Financial Analysis

13. Proposed Acquisition of PB Bankshares, Inc. On July 7, 2025, the Company and its wholly owned subsidiary, Wayne Bank, and PB Bankshares, Inc. (PB Bankshares), and its wholly owned subsidiary, Presence Bank, entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which PB Bankshares will merge with and into the Company, with the Company as the surviving corporation. Concurrent with the merger, it is expected that Presence Bank will merge with and into Wayne Bank. PB Bankshares common stock is traded on the Nasdaq Capital Market under the trading symbol PBBK. At June 30, 2025, PB Bankshares had total consolidated assets of $ 464.1 million, total deposits of $ 363.4 million and total stockholders equity of $ 50.3 million. Presence Bank is a stock savings bank organized under the laws of the Commonwealth of Pennsylvania and is subject to comprehensive regulation and examination by the FDIC and the Pennsylvania Department of Banking and Securities. Presence Bank operates from four offices and two loan production offices in Chester, Lancaster and Dauphin Counties, Pennsylvania. Presence Banks primary market area for deposits includes the communities in which it maintains banking office locations, while its primary lending market area is broader and includes customers in Lebanon, Dauphin and Cumberland Counties in Pennsylvania. Presence Bank is a community-oriented bank offering a variety of financial products and services to meet the needs of its custome …

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Three months ended September 30, (dollars in thousands) Noninterest Income 2025 2024 In-scope of Topic 606: Service charges on deposit accounts $ 121 $ 113 ATM fees 50 112 Overdraft fees 399 363 Safe deposit box rental 22 23 Loan related service fees 181 128 Debit card fees 634 590 Fiduciary activities 254 256 Commissions on mutual funds and annuities 188 131 Gains on sales of other real estate owned Other income 193 158 Noninterest Income ( in-scope of Topic 606 ) 2,042 1,874 Out-of-scope of Topic 606: Loan servicing fees 65 57 Gains on sales of loans 130 103 Earnings on and proceeds from bank-owned life insurance 268 261 Noninterest Income ( out-of-scope of Topic 606 ) 463 421 Total Noninterest Income $ 2,505 $ 2,295 Nine months ended September 30, (dollars in thousands) Noninterest Income 2025 2024 In-scope of Topic 606: Service charges on deposit accounts $ 348 $ 338 ATM fees 205 325 Overdraft fees 1,146 1,063 Safe deposit box rental 68 68 Loan related service fees 462 447 Debit card fees 1,777 1,732 Fiduciary activities 805 719 Commissions on mutual funds and annuities 528 275 Gains on sales of other real estate owned 32 Other income 551 467 Noninterest Income ( in-scope of Topic 606 ) 5,890 5,466 Out-of-scope of Topic 606: Loan servicing fees 153 116 Gains on sales of loans 242 145 Earnings on and proceeds from bank-owned life insurance 820 781 Noninterest Income ( out-of-scope of Topic 606 ) 1,215 1,042 Total Noninterest Income $ 7,105 $ 6,508 …

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4. Stock-Based Compensation During the nine-month period ended September 30, 2025, no stock options were granted. As of September 30, 2025, there was $ 62,000 of total unrecognized compensation cost related to non-vested options granted in 2024 under the 2024 Equity Incentive Plan, which will be fully realized by December 31, 2025. Compensation costs related to stock options amounted to $ 186,000 and $ 261,000 during the nine-month periods ended September 30, 2025 and 2024, respectively. For the three-month periods ended September 30, 2025 and 2024, the compensation costs related to stock options amounted to $ 62,000 and $ 86,000 , respectively. A summary of the Companys stock option activity for the nine-month period ended September 30, 2025 is as follows: Weighted Average Exercise Weighted Average Aggregate Price Remaining Intrinsic Value Options Per Share Contractual Term ($000) Outstanding at January 1, 2025 220,600 $ 29.78 6.1 Yrs. $ 112 Granted Exercised ( 750 ) 19.03 Forfeited ( 20,500 ) 29.64 7.1 Outstanding at September 30, 2025 199,350 $ 29.83 5.8 Yrs. $ 43 Exercisable at September 30, 2025 168,350 $ 30.31 5.2 Yrs. $ 43 Intrinsic value represents the amount by which the market price of the stock on the measurement date exceeded the exercise price of the option. The market price was $ 25.42 per share as of September 30, 2025 and $ 27.21 per share as of December 31, 2024. A summary of the Companys restricted stock activity for the nine-month periods ended September 30 …

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9 . Fair Value of Assets and Liabilities Fair value is the exchange price that would be received for an asset or paid to transfer a liability (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 accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the Consolidated Financial Statements. Those assets and liabilities are presented in the sections entitled Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis and Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis. There are three levels of inputs that may be used to measure fair values: Level 1 Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 Significant unobservable inputs that reflect a companys own assumptions about the assumptions that market participants would use in pricing an asset or liability. The methods of determining th …

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2. Revenue Recognition Under ASC Topic 606, management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans sold and earnings on bank-owned life insurance are not within the scope of this Topic. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three-month and nine-month periods ended September 30: Three months ended September 30, (dollars in thousands) Noninterest Income 2025 2024 In-scope of Topic 606: Service charges on deposit accounts $ 121 $ 113 ATM fees 50 112 Overdraft fees 399 363 Safe deposit box rental 22 23 Loan related service fees 181 128 Debit card fees 634 590 Fiduciary activities 254 256 Commissions on mutual funds and annuities 188 131 Gains on sales of other real estate owned Other income 193 158 Noninterest Income ( in-scope of Topic 606 ) 2,042 1,874 Out-of-scope of Topic 606: Loan servicing fees 65 57 Gains on sales of loans 130 103 Earnings on and proceeds from bank-owned life insurance 268 261 Noninterest Income ( out-of-scope of Topic 606 ) 463 421 Total Noninterest Income $ 2,505 $ 2,295 Nine months ended September 30, (dollars in thousands) Noninterest Income 2025 2024 In-scope of Topic 606: Service charges on deposit accounts $ 348 $ 338 ATM fees 205 325 Overdraft fees 1,146 1,063 Safe deposit box renta …

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12. Segment Reporting ASC Topic 280 Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporations Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to develop strategy, allocate resources and assess performance. The Company acts as an independent community financial services provider and offers traditional banking related financial services to individual, business and government customers. Through its Community Office and automated teller machine network, the Company offers a full array of commercial and retail financial services, including the taking of time, savings and demand deposits; the making of commercial, consumer and mortgage loans; and the providing of safe deposit services. The Company also performs personal, corporate, pension and fiduciary services through its Trust Department. Operating segments are aggregated into one segment, as operating results for all segments are similar. Accordingly, all the financial service operations are considered by management to be aggregated in one reportable operating segment, Community Banking. The Chief Operating Decision Maker assesses performance and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. Net income is used to monitor budget versus actual results. The Chief Operating Decision Maker uses revenue streams and significant expenses to assess performan …

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