NOTE B: ACQUISITIONS

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Subsequent Period Acquisitions

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On August 1, 2026, the Company, through its subsidiary OneGroup, NY, Inc. (“OneGroup”), completed the acquisition of certain assets of an insurance agency based in New York for approximately $3.1 million in cash plus contingent consideration. The transaction is expected to expand the insurance services revenue and offerings of the Company. The effects of the acquisition will be included in the consolidated financial statements from that date.

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Current and Prior Period Acquisitions

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On June 1, 2026, the Company, through its subsidiary Community Bank, N.A. (“CBNA”), completed the acquisition of ClearPoint Federal Bank & Trust (“ClearPoint”). The transaction expands the wealth management services offerings of the Company. Total consideration was $39.0 million, of which $28.2 million was paid as of June 30, 2026 and the remaining $10.8 million is accrued and not yet paid. The Company recorded investment securities of $118.2 million, deposits of $120.1 million, core deposit intangibles of $3.1 million, other intangibles consisting of a customer list intangible of $8.1 million, and goodwill of $10.4 million. The acquired investments consist primarily of available-for-sale securities, and the deposits consist primarily of core savings deposits. The effects of the acquired assets and liabilities for the acquisitions have been included in the consolidated financial statements since that date. For the three and six months ended June 30, 2026, revenues were $0.7 million and direct expenses were $0.5 million.

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During the first six months of 2026, the Company, through its subsidiaries OneGroup and Benefit Plans Administrative Services, LLC (“BPA”), completed the acquisitions of five financial services companies based in New York and Florida. Total aggregate consideration for the OneGroup acquisitions was $5.6 million in cash and contingent consideration with an estimated fair value of $1.5 million at the acquisition date. Total consideration for the BPA acquisition was $0.1 million in cash plus contingent consideration with an estimated fair value of $0.1 million at acquisition date. The contingent consideration arrangements require additional consideration to be paid by the Company based on a percentage of revenue over periods ranging from one to three years following the acquisition date. The fair value of the contingent consideration at the acquisition date was determined by forecasting estimated amounts of revenue for each applicable period and applying the appropriate factor to those amounts based on the purchase agreement. The effects of the acquired assets are included in the consolidated financial statements from that date. Net assets acquired included $5.8 million of customer list intangible assets and the Company recorded $2.1 million of goodwill in conjunction with the acquisitions. Revenues and direct expenses for the three and six months ended June 30, 2026 were immaterial.

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On November 7, 2025, the Company, through its subsidiary CBNA, completed the acquisition of seven branch locations in the Allentown, Pennsylvania area from Santander Bank, N.A. (“Santander”), including certain branch-related loans and deposits, acquiring $31.8 million of loans and $543.7 million of deposits. The assumed deposits consist primarily of core deposits (checking, savings and money market accounts) and the purchased loans consist of in-market performing loans, primarily residential real estate loans. Total consideration was $80.9 million, including a deposit premium of 8%, or $43.5 million, and the Company recorded core deposit intangibles of $11.9 million and goodwill of $32.1 million. The effects of the acquired assets and liabilities for the acquisitions have been included in the consolidated financial statements since that date.

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During 2025, the Company, through its subsidiaries Nottingham Investment Services, Inc. (“NISI”), OneGroup, BPA, Benefit Plans Administrative Services, Inc. (“BPAS”), completed the acquisitions of certain assets of financial services companies based in Pennsylvania, Florida, Kentucky, New York, Kansas, Minnesota and Missouri. Total aggregate consideration was $4.5 million in cash and contingent consideration with an estimated fair value of $6.7 million at the acquisition date. The contingent consideration arrangements require additional consideration to be paid by the Company based on a percentage of revenue over periods ranging from one to four years following the acquisition date. The fair value of the contingent consideration at the acquisition date was determined by forecasting estimated amounts of revenue for each applicable period and applying the appropriate factor to those amounts based on the purchase agreement. The effects of the acquired assets are included in the consolidated financial statements from that date. Net assets acquired included $8.4 million of customer list intangible assets and the Company recorded $2.9 million of goodwill in conjunction with the acquisitions. Revenues and direct expenses for the three and six months ended June 30, 2026 and 2025 were immaterial.

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The assets and liabilities assumed in the acquisitions were recorded at their estimated fair values based on management’s best estimates using information available at the dates of the acquisitions.

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The Santander transaction accelerates CBNA’s overall expansion in the strategic Greater Lehigh Valley and complements its existing commercial and consumer lending presence in the market. The ClearPoint, NISI, OneGroup, BPA and BPAS transactions generally expand the Company’s wealth management services, insurance services and employee benefit services presence. Management expects that the Company will benefit from greater geographic diversity and the advantages of other synergistic business development opportunities.

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The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in acquisitions considered to be business combinations:

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The Company acquired loans from Santander for which there was no evidence of a more-than-insignificant deterioration in credit quality since origination (purchased seasoned loans) with an unpaid principal balance of $31.8 million at the acquisition date. Total fair value adjustments for these loans resulted in an immaterial net discount, comprised of a noncredit premium of $0.5 million and an allowance for credit losses of $0.5 million. There were no acquired purchased credit deteriorated (“PCD”) loans.

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The fair value of checking, savings and money market deposit accounts acquired in the ClearPoint and Santander transactions were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificate of deposit accounts acquired in the Santander acquisition were valued at the present value of the certificates’ expected contractual payments discounted at market rates for similar certificates, which resulted in a premium of $0.5 million. Core deposit intangibles were valued using the cost savings approach, which is a variant of the income approach, where the spread between the cost of deposits and an alternative funds rate is calculated and the cost savings are discounted to present value using a risk adjusted discount rate. The total core deposit intangible for the ClearPoint acquisition was $3.1 million and $11.9 million for the Santander acquisition.

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The goodwill, which is not amortized for book purposes, was assigned to the Insurance Services segment for the OneGroup acquisitions. The goodwill was assigned to the Banking and Corporate segment for the Santander acquisition, the Wealth Management Services segment for the NISI and ClearPoint acquisitions and the Employee Benefits Services segment for the BPA and BPAS acquisitions. The goodwill arising from the ClearPoint acquisition is not deductible for tax purposes, while the goodwill from the remaining acquisitions completed in 2026 and 2025 is deductible for tax purposes.

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Disclosure of the pro forma revenue and earnings assuming the ClearPoint and Santander acquisitions had been completed as of January 1, 2025 and January 1, 2024, respectively, is not considered practicable. Retrospective application to that date would require assumptions about management's intent in prior periods that cannot be independently substantiated. It is not possible to objectively distinguish information about significant estimates of amounts that provide evidence of circumstances that existed on the dates at which those amounts would be recognized, measured, or disclosed under retrospective application and would have been available when the financial statements for that prior period were issued.