflected strong organic loan growth, partially offset by the loan sale noted above. Total investment securities averaged $348.1$364.5 million for the three months ended MarchJune 31,30, 2026, an increase of $2.1 $34.1 million, or 0.6%,10.3%, compared to $346.0$330.4 million for the same period in 2025. The tax-equivalent yield on earning assets increased 27 19 basis points to 5.99%6.06% for the three months ended MarchJune 31,30, 2026 from 5.72%5.87% for the same period in 2025, which resulted in a corresponding increase in tax-equivalent interest income of $1.1$1.0 million. The Corporation's tax-equivalent yield on loans increased 1511 basis points to 6.78% for the three months ended MarchJune 31,30, 2026 compared to 6.63%6.67% for the same period in 2025, resulting in a corresponding increase in tax-equivalent interest income of $0.5$0.3 million. Meanwhile, the tax-equivalent yield on investment securities increased 82 68 basis points to 3.55%3.76% for the three months ended MarchJune 31,30, 2026 from 2.73%3.08% for the same period in 2025 and caused a corresponding increase to tax-equivalent interest income of $0.7 million.

Interest expense decreased $0.5$0.2 million, or 7.4%,3.3%, to $6.5$6.7 million for the three months ended MarchJune 31,30, 2026 from $7.0$6.9 million for the same period in 2025, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which are largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $54.0$25.6 million for the three months ended MarchJune 31,30, 2026, a decrease of $54.0$47.5 million from $108.0$73.1 million for the same period in 2025. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $0.6$0.5 million. Total average interest-bearing deposits increased $97.7$90.8 million, or 9.3%,8.5%, to $1.143$1.164 billion for the three months ended MarchJune 31,30, 2026, compared to $1.046$1.073 billion for the same period in 2025, which resulted in a corresponding increase in interest expense of $0.6 million. For the three months ended March 31,June 30, 2026, the Corporation's cost of funds decreased 2616 basis points to 2.19%2.24% from 2.45%2.40% for the same period in 2025. The average rate paid on total borrowings decreased 15 basis pointsincreased to 4.25%9.06% for the three months ended MarchJune 31,30, 2026 from 4.40%4.48% for the same period in 2025. The increase in the average rate paid on total borrowings is related to the prepayment of long-term borrowings during the three months ended June 30, 2026 discussed above and associated recognition of approximately $0.3 million of remaining unamortized fair value adjustments as a yield adjustment during the period. The average rate paid on total interest-bearing deposits decreased 1618 basis points to 2.09%2.08% for the three months ended MarchJune 31, 30, 2026 from 2.25%2.26% for the same period in 2025, which resulted in a corresponding decrease in interest expense of $0.5$0.6 million.

The following Average Balance Sheet and Rate Analysis tables presentspresent the average assets, actual income or expense and the average yield on assets, liabilities and stockholders' equity for the three and six months ended MarchJune 31,30, 2026 and 2025.

THREE MONTHS ENDED MARCHJUNE 31,30,