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

Changes in prevailing interest rates may hurt the Bank’s business. The Bank derives its income primarily from the difference or “spread” between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits, borrowings and other interest-bearing liabilities. In general, the larger the spread, the more the Bank earns. When market rates of interest change, and in particular during periods of rapid rate movements as experienced in 2022 and 2023, the interest the Bank receives on its assets and the interest the Bank pays on its liabilities will fluctuate. This can cause decreases in the “spread” and can adversely affect the Bank’s income. Changes in market interest rates could reduce the value of the Bank’s financial assets. Fixed-rate investments, mortgage-backed and related securities and mortgage loans generally decrease in value as interest rates rise. In addition, interest rates affect how much money the Bank lends. For example, when interest rates rise, the cost of borrowing increases and the loan originations tend to decrease. If the Bank is unsuccessful in managing the effects of changes in interest rates, the financial condition and results of operations could suffer.

In deciding whether to extend credit or to enter into other transactions with clients and counterparties, we may rely on information furnished to us by or on behalf of clients and counterparties, including financial statements and other financial information, which we do not independently verify. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a client, we may assume that the client’s audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the client. Our financial condition and results of operations could be negatively affected to the extent we rely on financial statements that do not comply with GAAP or are materially misleading, any of which could be caused by errors, omissions, or fraudulent behavior by our employees, clients, counterparties, or other third parties.

The following is a discussion of the financial position and results of operations of the Company and should be read in conjunction with the information set forth under Item 1A Risk Factors in the Company’s Annual Report ofon Form 10-K and the Company’s Consolidated Financial Statements and Notes thereto on pages A-20 through A-62 of the Company’s 2025 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the 2026 Annual Meeting of Shareholders.

The Federal Reserve Federal Open Market Committee (“FOMC”) increased the target federal funds rate 500 basis points between March 2022 and July 2023 to address the supply-chain disruption and rising inflation that had developed in the markets. The target federal funds rate was lowered 175 basis points between September 2024 and December 2025 to a range of 3.50% to 3.75% at MarchJune 31,30, 2026. We believe that economic conditions in our market area continue to be relatively stable and as a result businesses in our market area continue to grow and invest. Our experience is that the uncertainty expressed in the national and international markets through the primary economic indicators of activity are not as pronounced in our local market, and as a result we expect continued moderate economic growth in our market area.

Summary. Net earnings were $4.4$5.2 million or $0.83$0.98 per share and $0.80$0.96 per diluted share for the three months ended MarchJune 31,30, 2026, compared to $4.3$5.2 million or $0.82$0.97 per share and $0.79$0.95 per diluted share for the prior year period. The increase in firstsecond quarter net earnings is primarily attributable to an increase in net interest income, which was partially offset by an increase in the provision for credit losseslosses, a decrease in non-interest income and an increase in non-interest expense, compared to the prior year period, as discussed below.

The annualized return on average assets was 1.04%1.13% for the threesix months ended MarchJune 31,30, 2026, compared to 1.07%1.15% for the same period one year ago, and annualized return on average shareholders’ equity was 11.45%12.22% for the threesix months ended MarchJune 31,30, 2026, compared to 13.52%14.06% for the same period one year ago.

Net interest income was $15.1$16.0 million for the three months ended MarchJune 31,30, 2026, compared to $13.9$14.6 million for the three months ended MarchJune 31,30, 2025. The increase in net interest income is due to a $906,000$806,000 increase in interest income and a $253,000$565,000 decrease in interest expense. Net interest income after the provision for credit losses was $14.5$15.7 million for the three months ended MarchJune 31,30, 2026, compared to $13.7$14.8 million for the three months ended MarchJune 31,30, 2025. The provision for credit losses for the three months ended MarchJune 31,30, 2026 was $560,000,$293,000, compared to $268,000a recovery of $213,000 for the three months ended MarchJune 31,30, 2025. The increase in the provision for credit losses isreflects primarilycontinued attributable to a $38.9 million increasegrowth in total loansloans, fromwhich Decemberincreased 31,$36.3 2025million toduring Marchthe 31,three months ended June 30, 2026, compared to aan $13.7increase of $5.9 million during the three months ended June 30, 2025. Additionally, the increase in totalthe loansprovision fromfor Decembercredit 31,losses 2024includes a $29,000 increase in net charge-offs during the three months ended June 30, 2026, compared to Marchthe 31,three months ended June 30, 2025.

Interest income was $20.9$21.5 million for the three months ended MarchJune 31,30, 2026, compared to $20.0$20.7 million for the three months ended MarchJune 31,30, 2025. The increase in interest income is primarily due to a $1.5 million increase in interest income and fees on loans, which was partially offset by a $109,000$511,000 decrease in interest income on balances due from banks and a $442,000$231,000 decrease in interest income on investment securities. The increase in interest income and fees on loans is primarily due to an increase in total loans. The decrease in interest income on balances due from banks is due to a decrease in average balances outstanding and rate decreases implemented by the FOMC. The decrease in interest income on investment securities is due to a reduction in averagebalances investment securitiesoutstanding and decreases in yields on variable rate securities. During the three months ended MarchJune 31,30, 2026, average loans were $1.22$1.25 billion, an increase of $80.2$96.2 million from average loans of $1.14$1.16 billion for the three months ended MarchJune 31,30, 2025. During the three months ended MarchJune 31,30, 2026, average investment securities were $413.4$411.2 million, a decrease of $22.9$7.8 million from average investment securities of $436.3$419.0 million for the three months ended MarchJune 31,30, 2025. The average yield on loans for the three months ended MarchJune 31,30, 2026 and 2025 was 5.80%5.83% and 5.69%,5.78%, respectively. The average yield on investment securities available for sale was 3.05%3.03% and 3.25%3.21% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The average yield on earning assets was 5.09%5.12% and 5.03%5.07% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Interest expense was $5.8$5.6 million for the three months ended MarchJune 31,30, 2026, compared to $6.0$6.1 million for the three months ended MarchJune 31,30, 2025. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities resulting from rate decreases implemented by the FOMC. During the three months ended MarchJune 31,30, 2026, average interest-bearing non-maturity deposits were $782.2$811.7 million, an increase of $35.3$61.4 million from average interest-bearing non-maturity deposits of $746.9$750.3 million for the three months ended MarchJune 31,30, 2025. During the three months ended MarchJune 31,30, 2026, average certificates of deposit were $340.0$315.9 million, a decrease of $1.3$37.4 million from average certificates of deposit of $341.3$353.3 million for the three months ended MarchJune 31,30, 2025. The average rate paid on interest-bearing checking and savings accounts was 1.50%1.51% and 1.44%1.46% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The average rate paid on certificates of deposit was 3.18%2.90% for the three months ended MarchJune 31,30, 2026, compared to 3.72%3.58% for the same period one year ago. The average rate paid on interest-bearing liabilities was 2.06%1.95% for the three months ended MarchJune 31,30, 2026, compared to 2.21%2.19% for the same period one year ago.

The following table sets forth for each category of interest-earning assets and interest-bearing liabilities, the average amounts outstanding, the interest incurred on such amounts and the average rate earned or incurred for the three months ended MarchJune 31,30, 2026 and 2025. The table also sets forth the average rate earned on total interest-earning assets, the average rate paid on total interest-bearing liabilities, and the net yield on total average interest-earning assets for the same periods. Yield information does not give effect to changes in fair value of available for sale investment securities that are reflected as a component of shareholders’ equity. Yields and interest income on tax-exempt investments for the three months ended MarchJune 31,30, 2026 have been adjusted to present this information on a tax equivalent basis using an effective tax rate of 22.58% for securities that are both federal and state tax exempt and an effective tax rate of 20.58% for federal tax-exempt securities. Yields and interest income on tax-exempt investments for the three months ended MarchJune 31,30, 2025 have been adjusted to present this information on a tax equivalent basis using an effective tax rate of 22.78% for securities that are both federal and state tax exempt and an effective tax rate of 20.53% for federal tax-exempt securities. Non-accrual loans and the interest income that was recorded on non-accrual loans, if any, are included in the yield calculations for loans in all periods reported. The Company believes the presentation of net interest income on a tax-equivalent basis provides comparability of net interest income from both taxable and tax-exempt sources and facilitates comparability within the industry. Although the Company believes these non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are presented below.

Provision for Credit Losses.TheLosses. The provision for credit losses for the three months ended MarchJune 31,30, 2026 was $560,000,$293,000, compared to $268,000a recovery of $213,000 for the three months ended MarchJune 31,30, 2025. The increase in the provision for credit losses isreflects primarilycontinued attributable to a $38.9 million increasegrowth in total loansloans, fromwhich Decemberincreased 31,$36.3 2025million toduring Marchthe 31,three months ended June 30, 2026, compared to aan $13.7increase of $5.9 million during the three months ended June 30, 2025. Additionally, the increase in totalthe loansprovision fromfor Decembercredit 31,losses 2024includes a $29,000 increase in net charge-offs during the three months ended June 30, 2026, compared to Marchthe 31,three months ended June 30, 2025.

Non-Interest Income. Non-interest income was $6.5$7.1 million for the three months ended MarchJune 31,30, 20262026, andcompared to $7.7 million for the three months ended June 30, 2025. AThe $422,000decrease in non-interest income is primarily attributable to a $929,000 decrease in appraisal management fee income due to a decrease in appraisal volumevolume, which was partially offset by a $108,000 increase in mortgage banking income due to an increase in secondary mortgage market activity,activity and a $238,000$254,000 increase in miscellaneous non-interest income primarily due to an increase in deferred compensation income associated with an increase in valuations for the assets in the deferred compensation plan and an increase in income on Small Business Investment Company (SBIC) investments and a $32,000 increase in insurance and brokerage commissions.investments.

Non-Interest Expense. Non-interest expense was $15.4$16.1 million for the three months ended MarchJune 31,30, 2026, compared to $14.6$15.8 million for the three months ended MarchJune 31,30, 2025. The increase in non-interest expense is primarily attributable to a $458,000 increase in salaries and employee benefits expense primarily due to increases in health insurance and restricted stock expenses, a $279,000$482,000 increase in occupancy expense primarily due to an increase in furniture and equipment maintenance/service contract expenses, a $173,000$241,000 increase in professionaldebit feescard expense and a $288,000 increase in miscellaneous non-interest expense primarily due to an increase in consultingdeferred expense,compensation andexpense aassociated $190,000with an increase in debitvaluations cardfor expense.the assets in the deferred compensation plan. The increases in non-interest expense were partially offset by a $324,000$718,000 decrease in appraisal management fee expense due to a decrease in appraisal volume.

Income Taxes.IncomeTaxes. Income tax expense was $1.3$1.5 million for the three months ended MarchJune 31,30, 2026 and 2025. The effective tax rate was 22.13%22.23% for the three months ended MarchJune 31,30, 2026, compared to 22.85%22.56% for the three months ended MarchJune 31,30, 2025. Income tax expense was $2.7 million for the six months ended June 30, 2026, compared to $2.8 million for the six months ended June 30, 2025. The effective tax rate was 22.18% for the six months ended June 30, 2026, compared to 22.69% for the six months ended June 30, 2025. The decrease in the effective tax rate is primarily due to the North Carolina corporate income tax rate decreasing from 2.25% to 2.00% effective January 1, 2026 and the revaluation of the deferred tax asset due to further upcoming reductions in the North Carolina corporate income tax rate.

Investment Securities.AvailableSecurities. Available for sale securities were $370.1$364.5 million as of MarchJune 31,30, 2026, compared to $377.4 million as of December 31, 2025. Average investment securities for the threesix months ended MarchJune 31,30, 2026 were $413.4$412.3 million, compared to $421.6 million for the year ended December 31, 2025.

Loans.TotalLoans. Total loans were $1.24$1.28 billion as of MarchJune 31,30, 2026, compared to $1.20 billion at December 31, 2025. Average loans represented 74% and 70% of average earning assets for the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, respectively.

The Bank had $1.7 million and $1.1 million in mortgage loans held for sale as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by real estate, which is dependent upon the real estate market. Real estate mortgage loans include both commercial and residential mortgage loans. At MarchJune 31,30, 2026, the Bank had $139.7$144.6 million in residential mortgage loans, $128.0$130.7 million in home equity loans and $758.6$773.2 million in commercial mortgage loans, which include $610.8$624.8 million secured by commercial property and $147.8$148.4 million secured by residential property. All residential mortgage loans are originated as fully amortizing loans, with no negative amortization. The Bank also had construction and land development loans totaling $127.4$133.6 million at MarchJune 31,30, 2026.

Allowance for Credit Losses (ACL).The. The allowance for credit losses reflects management’s assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed.

The allowance for credit losses on loans is a valuation account that is deducted from the loans'loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses. The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of MarchJune 31,30, 2026. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Company measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. The Company calculates the allowance for credit losses using a Weighted Average Remaining Maturity (“WARM”) methodology.

The portion of the ACL balance attributable to qualitative factors was $5.5$5.6 million and $5.3 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. The risk factors are weighted as follows: Local, State and National Economic Outlook – 30%, Concentrations of Credit – 5%, Interest Rate Risk – 5%, Trends in Terms of Volume, Mix and Size of Loans – 15%, Seasoning of the Loan Portfolio – 10%, Experience of Staff – 10%, and Levels and Trends of Delinquencies – 25%. No changes to the risk status of any of the risk factors was made during the threesix months ended MarchJune 31,30, 2026.

The allowance for credit losses on loans was $10.5$10.6 million or 0.84%0.83% of total loans at MarchJune 31,30, 2026, compared to $10.1 million or 0.84% of total loans at December 31, 2025. The allowance for credit losses on loans increased $332,000$504,000 primarily due to a $38.9$75.2 million increase in total loans from December 31, 2025 to MarchJune 31,30, 2026.

The allowance for credit losses on unfunded commitments was $1.6 million at MarchJune 31,30, 2026, compared to $1.4 million at December 31, 2025. The increase in the allowance for credit losses on unfunded commitments was due to a $5.7$11.7 million increase in unfunded loan commitments from December 31, 2025 to MarchJune 31,30, 2026.

Non-performing Assets. Non-performing assets were $4.8$5.2 million or 0.28%0.29% of total assets at MarchJune 31,30, 2026, compared to $4.2 million or 0.25% of total assets at December 31, 2025. Non-performing assets comprise $3.6$4.0 million in residential mortgage loansloans, and $1.2$1.1 million in commercial mortgage loans and $122,000 in other loans at MarchJune 31,30, 2026, compared to $3.6 million in residential mortgage loans and $533,000 in commercial mortgage loans at December 31, 2025. The Bank had no other real estate owned or repossessed assets as of MarchJune 31,30, 2026 and December 31, 2025.

Deposits. Deposits were $1.54$1.57 billion as of MarchJune 31,30, 2026, compared to $1.51 billion as of December 31, 2025. Core deposits, a non-GAAP measure, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations of less than $250,000, were $1.40$1.44 billion at MarchJune 31,30, 2026, compared to $1.35 billion at December 31, 2025. Management believes it is useful to calculate and present core deposits because of the positive impact this low cost funding source provides to the Bank’s overall cost of funds and profitability. Certificates of deposit in amounts of $250,000 or more totaled $143.7$131.2 million at MarchJune 31,30, 2026, compared to $160.4 million at December 31, 2025.

Estimated uninsured deposits totaled $347.4$336.5 million, or 22.55%21.47% of total deposits, at MarchJune 31,30, 2026, compared to $358.5 million, or 23.75% of total deposits, at December 31, 2025. Uninsured amounts are estimated based on the portion of account balances in excess of FDIC insurance limits. The Bank did not have any significant deposit concentrations at MarchJune 31,30, 2026.

Borrowed Funds. There were no borrowed funds, other than junior subordinated debt debentures, outstanding at MarchJune 31,30, 2026 and December 31, 2025.

Junior Subordinated Debentures (related to Trust Preferred Securities).Junior. Junior subordinated debentures were $15.5 million at MarchJune 31,30, 2026 and December 31, 2025.

The Company’s rate sensitive assets are those earning interest at variable rates and those with contractual maturities within one year. Rate sensitive assets therefore include both loans and available for sale securities. Rate sensitive liabilities include interest-bearing checking accounts, money market deposit accounts, savings accounts, time deposits and borrowed funds. Average rate sensitive assets for the threesix months ended MarchJune 31,30, 2026 totaled $1.66$1.67 billion, exceeding average rate sensitive liabilities of $1.14 billion by $525.5$533.8 million.

Included in the rate sensitive assets are $184.9$186.1 million in variable rate loans indexed to prime rate subject to immediate repricing upon changes by the FOMC. Certain variable rate loans are structured to establish floors on interest rates charged to protect against downward movements in the prime rate. At MarchJune 31,30, 2026, the Company had $130.2$131.9 million in loans with interest rate floors. Floors were in effect on fourthree loans, totaling $9,000,$6,000, at MarchJune 31,30, 2026.

Liquidity. The objectives of the Company’s liquidity policy are to provide for the availability of adequate funds to meet the needs of loan demand, deposit withdrawals, maturing liabilities and to satisfy regulatory requirements. Both deposit and loan customer cash needs can fluctuate significantly depending upon business cycles, economic conditions and yields and returns available from alternative investment opportunities. In addition, the Company’s liquidity is affected by off-balance sheet commitments to lend in the form of unfunded commitments to extend credit and standby letters of credit. As of MarchJune 31,30, 2026, such unfunded commitments to extend credit were $372.3$378.3 million, while commitments in the form of standby letters of credit totaled $1.6 million. As of December 31, 2025, such unfunded commitments to extend credit were $366.5 million, while commitments in the form of standby letters of credit totaled $1.6 million.

The Bank uses several sources to meet its liquidity requirements. The primary source is core deposits, which includes demand deposits, savings accounts and non-brokered certificates of deposit of denominations less than $250,000. The Bank considers these to be a stable portion of the Bank’s liability mix and the result of on-going consumer and commercial banking relationships. As of MarchJune 31,30, 2026, the Bank’s core deposits, a non-GAAP measure, totaled $1.40$1.44 billion, or 90.70%91.63% of total deposits. As of December 31, 2025, the Bank’s core deposits totaled $1.35 billion, or 89.44% of total deposits.

The other sources of funding for the Company are through large denomination certificates of deposit, including brokered deposits, federal funds purchased, securities under agreement to repurchase and FHLB borrowings. The Bank is also able to borrow from the Federal Reserve Bank (“FRB”) on a short-term basis. The Bank’s policies include the ability to access wholesale funding up to 40% of total assets. The Bank’s wholesale funding includes FHLB borrowings, FRB borrowings, brokered deposits and internet certificates of deposit. The Bank did not have any wholesale funding at MarchJune 31,30, 2026 and December 31, 2025.

The Bank has a line of credit with the FHLB equal to 20% of the Bank’s total assets. There were no FHLB borrowings outstanding at MarchJune 31,30, 2026 and December 31, 2025. At MarchJune 31,30, 2026, the carrying value of loans pledged as collateral to the FHLB totaled $253.6$255.4 million compared to $247.8 million at December 31, 2025. The remaining availability under the line of credit with the FHLB was $150.6$153.3 million at MarchJune 31,30, 2026 compared to $148.5 million at December 31, 2025. The Bank had no borrowings from the FRB at MarchJune 31,30, 2026 or December 31, 2025. FRB borrowings are collateralized by a blanket assignment on all qualifying loans that the Bank owns which are not pledged to the FHLB. At MarchJune 31,30, 2026, the carrying value of loans pledged as collateral to the FRB totaled $720.1$725.9 million compared to $689.9 million at December 31, 2025. Availability under the line of credit with the FRB was $603.7 million at MarchJune 31,30, 2026 compared to $583.8 million at December 31, 2025.

The Bank also had the ability to borrow up to $110.5 million for the purchase of overnight federal funds from five correspondent financial institutions as of MarchJune 31,30, 2026.

The liquidity ratio for the Bank, which is defined as net cash, interest-bearing deposits, federal funds sold and certain investment securities, as a percentage of net deposits and short-term liabilities was 26.91%26.07% at MarchJune 31,30, 2026 and 26.86% at December 31, 2025. The minimum required liquidity ratio as defined in the Bank’s Asset/Liability and Interest Rate Risk Management Policy was 10% at MarchJune 31,30, 2026 and December 31, 2025.

Capital Resources. Shareholders’ equity was $158.1$161.3 million, or 9.12%9.14% of total assets, at MarchJune 31,30, 2026, compared to $157.1 million, or 9.23% of total assets, at December 31, 2025.

Annualized return on average equity for the threesix months ended MarchJune 31,30, 2026 was 11.45%,12.22%, compared to 13.52%14.06% for the threesix months ended MarchJune 31,30, 2025. Total cash dividends paid on common stock were $2.1$3.2 million for the threesix months ended MarchJune 31,30, 2026, compared to $2.0$3.1 million for the threesix months ended MarchJune 31,30, 2025.

Under the regulatory capital guidelines, financial institutions are currently required to maintain a total risk-based capital ratio of 8.0% or greater, with a Tier 1 risk-based capital ratio of 6.0% or greater and a common equity Tier 1 capital ratio of 4.5% or greater. Tier 1 capital is generally defined as shareholders’ equity and trust preferred securities less all intangible assets and goodwill. Tier 1 capital includes $15.0 million in trust preferred securities at MarchJune 31,30, 2026 and December 31, 2025. The Company’s Tier 1 capital ratio was 14.75%14.68% and 14.96% at MarchJune 31,30, 2026 and December 31, 2025, respectively. Total risk-based capital is defined as Tier 1 capital plus supplementary capital. Supplementary capital, or Tier 2 capital, consists of the Company’s allowance for credit losses, not exceeding 1.25% of the Company’s risk-weighted assets. Total risk-based capital ratio is therefore defined as the ratio of total capital (Tier 1 capital and Tier 2 capital) to risk-weighted assets. The Company’s total risk-based capital ratio was 15.63%15.55% and 15.82% at MarchJune 31,30, 2026 and December 31, 2025, respectively. The Company’s common equity Tier 1 capital consists of common stock and retained earnings. The Company’s common equity Tier 1 capital ratio was 13.65%13.61% and 13.83% at MarchJune 31,30, 2026 and December 31, 2025, respectively. Financial institutions are also required to maintain a leverage ratio of Tier 1 capital to total average assets of 4.0% or greater. The Company’s Tier 1 leverage capital ratio was 11.60%11.70% and 11.33% at MarchJune 31,30, 2026 and December 31, 2025, respectively.

The Bank’s Tier 1 risk-based capital ratio was 14.62%14.55% and 14.83% at MarchJune 31,30, 2026 and December 31, 2025, respectively. The total risk-based capital ratio for the Bank was 15.50%15.42% and 15.70% at MarchJune 31,30, 2026 and December 31, 2025, respectively. The Bank’s common equity Tier 1 capital ratio was 14.62%14.55% and 14.83% at MarchJune 31,30, 2026 and December 31, 2025, respectively. The Bank’s Tier 1 leverage capital ratio was 11.39%11.50% and 11.13% at MarchJune 31,30, 2026 and December 31, 2025, respectively.

A bank is considered to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a common equity Tier 1 capital ratio of 6.5% or greater and a leverage ratio of 5.0% or greater. Based upon these guidelines, the Bank was considered to be “well capitalized” at MarchJune 31,30, 2026.