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

Total assets as of December 31, 20242025 were $2.317$2.425 billion compared to $2.201$2.317 billion as of year-end 2023,2024, an increase of $116.4$107.4 million. The increase in total assets was primarily attributable to a $109.1$139.8 million increase in loans receivable.receivable, offset by a $27.9 million decrease in cash and cash equivalents.

As of December 31, 2024,2025, loans receivable totaled $1.714$1.853 billion compared to $1.604$1.714 billion as of year-end 2023,2024, an increase of $110.2$139.8 million due primarily to a $43.5$42.6 million increase in consumer loans andloans, an increase of $41.7$33.4 million in commercial real estate loans.loans, Residentialand realan estateincrease loansof increased $14.3$32.4 million duringin theconstruction year ended December 31, 2024.loans.

Commercial loans and commercial mortgages are provided to local small and mid-sized businesses at a variety of terms and rate structures. Commercial lending activities include lines of credit, revolving credit, term loans, mortgages, various forms of secured lending and a limited amount of letter of credit facilities. The rate structure may be fixed, immediately repricing tied to the prime rate or adjustable at set intervals. Also included in commercial loans are municipal finance lending in which the Bank has been active in recent years. Municipal lending includes both general obligations of local taxing authorities and revenue obligations of specific revenue producing projects such as sewer authorities and educational units. At December 31, 2024,2025, the Bank had approximately $156.2$178.7 million in loans on commercial rentals, as well as $114.7$116.6 million of loans outstanding on residential rentals, which are its largest lending concentrations.rentals.

The Company has limited exposure to higher-risk loans. The Company does not originate option ARM products, interest only loans, sub-prime loans or loans with initial teaser rates in its residential real estate portfolio. As of December 31, 2024,2025, the Company had $19,070,000 million$21,122,000 of junior lien home equity loans. For the year ended December 31, 2024,2025, there were $0 of charge-offs in this portfolio, with recoveries of $41,000 in 2024.$0.

As of December 31, 20242025 and 2023,2024, the Company considered its concentration of credit risk to be acceptable. As of December 31, 2024,2025, the highest concentrations are in commercial rentals and the residential rentalshotels/motels category, with loans outstanding of $156.2$178.7 million, or 9.1%9.7% of loans outstanding, to commercial rentals, and $114.7$125.1 million, or 6.7%6.8% of loans outstanding, to residential rentals.hotels/motels. For the year ended December 31, 2024,2025, the Company recognized charge offs of $0 on commercial rentals and $0 on residential rentals.hotels/motels. The Company recognized charge offs of $6,000$0 on commercial rentals and $44,000$0 on residential rentals in 2023.2024, the highest concentrations in 2024.

During the twelve month period ended December 31, 2024,2025, the Bank recognized net charge-offs in the amount of $1,671,000$1,890,000 compared to the $6,078,000$1,671,000 of net charge-offs reported for the twelve months ended December 31, 2023.2024. The provision for credit losses decreased to $1,773,000 for the twelve months ended December 31, 2025, compared to $2,673,000 for the twelve months ended December 31, 2024, compared to $5,548,000 for the twelve months ended December 31, 2023.2024.

The portfolio had 8 adjustable-rate instrument as of December 31, 2025 and one adjustable-rate instrument as of December 31, 2024 and no adjustable-rate instruments as of December 31, 2023.2024. The portfolio contained no private label mortgage-backed securities, collateralized debt obligations (CDOs), or trust preferred securities, and no off-balance sheet derivatives were in use. As of December 31, 2024,2025, the portfolio did not contain any step-up bonds. The mortgage-backed securities portfolio includes pass-through bonds and collateralized mortgage obligations (CMO’s) issued by Fannie Mae, Freddie Mac and the Government National Mortgage Association (GNMA).

The Bank provides a full range of deposit products to its retail, business and municipal customers. These include interest-bearing and noninterest bearing transaction accounts, statement savings and money market accounts. Certificate of deposit terms range up to five years for retail instruments. As of December 31, 2024,2025, the Bank did not have any brokered deposits obtained through internet listing services. As of December 31, 2024,2025, broker deposits that were secured through Cede & Co totaled $20.0$33.2 million. The Bank participates in the Jumbo CD ($250,000 and over) markets with local municipalities and school districts which are typically priced on a competitive bid basis. Other services the Bank offers its customers include IntraFi CDARS and ICS, cash management, direct deposit, Remote Deposit Capture, mobile deposit capture, Zelle and Automated Clearing House (ACH) activity. The Bank operates thirty automated teller machines and is affiliated with the MoneyPass® ATM network. Internet banking including bill-pay is offered through the website at www.wayne.bank.wayne.bank. Other services, such as eStatements and mobile banking are available online.

As of December 31, 2024,2025, the total of U.S. time deposits in excess of the Federal Deposit Insurance CorporationFDIC insurance limits were $272,968,000.$289,851,000. Time deposits over $250,000, which consist principally of school district funds, other public funds and short-term deposits from large commercial customerscustomers, with maturities are generally less than one year. These deposits are subject to competitive bid and the Company bases its bid on current interest rates, loan demand, investment portfolio structure and the relative cost of other funding sources.

Total deposits as of December 31, 2024,2025, were $1.859$2.079 billion, an increase of $64.0$219.5 million from December 31, 2023.2024. Non-maturity interest-bearing deposits increased $23.7$83.6 million in 2024,2025, while non-interest bearing demand deposits decreasedincreased $18.1$38.1 million. Time deposits increased $58.4$97.8 million during 2024 primarily as a result of higher market interest rates.2025.

As of December 31, 2024,2025, non-interest bearing demand deposits totaled $381.5$419.6 million compared to $399.5$381.5 million at December 31, 2023.2024. Cash management accounts in the form of securities sold under agreements to repurchase included in short-term borrowings, totaled $36.3 million$0 at December 31, 20242025 compared to $54.1$36.3 million as of December 31, 2023.2024. These balances represent commercial and municipal customers’ funds invested in overnight securities. The Company considers these accounts as a source of core funding.

Net lossincome for the Company for the year ended December 31, 20242025 was $160,000,$27,755,000, compared to the net incomeloss of $16,759,000 earned$160,000 in the year ended December 31, 2023.2024. LossesEarnings per share on a fully diluted basis were $0.02$3.01 for 20242025 compared to earningslosses per share on fully diluted basis of $2.07$0.02 in 2023.2024. The return on average assets for the year ended December 31, 2024,2025, was (0.01)%,1.17%, and the return on average equity was (0.09)%,12.22%, compared to 0.79%(0.01)% and 9.67%,(0.09)%, respectively, for the year ended December 31, 2023.2024. Net interest income increased $124,000$16,133,000 for the year ended December 31, 2024.2025.

For the year ended December 31, 2024,2025, fully taxable equivalent (“fte”) net interest income totaled $63,010,000,$79,099,000, an increase of $194,000$16,089,000 from the year ended December 31, 20232024 total. Average loans outstanding increased $80.5$145.4 million in 2024,2025, which contributed to an increase in interest income (fte) of $14.3$10.6 million. During the year ended December 31, 2024,2025, average interest-bearing deposits increased $115.5$169.6 million, which contributed to an increase in interest expense of $16.3$1.3 million. The cost of borrowed funds increaseddecreased $611,000$3.5 million in 2024,2025, compared to the prior year due to ana increasedecrease in borrowings. During the year ended December 31, 2024,2025, the resulting net interest spread (fte) decreased to 2.17%2.81% compared to 2.47%2.17% at December 31, 2023,2024, asdue to a 0.56%0.38% increase in the yield earnedearned, was offset byand a 0.86%0.26% increasedecrease in the cost of funds.

Total other income was a loss of $11,151,000$9,617,000 for the year ended December 31, 2024,2025, compared to incomea loss of $8,124,000$11,151,000 in the prior year, aan decreaseincrease of $19,275,000.$20,768,000. Net realized losses on sales of securities increased $19,753,000 todecreased $19,962,000 during the year ended December 31, 2024,2025, primarily as a result of the repositioning of the securities portfolio in December 2024, while gains on the sale of foreclosed real estate owned and gains on sale of loans increased $84,000$99,000 in aggregate. Earnings and proceeds on life insurance policies increased $44,000$32,000 in 20242025 compared to 2023,2024, while all other items of other income increased $350,000,$675,000, net, in 2024.2025.

During the year ended December 3131, ,2024,2025, other expenses were $48,625,000,$51,149,000, compared to $43,497,000$48,625,000 for the sameyear periodended inDecember 2023,31, 2024, an increase of $5,128,000.$2,524,000. Salaries and benefits costs increased $1,453,000$1,910,000 in 2024,2025, while datamerger processingrelated costsexpenses increased $1,178,000.$1,238,000, Professionaland feesfurniture and equipment expenses increased $497,000.$284,000. All other operating expenses increaseddecreased $2,000,000,$908,000, net, in 2024.2025. Income tax benefitexpense for the 20242025 year totaled $98,000,$7,264,000, compared to an income tax expensebenefit of $4,387,000$98,000 from the 20232024 year ended. The effective tax rate in 20242025 was 38.0%20.7% compared to 20.7%38.0% in 2023.2024.

Interest income (fte) for the year ended December 31, 20242025 totaled $113,399,000$127,303,000 compared to $96,289,000$113,399,000 in 2023.2024. The fte yield on average earning assets was 5.24%,5.62%, increasing 5638 basis points from the 4.68%5.24% reported last year. The tax-equivalent yield on total loans was 6.16% in 2025, increasing from 6.06% in 2024, increasing from 5.46% in 2023, while average loans outstanding increased $80.5$145.4 million, resulting in an increase in interest income (fte) from loans of $14.3$10.6 million. The yield on securities increased 17123 basis points in 20242025 due primarily to higherthe yieldsrepositioning on new securities purchased duringof the yearportfolio endedin December 31, 2024. During the year ended December 31, 2024,2025, while average securities outstanding decreased $14.1$20.8 million, interest income (fte) from securities outstanding, increased $486,000$5.0 million from the year ended December 31, 2023.2024.

Interest expense was $50,389,000$48,204,000 for the year ended December 31, 2024,2025, which resulted in an average cost of interest-bearing liabilities of 3.07%2.81% compared to total interest expense of $33,473,000$50,389,000 during the year ended December 31, 2023,2024, with an average cost of 2.21%.3.07%. Total interest-bearing deposits cost was 2.94%2.71% for the year ended December 31, 2024,2025, which was ana increasedecrease of 9823 basis points over the 20232024 fiscal year ended. The increasedecrease in cost was due primarily to time certificates of deposit that repriced to current market rates upon maturity, resulting in ana increasedecrease in the interest rate paid from 3.25% in 2023 to 4.18% in 2024,2024 to 3.81% in 2025, along with ana increasedecrease in the interest-bearing demand and money market from 1.25% in 2023 to 2.21% in 2024.2024 to 2.04% in 2025, and a decrease in savings from 0.32% in 2024 to 0.24% in 2025.

Total other income was $9,617,000 for the year ended December 31, 2025, compared to a loss of other income of $11,151,000 for the year ended December 31, 2024, comparedan to incomeincrease of $8,124,000 for the year ended December 31, 2023, a decrease of $19,275,000.$20,768,000. Net realized losses on sales of securities increaseddecreased $19,753,000$19,962,000 to $19,962,000$0 during the year ended December 31, 2024,2025, primarily as a result of the repositioning of the securities portfolio in December 2024. TheService increasecharges inand lossesfees onincreased sales$462,000 of securities was partially offset by an increase of $145,000 in loan related service fees, an increase inand gains on sale of loans ofincreased $132,000, and an increase in commission on mutual funds and annuities of $111,000.$131,000. All other items of other income increased $90,000$213,000, net, during the year ended December 31, 2024.2025.

Other expenses totaled $48,625,000$51,149,000 for the year ended December 31, 2024,2025, compared to $43,497,000$48,625,000 in the 20232024 fiscal year. For the year ended December 31, 2024,2025, salaries and employee benefits increased $1,453,000$1,910,000 to $25,018,000,$26,928,000, while datamerger processingrelated costsexpenses increased $1,178,000$1,238,000. millionFurniture and equipment expenses increased $284,000 to $4,520,000, as compared to the year ended December 31, 2023. Professional fees increased $497,000 to $2,173,000$1,405,000 during the year ended December 31, 2024,2025, compared to $1,676,000$1,121,000 for the year ended December 31, 2023.2024. During the year ended December 31, 2024,2025, all other operating expenses increaseddecreased $2,000,000,$908,000, net. The Company’s efficiency ratio, which measures total other expenses as a percentage of net interest income (fte) plus other income excluding losses on securities sales was 68.5%58.2% in 20242025 compared to 62.1%68.5% in 2023.2024. Please see “Non-GAAP Financial Measures” later in this discussion for more information on this Non-GAAP Financial Measure.

Income tax benefitexpense for the year ended December 31, 20242025 totaled $98,000,$7,264,000, which resulted in an effective tax rate of 38.0%,20.7%, compared to an income tax expensebenefit of $4,387,000$98,000 and 20.7%38.0% for 2023.2024.

Total stockholders’ equity as of December 31, 2024,2025 was $213.5$242.2 million, compared to $181.1$213.5 million as of December 31, 2023.2024. TheEarnings increaseretention, innet stockholders’of equityan was$11.6 primarilymillion duereduction resulting from cash dividends declared, contributed to the receiptincrease. of approximately $28.1 millionFluctuations in netinterest proceeds from the Offering, partially offset by $10.2 million in cash dividends declared. The repositioning of the Company’s Available-for-Sale securities portfoliorates during the year ended December 31, 2024,2025, impacted the fair value of the portfolio,Company’s Available-for-Sale securities, and contributed to $14.2$11.8 million increase in accumulated other comprehensive income. As of December 31, 20242025 the Company had a leverage capital ratio of 9.36%,9.65%, a Tier 1 risk-based capital ratio and a common equity Tier 1 risk-based capital ratio of 12.35%,12.37%, and a total risk-based capital ratio of 13.45%,13.41%, compared to 9.00%,9.36%, 11.99%12.35% and 13.06%,13.45%, respectively, at December 31, 2023.2024.

Total assets as of MarchJune 31,30, 20262026, were $2.917$2.908 billion compared to $2.425 billion as of December 31, 2025. The increase was due primarily to a $385.2$409.4 million increase in grossoutstanding loans outstandingreceivable, andwhich a $58.1 million increase in cash and cash equivalents. Both werewas primarily a result of the PB Bankshares acquisition.

Other assets as of MarchJune 31,30, 20262026, were $10.6$13.6 million compared to $8.4 million as of December 31, 2025. The increase was primarilythe dueresult toof $3.6 million which consisted of two investment securities that were called/matured as of June 30, 2026, and final payment was not received until early in the increasenext of $1.4 million in right of use asset.quarter.

The fair value of securities available for sale as of MarchJune 31,30, 2026 was $431.2$439.0 million compared to $408.8 million as of December 31, 2025. The increase of $22.4$30.2 million was due primarily to the acquired portfolio.portfolio, as well as investment purchases during 2026.

The Company has securities in an unrealized loss position. In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities. The increase in the unrealized loss is due to the overall increase in interest rates. The Company did not recognize any credit losses on these available for sale debt securities for the threesix months ended MarchJune 31,30, 2026. The Company does not intend to sell the securities and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

Loans receivable totaled $2.239$2.263 billion at MarchJune 31,30, 2026 compared to $1.853$1.854 billion as of December 31, 2025, due primarily to the acquired portfolio.portfolio from Presence Bank. The $385.4$409.4 million increase in loans receivable during the threesix months ended MarchJune 31,30, 2026, was due primarily to a $118.3$273.4 million increase in commercial real estate loans, a $177.4 million increase in commercial loans, a $57.1$58.9 million increase in residential real estate loans, a $45.1 million increase in construction loans, and an increase of $32.6$32.4 million in all other portfolios, net.

The allowance for credit losses totaled $24.4$25.6 million as of MarchJune 31,30, 2026, and represented 1.09%1.13% of total loans outstanding, compared to $19.9 million, or 1.07% of total loans outstanding, at December 31, 2025. The Company had net charge-offs for the threesix months ended MarchJune 31,30, 2026 of $501,000,$1,869,000, compared to $324,000$699,000 in the corresponding period in 2025. The Company’s management assesses the adequacy of the allowance for credit losses on a quarterly basis. Based on management’s best judgement, the qualitative factors are applied to the final adjusted loss rate each quarter. Management considers the allowance for credit losses adequate at MarchJune 31,30, 2026 based on the Company’s criteria. However, there can be no assurance that the allowance for credit losses will be adequate to cover significant losses, if any, which might be incurred in the future.

As of MarchJune 31,30, 2026, non-performing loans totaled $10.3$27.4 millionmillion, or 0.46%,1.21%, of total loans compared to $6.3 million, or 0.34%, of total loans at December 31, 2025. At MarchJune 31,30, 2026, non-performing assets totaled $11.1$28.1 million, or 0.38%,0.97%, of total assets, compared to $7.1 million, or 0.29%, of total assets at December 31, 2025. The increase is due primarily to the addition of one large commercial real estate relationship being placed on non-accrual, following the borrower’s filing for chapter 11 bankruptcy in June 2026.

During the three-monthssix-months ended MarchJune 31,30, 2026, total deposits increased $428.1$435.7 million due primarily to a $198.1$192.1 million increase in certificates of deposit, an $83.9$80.8 million increase in non interest-bearing demand deposits, and a $146.1$162.7 million increase in all other deposit categories. All increases were primarily due to the PB Bankshares acquisition.

The Company had no short-term borrowings at MarchJune 31,30, 2026, compared to $14.7 million at December 31, 2025, due primarily to a decrease in overnight borrowings, which was a result of the overall growth in deposits.

Other borrowings as of MarchJune 31,30, 2026,2026 were $88.3$65.6 million compared to $59.4 million as of December 31, 2025. There were no Federal Reserve Bank borrowings during three-monthsthe six-months ended MarchJune 31,30, 2026, while Federal Home Loan Bank borrowings increased $29.0$6.1 million during the three-monthssix-months ended MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, total stockholders’ equity was $283.9$289.6 million, compared to $242.2 million as of December 31, 2025.2025, Totalan stockholders’ equity increased $41.7 million asincrease of March$47.4 31, 2026.million. The increase consisted of $44.3 million due to the PB Bankshares acquisition and net income of $3.7$13.1 million, offset, in part by a $2.8$3.2 million decrease in the fair value of securities in the available-for-sale portfolio and a decrease of $4.0$7.5 million of dividends declared, net of tax. Because of interest rate volatility, the Company’s accumulated other comprehensive income could materially fluctuate for each interim and year-end period.

In addition to the above minimum requirements, the Basel III Capital Rules require banks and covered financial institution holding companies to maintain a capital conservation buffer of at least 2.5% of risk-weighted assets over and above the minimum risk-based capital requirements. Institutions that do not maintain the required capital buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in dividends or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The capital buffer requirement effectively raises the minimum required risk-based capital ratios to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital on a fully phased-in basis. The Company and the Bank were in compliance with all applicable regulatory capital requirements as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the Company had cash and cash equivalents of $102.6$60.3 million in the form of cash, due from banks, and short-term deposits with other institutions, and fed funds sold.institutions. In addition, the Company had total non-pledged securities available for sale of $137.9$161.3 million which could be used for liquidity needs. Total liquidity of $234.3$230.7 million as of MarchJune 31,30, 2026,2026 represents 8.0%7.9% of total assets, compared to $190.8 million and 7.9% of total assets as of December 31, 2025. The Company also monitors other liquidity measures, all of which were within the Company’s policy guidelines as of MarchJune 31,30, 2026 and December 31, 2025. Based upon these measures, the Company believes its liquidity is adequate.

The Company has a line of credit commitment from Atlantic Community Bankers Bank for $7.0 million which expires June 30, 2026.2027. There were no borrowings under this line as of MarchJune 31,30, 2026 and December 31, 2025.

The Company has a line of credit commitment available which has no stated expiration date from PNC Bank for $10.0 million. There were no borrowings under this line as of MarchJune 31,30, 2026 and December 31, 2025.

The Bank’s maximum borrowing capacity with the Federal Home Loan Bank was estimated to be $682.8$912.2 million as of MarchJune 31,30, 2026, of which $88.4$65.6 million was outstanding in the form of borrowings as of MarchJune 31,30, 2026. As of December 31, 2025, the maximum borrowing capacity was $677.6 million, of which $74.1 million of borrowings was outstanding as of December 31, 2025. Additionally, as of MarchJune 31,30, 2026, the Bank had secured Letters of Credit from the Federal Home Loan Bank in the amount of $178.1$180.5 million as collateral for specific municipal deposits. These Letters of Credit reduce the availability under the maximum borrowing capacity. As of December 31, 2025, there was $155.5 million outstanding in the form of Letters of Credit. Advances and Letters of Credit from the Federal Home Loan Bank are secured by qualifying assets of the Bank.

This report contains or references fully taxable-equivalent (fte) interest income and net interest income, which are non-GAAP financial measures. Interest income (fte) and net interest income (fte) are derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income (fte) and net interest income (fte) ensures comparability of interest income and net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income (fte) and Net interest income (fte) is reconciled to GAAP interest income and net interest income on page 42. Fully taxable equivalent interest income46 and net interest income is also reflected in the table on page 43. Although the Company believes that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered as an alternative to GAAP measures.50.

Comparison of Operating Results for the Three Months Ended MarchJune 31,30, 2026 to MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, net income totaled $3.7$9.3 million compared to net income of $5.8$6.2 million for the three months ended MarchJune 31,30, 2025. The decreaseincrease in net income for the three months ended MarchJune 31,30, 2026,2026 was due primarily to a $4.9$7.8 million increase in merger-relatednet expenses,interest income and a net increase of $278,000 in all other income, offset, in part by a $2.1 million increase in salaries and employee benefits, a $602,000$994,000 increase in provision for credit losses, and a net increase of $1.9$1.8 million in all other expenses, offset, in part by an increase of $6.7 million in net interest income.expenses. Earnings for the three-months ended MarchJune 31,30, 2026 were $0.35$0.86 per basic and fully diluted share, compared to $0.63$0.67 per basic and fully diluted share for the three months ended MarchJune 31,30, 2025. The resulting annualized return on average assets and annualized return on average equity for the three months ended MarchJune 31,30, 2026 were 0.53%1.28% and 5.22%,12.98%, respectively, compared to 1.01%1.06% and 10.73%,11.14%, respectively, for the same period in 2025.

Net interest income on a fully taxable equivalent basis (fte) for the three months ended MarchJune 31,30, 2026 totaled $24.7$27.0 million which was $6.7$7.8 million higher than the comparable period in 2025. The increase in net interest income was due primarily to ana $8.3$9.2 million increase in total interest income, offset by a $1.6$1.5 million increase in total interest expense. The (fte) net interest spread and net interest margin were 3.04%3.27% and 3.68%,3.90%, respectively, for the three months ended MarchJune 31,30, 2026 compared to 2.61%2.75% and 3.30%,3.43%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 40.43.

For the three-months ended MarchJune 31,30, 2026, interest income (fte) totaled $38.6$40.6 million, with a yield on average earning assets of 5.73%5.87% compared to $30.3$31.4 million and 5.54%5.60% for the three months ended MarchJune 31,30, 2025. Average loans increased $451.5$470.4 million during the three-monthsthree months ended MarchJune 31,30, 2026, over the comparable period of 2025, while average securities increased $7.5$30.7 million compared to the three-monthsthree months ended MarchJune 31,30, 2025. Average earning assets totaled $2.729$2.778 billion for the three months ended MarchJune 31,30, 2026, an increase of $512.0$526.9 million, over average earning assets for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 40.43.

Interest expense for the three months ended MarchJune 31,30, 2026 totaled $13.8$13.6 million, at an average cost of 2.69%,2.60%, compared to $12.2$12.1 million, at an average cost of 2.93%2.84% for the same period in 2025. Average interest-bearing deposits increased $2.0$430.7 million during the three-monthsthree months ended MarchJune 31,30, 2026, over the comparable period in 2025, while average borrowings decreased $437,000$42.5 comparedmillion toduring the three-monthsthree months ended MarchJune 31,30, 2026. During the three months ended MarchJune 31,30, 2026, the average cost of time deposits, which is the most significant component of funding costs, decreased 4138 basis points compared to the same three-month period of last year. The average cost of interest-bearing demand and money market decreased 1411 basis points during the three months ended MarchJune 31,30, 2026, while savings deposit costs decreasedincreased two12 basis points. Average short-term borrowing costs decreased 3680 basis points, while average other borrowings cost decreased 2438 basis points, compared to the same three-month period of 2025.

The Company had a provision for credit losses of $1.5$1.9 million during the three months ended MarchJune 31,30, 2026, compared to $857,000$950,000 for the three months ended MarchJune 31,30, 2025. The Company makes provisions for, or releases of, credit loss expense in an amount necessary to maintain the allowance for credit losses at an acceptable level under the current expected credit loss (CECL) methodology analysis. The Company recorded a net charge-off of $501,000$1.4 million for the quarter ended MarchJune 31,30, 2026, compared to a net charge-off of $324,000$375,000 for the similaryear periodearlier in 2025.quarter. At MarchJune 31,30, 2026, the allowance for credit losses related to loans receivable was 1.09%1.13% of loans receivable, compared to 1.15%1.17% at MarchJune 31,30, 2025. Additionally, at MarchJune 31,30, 2026, the allowance for credit losses related to loans receivable represented 236%91% of non-performing loans, compared to 257%258% at MarchJune 31,30, 2025.

Other income totaled $2.7$2.5 million for the three months ended MarchJune 31,30, 2026, compared to $2.4$2.2 million for the same period in 2025. The increase was due primarily to an increase in service charges and fees of $242,000.$152,000. All other categories of other income increased $122,000,$126,000 net, during the three months ended MarchJune 31,30, 2026.

Other expense for the three months ended MarchJune 31,30, 2026 totaled $21.0$15.8 million, an increase of $8.9$3.3 million compared to the same period of 2025, due primarily to a $4.9 million increase in merger-related expenses and a $2.1 million increase in salaries and employee benefits.benefits, resulting primarily from the PB Bankshares acquisition which closed in January 2026. All other categories of other expense increased $1.9$1.2 million during the three months ended MarchJune 31,30, 2026 as compared to the year earlier quarter.

Income tax expense totaled $1.1$2.3 million for an effective tax rate of 22.6%19.8% for the three months ended MarchJune 31,30, 2026 compared to $1.5$1.6 million for an effective tax rate of 20.8% for the three months ended MarchJune 31,30, 2025.