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

During 2022 and 2023, the Federal Reserve Board in order to combat high inflation increased the Fed Funds target range multiple times to its currenta target range of 5.25% to 5.50% as of June 30, 2024. The current consensus is that rates will likely be decreasedSubsequently during the second half of calendar 2024 and 2025, the Federal Reserve Board decreased the Fed Funds target range multiple times to its current target range of 3.50% to 3.75% as of December 31, 2025. Decreases in interest rates can result in increased prepayments of loans and mortgage-related securities, as borrowers refinance to reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk as we may have to reinvest such loan or securities prepayments into lower-yielding assets, which may also negatively impact our income. Decreases in interest rates can also result in interest rates we receive on our loans and investments decreasing faster than the interest rates on deposits, causing our interest rate spread to decrease, which would have a negative effect on our net interest income and profitability. Conversely, increases in interest rates can result in interest rates on our deposits increasing faster than the interest rates we receive on our loans and investments, causing our interest rate spread to decrease, which would have a negative effect on our net interest income and profitability. Furthermore, increases in interest rates may adversely affect the ability of borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase.

If interest rates do decrease, we expect that our net portfolio value of equity would increase. Net portfolio value of equity represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities, adjusted for the value of off-balance sheet contracts. At JuneDecember 30,31, 20242025 and assuming a 200100 basis points decrease in market interest rates, we estimate that our net portfolio value would increase by $52.2$29.9 million, or 16.9%.9.6%. Additionally, at JuneDecember 30,31, 2024,2025, and assuming a 200100 basis points increase in market interest rates, we estimate that our net portfolio value would decrease by $72.1$23.4 million, or 23.4%.7.6%.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. As a result of sustained inflationary pressures, the Federal Reserve Board has increased the federal funds rate to a target range of 5.25% to 5.50% as of June 30, 2024. TheSubsequently during 2024 and 2025, the Federal Reserve Board alsodecreased plansthe Fed Funds target range multiple times to continueits current target range of 3.50% to reduce3.75% the sizeas of itsDecember balance31, sheet in 2024, although at a slower pace than it did in 2023.2025. To the extent these interventions do not mitigate the volatility and uncertainty related to inflation and the effects of inflation, or to the extent conditions otherwise worsen, we could experience adverse effects on our business, financial condition, and results of operations. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

Lawmakers’ failure to address the federal debt ceiling in a timely manner, downgrades of the U.S. credit ratingrating, potential government shutdowns, and uncertain credit and financial market conditions may affect the stability of securities issued or guaranteed by the federal government, which may affect the valuation or liquidity of our investment securities portfolio and increase future borrowing costs.

As a result of uncertain political, credit and financial market conditions, including the potential consequences of the federal government defaulting on its obligations for a period of time due to federal debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose credit default and liquidity risks. Given that future deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur. At JuneDecember 30,31, 2024,2025, we had approximately $243.5$200.9 million invested in U.S. government, U.S. government agency obligations and agencyGovernment-sponsored enterprises obligations. The 2024 downgrade by Fitch Rating Services to the U.S. credit rating could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities, and could result in our counterparties requiring additional collateral for our borrowings. Further, instabilityInstability in the U.S. political, credit and financial market conditions may increase our future borrowing costs.

Our loan portfolio includes commercial real estate loans, primarily loans secured by multi-family properties, office buildings, industrial facilities, retail facilities and other commercial properties. At JuneDecember 30,31, 2024,2025, our commercial real estate loans totaled $406.2$466.5 million, or 29.7%,27.9%, of our total loan portfolio. Our commercial real estate loans expose us to greater risk of nonpayment and loss than residential mortgage loans because repayment of the loans often depends on the successful operation and income stream of the borrower’s business. Continued uncertainty or weakness in economic conditions may impair a borrower's business operations and lead to existing lease turnover. Vacancy rates for retail, office and industrial space may increase, which could result in rents falling. The combination of these factors could result in deterioration in the fundamentals underlying the commercial real estate market and the deterioration in value of some of our loans, especially in industries that have been particularly adversely impacted by long-term work-from-home arrangements, including retail stores, hotels and office buildings, for example. Any such deterioration could adversely affect the ability of our borrowers to repay the amounts due under their loans. If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential property because there are fewer potential purchasers of the collateral. In addition, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential mortgage loans. Accordingly, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. An unexpected adverse development on one or more of these types of loans can expose us to a significantly greater risk of loss compared to an adverse development with respect to a residential mortgage loan. In addition, the physical condition of non-owner occupied properties may be below that of owner-occupied properties due to lax property maintenance standards, which have a negative impact on the value of the collateral properties. As our commercial real estate loans increase, the corresponding risks and potential for losses from these loans may also increase, which would adversely affect our business, financial condition and results of operations.

At JuneDecember 30,31, 2024,2025, $101.2$124.9 million, or 7.4%7.5% of our total loan portfolio, was comprised of commercial and industrial loans and lines of credit to a variety of small and medium-sized businesses in our market area collateralized by general business assets including, among other things, accounts receivable and inventory, and we may augment this collateral with additional liens on real property. These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a per loan basis. Additionally, the repayment of commercial and industrial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes moveable property such as inventory, which may decline in value more rapidly than we anticipate, or may be difficult to market and sell, exposing us to increased credit risk. For loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Significant adverse changes in the economy or local market conditions in which our commercial lending customers operate or individual business activities of our commercial customers could cause rapid declines in loan collectability and the values associated with general business assets, resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our business, financial condition and results of operations.

We make and hold in our portfolio commercial construction loans, which are considered to have greater credit risk than residential loansmortgage made by financial institutions.loans.

We originate and purchase commercial construction loans primarily to local developers to finance the construction of commercial and multi-family properties or to acquire land for development of commercial and multi-family properties and to finance infrastructure improvements. We also provide commercial construction loans to local developers for the construction of one- to four-family residential developments, and originate rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure. At JuneDecember 30,31, 2024,2025, commercial construction loans were $118.4$169.7 million, or 8.7%10.2% of our total loan portfolio. We also had undrawn amounts on the commercial construction loans totaling $52.7$66.4 million at JuneDecember 30,31, 2024.2025. The primary credit risks associated with construction lending are underwriting risks, project risks and market risks. Project risks include cost overruns, borrower credit risk, project completion risk, general contractor credit risk, and environmental and other hazard risks. Market risks are risks associated with the sale of the completed project. They include affordability risk, which means the risk of affordability of financing by borrowers, product design risk, and risks posed by competing projects.

Our allowance for credit losses on loanloans may not be sufficient to absorb losses in our loan portfolio.

We maintain an allowance for credit losses on loans, which is established through a provision for credit losses that represents management’s best estimate of credit losses within our existing portfolio of loans. We make various assumptions and judgments about the collectability of loans in our portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. In determining the adequacy of the allowance for credit losses on loans, we rely on our experience and our evaluation of economic conditions. If our assumptions prove to be incorrect, or if certain intervening events occur (like fraud by a customer or the COVID-19a pandemic), our allowance for credit losses on loans may not be sufficient to cover losses in our loan portfolio, and adjustments may be necessary to address different economic conditions or adverse developments in our loan portfolio. Consequently, a problem with one or more loans could require us to significantly increase our provision for credit losses. In addition, banking regulators periodically review our allowance for credit losses on loans and may require us to increase our provision for credit losses or recognize additional loan charge-offs. Material additions to the allowance for credit losses on loans would materially decrease our net income and would adversely affect our business, financial condition and results of operations.

At JuneDecember 30,31, 2024,2025, our non-performing assets, which consist of non-performing loans and other real estate owned, were $9.2$11.3 million, or 0.49%0.52% of total assets. Our non-performing assets adversely affect our net income in various ways:

We purchase commercial real estate,estate loan participations, commercial and industrial loan participations, and commercial construction loan participations (loans made by a group of lenders, including us, who share or participate in a specific loan) secured by properties outside our market area in which we are not the lead lender. We have purchased loan participations secured by various types of collateral such as real estate, equipment and other business assets. Loan participations may have a higher risk of loss than loans we originate because we rely in part on the lead lender to monitor the performance of the loan. Moreover, our decisions regarding the classification of a loan participation and loan loss provisions associated with a loan participation are made in part based upon information provided by the lead lender. A lead lender also may not monitor a participation loan in the same manner as we would for loans that we originate. At JuneDecember 30,31, 2024,2025, there were $14.4$37.9 million commercial construction, $2.4$21.0 million commercial real estate and no commercial and industrial loan participations outside our market area. At JuneDecember 30,31, 2024,2025, no loan participations were delinquent 60 days or more. If our underwriting of these participation loans is not sufficient, our non-performing loans may increase and our earnings may decrease.

We are susceptible to fraudulent activity committed against us or our clients, which has in the past and may continue to result in negative impacts to the Company which may include, but are not limited to, financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation, governmental and regulatory sanctions and penalties, or damage to our reputation. We have experienced fraudulent activities that are adversely impacting our current financial performance and results of operations. See “Part II, Item 8 – Financial Statements and Supplementary Data-Data – Note 14 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities,” for details. We expect these activities to continue to negatively impact our financial performance and results of operations. We are involved in numerous legal and other proceedings due to, among other reasons, the Mann Entities related fraudulent activity. See “Item 3 – Legal Proceedings,” for details.further Seedetails “Weon arethese subjectfraudulent to sanctionsactivities and othertheir negative actions if regulatory agencies with supervisory authority over us determine that we failed to comply with applicable laws and regulations” below.impacts.

We are also subject to fraud and compliance risk, and have experienced fraudulent activities,activities in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, checking transactions, and debit cards that we have issued to our customers and through our online banking portals. There can be no assurance that such incidents or losses will not occur again or that such acts will be detected in a timely manner.

WeWhile we maintain a system of internal controls and other measures to mitigate against such risks, includingthere datacan processingbe systemno failuresassurance andthat errors,fraudulent andincidents customeror fraud.losses will not occur again or that such acts will be detected in a timely manner. If we fail to prevent or detect any such occurrence, or if any resulting loss is not insured, exceeds applicable insurance limits or if the insurance companies dispute or deny coverage, it could have a material adverse effect on our business, financial condition and results of operations. With respect to the fraud described in “Part II, Item 8 – Financial Statements and Supplementary Data-Data – Note 14 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities,” and the proceedings described in “Item 3 – Legal Proceedings,” our insurance carriers have (a) denied coverage with respect to some of the claims, (b) accepted coverage, subject to certain conditions, with respect to some of the claims, and (c) sought additional information from the Company in order to further evaluate coverage. Costs related to the proceedings described in these two sections have exceeded the applicable limits and deductibles of our insurance policies. Further, though certain legal fees and expenses associated with these proceedings have been borne by our insurance carriers, up to applicable coverage limits and deductibles, such limits and deductibles have been met and/or exceeded, and we do not expect to recognize any additional insurance recoveries related to these claims. Because the amounts and timing of such legal fees and litigation-related expenses are inherently difficult to predict, there can be no assurance that legal fees and litigation-related expenses incurred by us in these proceedings will not continue to materially exceed the applicable insurance coverage limits and deductibles.

The Company and the Bank are involved in a variety of litigation and other proceedings. See “Item 3 – Legal Proceedings,” and “Part II, Item 8 – Financial Statements and Supplementary Data-Data – Note 14 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities,” for details. We are prosecuting and defending these lawsuits and other proceedings vigorously, and management believes that the Bank has substantial defenses to the claims that have been asserted. The ultimate outcome of any such proceedings cannot be predicted with any certainty. It also remains possible that other private parties or governmental authorities will pursue additional claims against the Bank as a result of the Bank’s dealings with certain of the Mann Entities or as a result of the actions taken by the Pioneer Parties.Parties (each as defined below). The Company’s and the Bank’s legal fees, costs and expenses related to these actions are significant and are expected to continue to be significant. In addition, costs associated with potentially prosecuting, litigating or settling any litigation, satisfying any adverse judgments, if any, or other proceedings, could be significant. These future costs, settlements, judgments, sanctions or other expenses could have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

In addition, it is inherently difficult to assess the outcome of these matters, and we may not prevail in such proceedings or litigation. Any such legal or regulatory actions will subject us to substantial compensatory or punitive damages, significant fines, sanctions, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. Our involvement in any such matters, whether tangential or otherwise, and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management’s attention from the operation of our business. In view of the inherent difficulty of predicting the outcome of such matters, we cannot predict the eventual outcome of the pending matters, timing of the ultimate resolution of these matters, or eventual loss, fines or penalties related to each pending matter. We establish an accrued liability when those matters present loss contingencies that are both probable and estimable. These estimates are based upon currently available information and are subject to significant judgment, a variety of assumptions and known and unknown uncertainties. See “Item 3 – Legal Proceedings,” for details. As a result, the ultimate outcome of our legal or regulatory actions could have a material adverse effect on the Company’s financial condition and results of operations. See “Item 3 – Legal Proceedings,” for details.

As described above in the section captioned “Supervision and Regulation” included in Part I above,, we are subject to extensive regulation, supervision and examination by our banking regulators, the OCC, the FDIC, and the Federal Reserve Board. Such regulation and supervision govern the activities in which a financial institution and its holding company may engage and are intended primarily for the protection of the insurance fund and the depositors and borrowers of the Bank rather than for the protection of our stockholders. In addition, as described above, we are involved in a number of legal, regulatory, governmental and other proceedings, claims or investigations. See “Item 3 – Legal Proceedings,” for details. The various regulatory agencies with supervisory authority over us have significant latitude in addressing our compliance with applicable laws and regulations including, but not limited to, those governing consumer compliance, credit, fair lending, anti-money laundering, anti-terrorism, capital adequacy, asset quality, interest rate risk, management, earnings, liquidity, and various other factors affecting us. As part of this regulatory structure, we are subject to policies and other guidance developed by the regulatory agencies with respect to, among other things, capital levels, the timing and amount of dividend payments, the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Our regulators have broad discretion to impose monetary fines, restrictions and limitations on our operations, and other possible sanctions if they determine, for any reason, that our operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies. For example, if it is determined that we have failed to operate according to the regulations, policies and directives of our regulators, we would be subject to sanctions for non-compliance, including seizure of the property and business of the bankBank and suspension or revocation of our charter. In addition, our regulators may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted our business in an unsafe or unsound manner, or contrary to the depositors’ interests, or have been negligent in the performance of their duties. In addition, if it is determined that we have engaged in an unfair or deceptive act or practice, our regulators may issue an order to cease and desist and impose a fine on us. New York consumer protection and civil rights statutes applicable to the Bank permit private individual and class action lawsuits, and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damages and attorney’s fees in the case of certain violations of those statutes. It is possible that regulators may impose any or all of these sanctions if they determine that we have failed to comply with applicable laws or regulations.

The OCC and the other federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under the guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors, (i) total reported loans for construction, land acquisition and development, and other land represent 100% or more of total capital, or (ii) total reported loans secured by multi-family and non-owner occupied, non-farm, non-residential properties, loans for construction, land acquisition and development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital. Based on these factors, we have a concentration in loans of the type described in (ii) above of 138.7%153.3% of our total capital at JuneDecember 30,31, 2024.2025. The purpose of the guidance is to assist banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. The guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. Our bank regulators could require us to implement additional policies and procedures consistent with their interpretation of the guidance if in the future our concentration levels increased and that may result in additional costs to us or that may result in a curtailment of our commercial real estate and multi-family lending and/or the requirement that we maintain higher levels of regulatory capital, either of which would adversely affect our loan originations and profitability.

ClimateEnvironmental changematters and related legislative and regulatory initiatives may materially affect our business and results of operations.

As the effects of climate change continue to create concern for the state of the global environment, the global business community has increased its political and social awareness surrounding this issue. Federal and state legislatures and regulatory agencies continue to propose numerous initiatives to address environmental issues, including to supplement the global effort to combat climate change. More expansive initiatives are expected to continue, including potentially increasing supervisory expectations with respect to banks’ risk management practices, revising expectations for credit portfolio concentrations based on climate-related factors and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change. We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns.

The lack of empirical data surrounding the credit and other financial risks posed by climate change render it difficult, or even impossible, for us to predict how specifically climate change may impact our financial condition and results of operations; however, the physical effects of climateenvironmental changematters may also directly impact us. Specifically, unpredictable and more frequent weather disasters may adversely impact the real property, and/or the value of the real property, securing the loans in our portfolio. Additionally, if insurance obtained by our borrowers is insufficient to cover any losses sustained to the collateral, or if insurance coverage is otherwise unavailable to our borrowers, the collateral securing our loans may be negatively impacted by climate change, natural disasters and related events, which could impact our financial condition and results of operations. Further, the effects of climate change may negatively impact regional and local economic activity, which could lead to an adverse effect on our customers and impact the communities in which we operate. Overall, climate change, its effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.

In preparing periodic reports we are required to file under the Securities Exchange Act of 1934, including our consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of specified dates. These estimates and assumptions are based on management’s best estimates and experience at such times and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management includes the items discussed in the proceedings described in “Item 3 – Legal Proceedings,” “Part II, Item 8 – Financial Statements and Supplementary Data-Data – Note 14 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities,” and the items described in our “Critical Accounting Policies and Estimates,” our evaluation of the legal remedies available to the Bank related to the potentially fraudulent activities and our evaluation of the adequacy of our allowance for credit losses on loans.

As a result of the completion of our initial public offering, we became a public reporting company. The obligations of being a public company, including the substantial public reporting obligations, require significant expenditures and place additional demands on our management team. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”) requires annual management assessments of the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm annually attests to the effectiveness of our internal control over financial reporting. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. These obligations have increased our operating expenses and could divert our management’s attention from our operations.

Liquidity is essential to our business. We rely on our ability to gather deposits, make investments and effectively manage the repayment and maturity schedules of loans to ensure that there is adequate liquidity to fund our operations and pay our obligations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity. Our most important source of funds is deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which are strongly influenced by external factors such as changes in interest rates, local and national economic conditions, the availability and attractiveness of alternative investments, and perceptions of the stability of the financial services industry generally and of our institution specifically. Further, the demand for deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the Federal Reserve Board, or regulatory actions that decrease customer access to particular products. Demand for deposits has also been adversely affected by the negative impact of bank failures and associated decrease in customer confidence in the safety and soundness of regional banks (see the Risk Factor entitled “Certain events involving the failure of financial institutions may adversely affect our business, and the market price of our common stock” elsewhere in this filing for more information on these events). If customers continue to move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, which would increase our funding costs and reduce net interest income. Any changes made by us to the rates we offer on deposits to remain competitive with other financial institutions may also adversely affect our profitability and liquidity.

Municipal deposits are a significant source of funds for our lending and investment activities. At JuneDecember 30,31, 2024,2025, $440.3$451.9 million, or 28.4%26.0% of our total deposits, consisted of municipal deposits from local government entities such as towns, cities, school districts and other municipalities, which are collateralized by letters of credit from the FHLBNY and investment securities. These deposits may be more volatile than other deposits. If a significant amount of these deposits were withdrawn in a short period of time, it could have a negative impact on our short-term liquidity and have an adverse impact on our liquidity, business, financial condition and results of operations.

As we have diversified our sources of income, we have become increasingly reliant on non-interest income, including insurance fees and commissions. Revenue from these sources could be negatively affected by fluctuating premiums in the insurance markets or other factors beyond our control. Other factors that affect our insurance revenue are the profitability and growth of our clients, continued development of new products and services, as well as our access to new markets. In addition, our insurance operations are dependent on a small number of established insurance professionals, whose departure could result in the loss of a significant number of client accounts. Our insurance revenues and profitability may also be adversely affected by regulatory developments impacting healthcare and insurance markets, possibly including recent legislative proposals and discussions relating to national health insurance and the elimination of the private health insurance market.

Also, additional or modified regulations, or non-compliance with regulations, may adversely affect our wealth management operations. Due to strong competition, our wealth management business may not be able to attract and retain clients. Competition is strong because there are numerous well-established and successful investment management and wealth advisory firms including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies. Many of our competitors have greater resources than we have. Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively impacted.

Non-interest Income. Our primary sources of non-interest income are banking fees and service charges, and insurance and wealth management services income. Our non-interest income also includes litigation-related income, net gain or losses on equity securities, net gain or losses on sales and calls of available for sale securities, net gain or loss on disposal of assets, other gains and losses, and miscellaneous income.

Non-Interest Expense. Our non-interest expensesexpense consist of salaries and employee benefits, net occupancy and equipment, data processing, advertising and marketing, insurance premiums, federal deposit insurance premiums, professional fees, litigation-relatedgoodwill expense,impairment loss, and other general and administrative expenses.

Salaries and employee benefits consist primarily of salaries and wages paid to our employees, payroll taxes, and expenses for worker’s compensation and disability insurance, health insurance, retirement plans and other employee benefits, as well as commissionscommissions, share-based compensation and other incentives.

Net occupancy and equipment expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of depreciation charges, rental expenses, furniture and equipment expenses, maintenance, real estate taxestaxes, net gain or loss on disposal or impairment of premises and equipment, and costs of utilities. Depreciation of premises and equipment is computed using a straight-line method based on the estimated useful lives of the related assets or the expected lease terms, if shorter.

Other general and administrative expenses include expenses for office supplies, postage, telephone, insuranceinsurance, litigation-related expense, which includes expenses related to legal proceedings, and other miscellaneous operating expenses.

The following tables set forth selected historical financial and other data for the Company on a consolidated basis at and for the yearsdates ended June 30, 2024 and 2023.indicated.

Our business strategy is to operate as a well-capitalized and profitable diversified financial institution focused on our relationship-based model of creating customer engagementadvocacy by way of our highly engaged employees, which we believe will result in growth through new customer acquisition, deepened existing customer relationships, and further market penetration. At Pioneer, we are “More Than a Bank” which means that we are focused on growing our broad range of financial products and services for individual, business and municipal customers by continuing to expand our banking, insurance, consulting, and wealth management businesses. We are fully grounded in the belief the future of financial services relies heavily on providing an unparalleled level of personal service and a comprehensive approach to our customer’s finances. Our sales enablement strategy reflects that approach and through this client-centric endeavor, we bring our products, services, and expertise to our customers in a seamless and efficient manner. We distinguish ourselves by maintaining the culture of a local community financial institution, emphasizing an engaged workforce, creating positive community impact all while offering a full range of comprehensive financial products and services, in a consultative approach. We believe that we have a competitive advantage in the markets we serve because of our over 130-year history in the community, our knowledge of the local marketplace and our long-standing reputation for providing superior, relationship-based customer service. The following are the key elements of our business strategy:

Strategically grow through deepening customer relationships. Integral to our strategy is our belief that there is a large customer base in our market that prefers doing business with local institutions that are grounded in the success of their customers and communities. These customers are seeking more relationship-based service than they receive from the larger regional banks and other financial services providers. By offering personalized relationship-based customer service, along with our extensive knowledge of our local markets and a wide range of product offerings, we believe it has allowed us to establish strong relationships with our customers. We believe we can continue to leverage these strengths to attract and retain customers. We have embarked on a sales enablement strategy that is focused on engaging in a multidisciplinary approach to customer interaction. Based on the foregoing, our attractive market area and strategic investment in technology to enhance the customer experience, we believe we are well-positioned to strategically grow our balancecustomer sheet.relationships.

Continue our emphasis on commercial customer acquisition, with a targeted focus on commercial lending while maintaining an appropriate balance in the overall loan portfolio. We view the long term growth of our commercial loan portfolio, consistent with safe and sound underwriting practices, as a means of increasing our interest income and establishing relationships with local businesses. These relationships will offer a recurring and we believe broader source of fee income through commercial deposits, commercial insurance and employee benefits products and consulting. We generally require that commercial borrowers establish a commercial deposit account with us, which assists our efforts to grow core deposits and cross-sell our other products and services. Our focus on commercial lending also has the benefits of increasing the yield on our loan portfolio while reducing the average term to repricing of our loans. However, we will continue to maintain an appropriate balance in the overall loan portfolio between our commercial and non-commercial loans to diversify our credit risk. Through our strategic partnership with the Mortgage Banking CompanyCompany, we are able to decide whether we want to purchase residential mortgage loans originated by the Mortgage Banking Company for our portfolio. During the calendar year ended JuneDecember 30,31, 20242025, we strategically increased our portfolio of non-commercial loans, in part to take advantage of the substantialhigher recentinterest increaserate in market rates,environment, through the purchases of residential mortgage loans, increasing that portfolio by $170.6$104.1 million or 36.8%15.1% as compared to theDecember prior31, year.2024.

Diversify our products and services to increase non-interest income. Our strategy includes further expansion of our customer base, deepening relationships and a focus on non-interest income by growing our financial services businesses. We sell commercial and personal insurance products and provide employee benefits products and services through our wholly-owned subsidiary, Pioneer Insurance Agency, Inc., which we acquired in 2016, and grew with our acquisition of Capital Region Strategic Employee Benefits Services, LLC employee benefits and consulting business in 2017. We entered into the wealth management services business by establishing Pioneer Financial Services, Inc. in 1997 as a wholly-owned subsidiary of the Bank (which operates under the name Pioneer Wealth Management). We substantially grew our wealth management services business with the acquisitionacquisitions of Ward Financial Management, LTD’s business in 2018, three wealth management practices’ businesses in fiscal year 2022 and withHudson Financial, LLC’s business in fiscal year 2024. On October 28, 2025, Pioneer Financial Services, Inc., completed the acquisition of certain assets of HudsonBrown Financial,Financial LLCManagement Group, LLC, a wealth management firm in fiscalthe yearCapital 2024.Region of New York. The acquisition was made to expand the Company’s wealth management services activities and added $73 million of assets under management. At JuneDecember 30,31, 2024,2025, Pioneer Financial Services, Inc. had $1.13$1.4 billion of assets under management. We believe that there will be opportunities to cross-sell these products to our deposit and borrower customers which may further increase our non-interest income, and also to cross-sell our banking services and products to customers and clients of Pioneer Insurance Agency, Inc. and Pioneer Financial Services, Inc. We intend to consider future acquisition opportunities to expand our insurance, wealth management or other complementary financial services businesses.

Increase our Share of Lower-Cost Core Deposits. Core deposits represent our best opportunity to develop customer relationships that enable us to cross-sell the products and services of our complementary subsidiaries. We continue to emphasize offering core deposits (demand deposit accounts, savings accounts and money market accounts) to individuals, businesses and municipalities located in our market area. We attract and retain transaction accounts by offering competitive products and rates and providing quality customer service. At JuneDecember 30,31, 2024,2025, core deposits comprised 89.2%84.5% of our total deposits. Core deposits are our least costly source of funds which improves our interest rate spread and also contributes non-interest income from account- related services.

Allowance for Credit Losses. The allowance for credit losses consists of the allowance for credit losses on loans, securities held to maturity and unfunded commitments. Effective July 1, 2023, theThe measurement of Current Expected Credit Losses (“CECL”) on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, macroeconomic variables (e.g., civilian unemployment and U.S. gross domestic product (“GDP”)), and reasonable and supportable forecasts from the Federal Open Market Committee (“FOMC”) that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the estimated fair value of the collateral, as applicable. The allowance for credit losses on loans and securities held to maturity, as reported in our consolidated statements of condition, are adjusted by a provision for credit losses, which is recognized in earnings, and reduced by the charge-offs, net of recoveries. The allowance for credit losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws and is included in other liabilities on the Company’s consolidated statements of condition. All loan information presented as of June 30, 2023 or a prior date is presented in accordance with previously applicable GAAP (the incurred loss method).

Legal Proceedings and Other Contingent Liabilities. In the ordinary course of business, we are involved in a number of legal, regulatory, governmental and other proceedings, claims or investigations that could result in losses, including damages, fines and/or civil penalties, which could be significant concerning matters arising from the conduct of our business. In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek large or indeterminate damages, we generally cannot predict the eventual outcome of the pending matters, timing of the ultimate resolution of these matters, or eventual loss, fines or penalties related to each pending matter. In accordance with applicable accounting guidance, we establish an accrued liability when those matters present loss contingencies that are both probable and estimable. Our estimate of potential losses will change over time and the actual losses may exceed these estimates, and there may be an exposure to loss in excess of any amounts accrued. As a matter develops, management, in conjunction with any outside counsel handling the matter, evaluate on an ongoing basis whether such matter presents a loss contingency that is probable and estimable; or where a loss is reasonably possible, whether in excess of a related accrued liability or where there is no accrued liability, whether it is possible to estimate a range of possible loss. Once the loss contingency is deemed to be both probable and estimable, we establish an accrued liability and record a corresponding amount of litigation-related expense. We continue to monitor the matters for further developments, including our interactions with various regulatory agencies with supervisory authority over us,developments that could affect the amount of the accrued liability that has been previously established. These estimates are based upon currently available information and are subject to significant judgment, a variety of assumptions and known and unknown uncertainties. The matters underlying the accrued liability and estimated range of possible losses are unpredictable and may change from time to time, and actual losses may vary significantly from the current estimate and accrual which could have a material negative effect on our financial results. The estimated range of possible loss does not represent our maximum loss exposure.

The following tabletables setsset forth average balances, average yields and costs, and certain other information for the yearsperiods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense, as applicable.

The following table presents the effects of changing rates and volumes on our net interest income for the yearsperiods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior two columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

Comparison of Financial Condition at JuneDecember 30,31, 20242025 and JuneDecember 30,31, 20232024

Total Assets. Total assets of $1.90$2.15 billion at JuneDecember 30,31, 20242025 increased $39.2$171.0 million, or 2.1%,8.6%, from $1.86$1.98 billion at JuneDecember 30,31, 2023.2024. The increase was due primarily to an increase of $199.9$211.7 million, or 17.5%,14.8%, in net loans receivable,receivable and an increase of $14.7$37.2 million, or 9.8%,38.5%, in cash and cash equivalents and an increase of $1.1 million, or 4.8%, in securities held to maturity,equivalents, offset in part by a decrease of $174.3$101.1 million, or 40.4%,31.4%, in securities available for sale. Since June 30, 2023, we continued to shift the composition of interest-earning assets from securities available for sale to net loans receivable.

Cash and Cash Equivalents. Total cash and cash equivalents of $165.2$133.7 million at JuneDecember 3031, 2024,2025, increased $14.7$37.2 million, or 9.8%,38.5%, from $150.5$96.5 million at JuneDecember 30,31, 2023.2024.

Securities HeldAvailable tofor Maturity.Sale. Total securities heldavailable tofor maturitysale of $25.1$220.4 million at JuneDecember 30,31, 20242025 increaseddecreased $1.1$101.1 million, or 4.8%,31.4%, from $23.9$321.5 million at JuneDecember 30,31, 2023.2024. The increasedecrease was primarily due to purchasesmaturities, paydowns and calls of $4.1$212.7 millionmillion, offset in part by maturitiespurchases of $2.7$102.0 million and a provision for credit losses of $262,000securities during the year ended JuneDecember 30,31, 2024.2025.

Net Loans Receivable. Net loans receivable of $1.34$1.65 billion at JuneDecember 30,31, 20242025 increased $199.9$211.7 million, or 17.5%,14.8%, from $1.14$1.43 millionbillion at JuneDecember 30,31, 2023.2024. By loan category, residential mortgage loans increased by $170.6$104.1 million, or 36.8%,15.1%, to $633.8$793.7 million at JuneDecember 30,31, 20242025 from $463.2$689.6 million at JuneDecember 30,31, 2023,2024; commercial real estate loans increased by $51.7 million, or 12.4%, to $466.5 million at December 31, 2025 from $414.8 million at December 31, 2024; commercial construction loans increased by $25.7$38.7 million, or 27.7%,29.6%, to $118.4$169.7 million at JuneDecember 30,31, 20242025 from $92.7$131.0 million at JuneDecember 30,31, 2023,2024; commercial and industrial loans increased by $3.9$16.4 million, or 4.0%,15.1%, to $101.2$124.9 million at JuneDecember 30,31, 20242025 from $97.3$108.5 million at JuneDecember 30,31, 2023, and2024; home equity loans and lines of credit increased by $7.3$2.7 million, or 8.5%,2.8%, to $92.8$97.6 million at JuneDecember 30,31, 20242025 from $85.5$94.9 million at JuneDecember 30,31, 2023.2024; Theseand increasesconsumer wereloans partially offsetincreased by a decrease in commercial real estate loans of $5.0$1.6 million, or 1.2%,9.3%, to $406.2$19.2 million at JuneDecember 30,31, 20242025 from $411.2$17.6 million at JuneDecember 30,31, 2023, and a decrease in consumer loans of $3.3 million, or 19.3%, to $13.5 million at June 30, 2024 from $16.8 million at June 30, 2023.2024.

The increase in residential mortgage loans was primarily related to the Bank’s asset allocation shift, using investment securities cash flow and cash to fund higher yielding assets. The Bank’s relationship with the third-party Mortgage Banking Company which facilitated a significantan increase in residential mortgage loan volume,volume. despiteThe theincrease higherin interestcommercial ratereal environment.estate and commercial and industrial loans was due to loan funding outpacing loan payoffs. The increase in commercial construction loans was due to funding of increased construction commitments. The increase in home equity loans and lines of credit was due to increased utilization rates of home equity lines of credit. The decrease in commercial real estate loans was related to loan payoffs outpacing loan originations.

Total Shareholders’ Equity. Total shareholders’Shareholders’ equity of $296.5$323.9 million at JuneDecember 30,31, 20242025 increased $29.8$19.3 million, or 11.2%,6.3%, from $266.7$304.6 million at JuneDecember 30,31, 20232024 primarily as a result of net income of $15.3$20.3 million,million aand decreasean increase in accumulated other comprehensive lossincome of $14.5$8.5 million, and the net increase of $507,000 related to the day-one CECL adjustment, partially offset by the repurchase of common stock of $1.1$11.3 million.

Comparison of Operating Results for the YearsYear Ended December 31, 2025 and the Fiscal Year Ended June 30, 2024 and June 30, 2023

General. Net income decreasedincreased by $6.6$5.0 million, or 30.5%,32.9%, to $15.3$20.3 million for the year ended JuneDecember 30,31, 20242025 from $21.9$15.3 million for the fiscal year ended June 30, 2023.2024. The decreaseincrease was primarily due to a $8.9$21.2 million increase in interest and dividend income, partially offset by a $8.6 million increase in interest expense, a $5.4 million increase in non-interest expense and a $2.7$2.1 million increase in the provision for credit losses, partially offset by a $2.2 million increase in non-interest income, a $1.0 million increase in net interest income and a $1.8 million decrease in income tax expense.

Interest and Dividend Income. Interest and dividend income increased $17.3$21.2 million, or 24.3%,24.0%, to $88.3$109.5 million for the year ended JuneDecember 30,31, 2024,2025 from $71.0$88.3 million for the fiscal year ended June 30, 2023 due to increases in interest income on loans and interest-earning deposits and other.2024. The increase was the result of a 9961 basis points increase in the average yield on interest-earning assets to 5.02%5.63% for the year ended JuneDecember 30,31, 2024,2025, from 4.03%5.02% for the fiscal year ended June 30, 2023,2024 partiallyand offsetdue byto a decrease$185.3 million increase in the average balance of interest-earning assets ofto $1.9$1.95 million.billion for the year ended December 31, 2025 from $1.76 billion for the fiscal year ended June 30, 2024. The increase in the average yield on interest-earning assets was driven by an increase in variable rate loan yields and yields on interest-earning deposits with banks due to the current higher interest rate environment, as well as due to market relatedmarket-related increases in interest rates on new loans and an asset allocation shift, usingon investment securities’securities cashpurchased. flowThe toincrease fundin higher yielding assets. Averageaverage interest-earning assets ofwas $1.76primarily billiondue forto the yearincrease ended June 30, 2024 decreased by $1.9 milllion fromin the yearaverage endedbalance Juneof 30, 2023.loans.

Interest income on loans increased $17.2$19.2 million, or 31.0%,26.6%, to $72.4$91.6 million for the year ended JuneDecember 30,31, 20242025 from $55.2$72.4 million for the fiscal year ended June 30, 2023.2024. Interest income on loans increased due to a 5118 basis points increase in the average yield on loans to 5.72%5.90% for the year ended JuneDecember 30,31, 20242025 from 5.21%5.72% for the fiscal year ended June 30, 2023,2024, coupled with a $206.2$287.2 million increase in the average balance of loans to $1.27$1.55 billion for the year ended JuneDecember 30,31, 20242025 from $1.06$1.27 billion for the fiscal year ended June 30, 2023.2024. The increase in average yield on loans was primarily due to loans tied to variable short-term rates which increased during the year ended June 30, 2024 as well as due to market relatedmarket-related increases in interest rates on new loans. The increase in the average balance of loans was principally due to purchases of residential mortgage loans and an increase in originations of commercial real estate, commercial construction and commercial and industrial loans.

Certain statements contained herein are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, or future or conditional verbs, such as “will,” “would,”, “expand”, “extend”, “should,” “could,” or “may.” The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. No assurance can be given that the future results covered by forward-looking statements will be achieved. Certain forward-looking statements are included in this Form 10-Q, principally in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition to the factors described in Item 1A – Risk Factors, factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to:

Non-interest Income. Our primary sources of non-interest income are banking fees and service charges, and insurance and wealth management services income.income and net gains on sale of loans. Our non-interest income also includes net gains or losses on trading securities, other gains and losses, and miscellaneous income.

Targeted Lending Co., LLC (“Targeted Lending”)

As we continue to execute on our business strategy, on April 24, 2026 we completed the acquisition of 100% of the membership interests of Targeted Lending Co., LLC, (“Targeted Lending”),Lending, an independent equipment financing company with approximately $120 million of loans on its balance sheet.

Targeted Lending, as a wholly owned subsidiary of Pioneer Bank, National Bank,Association, will operate as the newly formed Specialty Financing division, expanding our commercial lending capabilities and extending our reach into nationwide equipment finance markets. Targeted Lending through its originator-centric equipment finance platform provides financing solutions for essential, income-producing equipment, offering loans up to $400,000 to small and mid-sized businesses across diverse industries.

On April 20, 2026, we completed the acquisitions of Reiser Consulting Group, Inc. of Albany, NY and Wyndham Benefits, LLC of Ballston Spa, NY.LLC. The acquisitions are expected to significantly increaseincreased the size of our Employee Benefits division and are expected to strengthenstrengthens our ability to deliver expanded services and product offerings for both current and prospective clients throughout the Capital region.clients.

As we look forward, our strategic focus remains clear: to deliver long-term value to our stockholders while serving the needs of our clients, employees, and communities. Our strategy of being “More Than a Bank” will continue to prioritize growth in key markets, disciplined lending, diversifying revenue streams and expanding our product and service offerings to meet evolving client needs.

Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting estimate given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolios. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain, including making significant estimates of current credit risks and trends using existing quantitative and qualitative information, and reasonable and supportable forecasts of future economic conditions, which may undergo frequent and material changes. Subsequent evaluations of the then-existing loan portfolios, in light of changes in economic conditions, new information regarding existing loans and other factors, may result in significant changes in the allowance for credit losses in those future periods. For example, changes to the FOMC’s forecasted civilian unemployment rate and year-over-year U.S. GDP growth could have a material impact on the model’s estimation of the allowance for credit losses on loans. An immediate increase of 100 basis points in the FOMC’s projected rate of civilian unemployment and a decrease of 100 basis points in the FOMC’s projected rate of U.S. GDP growth would increase the model’s total calculated allowance for credit losses on loans by $1.4$1.7 million, or 5.4%,6.1%, as of MarchJune 31,30, 2026 assuming qualitative adjustments are kept at current levels. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Additionally, changes in those factors and inputs may not occur at the same rate and inputs may be directionally inconsistent, such that improvements in one factor may offset deterioration in others. Going forward, the impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolios, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to our reported earnings.

The following tabletables setsset forth average balances, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense, as applicable.

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

Total Assets. Total assets of $2.22$2.36 billion at MarchJune 31,30, 2026 increased $70.3$213.0 million, or 3.3%,9.9%, from $2.15 billion at December 31, 2025. The increase was due primarily to an increase of $54.7$224.6 million, or 3.3%,13.6%, in net loans receivable and an increase of $23.2$22.0 million, or 17.4%,100.0%, in trading securities, offset in part by a decrease of $39.1 million, or 29.3% in cash and cash equivalents,equivalents offset in part byand a decrease of $19.5 million, or 8.9%, in securities available for sale.

Cash and Cash Equivalents. Total cash and cash equivalents of $156.9$94.6 million at MarchJune 31,30, 2026, increaseddecreased $23.2$39.1 million, or 17.4%,29.3%, from $133.7 million at December 31, 2025.

Securities Available for Sale. Total securities available for sale of $200.9 million at MarchJune 31,30, 2026 decreased $19.5 million, or 8.9%, from $220.4 million at December 31, 2025. The decrease was primarily due to maturities, paydowns and calls of $26.1$45.8 million, offset in part by purchases of $7.0$28.0 million of securities during the threesix months ended MarchJune 31,30, 2026.

Securities Held to Maturity. Total securities held to maturity of $44.4$44.8 million at MarchJune 31,30, 2026 increased $2.9$3.3 million, or 6.9%,7.8%, from $41.5 million at December 31, 2025. The increase was primarily due to purchases of $3.0$3.7 million during the threesix months ended MarchJune 31,30, 2026.

Trading Securities. Total trading securities was $8.1$22.0 million at MarchJune 31,30, 2026 compared to none at December 31, 2025. The increase in trading securities was a result of the commencement of operations of our broker-dealer subsidiary, Pioneer Capital Markets, Inc. in January 2026.

Net Loans Receivable. Net loans receivable of $1.70$1.87 billion at MarchJune 31,30, 2026 increased $54.7$224.6 million, or 3.3%,13.6%, from $1.65 billion at December 31, 2025. The increase in net loans receivable was primarily a result of growth in the commercial constructionand industrial loan portfolio which increased by $31.7$147.4 million, 18.6%,or 118.0%, to $201.4$272.3 million at MarchJune 31,30, 2026 from $169.7$124.9 million at December 31, 2025. The residential mortgage loan portfolio increased by $27.1$46.2 million, or 3.4%,5.8%, to $820.8$839.9 million at MarchJune 31,30, 2026 from $793.7 million at December 31, 2025 and the commercial andconstruction industrialloan loansportfolio increased by $5.4$39.9 million, or 4.3%,23.5%, to $130.3$209.6 million at MarchJune 31,30, 2026 from $124.9$169.7 million at December 31, 2025, offset in part by a decrease in commercial real estate loans by $8.6$5.0 million, or 1.8%,1.1%, to $457.9$461.4 million at MarchJune 31,30, 2026 from $466.5$466.4 million at December 31, 2025.

The increase in commercial constructionand industrial loans was primarily due to fundingthe acquisition of increasedTargeted constructionLending commitments.during the three months ended June 30, 2026. The increase in residential mortgage loans was primarily related to the Bank’s relationship with a third-party mortgage banking company which facilitated an increase in residential mortgage loan volume, despite the higher interest rate environment. The increase in commercial and industrialconstruction loans was due to loan funding outpacingof loanincreased payoffs.construction commitments. The decrease in commercial real estate loans was due to loan payoffs outpacing loan funding.

The following table presents our commercial real estate loan portfolio by industry sector at MarchJune 31,30, 2026.

Deposits. Deposits of $1.85$1.97 billion at MarchJune 31,30, 2026 increased $113.1$229.8 million, or 6.5%,13.2%, from $1.74 billion at December 31, 2025. By deposit category, moneycertificates marketof accountsdeposits increased by $86.7$201.7 million, or 13.7%,74.9%, to $720.2$471.2 million at MarchJune 31, 2026 from $633.5 million at December 31, 2025, interest-bearing demand accounts increased by $34.1 million, or 26.2%, to $164.5 million at March 31, 2026 from $130.4 million at December 31, 2025, and non-interest-bearing demand accounts increased by $21.9 million, or 4.8%, to $478.0 million at March 31, 2026 from $456.1 million at December 31, 2025, offset in part by a decrease in certificates of deposit by $29.5 million, or 10.9%, to $240.0 million at March 31,30, 2026 from $269.5 million at December 31, 2025 (included in certificates of deposit were brokered deposits which decreasedincreased by $43.3$174.5 million to $66.9$284.7 million at MarchJune 31,30, 2026 from $110.2 million at December 31, 2025)., and money market accounts increased by $24.7 million, or 3.9%, to $658.2 million at June 30, 2026 from $633.5 million at December 31, 2025.

The increase in moneycertificates marketof accountsdeposit was primarily due to growthan increase in municipalbrokered deposits due to seasonalitydeposits, and due toby a migration of funds from non-interest bearing demand, savings and other lower rate interest-bearing accounts. The increase in non-interestmoney bearing demand accounts and demandmarket accounts was primarily due to growtha migration of funds from non-interest bearing demand, savings and other lower rate interest-bearing accounts. The increase in municipalbrokered deposits due to seasonality. The decrease in certificates of deposit was primarily due to afund decreaseloan ingrowth brokeredand deposits.the acquisition of Targeted Lending.

Uninsured deposits after exclusions represented 14.4%13.4% and 16.6% of total deposits as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The Company believes that this presentation of uninsured deposits provides a more accurate view of deposits at risk as affiliate deposits are not customer facing and therefore are eliminated upon consolidation, and collateralized deposits are fully secured by investments and municipal letters of credit.

Borrowings from Federal Home Loan Bank of New York (“FHLBNY”). There were no borrowings from FHLBNY at MarchJune 31,30, 2026, compared to $50.0 million at December 31, 2025. The decrease in borrowings from FHLBNY was due to the payoff of the borrowings during the threesix months ended MarchJune 31,30, 2026.

Total Shareholders’ Equity. Total shareholders’Shareholders’ equity of $328.6$328.3 million at MarchJune 31,30, 2026 increased $4.7$4.4 million, or 1.5%,1.4%, from $323.9 million at December 31, 2025 primarily as a result of net income of $5.3$8.8 millionmillion, offset in part by a decrease in accumulated other comprehensive income of $1.2$1.9 million and by the repurchase of common stock of $3.6 million.

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

General. Net income decreased by $473,000$3.0 million to $5.3$3.5 million for the three months ended MarchJune 31,30, 2026 as compared to $5.8$6.5 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily due to an increase in non-interest expense of $3.5$7.5 million, partially offset by an increase in net interest income of $1.7$3.3 millionmillion, an increase of non-interest income of $658,000, and a decrease in income tax expense of $1.2 million.$385,000.

Interest and Dividend Income. Interest and dividend income increased $2.6$4.9 million, or 9.8%,18.0%, to $28.4$31.9 million for the three months ended MarchJune 31,30, 2026, from $25.8$27.0 million for the three months ended MarchJune 31,30, 2025. The increase was the result of a 1632 basis points increase in the average yield on interest-earning assets to 5.78%6.04% for the three months ended MarchJune 31,30, 2026, from 5.62%5.72% for the three months ended MarchJune 31,30, 2025. The increase in the average yield on interest-earning assets was driven by market relatedmarket-related increases in interest rates on new loans and on investment securities purchased.and loans acquired from the Targeted Lending acquisition. Average interest-earning assets increased by $127.2$232.2 million from $1.91$1.93 billion for the three months ended MarchJune 31,30, 2025 to $2.03$2.16 billion for the three months ended MarchJune 31,30, 2026 primarily due to the increase in the average balance of loans.

Interest income on loans increased $3.2$5.5 million, or 15.3%,24.6%, to $24.4$27.8 million for the three months ended MarchJune 31,30, 2026 from $21.2$22.3 million for the three months ended MarchJune 31,30, 2025. Interest income on loans increased due to a $205.7$303.2 million increase in the average balance of loans to $1.67$1.82 billion for the three months ended MarchJune 31,30, 2026 from $1.47$1.52 billion for the three months ended MarchJune 31,30, 2025 and a seven24 basis points increase in the average yield on loans to 6.05%6.28% for the three months ended MarchJune 31,30, 2026 from 5.98%6.04% for the three months ended MarchJune 31,30, 2025. The increase in the average balance of loans was principallyprimarily due to the acquisition of Targeted Lending during the three months ended June 30, 2026 and by purchases of residential mortgage loans and increased originations of commercial construction loans. The increase in average yield on loans was primarily due to market related increases in interest rates on new loans.loans and the acquisition of Targeted Lending during the three months ended June 30, 2026.

Interest income on securities decreased $773,000,$966,000, or 20.5%,24.5%, to $3.0 million for the three months ended MarchJune 31,30, 2026 from $3.8$3.9 million for the three months ended MarchJune 31,30, 2025. Interest income on securities decreased due to a $102.4$109.1 million decrease in the average balance of securities to $254.8$243.8 million for the three months ended MarchJune 31,30, 2026 from $357.2$352.9 million for the three months ended MarchJune 31,30, 2025, partially offset by a 5143 basis points increase in the average yield on securities to 4.87%4.99% for the three months ended MarchJune 31,30, 2026 from 4.36%4.56% for the three months ended MarchJune 31,30, 2025. The decrease in the average balance of securities was due to the maturities of U.S. government and agency and municipal obligation securities, outpacing purchases during the three months ended MarchJune 31,30, 2026. The increase in the average yield of securities was primarily due to the higher market interest rates for new securities that were purchased replacing maturities of lower yielding securities.

Interest income on interest-earning deposits with banks, trading securities, and other increased $56,000$344,000 to $953,000$1.1 million for the three months ended MarchJune 31,30, 2026 from $897,000$732,000 for the three months ended MarchJune 31,30, 2025. Interest income on interest-earning deposits with banks, trading securities, and other increased due to a $23.9$38.2 million increase in the average balances to $103.9$102.7 million for the three months ended MarchJune 31,30, 2026 from $80.0$64.5 million for the three months ended MarchJune 31,30, 2025, primarily due to an increase in the average balance of trading securities,securities and interest-earning deposits with banks, partially offset by an 8636 basis points decrease in the average yield to 3.77%4.27% for the three months ended MarchJune 31,30, 2026 from 4.63% for the three months ended MarchJune 31,30, 2025 primarily due to changes in market interest rates.

Interest Expense. Interest expense increased $860,000,$1.6 million, or 12.7%,21.9%, to $7.6$9.0 million for the three months ended MarchJune 31,30, 2026 from $6.8$7.4 million for the three months ended MarchJune 31,30, 2025, primarily as a result of an increase in interest expense on deposits. The increase was primarily due to a four basis points increase in the average cost of interest-bearing liabilities to 2.34%2.45% for the three months ended MarchJune 31,30, 2026 from 2.30%2.41% for the three months ended MarchJune 31,30, 2025, as well as a shift in the mix of interest-bearing liabilities to higher interest rate liability accounts.

Interest expense on interest-bearing deposits increased $935,000,$1.8 million, or 14.6%,25.7%, to $7.4$8.6 million for the three months ended MarchJune 31,30, 2026 from $6.4$6.8 million for the three months ended MarchJune 31,30, 2025. Interest expense on interest-bearing deposits increased primarily due to aan foureight basis points increase in the average cost of interest-bearing deposits to 2.29%2.42% for the three months ended MarchJune 31,30, 2026 from 2.25%2.34% for the three months ended MarchJune 31,30, 2025, as well as a shift in the mix of interest-bearing deposits to higher interest rate deposit accounts2025 and an increase in average interest-bearing deposits of $143.7$251.5 million to $1.31$1.44 billion for the three months ended MarchJune 31,30, 2026 from $1.17$1.19 billion for the three months ended MarchJune 31,30, 2025. The increase in the average cost of interest-bearing deposits was primarily due to the upward repricing of certain interest-bearing deposit accounts in response to changes in market interest rates and competition, as well as a shift in the mix of deposits towards higher cost interest-bearing deposit accounts. The increase in the average balance of interest-bearing deposits was primarily due to higher average money market and certificates of deposit balances. The increase in certificates of deposit balances was the result of an increase in brokered deposits.

Interest expense on borrowings and other liabilities decreased $74,000$139,000 to $273,000$415,000 for the three months ended MarchJune 31,30, 2026 from $347,000$554,000 for the three months ended MarchJune 31,30, 2025 due primarily to a decrease in average borrowings and other liabilities of $13.2 million to $21.4 million for the three months ended March 31, 2026 from $34.6 million for the three months ended March 31, 2025, partially offset by an increase in the average cost of borrowings and other liabilities of 11580 basis points to 5.28%3.31% for the three months ended MarchJune 31,30, 2026 from 4.13%4.11% for the three months ended MarchJune 31,30, 2025 and by a decrease in the average borrowings and other liabilities of $3.8 million to $51.0 million for the three months ended June 30, 2026 from $54.8 million for the three months ended June 30, 2025.

Net Interest Income. Net interest income of $20.8$22.9 million for the three months ended MarchJune 31,30, 2026 increased $1.7$3.3 million, or 8.7%,16.5%, compared to $19.1$19.6 million for the three months ended MarchJune 31,30, 2025 as net interest margin increased nine17 basis points to 4.21%4.30% for the three months ended MarchJune 31,30, 2026 from 4.12%4.13% for the three months ended MarchJune 31,30, 2025, partially offset by a decrease in net interest-earning assets of $3.3$15.4 million to $699.8$677.5 million for the three months ended MarchJune 31,30, 2026 from $703.1$692.9 million for the three months ended MarchJune 31,30, 2025. Net interest rate spread increased 1227 basis points to 3.44%3.58% for the three months ended MarchJune 31,30, 2026 from 3.32%3.31% for the three months ended MarchJune 31,30, 2025.

Provision for Credit Losses. The provision for credit losses was $780,000$1.4 million for the three months ended MarchJune 31,30, 2026, as compared to a provision for credit losses of $800,000$1.6 million for the three months ended MarchJune 31,30, 2025. The decrease in the provision for credit losses for the three months ended MarchJune 31,30, 2026 was primarily due to improvement in the loan portfolio credit quality, offset by growth in the loan portfolio.portfolio and an increase in net charge-offs for the three months ended June 30, 2026.

Non-Interest Income. Non-interest income increased $135,000,$658,000, or 3.6%,13.7%, to $3.9$5.5 million for the three months ended MarchJune 31,30, 2026 as compared to $3.7$4.8 million for the three months ended MarchJune 31,30, 2025. The increase in non-interestnoninterest income for the three months ended MarchJune 31,30, 2026 was primarily due to an increase in insurance and wealth management services income, an increase in bank fees and service charges, and an increase in net gain on sale of loans, offset in part by a decrease in other noninterest income. The increase in insurance and wealth management services income was as a result of organic growth related to our wealth management services and the acquisition of Brown Financial Management Group during the three months ended December 31, 2025. The increase in bank fees and service charges and net gain on sale of loans was a result of the acquisition of Targeted Lending during the three months ended June 30, 2026. The decrease in other noninterest income was primarily due to $550,000 of bank-owned life insurance income as a result of a death benefit recognized during the three months ended June 30, 2025.

Non-Interest Expense. Non-interest expense increased $3.5$7.5 million, or 24.2%,50.6%, to $18.1$22.2 million for the three months ended MarchJune 31,30, 2026 as compared to $14.6$14.7 million for the three months ended MarchJune 31,30, 2025. The increase in noninterest expense for the three months ended MarchJune 31,30, 2026 was primarily due to an increase in professional fees of $2.7 million andfees, an increase in salaries and employee benefitsbenefits, ofand $450,000.an Professionalincrease in other noninterest expense. The increase in professional fees increasedfor the three months ended June 30, 2026 was primarily due to higher legal fees and expenses and partially related to expenses in connection with the completion of our recent acquisitions described above during the three months ended MarchJune 31,30, 2026. Salaries and employee benefits increased for the three months ended June 30, 2026 primarily due to compensation expense from annual merit increases.increases Includedand an increase in the number of employees from acquisitions completed during the three months ended June 30, 2026. The increase in other non-interest expense for the three months ended MarchJune 31,30, 2026 was aprimarily netdue to an increase of $350,000$2.9 million in litigation-related expense (see Part I, Item 1 – Consolidated Financial Statements – Note 9 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities” for details).

Income Tax Expense. Income tax expense decreased $1.2 million$385,000 to $416,000$1.3 million for the three months ended MarchJune 31,30, 2026 as compared to $1.7 million for the three months ended MarchJune 31,30, 2025. Our effective tax rate was 7.3%27.2% for the three months ended MarchJune 31,30, 2026 compared to 22.3%20.7% for the three months ended MarchJune 31,30, 2025. The decreaseincrease in income tax expense and the effective tax rate for the three months ended MarchJune 31,30, 2026 was primarily due to a discrete tax item related to a reversal of an accruedincrease liability for a previouslyin non-deductible expense.expenses.

Non-accrual loans decreased $2.4$2.1 million to $8.9$9.1 million at MarchJune 31,30, 2026 from $11.3$11.2 million at December 31, 2025 primarily due to paydowns of $2.6$2.7 million on a commercial real estate loan relationship secured by multiple office, warehouse and industrial properties during the threesix months ended MarchJune 31,30, 2026.2026, the payoff of a $820,000 commercial real estate loan and the paydown and partial charge-off of a $844,000 commercial real estate loan that was secured by manufactured housing parks. The decrease in non-accrual loans was partially offset by an increase in commercial and industrial non-accrual equipment loans as a result of the Targeted Lending acquisition and an increase in non-accrual residential mortgages.