MORTGAGE BANKING ACTIVITIES	6 Months Ended
Jun. 30, 2026
Mortgage Banking Activities [Abstract]
Mortgage Banking Activities	NOTE 4 – MORTGAGE BANKING ACTIVITIES The Company’s mortgage banking activities include mandatory delivery loan sales, forward sales contracts used to manage residential loan pipeline price risk, utilization of warehouse lines to fund secondary market residential loan closings, and residential mortgage servicing. Residential Mortgage Loan Production The Company originates, markets, and services conventional and government-sponsored residential mortgage loans. Generally, conforming fixed rate residential mortgage loans are held for sale in the secondary market and non-conforming and adjustable-rate residential mortgage loans may be held for investment. The volume of residential mortgage loans originated for sale and secondary market prices are the primary drivers of origination revenue. Residential mortgage loan commitments are generally outstanding for 30 to 90 days, which represents the typical period from commitment to originate a residential mortgage loan to when the closed loan is sold to an investor. Residential mortgage loan commitments are subject to both credit and price risk. Credit risk is managed through underwriting policies and procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Price risk is primarily related to interest rate fluctuations and is partially managed through forward sales of residential mortgage-backed securities (primarily to-be announced securities, or TBAs) or mandatory delivery commitments with investors. The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loan commitments, such as interest rate lock commitments (“IRLCs”) and forward contract sales and their related fair values are set forth below. June 30, 2026 December 31, 2025 Unpaid Principal Unpaid Principal (Dollars in Thousands) Balance/Notional Fair Value Balance/Notional Fair Value Residential Mortgage Loans Held for Sale $ 33,214 34,278 $ 20,944 $ 21,695 Residential Mortgage Loan Commitments ("IRLCs") (1) 28,726 626 20,699 464 Forward Sales Contracts (2) 30,000 55 25,500 84 (1) Recorded in other assets at fair value. (2) Recorded in other liabilities at fair value. At June 30, 2026 and December 31, 2025, the Company had no residential mortgage loans held for sale 30-89 days past due or on nonaccrual status. Mortgage banking revenue was as follows: Three Months Ended June 30, Six Months Ended June 30, (Dollars in Thousands) 2026 2025 2026 2025 Net realized gains on sales of mortgage loans $ 3,529 $ 3,605 $ 6,479 $ 6,485 Net change in unrealized gain (loss) on mortgage loans held for sale 370 (62) 329 171 Net change in the fair value of IRLCs (111) (91) 162 405 Net change in the fair value of forward sales contracts (179) (109) 30 (285) Pair-Offs on net settlement of forward sales contracts 116 16 192 (169) Mortgage servicing rights additions 70 24 96 44 Net origination fees 865 807 1,624 1,359 Total mortgage banking revenues $ 4,660 $ 4,190 $ 8,912 $ 8,010 Residential Mortgage Servicing The Company may retain the right to service residential mortgage loans sold. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue. The following represents a summary of mortgage servicing rights. (Dollars in Thousands) June 30, 2026 December 31, 2025 Number of residential mortgage loans serviced for others 464 456 Outstanding principal balance of residential mortgage loans serviced for others $ 124,200 $ 118,429 Weighted average interest rate 5.71% 5.69% Remaining contractual term (in months) 354 354 Conforming conventional loans serviced by the Company are sold to Federal National Mortgage Association (“FNMA”) on a non- recourse basis, whereby foreclosure losses are generally the responsibility of FNMA and not the Company. The government loans serviced by the Company are secured through the Government National Mortgage Association (“GNMA”), whereby the Company is insured against loss by the Federal Housing Administration or partially guaranteed against loss by the Veterans Administration. At June 30, 2026, the servicing portfolio balance consisted of the following loan types: FNMA ( 61.9 %), GNMA ( 4.3 %), and private investor ( 33.8 %). FNMA and private investor loans are structured as actual/actual payment remittance. At June 30, 2026 and December 31, 2025, the Company did no t have delinquent residential mortgage loans in GNMA pools serviced by the Company. The right to repurchase these loans and the corresponding liability has been recorded in other assets and other liabilities, respectively, in the Consolidated Statements of Financial Condition. The Company had no repurchases for the three months ended June 30, 2026 and 2025, and no repurchases and $ 0.3 million repurchases in the six months ended June 30, 2026 and June 30, 2025, respectively, of GNMA delinquent or defaulted mortgage loans with the intention to modify their terms and include the loans in new GNMA pools. Activity in the capitalized mortgage servicing rights was as follows: Three Months Ended June 30, Six Months Ended June 30, (Dollars in Thousands) 2026 2025 2026 2025 Beginning balance $ 903 $ 908 $ 924 $ 933 Additions due to loans sold with servicing retained 70 24 96 44 Deletions and amortization (46) (43) (93) (88) Ending balance $ 927 $ 889 $ 927 $ 889 The Company did no t record any permanent impairment losses on mortgage servicing rights for the three or six months ended June 30, 2026 or 2025. The key unobservable inputs used in determining the fair value of the Company’s mortgage servicing rights were as follows: June 30, 2026 December 31, 2025 Minimum Maximum Minimum Maximum Discount rates 9.50% 12.00% 9.50% 12.00% Annual prepayment speeds 8.85% 19.13% 8.50% 18.73% Cost of servicing (per loan) $ 85 $ 95 $ 85 $ 95 Changes in residential mortgage interest rates directly affect the prepayment speeds used in valuing the Company’s mortgage servicing rights. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults, and other relevant factors. The weighted average annual prepayment speed was 13.10 % at June 30, 2026 and 13.05 % at December 31, 2025. Warehouse Line Borrowings The Company has the following warehouse lines of credit and master repurchase agreements with various financial institutions at June 30, 2026: Amounts (Dollars in Thousands) Outstanding $ 30 million master repurchase agreement without defined expiration. Interest is at the secured overnight financing rate (SOFR) rate plus 2.25% to 3.25% , with a floor rate of 3.25% to 4.25% . A cash pledge deposit of $ 0.1 million is required by the lender. $ 21,950 $ 25 million warehouse line of credit agreement expiring in September 2026 . Interest is at the SOFR rate plus 2.50% to 3.00% , with a floor rate of 3.00% to 3.50% . 17,537 Total Warehouse Borrowings $ 39,487 Warehouse line borrowings are classified as short-term borrowings. At December 31, 2025, warehouse line borrowings totaled $ 28.1 million. At June 30, 2026, the Company had residential mortgage loans held for sale pledged as collateral under the above warehouse lines of credit and master repurchase agreements. The above agreements also contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquid assets, and maximum debt to net worth ratio, as defined in the agreements. The Company was in compliance with all significant debt covenants at June 30, 2026.

NOTE 4 – MORTGAGE BANKING ACTIVITIES

The Company’s mortgage

banking activities include mandatory delivery loan sales, forward sales contracts used

to manage residential

loan pipeline price risk, utilization of warehouse lines to fund secondary

market residential loan closings, and residential mortgage

servicing.

Residential Mortgage Loan Production

The Company originates, markets, and services conventional and

government-sponsored residential mortgage loans.

Generally,

conforming fixed rate residential mortgage loans are held for sale in the

secondary market and non-conforming and adjustable-rate

residential mortgage loans may be held for investment.

The volume of residential mortgage loans originated for sale and secondary

market prices are the primary drivers of origination revenue.

Residential mortgage loan commitments are generally outstanding for 30

to 90 days, which represents the typical period from

commitment to originate a residential mortgage loan to when the

closed loan is sold to an investor.

Residential mortgage loan

commitments are subject to both credit and price risk.

Credit risk is managed through underwriting policies and procedures, including

collateral requirements, which are generally accepted by the secondary

loan markets.

Price risk is primarily related to interest rate

fluctuations and is partially managed through forward sales of residential

mortgage-backed securities (primarily to-be announced

securities, or TBAs) or mandatory delivery commitments with investors.

The unpaid principal balance of residential mortgage loans held

for sale, notional amounts of derivative contracts related to residential

mortgage loan commitments,

such as interest rate lock commitments (“IRLCs”) and forward contract

sales and their related fair values

are set forth below.

June 30, 2026

December 31, 2025

Unpaid Principal

(Dollars in Thousands)

Balance/Notional

Fair Value

Balance/Notional

Fair Value

Residential Mortgage Loans Held for Sale

33,214

34,278

20,944

21,695

Residential Mortgage Loan Commitments ("IRLCs")

(1)

28,726

626

20,699

464

Forward Sales Contracts

(2)

30,000

25,500

(1)

Recorded in other assets at fair value.

(2)

Recorded in other liabilities at fair value.

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2026

2025

2026

2025

Net realized gains on sales of mortgage loans

3,529

3,605

6,479

6,485

Net change in unrealized gain (loss) on mortgage loans held for

sale

370

(62)

329

171

Net change in the fair value of IRLCs

(111)

(91)

162

405

Net change in the fair value of forward sales contracts

(179)

(109)

(285)

Pair-Offs on net settlement of forward

sales contracts

116

192

(169)

Mortgage servicing rights additions

Net origination fees

865

807

1,624

1,359

Total mortgage banking

revenues

4,660

4,190

8,912

8,010

Conforming conventional loans serviced by the Company are sold to Federal

National Mortgage Association (“FNMA”) on a non-

recourse basis, whereby foreclosure losses are generally the responsibility

of FNMA and not the Company.

The government loans

serviced by the Company are secured through the Government National

Mortgage Association (“GNMA”), whereby the Company is

insured against loss by the Federal Housing Administration or partially

guaranteed against loss by the Veterans

Administration.

June 30, 2026, the servicing portfolio balance consisted of the

following loan types: FNMA (

61.9

%), GNMA (

4.3

%), and private

investor (

33.8

%).

FNMA and private investor loans are structured as actual/actual payment remittance.

At June 30, 2026 and December 31, 2025, the Company did

t have delinquent residential mortgage loans in GNMA pools serviced

by the Company.

The right to repurchase these loans and the corresponding liability has been recorded

in other assets and other

liabilities, respectively, in

the Consolidated Statements of Financial Condition.

The Company had

repurchases for the three months

ended June 30, 2026 and 2025, and

repurchases and $

0.3

million repurchases in the six months ended June 30, 2026 and June 30,

2025, respectively, of

GNMA delinquent or defaulted mortgage loans with the intention to modify

their terms and include the loans in

new GNMA pools.

Activity in the capitalized mortgage servicing rights was as follows:

Changes in residential mortgage interest rates directly affect

the prepayment speeds used in valuing the Company’s

mortgage

servicing rights.

A separate third party model is used to estimate prepayment speeds based on interest rates, housing

turnover rates,

estimated loan curtailment, anticipated defaults, and other relevant factors.

The weighted average annual prepayment speed was

13.10

% at June 30, 2026 and

13.05

% at December 31, 2025.

Amounts

(Dollars in Thousands)

Outstanding

million master repurchase agreement without defined expiration.

Interest is at the secured overnight

financing rate (SOFR) rate plus

2.25%

3.25%

, with a floor rate of

3.25%

4.25%

A cash pledge deposit of

0.1

million is required by the lender.

21,950

million warehouse line of credit agreement expiring in

September 2026

Interest is at the SOFR rate plus

2.50%

3.00%

, with a floor rate of

3.00%

3.50%

17,537

Total Warehouse

Borrowings

39,487

Warehouse

line borrowings are classified as short-term borrowings.

At December 31, 2025, warehouse line borrowings totaled $

28.1

million. At June 30, 2026, the Company had residential mortgage loans

held for sale pledged as collateral under the above warehouse

lines of credit and master repurchase agreements.

The above agreements also contain covenants which include certain financial

requirements, including maintenance of minimum tangible net worth, minimum

liquid assets, and maximum debt to net worth ratio, as

defined in the agreements. The Company was in compliance with all significant

debt covenants at June 30, 2026.