UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____.

Commission File Number 1-12431

Unity Bancorp, Inc.

(Exact name of registrant as specified in its charter)

New Jersey	22-3282551
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
64 Old Highway 22, Clinton, NJ	08809
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (800) 618‑2265

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	UNTY	NASDAQ

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☐	Accelerated filer ☒	Nonaccelerated filer ☐	Smaller reporting company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b‑2 of the Exchange Act: Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common equity stock, as of July 31, 2026 common stock, no par value: 10,042,578 shares outstanding.

Table of Contents

		Page #
PART I	CONSOLIDATED FINANCIAL INFORMATION
ITEM 1	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at June 30, 2026 and December 31, 2025	3
	Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025	4
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025	5
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2026 and 2025	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025	7
	Notes to the Consolidated Financial Statements	8
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	48
ITEM 4	Controls and Procedures	48
PART II	OTHER INFORMATION	49
ITEM 1	Legal Proceedings	49
ITEM 1A	Risk Factors	49
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
ITEM 3	Defaults upon Senior Securities	49
ITEM 4	Mine Safety Disclosures	49
ITEM 5	Other Information	49
ITEM 6	Exhibits	50
	EXHIBIT INDEX	51
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 31.3
	Exhibit 32.1
	SIGNATURES	52

2

PART I CONSOLIDATED FINANCIAL INFORMATION

ITEM 1 Consolidated Financial Statements (Unaudited)

Unity Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands)	June 30, 2026			December 31, 2025
ASSETS
Cash and due from banks	$	28,267		$	19,841
Interest-bearing deposits		222,054			196,678
Cash and cash equivalents		250,321			216,519
Securities:
Debt securities available for sale (“AFS”), at fair value (amortized cost of $68,814 and $72,474 at June 30, 2026 and December 31, 2025, respectively)		67,221			70,870
Debt securities held to maturity (“HTM”), at amortized cost		37,707			36,576
Equity securities with readily determinable fair values		14,372			16,569
Total securities		119,300			124,015
Loans:
Loans held for sale		9,458			9,490
SBA loans held for investment		35,816			34,259
Commercial loans		1,649,252			1,518,032
Commercial construction loans		128,628			147,215
Residential mortgage loans		668,502			677,221
Consumer loans		94,757			85,219
Residential construction loans		96,081			73,277
Total loans		2,682,494			2,544,713
Allowance for credit losses		(34,551	)		(32,342	)
Net loans		2,647,943			2,512,371
Premises and equipment, net		17,878			18,022
Bank owned life insurance (“BOLI”)		26,977			26,547
Deferred tax assets, net		15,975			14,640
Federal Home Loan Bank (“FHLB”) stock		17,401			14,314
Accrued interest receivable		12,988			12,896
Goodwill		1,516			1,516
Other real estate owned (“OREO”)		1,472			1,472
Prepaid expenses and other assets		82,542			24,340
Total assets	$	3,194,313		$	2,966,652
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	487,132		$	465,596
Interest-bearing demand		380,473			369,131
Savings		566,649			535,044
Brokered deposits		301,525			274,203
Time deposits		726,770			680,087
Total deposits		2,462,549			2,324,061
Borrowed funds		316,123			255,774
Subordinated debentures		10,310			10,310
Accrued interest payable		2,758			2,138
Accrued expenses and other liabilities		30,760			28,738
Total liabilities		2,822,500			2,621,021
Shareholders’ equity:
Preferred Stock		—			—
Common stock		106,701			105,892
Retained earnings		269,486			243,935
Treasury stock		(3,425	)		(3,101	)
Accumulated other comprehensive loss		(949	)		(1,095	)
Total shareholders’ equity		371,813			345,631
Total liabilities and shareholders’ equity	$	3,194,313		$	2,966,652
Common shares at period end
Shares issued		10,116			10,048
Shares outstanding		10,043			9,982
Treasury shares		73			66

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

3

Unity Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
(In thousands, except per share amounts)	2026			2025			2026			2025
INTEREST INCOME
Interest-bearing deposits	$	455		$	487		$	1,013		$	819
FHLB stock		140			130			274			312
Securities:
Taxable		1,391			1,735			2,800			3,521
Tax-exempt		24			17			42			35
Total securities		1,415			1,752			2,842			3,556
Loans:
SBA loans		840			856			1,684			1,790
Commercial loans		26,509			23,352			51,525			44,666
Commercial construction loans		3,347			2,384			6,385			5,330
Residential mortgage loans		10,411			10,390			21,324			20,337
Consumer loans		1,471			1,491			2,895			2,837
Residential construction loans		2,047			1,758			3,872			3,754
Total loans		44,625			40,231			87,685			78,714
Total interest income		46,635			42,600			91,814			83,401
INTEREST EXPENSE
Interest-bearing demand deposits		2,084			1,898			3,994			3,520
Savings deposits		3,291			2,718			6,451			5,311
Brokered deposits		2,247			1,786			4,513			3,573
Time deposits		6,282			6,560			12,411			12,975
Borrowed funds and subordinated debentures		904			1,081			1,887			2,214
Total interest expense		14,808			14,043			29,256			27,593
Net interest income		31,827			28,557			62,558			55,808
Provision for credit losses, loans		1,040			1,725			2,083			3,083
Provision for credit losses, off-balance sheet		127			136			133			95
Release of credit losses, securities		—			(2,036	)		—			(2,036	)
Net interest income after provision for credit losses		30,660			28,732			60,342			54,666
NONINTEREST INCOME
Branch fee income		612			465			1,101			912
Service and loan fee income		657			536			1,570			1,400
Gain on sale of SBA loans held for sale, net		213			163			640			302
Gain on sale of mortgage loans, net		406			435			905			603
BOLI income		213			183			430			334
Net security (losses) gains		(643	)		3,600			(725	)		3,551
Other income		463			433			876			814
Total noninterest income		1,921			5,815			4,797			7,916
NONINTEREST EXPENSE
Compensation and benefits		8,669			8,160			17,342			16,062
Processing and communications		1,131			980			2,277			1,966
Occupancy		842			809			1,829			1,689
Furniture and equipment		831			787			1,546			1,533
Professional services		456			350			944			714
Advertising		442			456			835			847
Loan related expenses		396			265			868			311
Deposit insurance		300			313			600			554
Director fees		270			265			530			760
Other expenses		592			634			1,230			1,194
Total noninterest expense		13,929			13,019			28,001			25,630
Income before provision for income taxes		18,652			21,528			37,138			36,952
Provision for income taxes		4,180			5,037			8,378			8,863
Net income	$	14,472		$	16,491		$	28,760		$	28,089
Net income per common share – Basic	$	1.44		$	1.64		$	2.87		$	2.79
Net income per common share – Diluted	$	1.42		$	1.61		$	2.82		$	2.74
Weighted average common shares outstanding – Basic		10,041			10,033			10,026			10,043
Weighted average common shares outstanding – Diluted		10,221			10,212			10,210			10,229

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

4

Unity Bancorp, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	For the three months ended
	June 30, 2026									June 30, 2025
				Income tax									Income tax
	Before tax			expense			Net of tax			Before tax			expense			Net of tax
(In thousands)	amount			(benefit)			amount			amount			(benefit)			amount
Net income	$	18,652		$	4,180		$	14,472		$	21,528		$	5,037		$	16,491
Other comprehensive income (loss) before reclassifications
Debt securities available for sale:
Unrealized holding gains on debt securities arising during the period		160			39			121			33			9			24
Less: reclassification adjustment on debt securities included in net income		—			—			—			—			—			—
Total unrealized gains on debt securities available for sale		160			39			121			33			9			24
Cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period		51			14			37			(233	)		(63	)		(170	)
Less: reclassification adjustment for gains on cash flow hedges included in net income		(37	)		(10	)		(27	)		(73	)		(20	)		(53	)
Total unrealized gains (losses) on cash flow hedges		88			24			64			(160	)		(43	)		(117	)
Total other comprehensive income (loss)		248			63			185			(127	)		(34	)		(93	)
Total comprehensive income	$	18,900		$	4,243		$	14,657		$	21,401		$	5,003		$	16,398

	For the six months ended
	June 30, 2026									June 30, 2025
				Income tax									Income tax
	Before tax			expense			Net of tax			Before tax			expense			Net of tax
(In thousands)	amount			(benefit)			amount			amount			(benefit)			amount
Net income	$	37,138		$	8,378		$	28,760		$	36,952		$	8,863		$	28,089
Other comprehensive income (loss) before reclassifications
Debt securities available for sale:
Unrealized holding gains on debt securities arising during the period		11			3			8			717			176			541
Less: reclassification adjustment on debt securities included in net income		—			—			—			—			—			—
Total unrealized gains on debt securities available for sale		11			3			8			717			176			541
Cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period		114			31			83			(722	)		(197	)		(525	)
Less: reclassification adjustment for gains on cash flow hedges included in net income		(76	)		(21	)		(55	)		(229	)		(63	)		(166	)
Total unrealized gains (losses) on cash flow hedges		190			52			138			(493	)		(134	)		(359	)
Total other comprehensive income		201			55			146			224			42			182
Total comprehensive income	$	37,339		$	8,433		$	28,906		$	37,176		$	8,905		$	28,271

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

5

Unity Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the three and six months ended June 30, 2026 and 2025

(Unaudited)

												Accumulated
												other			Total
	Common Stock					Retained			Treasury			comprehensive			shareholders’
(In thousands, except per share data)	Shares			Amount		earnings			stock			loss (income)			equity
Balance, December 31, 2025		9,982		$	105,892	$	243,935		$	(3,101	)	$	(1,095	)	$	345,631
Net income		—			—		14,288			—			—			14,288
Other comprehensive loss, net of tax		—			—		—			—			(39	)		(39	)
Dividends on common stock ($0.16 per share)		1			60		(1,603	)		—			—			(1,543	)
Share-based compensation (1)		65			82		—			—			—			82
Treasury stock purchased, at cost		(7	)		—		—			(324	)		—			(324	)
Balance, March 31, 2026		10,041		$	106,034	$	256,620		$	(3,425	)	$	(1,134	)	$	358,095
Net income		—			—		14,472			—			—			14,472
Other comprehensive income, net of tax		—			—		—			—			185			185
Dividends on common stock ($0.16 per share)		1			29		(1,606	)		—			—			(1,577	)
Share-based compensation (1)		1			638		—			—			—			638
Balance, June 30, 2026		10,043		$	106,701	$	269,486		$	(3,425	)	$	(949	)	$	371,813

												Accumulated
												other			Total
	Common Stock					Retained			Treasury			comprehensive			shareholders’
(In thousands, except per share data)	Shares			Amount		earnings			stock			(loss) income			equity
Balance, December 31, 2024		10,026		$	103,936	$	227,331		$	(33,577	)	$	(2,107	)	$	295,583
Net income		—			—		11,598			—			—			11,598
Other comprehensive income, net of tax		—			—		—			—			275			275
Dividends on common stock ($0.14 per share)		1			56		(1,411	)		—			—			(1,355	)
Share-based compensation (1)		49			41		—			—			—			41
Balance, March 31, 2025		10,076		$	104,033	$	237,518		$	(33,577	)	$	(1,832	)	$	306,142
Net income		—			—		16,491			—			—			16,491
Other comprehensive loss, net of tax		—			—		—			—			(93	)		(93	)
Dividends on common stock ($0.14 per share)		1			53		(1,403	)		—			—			(1,350	)
Share-based compensation (1)		5			588		—			—			—			588
Treasury stock purchased, at cost		(50	)		—		—			(1,938	)		—			(1,938	)
Balance, June 30, 2025		10,032		$	104,674	$	252,606		$	(35,515	)	$	(1,925	)		319,840

(1)Includes the issuance of common stock under employee benefit plans, which includes nonqualified stock options and restricted stock expense related entries, employee option exercises and the tax benefit of options exercised.

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

6

Unity Bancorp, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the six months ended June 30,
(In thousands)	2026			2025
OPERATING ACTIVITIES:
Net income	$	28,760		$	28,089
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses, loans		2,083			3,083
Release of credit losses, securities		—			(2,036	)
Net accretion of purchase premiums and discounts on securities		(160	)		(36	)
Depreciation and amortization		915			977
Deferred income tax benefit		(1,389	)		(719	)
Net security losses (gains)		725			(3,551	)
Stock compensation expense		1,136			1,029
Gain on sale of mortgage loans held for sale, net		(905	)		(603	)
Gain on sale of SBA loans held for sale, net		(640	)		(302	)
Origination of mortgage loans held for sale		(31,466	)		(23,572	)
Origination of SBA loans held for sale		(3,658	)		(3,300	)
Proceeds from sale of mortgage loans held for sale		32,371			24,175
Proceeds from sale of SBA loans held for sale		4,298			3,602
BOLI income		(430	)		(334	)
Net change in other assets and liabilities		(55,466	)		(33,064	)
Net cash used by operating activities		(23,826	)		(6,562	)
INVESTING ACTIVITIES
Purchases of securities held to maturity		(986	)		—
Purchases of equity securities		(534	)		(501	)
Purchases of AFS securities		(6,000	)		(10,500	)
Purchase of FHLB stock, at cost, net		(3,087	)		(7,223	)
Maturities, calls, and principal payments on HTM securities		—			4,893
Maturities, calls, and principal payments on AFS securities		9,489			10,643
Proceeds from sales on AFS securities		—			998
Proceeds from sales of equity securities		2,191			6,490
Net increase in loans		(137,904	)		(123,088	)
Purchases of premises and equipment		(519	)		(466	)
Net cash used in investing activities		(137,350	)		(118,754	)
FINANCING ACTIVITIES
Net increase in deposits		138,488			87,053
Proceeds from short-term borrowings, net		70,025			135,400
(Repayments of) proceeds from long-term borrowings, net		(9,676	)		21,203
(Shares withheld for taxes), net of proceeds from stock option exercises		(415	)		(400	)
Dividends on common stock		(3,120	)		(2,707	)
Purchase of treasury stock, including excise tax accrual		(324	)		(1,938	)
Net cash provided by financing activities		194,978			238,611
Increase in cash and cash equivalents		33,802			113,295
Cash and cash equivalents, beginning of year		216,519			180,438
Cash and cash equivalents, end of period	$	250,321		$	293,733
SUPPLEMENTAL DISCLOSURES
Cash:
Interest paid	$	28,637		$	27,830
Income taxes paid		4,690			8,071
Noncash activities:
Capitalization of servicing rights		178			106

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

7

Unity Bancorp, Inc.

Notes to the Consolidated Financial Statements (Unaudited)

June 30, 2026

NOTE 1. Significant Accounting Policies

The accompanying Consolidated Financial Statements include the accounts of Unity Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiary, Unity Bank (the “Bank” or when consolidated with the Parent Company, the “Company”). The Bank has multiple subsidiaries used to hold part of its investment and loan portfolios and may be used to hold other real estate owned when the Bank takes title to properties securing loans. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current year presentation, with no impact on current earnings or shareholders’ equity. The financial information has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and has not been audited. In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the reporting periods. Actual results could differ from those estimates. Amounts requiring the use of significant estimates include the allowance for credit losses. Management believes that the allowance for credit losses is adequate. While Management uses available information to recognize credit losses, future additions to the allowance for credit losses may be necessary based on changes in economic conditions, changes in customer-related circumstances, and the general credit quality of the loan portfolio.

The interim unaudited Consolidated Financial Statements included herein have been prepared in accordance with instructions for Form 10‑Q and the rules and regulations of the Securities and Exchange Commission (“SEC”) and consist of normal recurring adjustments, that in the opinion of Management, are necessary for the fair presentation of interim results. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results which may be expected for the entire year. As used in this Form 10‑Q, “we” and “us” and “our” refer to Unity Bancorp, Inc., and its consolidated subsidiary, Unity Bank, depending on the context. Certain information and financial disclosures required by U.S. GAAP have been condensed or omitted from interim reporting pursuant to SEC rules. Interim financial statements should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025. The Company continues to operate as a single reportable segment as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Risks and Uncertainties

Overall, the markets and customers serviced by the Company may be significantly impacted by ongoing macro-economic trends, such as pressures created by a lower interest rate environment, uncertainty surrounding tariffs and the impact of uncertain or changing political conditions and geopolitical conflicts, uncertainty surrounding potential for economic slowdown or recession, and uncertainty regarding the federal government’s debt limit or changes in fiscal, monetary, trade or regulatory policy. Additionally, the Company assesses the impact of inflation on an ongoing basis.

Market conditions and external factors may unpredictably impact the competitive landscape for deposits in the banking industry. Additionally, the current interest rate environment has increased competition for liquidity. The Company believes the sources of liquidity presented in the Unaudited Consolidated Financial Statements and the Notes to the Unaudited Consolidated Financial Statements are sufficient to meet its needs as of the balance sheet date.

An unexpected withdrawal of deposits could adversely impact the Company's ability to rely on organic deposits to primarily fund its operations, potentially requiring greater reliance on secondary sources of liquidity to meet withdrawal demands or to fund continuing operations. These sources may include proceeds from Federal Home Loan Bank (“FHLB”) advances, sales of securities and loans, federal funds lines of credit from correspondent banks, out-of-market time deposits and other wholesale funding sources.

Such reliance on secondary funding sources could increase the Company's overall cost of funding and thereby reduce net income. While the Company believes its current sources of liquidity are adequate to fund operations, there is no guarantee they will suffice to meet future liquidity demands. This may necessitate slowing or discontinuing loan growth, capital expenditures or other investments, or liquidating assets.

8

Recent Accounting Pronouncements

ASU 2024-03, “Disaggregation of Income Statement Expenses”, requires public entities to provide further disclosure surrounding expenses, including but not limited to, employee compensation, depreciation and intangible asset amortization. ASU 2025-01 clarified the effective date of ASU 2024-03. This ASU is effective for fiscal years beginning after December 31, 2026. The Company expects ASU 2024-03 to have no material impact to its financials.

ASU 2025-08, “Credit Losses: Purchased Loans”, expands the “gross-up” method to more types of purchased loans and reduce day-1 credit loss exposure volatility on purchased credit-deteriorated (“PCD”) assets. This ASU is effective for fiscal years beginning after December 31, 2026. The Company expects ASU 2025-08 to have no material impact to its financials.

ASU 2025-09, “Hedge Accounting Improvements”, aims to align hedge accounting with the economics of an entity’s risk management activities. This ASU is effective for fiscal years beginning after December 31, 2026. The Company expects ASU 2025-09 to have no material impact to its financials.

NOTE 2. Litigation

The Company may, in the ordinary course of business, become a party to litigation involving collection matters, contract claims and other legal proceedings relating to the conduct of its business. In the best judgment of Management, based upon consultation with counsel, the consolidated financial position and results of operations of the Company will not be affected materially by the final outcome of any pending legal proceedings or other contingent liabilities and commitments.

NOTE 3. Net Income per Share

Basic net income per common share is calculated as net income divided by the weighted average common shares outstanding during the reporting period. Common shares include vested and unvested restricted shares.

Diluted net income per common share is computed similarly to that of basic net income per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, principally stock options, were issued during the reporting period utilizing the treasury stock method.

The following is a reconciliation of the calculation of basic and diluted income per share:

	For the three months ended June 30,				For the six months ended June 30,
(In thousands, except per share amounts)	2026		2025		2026		2025
Net income	$	14,472	$	16,491	$	28,760	$	28,089
Weighted average common shares outstanding - Basic		10,041		10,033		10,026		10,043
Plus: Potential dilutive common stock equivalents		180		179		184		186
Weighted average common shares outstanding - Diluted		10,221		10,212		10,210		10,229
Net income per common share - Basic	$	1.44	$	1.64	$	2.87	$	2.79
Net income per common share - Diluted		1.42		1.61		2.82		2.74
Stock options and common stock excluded from the income per share calculation as their effect would have been anti-dilutive		—		—		—		—

9

NOTE 4. Other Comprehensive (Loss) Income

The following tables show the changes in other comprehensive (loss) income for the three and six months ended June 30, 2026 and 2025, net of tax:

	For the three months ended June 30, 2026
							Accumulated
	Net unrealized			Net unrealized			other
	(losses) gains			gains (losses) from			comprehensive
(In thousands)	on securities			cash flow hedges			(loss) income
Balance, beginning of period	$	(1,328	)	$	194		$	(1,134	)
Other comprehensive income before reclassifications		121			37			158
Less: amounts reclassified from accumulated other comprehensive income		—			(27	)		(27	)
Period change		121			64			185
Balance, end of period	$	(1,207	)	$	258		$	(949	)

	For the three months ended June 30, 2025
							Accumulated
	Net unrealized			Net unrealized			other
	(losses) gains on			gains (losses) from			comprehensive
(In thousands)	securities			cash flow hedges			loss
Balance, beginning of period	$	(2,136	)	$	304		$	(1,832	)
Other comprehensive income (loss) before reclassifications		24			(170	)		(146	)
Less: amounts reclassified from accumulated other comprehensive loss		—			(53	)		(53	)
Period change		24			(117	)		(93	)
Balance, end of period	$	(2,112	)	$	187		$	(1,925	)

	For the six months ended June 30, 2026
							Accumulated
	Net unrealized			Net unrealized			other
	(losses) gains on			gains (losses) from			comprehensive
(In thousands)	securities			cash flow hedges			(loss) income
Balance, beginning of period	$	(1,215	)	$	120		$	(1,095	)
Other comprehensive income before reclassifications		8			83			91
Less: amounts reclassified from accumulated other comprehensive loss		—			(55	)		(55	)
Period change		8			138			146
Balance, end of period	$	(1,207	)	$	258		$	(949	)

	For the six months ended June 30, 2025
							Accumulated
	Net unrealized			Net unrealized			other
	(losses) gains on			gains (losses) from			comprehensive
(In thousands)	securities			cash flow hedges			(loss) income
Balance, beginning of period	$	(2,653	)	$	546		$	(2,107	)
Other comprehensive income (loss) before reclassifications		541			(525	)		16
Less: amounts reclassified from accumulated other comprehensive loss		—			(166	)		(166	)
Period change		541			(359	)		182
Balance, end of period	$	(2,112	)	$	187		$	(1,925	)

10

NOTE 5. Fair Value

Fair Value Measurement

The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 820, “Fair Value Measurement and Disclosures,” which requires additional disclosures about the Company’s assets and liabilities that are measured at fair value. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company utilizes techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed as follows:

Level 1 Inputs

•Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•Generally, this includes debt and equity securities and derivative contracts that are traded in an active exchange market (i.e. New York Stock Exchange), as well as certain U.S. Treasury securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Inputs

•Quoted prices for similar assets or liabilities in active markets.

•Quoted prices for identical or similar assets or liabilities in inactive markets.

•Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (i.e. interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.”

•Generally, this includes U.S. Government and sponsored entity mortgage-backed securities, corporate debt securities and derivative contracts.

Level 3 Inputs

•Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.

•These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Fair Value on a Recurring Basis

The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis:

Debt Securities Available for Sale

As of June 30, 2026, the fair value of the Company’s AFS debt securities portfolio was $67.2 million. Most of the Company’s AFS debt securities were classified as Level 2 assets at June 30, 2026. The valuation of AFS debt securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar assets or liabilities in active markets and all other relevant information. It includes third-party model pricing, defined as valuing securities based upon their relationship with other benchmark securities.

Included in the Company’s AFS debt securities are select corporate bonds which are classified as Level 3 assets at June 30, 2026. The valuation of these corporate bonds is determined using broker quotes, third-party vendor prices, or other

11

valuation techniques. Market inputs used in the other valuation techniques or underlying third-party vendor prices or broker quotes include benchmark and government bond yield curves, credit spreads and trade execution data.

Equity Securities

As of June 30, 2026, the fair value of the Company’s equity securities portfolio was $14.4 million. All of the Company’s equity marketable securities were classified as Level 1 assets at June 30, 2026.

The following table presents a reconciliation of the Level 3 securities measured at fair value on a recurring basis for the six months ended June 30, 2026 and 2025:

	For the six months ended
	June 30, 2026						June 30, 2025
(In thousands)	Corporate Debt			Restricted Stock			Corporate Debt			Restricted Stock
Balance of recurring Level 3 assets at January 1	$	6,708		$	3,480		$	6,488		$	—
Activity
Transfers from corporate debt to restricted stock		—			—			(1,375	)		1,375
Release of valuation allowance		—			—			411			1,625
Transfers from restricted stock to unrestricted equity securities categorized as Level 1		—			(3,480	)		—			(3,000	)
Unrealized holding (losses) gains included in other comprehensive income		(55	)		—			27			—
Unrealized holding losses included in net income		(185	)		—			—			—
Balance of recurring Level 3 assets at June 30	$	6,468		$	—		$	5,551		$	—

Interest Rate Swap Agreements

The Company’s derivative instruments are classified as Level 2 assets, as the readily observable market inputs to these models are validated to external sources, such as industry pricing services, or are corroborated through recent trades, dealer quotes, yield curves, implied volatility or other market-related data.

There were no material changes in the inputs or methodologies used to determine fair value during the period ended June 30, 2026, as compared to the periods ended December 31, 2025 and June 30, 2025.

12

The tables below present the balances of assets measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:

	Fair Value Measurements at June 30, 2026
			Quoted Prices in
	Assets		Active Markets		Significant Other		Significant
	Measured at		for Identical		Observable		Unobservable
(In thousands)	Fair Value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Measured on a recurring basis:
Assets:
Debt securities available for sale:
U.S. Government sponsored entities	$	4,965	$	—	$	4,965	$	—
State and political subdivisions		149		—		149		—
Residential mortgage-backed securities		11,147		—		11,147		—
Asset backed securities		19,016		—		19,016		—
Corporate and other securities		31,944		—		25,476		6,468
Total debt securities available for sale	$	67,221	$	—	$	60,753	$	6,468
Equity securities, at fair value	$	14,372	$	14,372	$	—	$	—
Total equity securities	$	14,372	$	14,372	$	—	$	—
Interest rate swap agreements	$	346	$	—	$	346	$	—
Total swap agreements	$	346	$	—	$	346	$	—

	Fair value Measurements at December 31, 2025
			Quoted Prices in
	Assets		Active Markets		Significant Other		Significant
	Measured at		for Identical		Observable		Unobservable
(In thousands)	Fair Value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Measured on a recurring basis:
Assets:
Debt securities available for sale:
U.S. Government sponsored entities	$	4,969	$	—	$	4,969	$	—
State and political subdivisions		159		—		159		—
Residential mortgage-backed securities		11,752		—		11,752		—
Asset backed securities		22,000		—		22,000		—
Corporate and other securities		31,990		—		25,282		6,708
Total debt securities available for sale	$	70,870	$	—	$	64,162	$	6,708
Equity securities, at fair value	$	16,569	$	13,089	$	—	$	3,480
Total equity securities	$	16,569	$	13,089	$	—	$	3,480
Interest rate swap agreements	$	157	$	—	$	157	$	—
Total swap agreements	$	157	$	—	$	157	$	—

There were no liabilities measured on a recurring basis as of June 30, 2026 or December 31, 2025.

13

Fair Value on a Nonrecurring Basis

The following tables present the assets and liabilities subject to fair value adjustments on a non-recurring basis carried on the balance sheet by caption and by level within the hierarchy (as described above):

	Fair Value Measurements at December 31, 2025
			Quoted Prices		Significant
			in Active		Other		Significant
	Assets		Markets for		Observable		Unobservable
	Measured at		Identical Assets		Inputs		Inputs
(In thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Measured on a non-recurring basis:
Financial assets:
Collateral-dependent loans	$	3,376	$	—	$	—	$	3,376

There were no assets or liabilities measured on a non-recurring basis as of June 30, 2026.

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis:

Collateral-Dependent Loans

Fair value is determined based on the fair value of the collateral and is measured for impairment based upon a third-party appraisal. When an updated appraisal is received for a nonperforming loan, the value on the appraisal may be discounted. If there is a deficiency in the value after the Company applies these discounts, Management applies a specific reserve and the loan remains in nonaccrual status. The receipt of an updated appraisal would not qualify as a reason to put a loan back into accruing status. The Company removes loans from nonaccrual status generally when the ability to collect is reasonably assured or when the loan is brought current as to principal and interest. Charge-offs are determined based upon the loss that Management believes the Company will incur after evaluating collateral for impairment based upon the valuation methods described above and the ability of the borrower to pay any deficiency.

The allowance for individually evaluated loans is included in the allowance for credit losses in the Consolidated Balance Sheets. At June 30, 2026, there was no allowance for individually evaluated loans, compared to $0.1 million at December 31, 2025.

Fair Value of Financial Instruments

FASB ASC Topic 825, “Financial Instruments,” requires the disclosure of the estimated fair value of certain financial instruments, including those financial instruments for which the Company did not elect the fair value option. These estimated fair values as of June 30, 2026 and December 31, 2025 have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on these estimates of fair value. The methodology for estimating the fair value of financial assets and liabilities that are measured on a recurring or nonrecurring basis is discussed above.

The following methods and assumptions were used to estimate the fair value of other financial instruments for which it is practicable to estimate that value:

Securities

The fair value of securities is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).

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Loans Held for Sale

The fair value of loans held for sale is estimated by using a market approach that includes significant other observable inputs.

Loans

The fair value of loans is estimated by discounting the future cash flows using current market rates that reflect the interest rate risk inherent in the loan, except for previously discussed loans.

Deposit Liabilities

The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date (i.e. carrying value). The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using current market rates.

Borrowed Funds and Subordinated Debentures

The fair value of borrowings is estimated by discounting the projected future cash flows using current market rates.

The table below presents the carrying amount and estimated fair values of the Company’s financial instruments presented as of June 30, 2026 and December 31, 2025:

	June 30, 2026
	Carrying
(In thousands)	amount		Level 1		Level 2		Level 3
Financial assets:
Debt securities held to maturity	$	37,707	$	—	$	31,367	$	—
Loans held for sale		9,458		—		9,776		—
Loans, net of allowance for credit losses		2,638,485		—		2,603,018		—
Financial liabilities:
Deposits		2,462,549		—		2,459,277		—
Borrowed funds and subordinated debentures		326,433		—		326,251		—

	December 31, 2025
	Carrying
(In thousands)	amount		Level 1		Level 2		Level 3
Financial assets:
Debt securities held to maturity	$	36,576	$	—	$	30,405	$	—
Loans held for sale		9,490		—		10,041		—
Loans, net of allowance for credit losses		2,502,881		—		2,466,691		3,376
Financial liabilities:
Deposits		2,324,061		—		2,322,637		—
Borrowed funds and subordinated debentures		266,084		—		266,769		—

Limitations

Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

15

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the effect of fair value estimates have not been considered in the above estimates.

NOTE 6. Securities

This table provides the major components of debt securities available for sale ("AFS") and held to maturity (“HTM”) at amortized cost and estimated fair value at June 30, 2026 and December 31, 2025:

	June 30, 2026
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(In thousands)	cost		gains		losses			fair value
Available for sale:
U.S. Government sponsored entities	$	5,000	$	—	$	(35	)	$	4,965
State and political subdivisions		168		—		(19	)		149
Residential mortgage-backed securities		12,227		25		(1,105	)		11,147
Asset backed securities		19,000		17		(1	)		19,016
Corporate and other securities		32,419		411		(886	)		31,944
Total debt securities available for sale	$	68,814	$	453	$	(2,046	)	$	67,221
Held to maturity:
U.S. Government sponsored entities	$	28,000	$	—	$	(3,899	)	$	24,101
State and political subdivisions		2,319		58		(7	)		2,370
Residential mortgage-backed securities		7,388		—		(2,492	)		4,896
Total debt securities held to maturity	$	37,707	$	58	$	(6,398	)	$	31,367

	December 31, 2025
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(In thousands)	cost		gains		losses			fair value
Available for sale:
U.S. Government sponsored entities	$	5,000	$	—	$	(31	)	$	4,969
State and political subdivisions		185		—		(26	)		159
Residential mortgage-backed securities		12,702		27		(977	)		11,752
Asset backed securities		22,001		11		(12	)		22,000
Corporate and other securities		32,586		314		(910	)		31,990
Total debt securities available for sale	$	72,474	$	352	$	(1,956	)	$	70,870
Held to maturity:
U.S. Government sponsored entities	$	28,000	$	—	$	(3,812	)	$	24,188
State and political subdivisions		1,299		42		—			1,341
Residential mortgage-backed securities		7,277		—		(2,401	)		4,876
Total debt securities held to maturity	$	36,576	$	42	$	(6,213	)	$	30,405

There was no provision or release for credit losses on securities for the three and six months ended June 30, 2026, compared to $2.0 million release on credit losses for six months ended June 30, 2025. During the three months ended June 30, 2026, the Company entered into a modification agreement with a borrower experiencing financial difficulty. The Company holds $2.0 million par of the original senior debt security. A $185 thousand loss was recognized through Net Securities Gains (Losses) in the Consolidated Statements of Income during the three months ended March 31, 2026 as the Company has plans to sell the security.

16

The contractual maturities of AFS and HTM debt securities at June 30, 2026 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.

	Amortized		Fair
(In thousands)	Cost		Value
Available for sale:
Due in one year	$	7,000	$	6,966
Due after one year through five years		13,063		12,729
Due after five years through ten years		22,356		22,222
Due after ten years		14,168		14,157
Residential mortgage-backed securities		12,227		11,147
Total	$	68,814	$	67,221
Held to maturity:
Due in one year	$	986	$	979
Due after one year through five years		3,000		2,983
Due after five years through ten years		4,000		3,556
Due after ten years		22,333		18,953
Residential mortgage-backed securities		7,388		4,896
Total	$	37,707	$	31,367

Actual maturities of AFS and HTM debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

The fair value of debt securities in an unrealized loss position, categorized by the length of time each security has been in a continuous unrealized loss position at June 30, 2026 and December 31, 2025, is as follows:

	June 30, 2026
	Less than 12 months					12 months and greater					Total
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
(In thousands)	fair value		loss			fair value		loss			fair value		loss
Available for sale:
U.S. Government sponsored entities	$	—	$	—		$	4,965	$	(35	)	$	4,965	$	(35	)
State and political subdivisions		—		—			149		(19	)		149		(19	)
Residential mortgage-backed securities		—		—			11,043		(1,105	)		11,043		(1,105	)
Asset backed securities		3,999		(1	)		—		—			3,999		(1	)
Corporate and other securities		1,994		(6	)		10,218		(880	)		12,212		(886	)
Total temporarily impaired AFS securities	$	5,993	$	(7	)	$	26,375	$	(2,039	)	$	32,368	$	(2,046	)
Held to maturity:
U.S. Government sponsored entities	$	3,971	$	(30	)	$	20,131	$	(3,869	)	$	24,101	$	(3,899	)
State and political subdivisions		979		(7	)		—		—			979		(7	)
Residential mortgage-backed securities		—		—			4,896		(2,492	)		4,896		(2,492	)
Total temporarily impaired HTM securities	$	4,950	$	(37	)	$	25,027	$	(6,361	)	$	29,976	$	(6,398	)

17

	December 31, 2025
	Less than 12 months					12 months and greater					Total
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
(In thousands)	fair value		loss			fair value		loss			fair value		loss
Available for sale:
U.S. Government sponsored entities	$	—	$	—		$	4,969	$	(31	)	$	4,969	$	(31	)
State and political subdivisions		—		—			159		(26	)		159		(26	)
Residential mortgage-backed securities		—		—			11,625		(977	)		11,625		(977	)
Asset backed securities		9,988		(12	)		—		—			9,988		(12	)
Corporate and other securities		2,483		(18	)		9,681		(892	)		12,164		(910	)
Total temporarily impaired AFS securities	$	12,471	$	(30	)	$	26,434	$	(1,926	)	$	38,905	$	(1,956	)
Held to maturity:
U.S. Government sponsored entities	$	—	$	—		$	24,188	$	(3,812	)	$	24,188	$	(3,812	)
Residential mortgage-backed securities		—		—			4,876		(2,401	)		4,876		(2,401	)
Total temporarily impaired HTM securities	$	—	$	—		$	29,064	$	(6,213	)	$	29,064	$	(6,213	)

Unrealized losses in each of the categories presented in the tables above were primarily driven by market interest rate fluctuations. Residential mortgage-backed securities are guaranteed by either Ginnie Mae, Freddie Mac or Fannie Mae.

The Company is using the practical expedient to exclude accrued interest receivable from credit loss measurement. At June 30, 2026, there was $0.7 million of accrued interest on securities. At December 31, 2025, there was $0.8 million of accrued interest on securities.

Securities with a carrying value of $67.0 million and $69.2 million at June 30, 2026 and December 31, 2025, respectively, were held at the FHLB or FRB and were pledged for borrowing purposes; however, there were no securities borrowed against at June 30, 2026 and December 31, 2025.

Realized Gains and Losses on Debt Securities

Net realized gains (losses) on debt securities are included in noninterest income in the Consolidated Statements of Income as net security gains (losses). There were no gains or losses on sales of AFS debt securities during the three and six months ended June 30, 2026 compared to a $11 thousand loss on AFS debt securities during the six months ended June 30, 2025 and no loss during the three months ended June 30, 2025. There were no realized gains or losses on HTM debt securities during the three and six months ended June 30, 2026 and 2025.

Equity Securities

Included in this category are Community Reinvestment Act (“CRA”) investments and the Company’s current other equity holdings of financial institutions. Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interests in entities at fixed or determinable prices.

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2026 and 2025:

	For the three months ended June 30,					For the six months ended June 30,
(In thousands)	2026			2025		2026			2025
Net unrealized (losses) gains occurring during the period on equity securities	$	(779	)	$	91	$	(1,283	)	$	53
Net gains recognized during the period on equity securities sold during the period		136			3,509		743			3,509
(Losses) gains recognized during the reporting period on equity securities	$	(643	)	$	3,600	$	(540	)	$	3,562

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NOTE 7. Loans

The following table sets forth the classification of loans by class, including unearned fees and deferred costs and excluding the allowance for credit losses as of June 30, 2026 and December 31, 2025:

(In thousands)	June 30, 2026		December 31, 2025
SBA loans held for investment		35,816		34,259
Commercial loans
SBA 504		44,353		43,802
Commercial & industrial		191,787		183,163
Commercial real estate2		1,413,112		1,291,067
Commercial construction loans		128,628		147,215
Residential mortgage loans		668,502		677,221
Consumer loans
Home equity		92,175		82,488
Consumer other		2,582		2,731
Residential construction loans		96,081		73,277
Total loans held for investment	$	2,673,036	$	2,535,223
Loans held for sale1		9,458		9,490
Total loans	$	2,682,494	$	2,544,713

1Loans held for sale included SBA and residential mortgage loans of $2.9 million and $6.6 million as of June 30, 2026, respectively. Loans held for sale included SBA and residential mortgage loans of $8.0 million and $1.5 million as of December 31, 2025, respectively.

2Commercial real estate includes Commercial Mortgage – Owner Occupied, Commercial Mortgage – Nonowner Occupied and Commercial Mortgage – Other. Commercial Mortgage – Other primarily includes multifamily and land loans.

Loans are made to individuals and commercial entities. Specific loan terms vary as to interest rate, repayment and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by the Bank, most notably in New Jersey. Additionally, the New Jersey credit concentration is primarily focused within the counties that the Company operates in. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type. A description of the Company’s different loan segments follows:

SBA Loans: SBA 7(a) loans, on which the SBA has historically provided guarantees of up to 90 percent of the principal balance, are considered a higher risk loan product for the Company than its other loan products. The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the nonguaranteed portion held in the portfolio as a loan held for investment. SBA loans are for the purpose of providing working capital, business acquisitions, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. Loans are guaranteed by the businesses’ major owners. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Loans held for sale includes the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value. When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income. All criteria for sale accounting must be met in order for the loan sales to occur.

Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions.

Serviced loans sold to others are not included in the accompanying Consolidated Balance Sheets. Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets, in the accompanying Consolidated Statements of Income.

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Commercial and Commercial Construction Loans: Commercial credit is extended primarily to middle market and small business customers. Commercial loans are generally made in the Company’s marketplace for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. The SBA 504 program consists of real estate backed commercial mortgages where the Company has the first mortgage and the SBA has the second mortgage on the property. Loans will generally be guaranteed in full or for a meaningful amount by the businesses’ major owners. Commercial loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Residential Mortgage, Consumer and Residential Construction Loans: The Company originates mortgage and consumer loans including principally residential real estate and home equity lines and loans and residential construction lines. The Company originates qualified mortgages which are generally sold in the secondary market and nonqualified mortgages which are generally held for investment. Each loan type is evaluated on debt to income, type of collateral, loan to collateral value, credit history and Company relationship with the borrower.

Loans held for sale includes a portion of residential mortgage loans and are reflected at the lower of aggregate cost or market value. When sales of residential mortgage loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income. All criteria for sale accounting must be met in order for the loan sales to occur.

Inherent in the lending function is credit risk, which is the possibility a borrower may not perform in accordance with the contractual terms of their loan. A borrower’s inability to pay their obligations according to the contractual terms can create the risk of past due loans and, ultimately, credit losses, especially on collateral deficient loans. The Company minimizes its credit risk by loan diversification and adhering to credit administration policies and procedures. Due diligence on loans begins when the Company initiates contact regarding a loan with a borrower. Documentation, including a borrower’s credit history, materials establishing the value and liquidity of potential collateral, the purpose of the loan, the source of funds for repayment of the loan and other factors, are analyzed before a loan is submitted for approval. The commercial loan portfolio is then subject to on-going internal reviews for credit quality which in part is derived from ongoing collection and review of borrowers’ financial information, as well as, independent credit reviews performed by an independent external firm.

The Company’s extension of credit is governed by the Loan Policy which was established to control the quality of the Company’s loans. This policy and the underlying procedures are reviewed and approved by the Board of Directors on a regular basis.

Credit Ratings

The Company places all SBA, commercial, commercial construction and residential construction loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. The credit risk rating is evaluated at the time of loan approval and subsequently during the annual reviews, in accordance with the guidelines set forth in the Loan Policy.

The Company uses the following regulatory definitions for criticized and classified risk ratings:

Pass: Risk ratings of 1 through 6 are used for loans that are performing, as they meet, and are expected to continue to meet, all of the terms and conditions set forth in the original loan documentation, and are generally current on principal and interest payments. These performing loans are termed “Pass”.

Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: These loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts,

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conditions and values. Once a borrower is deemed incapable of repayment of unsecured debt, the loan is termed a “Loss” and charged off immediately, subject to government guarantee.

Loss: These loans are considered uncollectible and hold minute value that their continuance as bankable loans is no longer warranted. This classification does not imply zero possible recovery or salvage value; rather, it is neither practical nor desirable to postpone writing off the asset despite some partial recovery occurring later.

For residential mortgage and consumer loans, Management uses performing versus nonperforming as the best indicator of credit quality. Nonperforming loans consist of loans that are not accruing interest (nonaccrual loans) as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt. These credit quality indicators are updated on an ongoing basis, as a loan is placed on nonaccrual status as soon as Management believes there is sufficient doubt as to the ultimate ability to collect interest on a loan.

Nonaccrual and Past Due Loans

Nonaccrual loans consist of loans that are not accruing interest as a result of principal or interest being in default, typically for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt. When a loan is classified as nonaccrual, interest accruals are discontinued and all past due interest previously recognized as income is reversed and charged against current period earnings. Generally, until the loan becomes current, any payments received from the borrower are applied to outstanding principal until such time as Management determines that the financial condition of the borrower and other factors merit recognition of a portion of such payments as interest income. Loans may be returned to an accrual status when the ability to collect is reasonably assured and when the loan is brought current as to principal and interest. The risk of loss is difficult to quantify and is subject to fluctuations in collateral values, general economic conditions and other factors. The Company values its collateral through the use of appraisals, broker price opinions and knowledge of its local market.

The following tables set forth an aging analysis of past due and nonaccrual loans as of June 30, 2026 and December 31, 2025:

	June 30, 2026
					90+ days
	30‑59 days		60‑89 days		and still				Total
(In thousands)	past due		past due		accruing		Nonaccrual		past due		Current		Total loans
SBA loans held for investment	$	—	$	853	$	—	$	1,616	$	2,469	$	33,347	$	35,816
Commercial loans
SBA 504	—		—		—		—		—			44,353		44,353
Commercial & industrial		3	—		—			211		214		191,573		191,787
Commercial real estate		5,470		1,380	—			17,532		24,382		1,300,358		1,324,740
Commercial other		—		—		—		—		—		88,373		88,373
Commercial real estate construction	—		—		—		—		—			128,628		128,628
Residential mortgage loans		8,711		1,888	—			10,290		20,889		647,613		668,502
Consumer loans
Home equity		3,918		207	—			2,926		7,051		85,124		92,175
Consumer other		2	—		—		—			2		2,580		2,582
Residential construction loans	—		—		—			442		442		95,639		96,081
Total loans held for investment		18,104		4,328	—			33,017		55,449		2,617,587		2,673,036
Loans held for sale	—		—		—		—		—			9,458		9,458
Total loans	$	18,104	$	4,328	$	—	$	33,017	$	55,449	$	2,627,045	$	2,682,494

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	December 31, 2025
					90+ days
	30‑59 days		60‑89 days		and still				Total
(In thousands)	past due		past due		accruing		Nonaccrual		past due		Current		Total loans
SBA loans held for investment	$	730	$	68	$	—	$	1,751	$	2,549	$	31,710	$	34,259
Commercial loans
SBA 504		—	—		—		—			—		43,802		43,802
Commercial & industrial		401		—	—			1,240		1,641		181,522		183,163
Commercial real estate		6,463		150	—			17,233		23,846		1,168,535		1,192,381
Commercial other		—		—		—		—		—		98,686		98,686
Commercial construction loans		—		—	—		—			—		147,215		147,215
Residential mortgage loans		8,538		7,568		—		8,173		24,279		652,942		677,221
Consumer loans
Home equity		2,507		240		—		1,268		4,015		78,473		82,488
Consumer other		4		—	—			—		4		2,727		2,731
Residential construction loans		—		—		—		171		171		73,106		73,277
Total loans held for investment		18,643		8,026		—		29,836		56,505		2,478,718		2,535,223
Loans held for sale		—		—		—		—		—		9,490		9,490
Total loans	$	18,643	$	8,026	$	—	$	29,836	$	56,505	$	2,488,208	$	2,544,713

The Company is using the practical expedient to exclude accrued interest receivable from credit loss measurement. At June 30, 2026 and December 31, 2025, there was $12.1 million and $12.0 million of accrued interest on loans, respectively.

Individually Evaluated Loans

The Company has defined individually evaluated loans to be all nonperforming loans. Management individually evaluates a loan when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract.

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The following tables provide detail on the Company’s loans individually evaluated in the Company’s Current Expected Credit Losses (“CECL”) evaluation with the associated allowance amount, if applicable, as of June 30, 2026 and December 31, 2025:

	June 30, 2026
	Unpaid				Allowance for
	principal		Recorded		Credit Losses
(In thousands)	balance		investment		Allocated
With no related allowance:
SBA loans held for investment	$	2,704	$	1,616	$	—
Commercial loans
Commercial & industrial		543		211		—
Commercial real estate		17,627		17,532		—
Total commercial loans		18,170		17,743		—
Residential mortgage loans		10,336		10,290		—
Consumer loans
Home equity		3,164		2,926		—
Total consumer loans		3,164		2,926		—
Residential construction loans		487		442		—
Total individually evaluated loans with no related allowance		34,861		33,017		—
Total individually evaluated loans:
SBA loans held for investment		2,704		1,616		—
Commercial loans
Commercial & industrial		543		211		—
Commercial real estate		17,627		17,532		—
Total commercial loans		18,170		17,743		—
Residential mortgage loans		10,336		10,290		—
Consumer loans
Home equity		3,164		2,926		—
Total consumer loans		3,164		2,926		—
Residential construction loans		487		442		—
Total individually evaluated loans	$	34,861	$	33,017	$	—

As of June 30, 2026, there was no allowance for credit losses on individually evaluated loans based upon the valuation of the collateral securing each loan.

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	December 31, 2025
	Unpaid				Allowance for
	principal		Recorded		Credit Losses
(In thousands)	balance		investment		Allocated
With no related allowance:
SBA loans held for investment	$	1,355	$	1,163	$	—
Commercial loans
Commercial & industrial		1,468		1,156		—
Commercial real estate		17,235		17,233		—
Total commercial loans		18,703		18,389		—
Residential mortgage loans		5,704		5,494		—
Consumer loans
Home equity		1,292		1,268		—
Total consumer loans		1,292		1,268		—
Total individually evaluated loans with no related allowance		27,054		26,314		—
With an allowance:
SBA loans held for investment		1,504		588		3
Commercial loans
Commercial & industrial		91		84		84
Total commercial loans		91		84		84
Residential mortgage loans		2,725		2,679		15
Residential construction loans		171		171		44
Total individually evaluated loans with a related allowance		4,491		3,522		146
Total individually evaluated loans:
SBA loans held for investment		2,859		1,751		3
Commercial loans
Commercial & industrial		1,559		1,240		84
Commercial real estate		17,235		17,233		—
Total commercial loans		18,794		18,473		84
Residential mortgage loans		8,429		8,173		15
Consumer loans
Home equity		1,292		1,268		—
Total consumer loans		1,292		1,268		—
Residential construction loans		171		171		44
Total individually evaluated loans	$	31,545	$	29,836	$	146

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The following tables show the internal loan classification risk by loan portfolio classification by origination year as of June 30, 2026 and December 31, 2025, respectively, as well as gross write-offs for the six months ended June 30, 2026 and the twelve months ended December 31, 2025:

	Term Loans												Revolving
	Amortized Cost Basis by Origination Year, June 30, 2026												Loans
(In thousands)	2026		2025		2024		2023		2022		2021 and  Earlier		Amortized Cost Basis		Total
SBA loans held for investment
Risk Rating:
Pass	$	3,539	$	2,607	$	1,997	$	1,044	$	6,734	$	17,282	$	—	$	33,203
Special Mention		—		—		—		—		282		737		—		1,019
Substandard		—		—		—		151		1,443		—		—		1,594
Total SBA loans held for investment	$	3,539	$	2,607	$	1,997	$	1,195	$	8,459	$	18,019	$	—	$	35,816
SBA loans held for investment
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	50	$	—	$	—	$	50
Commercial loans
Risk Rating:
Pass	$	136,302	$	294,389	$	176,450	$	138,316	$	275,029	$	480,977	$	108,905	$	1,610,368
Special Mention		—		1,110		163		1,324		11,733		7,125		—		21,455
Substandard		—		—		9,893		80		—		7,456		—		17,429
Total commercial loans	$	136,302	$	295,499	$	186,506	$	139,720	$	286,762	$	495,558	$	108,905	$	1,649,252
Commercial loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	140	$	—	$	140
Commercial construction loans
Risk Rating:
Pass	$	5,119	$	71,599	$	29,969	$	—	$	11,610	$	5,655	$	4,676	$	128,628
Total commercial construction loans	$	5,119	$	71,599	$	29,969	$	—	$	11,610	$	5,655	$	4,676	$	128,628
Commercial construction loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential mortgage loans
Risk Rating:
Performing	$	58,244	$	136,966	$	59,957	$	42,040	$	175,912	$	185,093	$	—	$	658,212
Nonperforming		—		—		—		1,250		5,432		3,608		—		10,290
Total residential mortgage loans	$	58,244	$	136,966	$	59,957	$	43,290	$	181,344	$	188,701	$	—	$	668,502
Residential mortgage loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer loans
Risk Rating:
Performing	$	10,713	$	7,854	$	4,239	$	1,522	$	2,237	$	6,592	$	58,674	$	91,831
Nonperforming		—		—		917		—		—		1,954		55		2,926
Total consumer loans	$	10,713	$	7,854	$	5,156	$	1,522	$	2,237	$	8,546	$	58,729	$	94,757
Consumer loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	10	$	—	$	10
Residential construction
Risk Rating:
Pass	$	32,630	$	48,557	$	10,976	$	—	$	—	$	3,308	$	—	$	95,471
Special Mention		—		—		484		—		—		—		—		484
Substandard		—		—		—		—		—		126		—		126
Total residential construction loans	$	32,630	$	48,557	$	11,460	$	—	$	—	$	3,434	$	—	$	96,081
Residential construction
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	40	$	—	$	40
Total loans held for investment	$	246,547	$	563,082	$	295,045	$	185,727	$	490,412	$	719,913	$	172,310	$	2,673,036

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	Term Loans												Revolving
	Amortized Cost Basis by Origination Year, December 31, 2025												Loans
(In thousands)	2025		2024		2023		2022		2021		2020 and  Earlier		Amortized Cost Basis		Total
SBA loans held for investment
Risk Rating:
Pass	$	2,719	$	3,311	$	1,155	$	5,663	$	6,339	$	11,751	$	—	$	30,938
Special Mention		—		—		711		283		351		311		—		1,656
Substandard		—		—		172		1,493		—		—		—		1,665
Total SBA loans held for investment	$	2,719	$	3,311	$	2,038	$	7,439	$	6,690	$	12,062	$	—	$	34,259
SBA loans held for investment
Current-period gross writeoffs	$	—	$	—	$	61	$	535	$	323	$	11	$	—	$	930
Commercial loans
Risk Rating:
Pass	$	291,258	$	148,983	$	127,049	$	309,072	$	137,214	$	375,281	$	100,978	$	1,489,835
Special Mention		—		—		762		536		914		6,460		—		8,672
Substandard		—		9,893		137		—		6,714		2,781		—		19,525
Total commercial loans	$	291,258	$	158,876	$	127,948	$	309,608	$	144,842	$	384,522	$	100,978	$	1,518,032
Commercial loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	1	$	101	$	—	$	102
Commercial construction loans
Risk Rating:
Pass	$	58,495	$	55,511	$	10,118	$	10,003	$	—	$	5,692	$	7,396	$	147,215
Total commercial construction loans	$	58,495	$	55,511	$	10,118	$	10,003	$	—	$	5,692	$	7,396	$	147,215
Commercial construction loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential mortgage loans
Risk Rating:
Performing	$	147,623	$	69,751	$	53,816	$	197,958	$	57,512	$	142,388	$	—	$	669,048
Nonperforming		—		865		—		3,294		944		3,070		—		8,173
Total residential mortgage loans	$	147,623	$	70,616	$	53,816	$	201,252	$	58,456	$	145,458	$	—	$	677,221
Residential mortgage loans
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	312	$	231	$	—	$	543
Consumer loans
Risk Rating:
Performing	$	9,647	$	4,093	$	1,624	$	2,404	$	390	$	7,928	$	57,865	$	83,951
Nonperforming		—		926		—		—		—		342		—		1,268
Total consumer loans	$	9,647	$	5,019	$	1,624	$	2,404	$	390	$	8,270	$	57,865	$	85,219
Consumer loans
Current-period gross writeoffs	$	—	$	—	$	—	$	11	$	71	$	30	$	—	$	112
Residential construction
Risk Rating:
Pass	$	46,077	$	22,263	$	1,773	$	—	$	595	$	2,398	$	—	$	73,106
Substandard		—		—		—		—		—		171		—		171
Total residential construction loans	$	46,077	$	22,263	$	1,773	$	—	$	595	$	2,569	$	—	$	73,277
Residential construction
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total loans held for investment	$	555,819	$	315,596	$	197,317	$	530,706	$	210,973	$	558,573	$	166,239	$	2,535,223

Modifications

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on in-scope assets upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a weighted-average remaining maturity model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized

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cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of gross loans and type of concession granted during the six months ended June 30, 2026 and 2025, respectively:

	Term Extension
	Principal		Percentage
(Dollars in thousands)	Balance		of Loan Class
Commercial loans
Commercial & industrial		72		—
Commercial real estate		373		—
Commercial - other		563		0.6
Balance as of June 30, 2026	$	1,008		—	%

	Payment Delay					Term Extension					Interest Rate Reduction
	Principal		Percentage			Principal		Percentage			Principal		Percentage
(Dollars in thousands)	Balance		of Loan Class			Balance		of Loan Class			Balance		of Loan Class
SBA loans held for investment	$	187		0.5	%	$	214		0.6	%	$	—		—	%
Commercial loans
Commercial real estate		628		0.1			—		—			1,860		0.2
Residential mortgage loans		1,123		0.2			—		—			—		—
Consumer loans
Home equity		—		—			53		0.1			—		—
Balance as of June 30, 2025	$	1,938		0.1	%	$	267		0.1	%	$	1,860		0.1	%

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There are no loans that were modified during the twelve months ended June 30, 2026 that were not in compliance with the modified terms.

NOTE 8. Allowance for Credit Losses and Reserve for Unfunded Loan Commitments

Allowance for Credit Losses

The Company has an established methodology to determine the adequacy of the allowance for credit losses that assesses the risks and losses inherent in the loan portfolio. At a minimum, the adequacy of the allowance for credit losses is reviewed by Management on a quarterly basis. The allowance is increased by provisions charged to expense and is reduced by net charge-offs. For purposes of determining the allowance for credit losses, the Company has segmented the loans in its portfolio by loan type. Loans are segmented into the following pools: SBA, commercial, residential mortgage, consumer and residential construction loans. Certain portfolio segments are further broken down into classes based on the associated risks within those segments and the type of collateral underlying each loan. Commercial loans are divided into the following four classes: commercial real estate, commercial real estate construction, commercial & industrial and SBA 504. Consumer loans are divided into two classes as follows: home equity and other.

The standardized methodology used to assess the adequacy of the allowance includes the allocation of specific and general reserves. The same standard methodology is used, regardless of loan type. Specific reserves are established for individually evaluated loans. The general reserve is set based upon a representative average historical net charge-off rate adjusted for the following environmental factors: delinquency and impairment trends, charge-off and recovery trends, volume and loan term trends, changes in risk and underwriting policy trends, staffing and experience changes, national and local economic trends, industry conditions and credit concentration changes. These environmental factors include reasonable and supportable

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forecasts. Within the historical net charge-off rate, the Company weights the data dating back ten years on a straight line basis and projects the losses on a weighted average remaining maturity basis for each segment. All of the environmental factors are ranked and assigned a basis points value based on the following scale: low, low moderate, moderate, high moderate and high risk. Each environmental factor is evaluated separately for each class of loans and risk weighted based on its individual characteristics.

•For SBA 7(a) and commercial loans, the estimate of loss based on pools of loans with similar characteristics is made through the use of a standardized loan grading system that is applied on an individual loan level and updated on a continuous basis. The loan grading system incorporates reviews of the financial performance of the borrower, including cash flow, debt-service coverage ratio, earnings power, debt level and equity position, in conjunction with an assessment of the borrower’s industry and future prospects. It also incorporates analysis of the type of collateral and the relative loan to value ratio.

•For residential mortgage, consumer and residential construction loans, the estimate of loss is based on pools of loans with similar characteristics. Factors such as delinquency status and type of collateral are evaluated. Factors are updated frequently to capture the recent behavioral characteristics of the subject portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as needed.

According to the Company’s policy, a loss (“charge-off”) is to be recognized and charged to the allowance for credit losses as soon as a loan is recognized as uncollectible. All credits which are 90 days past due must be analyzed for the Company’s ability to collect on the credit. Once a loss is known to exist, the charge-off approval process is immediately expedited. This charge-off policy is followed for all loan types.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2026 and 2025:

	For the three months ended June 30, 2026
	SBA
(In thousands)	Held for Investment		Commercial		Residential		Consumer		Residential construction		Total
Balance, beginning of period	$	1,111	$	22,870	$	7,523	$	795	$	1,055	$	33,354
Charge-offs		—		—		—		—		—