Ballston Spa Bancorp, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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


☐	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: 333-291808

Ballston Spa Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

New York

74-2245601

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

990 State Route 67

Ballston Spa, New York

12020

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (518) 363-8199

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $12.50 per share

BSPA

OTCQX

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 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, 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	☐
Non-accelerated 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 ☒

As of August 14, 2026, the registrant had 1,100,071 shares of common stock, $12.50 par value per share, outstanding.

Table of Contents

Table of Contents

			Page

PART I.	FINANCIAL INFORMATION		1

Item 1.	Consolidated Financial Statements (unaudited)		1
	Consolidated Balance Sheets		1
	Consolidated Statements of Income (Loss)		2
	Consolidated Statements of Comprehensive Income (Loss)		3
	Consolidated Statements of Changes in Shareholders’ Equity		4
	Consolidated Statements of Cash Flows		5
	Notes to Unaudited Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		42
Item 4.	Controls and Procedures		42

PART II.	OTHER INFORMATION		43

Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information		43
Item 6.	Exhibits		44
Signatures			45

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (unaudited).

BALLSTON SPA BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	(Unaudited)
	June 30,			December 31,
	2026			2025
ASSETS
Cash and due from banks	$	16,193		$	7,385
Short-term investments		76,948			20,761
Cash and cash equivalents		93,141			28,146
Securities available for sale, at fair value (amortized cost $116,022 and $66,461)		115,033			66,562
Federal Home Loan Bank of New York (“FHLB”) and Federal Reserve Bank (“FRB”) stock, at cost		7,047			7,908
Loans		1,110,107			803,219
Allowance for credit losses		(13,138)			(8,749)
Net loans		1,096,969			794,470
Premises and equipment, net		18,815			12,047
Accrued interest receivable		4,528			3,143
Goodwill		2,046			1,595
Core deposit intangible		6,775			—
Bank-owned life insurance		5,722			5,637
Other assets		14,523			8,993
Total assets	$	1,364,599		$	928,501
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Demand deposits	$	259,116		$	148,536
Savings accounts		179,290			87,243
NOW and money market		491,253			382,252
Time deposits		270,282			147,202
Total deposits		1,199,941			765,233
FHLB borrowings, short-term		-			54,000
FHLB borrowings, long-term		17,298			20,000
Junior subordinated debentures		39,936			7,750
Other liabilities		12,531			10,379
Total liabilities		1,269,706			857,362
Commitments and contingent liabilities (Note 9)
Shareholders’ equity
Common stock, $12.50 par value. Authorized 10,000,000 shares;issued 1,149,544 as of June 30, 2026 and issued 768,000 shares as of December 31, 2025		14,369			9,600
Preferred stock, $12.50 par value. Authorized 2,000,000 shares; none issued at June 30, 2026 and December 31, 2025		—			—
Additional paid in capital		22,904			42
Treasury stock, at cost; 49,473 shares as of June 30, 2026 and 25,337 shares as of December 31, 2025		(3,246)			(991)
Retained earnings		60,790			61,874
Accumulated other comprehensive income/(loss)		76			614
Total shareholders’ equity		94,893			71,139
Total liabilities and shareholders’ equity	$	1,364,599		$	928,501

See accompanying notes to consolidated financial statements.

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BALLSTON SPA BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Three and six months ended June 30, 2026, and 2025

(In thousands, except share amounts)


	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025
INTEREST AND FEE INCOME
Loans, including fees	$	15,371	$	9,410	$	25,355	$	18,672
Taxable investment securities		1,210		852		1,913		1,740
Tax exempt investment securities		200		22		222		44
FHLB and FRB stock		198		176		387		352
Short-term investments		328		33		372		63
Total interest and fee income		17,307		10,493		28,249		20,871
INTEREST EXPENSE
Deposits		5,611		3,265		9,259		6,419
FHLB borrowings, short-term		—		572		157		949
FHLB borrowings, long-term		262		247		463		558
Junior subordinated debentures		718		112		866		223
Total interest expense		6,591		4,196		10,745		8,149
NET INTEREST INCOME		10,716		6,297		17,504		12,722
Provision for credit losses		—		150		180		300
NET INTEREST INCOME AFTER PROVISION		10,716		6,147		17,324		12,422
NON-INTEREST INCOME
Service charges on deposit accounts		235		159		384		321
Trust and investment services income		403		365		786		703
Gain on sale/servicing of loans		111		54		266		54
Debit card interchange income		445		199		625		383
Earnings on bank-owned life insurance		43		39		85		77
Other		463		155		543		283
Total non-interest income		1,700		971		2,689		1,821
NON-INTEREST EXPENSE
Compensation and benefits		5,650		3,511		9,582		6,947
Occupancy and equipment		1,124		595		1,967		1,184
FDIC and OCC assessment		299		216		548		432
Advertising and public relations		163		114		313		228
Legal and professional fees		303		167		560		423
Merger expenses		3,864		—		4,613		-
Data processing		488		272		717		550
Debit card processing		319		128		456		252
Other		1,322		590		1,896		1,096
Total non-interest expense		13,532		5,593		20,652		11,112
INCOME BEFORE INCOME TAX EXPENSE		(1,116)		1,525		(639)		3,131
Income tax expense		(405)		290		(172)		595
NET (LOSS) INCOME	$	(711)	$	1,235	$	(467)	$	2,536
Basic (loss) earnings per share	$	(0.65)	$	1.66	$	(0.51)	$	3.41
Weighted average number of common shares outstanding		1,100,071		742,663		921,367		742,663

See accompanying notes to consolidated financial statements.

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BALLSTON SPA BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except share amounts)

Three and six months ended June 30, 2026, and 2025


	Three months ended June 30,				Six months ended June 30,
Description	2026		2025		2026		2025
NET (LOSS) INCOME	$	(711)	$	1,235	$	(467)	$	2,536
Available-for-sale securities:
Unrealized holding (loss) gain on securities arising during period		(291)		373		(1,090)		1,112
Tax effect		76		(97)		286		(291)
Net-of-tax amount		(215)		276		(804)		821

Fair value adjustment on derivatives:
Unrealized holding gain (loss) on derivative		200		(2)		361		(27)
Tax effect		(52)		1		(94)		7
Net-of-tax amount		148		(1)		267		(20)
Other comprehensive (loss) income, net of tax		(67)		275		(538)		801
COMPREHENSIVE (LOSS) INCOME	$	(778)	$	1,510	$	(1,005)	$	3,337

See accompanying notes to consolidated financial statements.

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BALLSTON SPA BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except share amounts)


	Six Months Ended June 30,
									Accumulated
			Additional						other		Total
	Common		paid in		Treasury		Retained		comprehensive		shareholders’
	Stock		capital		stock		earnings		income (loss)		equity

Balance at January 1, 2025	$	9,600	$	42	$	(991)	$	58,315	$	(735)	$	66,231
Comprehensive income:
Net income		—		—		—		2,536		—		2,536
Other comprehensive income, net of tax:		—		—		—		—		801		801
Cash dividends declared ($0.66 per share)		—		—		—		(490)		—		(490)

Balance June 30, 2025		9,600		42		(991)		60,361		66		69,078

Balance at January 1, 2026		9,600		42		(991)		61,874		614		71,139
Comprehensive income:
Net loss		—		—		—		(467)		—		(467)
Other comprehensive loss, net of tax:		—		—		—		—		(538)		(538)
Common stock issued for merger with NBC Bancorp, Inc.		4,769		22,862		—		—		—		27,631
Repurchase of treasury stock (24,136 shares)		—		—		(2,255)		—		—		(2,255)
Cash dividends declared ($0.66 per share)		—		—		—		(617)		—		(617)
Balance at June 30, 2026	$	14,369	$	22,904	$	(3,246)	$	60,790	$	76	$	94,893


	Three Months Ended June 30,
									Accumulated
			Additional						other		Total
	Common		paid in		Treasury		Retained		comprehensive		shareholders’
	Stock		capital		stock		earnings		income (loss)		equity

Balance at March 31, 2025	$	9,600	$	42	$	(991)	$	59,371	$	(209)	$	67,813
Comprehensive income:
Net income		—		—		—		1,235		—		1,235
Other comprehensive income, net of tax:		—		—		—		—		275		275
Cash dividends declared ($0.33 per share)		—		—		—		(245)		—		(245)

Balance June 30, 2025		9,600		42		(991)		60,361		66		69,078

Balance at March 31, 2026		9,600		42		(991)		61,873		143		70,667
Comprehensive income:
Net loss		—		—		—		(711)		—		(711)
Other comprehensive loss, net of tax:		—		—		—		—		(67)		(67)
Common stock issued for merger with NBC Bancorp, Inc.		4,769		22,862		—		—		—		27,631
Repurchase of treasury stock (24,136 shares)		—		—		(2,255)		—		—		(2,255)
Cash dividends declared ($0.33 per share)		—		—		—		(372)		—		(372)
Balance at June 30, 2026	$	14,369	$	22,904	$	(3,246)	$	60,790	$	76	$	94,893

See accompanying notes to consolidated financial statements.

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BALLSTON SPA BANCORP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) Income	$	(467)	$	2,536
Adjustment to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		404		323
Amortization of other intangibles		323		—
Provision for credit losses		180		300
Net premium accretion on securities		(218)		(292)
Deferred tax expense		83		110
Net gain on sale of loans		(266)		(54)
Proceeds from sale of loans held for sale		15,160		2,081
Loans originated for sale		(14,894)		(2,027)
Earnings on bank owned life insurance		(85)		(77)
Net decrease (increase) in accrued interest receivable		120		(277)
Net decrease in other assets		648		1,090
Net decrease in other liabilities		(428)		(2,609)
Net cash provided by operating activities		560		1,104

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities, calls and pay downs of securities available for sale		38,218		9,402
Proceeds from sales of securities available for sale		50,221		—
Purchases of securities available for sale		(39,368)		(7,845)
Net redemption of FHLB stock		2,791		30
Proceeds from loans held for sale previously classified as portfolio loans		49,536		—
Loan originations and payments, net		(15,461)		(17,587)
Purchase of premises and equipment		(1,486)		(862)
Cash acquired, net of consideration paid		49,579		—
Net cash provided by (used in) investing activities		134,030		(16,862)

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits		(22,181)		16,343
Net decrease in short-term FHLB borrowings		(54,000)		7,800
Repayment of long-term FHLB borrowings		(15,000)		(10,000)
Issuance of junior subordinated note, net		24,458		—
Repurchase of treasury stock		(2,255)		—
Dividends paid		(617)		(490)
Net cashed (used in) provided by financing activities		(69,595)		13,653

NET CHANGE IN CASH AND CASH EQUIVALENTS		64,995		(2,105)
Cash and cash equivalents at beginning of year		28,146		25,743
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	93,141	$	23,638

SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	10,744	$	8,149
Income taxes paid, net		233		594
Assets acquired in acquisition of NBC Bancorp, Inc., excluding cash		458,464		—
Liabilities assumed in acquisition of NBC Bancorp, Inc.		480,863		—
Common stock issued for acquisition of NBC Bancorp, Inc.		27,631		—
Loans transferred to held for sale		49,536		—

See accompanying notes to consolidated financial statements.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of Ballston Spa Bancorp, Inc. (the “Parent Company”) and its subsidiaries (collectively referred to as the “Company”) conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry. A summary of the more significant policies is described below.

Organization: The Company is a financial holding company. The Parent Company’s banking subsidiary, Ballston Spa National Bank (the “Bank”), is a community-based commercial bank and provides a wide range of banking, financing, fiduciary, brokerage and other financial services to corporate, municipal, and individual customers through its twenty one branch offices.

Basis of Presentation: The consolidated financial statements include the accounts of the Parent Company and the Bank and its subsidiary, BSNB Real Estate Company, Inc. All material intercompany accounts and transactions have been eliminated. The Company utilizes the accrual method of accounting for financial reporting purposes. Amounts in the prior year’s consolidated financial statements have been reclassified whenever necessary to conform with the current year’s presentation.

Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Segment Reporting: The Company has a single segment for financial reporting purposes. The Company’s reportable segment is determined by the Chief Financial Officer, who is designated as the chief operating decision maker, based upon information provided about the Company’s products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the chief operating decision maker, who uses this information to review performance of various components, such as branches and wealth management component which are then aggregated. The chief operating decision maker will evaluate the financial performance of the Company’s business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company’s segment and in the determination of allocating resources. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used to assess performance and to establish compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provision for credit losses, and salaries and employee benefits provide the significant expense in the banking operation. All of the Company’s operations are domestic.

Adoption of New Accounting Standards

On November 12, 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. The update expands the population of purchased loans subject to the gross-up approach under Topic 326. Under the new guidance, purchased seasoned loans (excluding credit card receivables) will be accounted for using the gross-up approach. The ASU is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company early adopted this standard effective January 1, 2026.

Recently Issued Accounting Pronouncements, Not Yet Adopted

On November 4, 2024, the FASB issued ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which requires companies to disclose additional information about certain expenses. This guidance is effective for companies with fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company expects to adopt this standard beginning January 1, 2027. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 2 – BUSINESS COMBINATION

On April 1, 2026, the Company completed its previously announced strategic merger of equals with NBC Bancorp, Inc., the holding company for The National Bank of Coxsackie (collectively “NBC”), pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”) dated September 23, 2025. Under the terms of the Merger Agreement, NBC merged with and into the Company.

At the effective time of the transaction, in a stock-for-stock exchange, NBC shareholders received 0.8065 shares of the Company’s stock for each share of NBC stock, with cash paid in lieu of any fractional shares. The total consideration paid by the Company was $27.6 million, based on the Company’s April 1, 2026 (acquisition date) closing price of $71.00.

The merger was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair values. The excess of consideration paid over the estimated fair value of the net assets acquired totaled $451 thousand and was recorded as goodwill, which is not amortizable or deductible for tax purposes. The results of NBC’s operations were included in the Company’s consolidated financial statements subsequent to the merger date. The fair values assigned to certain assets acquired and liabilities assumed are provisional and subject to change as additional information becomes available during the measurement period (not to exceed one year from the acquisition date). The provisional amounts primarily relate to the valuation of loans, identifiable intangible assets, and certain assumed liabilities such as deposits. Adjustments to the provisional fair values, if any, will be recorded as measurement period adjustments in the reporting period in which the adjustments are determined, with corresponding adjustments to goodwill.

The following table summarizes the purchase of NBC Bancorp, Inc. as of April 1, 2026:


(in thousands, except per share data)
Purchase Price Consideration – Common Stock (excluding Dissenting shares)
NBC Bancorp, Inc. common shares outstanding		473,239
less: Dissenting shares		(29,927)
NBC Bancorp, Inc. common shares to be exchanged for stock consideration		443,312
Exchange Ratio		0.8065
Ballston Spa Bancorp, Inc. shares to be issued in the merger and excludes fractional shares		357,408
Fair Value price per share of Ballston Spa Bancorp, Inc. common stock	$	71.00
Total Fair Value of Purchase Price Consideration for Common Stock			$	25,376

Purchase Price Consideration – Cash for Dissenting Shares
Dissenting shares		29,927
Exchange Ratio		0.8065
Dissenting shares to be settled in cash		24,136
Fair Value of Dissenting shares	$	93.41
Total fair value of Dissenting Shares				2,255

Cash in lieu of fractional shares				8

Total Purchase Price Assigned to Cash Consideration				2,263

Total Purchase Price for Accounting Purposes			$	27,639

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 2 – BUSINESS COMBINATION (Continued)

Consideration paid, and fair values of NBC’s assets acquired and liabilities assumed, along with the resulting goodwill, are summarized in the following table:


								As Recorded
(in thousands except shares)		As Acquired			Fair Value Adjustments			at Acquisition

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		$	48,524		$	—		$	48,524
Federal funds			1,063			—			1,063
Securities, available for sale			96,181			(482)			95,699
Securities, held to maturity			3,914			75			3,989
Loans, gross			360,067			(19,419)			340,648
Allowance for credit losses			(3,549)			(773)			(4,322)
Loans, net of allowance			356,518			(20,192)			336,326

Premises and equipment			4,133			1,405			5,538
Accrued interest receivable			1,505			—			1,505
Restricted investment in bank stock			1,929			—			1,929
Deferred tax asset			1,618			2,988			4,606
Core deposit intangible			—			7,098			7,098
Operating lease right of use asset			1,398			—			1,398
Other Assets			376			—			376
Total identifiable assets acquired at fair value			517,159			(9,108)			508,051

Deposits			456,930			(52)			456,878
Borrowings			12,407			(121)			12,286
Subordinated debt			9,550			(336)			9,214
Accrued interest payable			557			—			557
Operating lease liability			1,465			—			1,465
Reserve for unfunded commitments			177			(159)			18
Other liabilities			445			—			445
Total liabilities assumed			481,531			(668)			480,863

Total identifiable net assets, at fair value		$	35,628		$	(8,440)		$	27,188

Goodwill								$	451

Investment securities

The estimated fair value for investment securities, both available-for-sale and held-to-maturity, were calculated using Level 2 inputs. The securities acquired are bought and sold in active markets.

Loans

The acquired loan portfolio was valued utilizing Level 3 inputs and included the use of a discounted cash flow methodology applied on a pooled basis for accruing loans, and on individual basis for non-accruing loans and incorporated assumptions that a market participant would employ. In the fair value process, the Company developed assumptions to credit risk, expected lifetime losses, qualitative credit factors, collateral values, discount rates, expected payments and expected prepayments.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 2 – BUSINESS COMBINATION (Continued)

Acquired loans are classified into two categories: Purchased Seasoned Loans (PSLs) and Purchase Credit Deteriorated Loans (PCDs). PCD loans are defined as a loan, or a group of loans, that have experienced more than insignificant credit deterioration since origination, and the remaining loans were considered PSLs. Effective January 1, 2026, the Company early adopted ASU 2025-08 (Topic 326) on a prospective basis. In accordance with ASU 2025-08, an allowance for credit loss was determined using the same methodology as other loans held for investment and an initial allowance for credit losses for all acquired loans totaled $4.3 million. There was no provision for credit losses expense recognized because the initial allowance is established by grossing-up the amortized cost of the acquired loans. The remaining difference between the net of the amortized cost basis and the allowance for credit losses and the fair value allocated to the loans on the date of acquisition is recognized as a non-credit-related discount that will be accreted into interest income over the life of the loans.

The following table provides details related to the fair values of PCD loans and PSL loans acquired from NBC:


					As of April 1, 2026
(in thousands)		PCD Loans			PSLs			Total Loans
Gross amortized cost basis at acquisition		$	47,173		$	312,894		$	360,067
Allowance for credit losses at acquisition			(1,511)			(2,811)			(4,322)
Non-Credit discount at acquisition			(570)			(18,849)			(19,419)
Basis at acquisition – estimated fair value		$	45,092		$	291,234		$	336,326

Premises and equipment

The fair value estimate is based on appraised values. The owned facilities fair value adjustment will be amortized into expense over the estimated life of the owned facility.

The fair value adjustment for leased facilities contracts was based on a discounted cash flow methodology of the contract lease obligations versus observed comparable market rents and discounted based upon interest rates for similar term borrowing rates. The facilities fair value adjustment will be amortized into expense over the contractual life of the leased facility.

Core Deposit Intangible

The fair value of the core deposit intangible was determined based on a discounted cash flow analysis using a discount rate commensurate with market participants. To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared o the higher cost of alternative funding sources available through national brokered CD offering rates and FHLB advance rates. The projected cash flows were developed using expected deposit attrition. The core deposit intangible will be amortized over ten years using the sum-of-years digits method.

Deposits

The fair value of acquired savings and transaction deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair values for time deposits were estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on such time deposits.

Borrowings and Subordinated Debt

The fair value adjustments for borrowings and subordinated debt was based on a discounted cash flow methodology of the contract rates and contractual repayments of the respective instruments using prevailing market interest rates for similar-term instruments. The fair value adjustments for borrowings and subordinated debt will be amortized into income on a level yield amortization method over the contractual life of the respective instrument.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 2 – BUSINESS COMBINATION (Continued)

Pro Forma Information (unaudited)

The following table presents selected unaudited pro forma financial information reflecting the acquisition of NBC assuming the acquisition was completed as of January 1, 2025. The unaudited pro forma information includes acquisition accounting adjustments and the related income tax effects. In addition, the unaudited proforma information excludes merger-related expenses and includes adjustments related to other transactions at the acquisition date, and does not reflect management’s estimate of any revenue-enhancing opportunities or anticipated cost savings as a result of the integration. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the combined financial results of the Company nor does it indicate future results for any other interim or full-year period.


	Three months ended June 30,					Six months ended June 30,
(in thousands)	2026			2025		2026		2025
Net interest income	$	10,670		$	10,143	$	21,320	$	20,492
Net income	$	2,258		$	1,784	$	3,280	$	3,645

NOTE 3 – SECURITIES

The amortized cost and fair value of securities available for sale at June 30, 2026 and December 31, 2025 are as follows (in thousands):


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
June 30, 2026
U.S. Treasury Securities	$	29,635	$	—	$	(50)	$	29,585
State and political subdivisions		27,904		32		(395)		27,541
Mortgage-backed securities (“MBSs”) – residential		51,617		184		(669)		51,132
Collateralized mortgage obligations (“CMOs”)		2,875		—		(77)		2,798
Corporate securities		3,991		—		(14)		3,977
Total securities available for sale	$	116,022	$	216	$	(1,205)	$	115,033


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
December 31, 2025
U.S. Treasury Securities	$	2,955	$	6	$	—	$	2,961
State and political subdivisions		12,204		—		(185)		12,019
Mortgage-backed securities (“MBSs”) – residential		45,721		708		(382)		46,047
Collateralized mortgage obligations (“CMOs”)		97		—		(44)		53
Corporate securities		5,484		—		(2)		5,482
Total securities available for sale	$	66,461	$	714	$	(613)	$	66,562

Immediately after the merger with NBC, the Company sold $50.2 million AFS investments that were acquired from NBC, with no gross gains or losses realized upon sale. There were no other sales during the three and six months ended June 30, 2026. None were sold during the year ended December 31, 2025. There were no securities called during the six months ended June 30, 2026 and none during the year ended December 31, 2025.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 3 – SECURITIES (Continued)

As of June 30, 2026, the contractual maturity of debt securities available for sale (MBSs and CMOs are shown separately) at amortized cost and approximate fair value is as follows (in thousands):


	Amortized
	Cost		Fair Value
Within one year	$	33,260	$	33,203
After one year to five years		17,443		17,286
After five years to ten years		10,490		10,268
Over ten years		337		345
Total debt securities		61,530		61,102
MBSs and CMOs		54,492		53,931
Total	$	116,022	$	115,033

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

The carrying value of securities available for sale pledged to secure borrowings, deposits, and for other purposes was $50.9 million and $60.6 million at June 30, 2026 and December 31, 2025, respectively. At June 30, 2026 and December 31, 2025, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position at June 30, 2026 and December 31, 2025 (in thousands).


		Less than 12 Months						12 Months or longer						Total
					Gross						Gross
					Unrealized						Unrealized						Unrealized
		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
June 30, 2026
U.S. Treasury Securities		$	29,585		$	(50)		$	—		$	—		$	29,585		$	(50)
State and political subdivisions			15,006			(231)			5,956			(164)			20,962			(395)
MBSs			18,729			(149)			15,108			(520)			33,837			(669)
CMOs			2,751			(25)			47			(52)			2,798			(77)
Corporate Securities			2,476			(14)			—			—			2,476			(14)
		$	68,547		$	(469)		$	21,111		$	(736)		$	89,658		$	(1,205)


	Less than 12 Months						12 Months or longer						Total
	Estimated			Unrealized			Estimated			Unrealized			Estimated			Unrealized
	Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
December 31, 2025
Treasury	$	—		$	—		$	—		$	—		$	—		$	—
State and political subdivisions		—			—			11,816			(185)			11,816			(185)
MBSs		—			—			16,133			(382)			16,133			(382)
CMOs		—			—			53			(44)			53			(44)
Corporate Securities		2,482			(2)			—			—			2,482			(2)
	$	2,482		$	(2)		$	28,002		$	(611)		$	30,484		$	(613)

Management has assessed the securities available for sale that were in an unrealized loss position at June 30, 2026 and December 31, 2025, and determined that the decline in fair value is driven by changes in market interest rates and credit spreads, not changes in credit quality. There were no defaults on principal or interest payments, and no interest payments were deferred. Based on management’s analysis of each individual security, the issues appear to have the ability to meet debt service requirements over the life of the security. The Company had no allowance for credit losses on securities available for sale at June 30, 2026 and December 31, 2025. At June 30, 2026 the Company does not intend to sell, nor is it more likely than not that the Company will be required to sell, any securities before recovery of its amortized cost basis, which may be maturity.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

A summary of loans at June 30, 2026 and December 31, 2025 is as follows (in thousands):


	June 30,		December 31,
	2026		2025
Residential real estate	$	420,847	$	318,694
HELOCs		22,241		17,092
Commercial real estate		552,240		370,380
Commercial and industrial		43,631		32,582
Consumer		69,808		63,698
Total gross loans		1,108,767		802,446
Unearned discount and net deferred fees and costs		1,340		773
Total loans		1,110,107		803,219
Allowance for credit losses		(13,138)		(8,749)
Net loans	$	1,096,969	$	794,470

The allowance for credit loss (“ACL”) represents management’s best estimate of future lifetime expected losses on its held for investment loan portfolio. The Company calculates its ACL by estimating expected credit losses on a collective basis for loans that share similar risk characteristics. Loans that do not share similar risk characteristics with other loans are evaluated for credit losses on an individual basis.

The following table presents the activity in the allowance for credit losses by portfolio class for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Residential						Commercial			Commercial
	Real Estate			HELOCs			Real Estate			and Industrial			Consumer			Total
March 31, 2026
Allowance for credit losses:
Beginning balance	$	2,831		$	71		$	5,390		$	374		$	250		$	8,916
Provision (credit) for credit losses		(433)			(20)			402			63			(12)			—
Loans charged-off		—			—			(93)			—			(23)			(116)
Recoveries		—			—			—			—			16			16
Acquired PCD Loans		97			1			1,408			2			3			1,511
Acquired PSL Loans		1,337			41			1,278			79			76			2,811
June 30, 2026	$	3,832		$	93		$	8,385		$	518		$	310		$	13,138


	Residential				Commercial		Commercial
	Real Estate		HELOCs		Real Estate		and Industrial		Consumer		Total
December 31, 2025
Allowance for credit losses:
Beginning balance	$	2,721	$	71	$	5,355	$	375	$	227	$	8,749
Provision (credit) for credit losses		(323)		(20)		438		62		23		180
Loans charged-off		—		—		(94)		—		(50)		(144)
Recoveries		—		—		—		—		31		31
Acquired PCD Loans		97		1		1,408		2		3		1,511
Acquired PSL Loans		1,337		41		1,278		79		76		2,811
June 30, 2026	$	3,832	$	93	$	8,385	$	518	$	310	$	13,138

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)


	Residential				Commercial		Commercial
	Real Estate		HELOCs		Real Estate		and Industrial		Consumer		Total
March 31, 2025
Allowance for credit losses: Beginning balance	$	2,522	$	103	$	5,533	$	318	$	159	$	8,635
Provision (credit) for credit losses		—		(1)		(134)		255		29		149
Loans charged-off		(62)		—		—		(201)		(36)		(299)
Recoveries		—		—		—		—		3		3
June 30, 2025	$	2,460	$	102	$	5,399	$	372	$	155	$	8,488


	Residential				Commercial		Commercial
	Real Estate		HELOCs		Real Estate		and Industrial		Consumer		Total
December 31, 2024
Allowance for credit losses: Beginning balance	$	2,564	$	104	$	5,396	$	313	$	168	$	8,545
Provision for credit losses		(41)		(2)		3		260		80		300
Loans charged-off		(63)		—		—		(201)		(103)		(367)
Recoveries		—		—		—		—		10		10
June 30, 2025	$	2,460	$	102	$	5,399	$	372	$	155	$	8,488

The following tables present the amortized cost in nonaccrual and loans past due over 89 days still on accrual by class of loans as of June 30, 2026 and December 31, 2025 (in thousands):


					Loans Past Due Over
	Nonaccrual				89 Days Still Accruing
	2026		2025		2026		2025
Residential real estate	$	1,482	$	331	$	909	$	660
HELOCs		—		—		—		—
Commercial real estate		592		328		—		—
Commercial and industrial		—		—		—		—
Consumer		3		1		15		75
Total	$	2,077	$	660	$	924	$	735

Nonaccrual loans and loans past due 89 days and still accruing interest include both smaller-balance homogeneous loans that are collectively evaluated for credit losses and loans that are individually evaluated. At June 30, 2026 and December 31, 2025, the Company had no allowance for credit losses allocated to nonaccrual loans. At June 30, 2026, collateral-dependent loans consisted of $1,482 thousand of residential real estate loans and $592 thousand of commercial real estate loans. At December 31, 2025, collateral-dependent loans consisted of $331 thousand of residential real estate loans and $328 thousand of commercial real estate loans. Residential real estate loans were secured by residential real estate properties, and commercial real estate loans were secured by commercial real estate properties.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table presents the aging of the amortized cost in past due loans by class of loans as of June 30, 2026 and December 31, 2025 (in thousands):


	30‑59			60‑89			Greater Than
	Days			Days			89 Days			Total			Loans Not
	Past Due			Past Due			Past Due			Past Due			Past Due			Total
June 30, 2026
Residential real estate	$	1,784		$	1,109		$	909		$	3,802		$	417,045		$	420,847
HELOCs		111			—			—			111			22,130			22,241
Commercial real estate		3,406			95			—			3,501			548,739			552,240
Commercial and industrial		183			—			—			183			43,448			43,631
Consumer		245			23			15			283			69,525			69,808
Total	$	5,729		$	1,227		$	924		$	7,880		$	1,100,887		$	1,108,767

December 31, 2025
Residential real estate	$	—		$	1,260		$	992		$	2,252		$	316,442		$	318,694
HELOCs		—			—			—			—			17,092			17,092
Commercial real estate		—			—			328			328			370,052			370,380
Commercial and industrial		—			—			—			—			32,582			32,582
Consumer		227			70			75			372			63,326			63,698
Total	$	227		$	1,330		$	1,395		$	2,952		$	799,494		$	802,446

Loan Modification Made to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

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

There were no loans modified to borrowers experiencing financial difficulty during the three and six months ended June 30, 2026 and 2025.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk.

The Company uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified 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: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The Bank analyzes commercial loans individually by classifying the loans as to credit risk using standard industry classifications. Commercial loans not classified are considered to be pass-rated loans. The Bank considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential real estate, HELOC and consumer loans, the Bank evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the risk category of loans and current period gross charge-offs as of and during the six months ended June 30, 2026 and the year December 31, 2025 by loan segment and vintage year (in thousands):


																			Revolving
As of June 30, 2026	2026			2025			2024			2023			2022			Prior			Loans			Total
Commercial & Industrial:
Risk rating
Pass	$	10,439		$	12,763		$	6,976		$	3,003		$	3,087		$	6,626		$	506		$	43,400
Special mention		—			—			—			—			—			—			—			—
Substandard		—			—			—			—			27			204			—			231
Doubtful		—			—			—			—			—			—			—			—
Total	$	10,439		$	12,763		$	6,976		$	3,003		$	3,114		$	6,830		$	506		$	43,631
Commercial & Industrial:
Current period gross write off	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real estate
Risk rating
Pass	$	32,897		$	65,560		$	51,192		$	97,877		$	102,878		$	181,541		$	—		$	531,945
Special mention		—			—			—			—			437			5,293			—			5,730
Substandard		—			—			—			6,970			3,542			4,053			—			14,565
Doubtful		—			—			—			—			—			—			—			—
Total	$	32,897		$	65,560		$	51,192		$	104,847		$	106,857		$	190,887		$	—		$	552,240
Commercial real estate
Current period gross write off	$	—		$	—		$	—		$	94		$	—		$	—		$	—		$	94
Residential real estate
Payment Performance
Performing	$	16,453		$	41,339		$	35,098		$	56,954		$	72,464		$	196,148		$	—		$	418,456
Non Performing		—			—			—			176			—			2,215			—			2,391
Total	$	16,453		$	41,339		$	35,098		$	57,130		$	72,464		$	198,363		$	—		$	420,847
Residential real estate
Current period gross write off	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
HELOC
Payment Performance
Performing	$	1,326		$	2,762		$	3,767		$	3,273		$	3,724		$	7,389		$	—		$	22,241
Non Performing		—			—			—			—			—			—			—			—
Total	$	1,326		$	2,762		$	3,767		$	3,273		$	3,724		$	7,389		$	—		$	22,241
HELOC
Current period gross write off	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Consumer
Payment Performance
Performing	$	14,488		$	15,858		$	16,111		$	8,115		$	5,012		$	10,206		$	—		$	69,790
Non Performing		—			—			—			—			10			8			—			18
Total	$	14,488		$	15,858		$	16,111		$	8,115		$	5,022		$	10,214		$	—		$	69,808
Consumer
Current period gross write off	$	—		$	1		$	9		$	19		$	15		$	6		$	—		$	50

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)


													Revolving
As of December 31, 2025	2025		2024		2023		2022		2021		Prior		Loans		Total
Commercial & Industrial:
Risk rating
Pass	$	9,528	$	9,684	$	3,143	$	2,762	$	1,827	$	4,891	$	564	$	32,399
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		183		—		183
Doubtful		—		—		—		—		—		—		—		—
Total	$	9,528	$	9,684	$	3,143	$	2,762	$	1,827	$	5,074	$	564	$	32,582
Commercial & Industrial:
Current period gross write off	$	—	$	200	$	—	$	—	$	—	$	1	$	—	$	201
Commercial real estate
Risk rating
Pass	$	39,066	$	39,227	$	56,299	$	75,765	$	50,351	$	105,002	$	—	$	365,710
Special mention		—		—		—		—		—		3,721		—		3,721
Substandard		—		—		327		—		—		622		—		949
Doubtful		—		—		—		—		—		—		—		—
Total	$	39,066	$	39,227	$	56,626	$	75,765	$	50,351	$	109,345	$	—	$	370,380
Commercial real estate
Current period gross write off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate
Payment Performance
Performing	$	49,283	$	32,818	$	44,660	$	43,589	$	51,302	$	96,051	$	—	$	317,703
Non Performing		—		—		—		—		499		492		—		991
Total	$	49,283	$	32,818	$	44,660	$	43,589	$	51,801	$	96,543	$	—	$	318,694
Residential real estate
Current period gross write off	$	—	$	—	$	—	$	—	$	—	$	63	$	—	$	63
HELOC
Payment Performance
Performing	$	2,059	$	3,693	$	4,001	$	3,058	$	1,396	$	2,885	$	—	$	17,092
Non Performing		—		—		—		—		—		—		—		—
Total	$	2,059	$	3,693	$	4,001	$	3,058	$	1,396	$	2,885	$	—	$	17,092
HELOC
Current period gross write off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Payment Performance
Performing	$	16,187	$	16,209	$	8,128	$	5,502	$	2,462	$	15,135	$	—	$	63,623
Non Performing		—		20		14		41		—		—		—		75
Total	$	16,187	$	16,229	$	8,142	$	5,543	$	2,462	$	15,135	$	—	$	63,698
Consumer
Current period gross write off	$	—	$	24	$	35	$	45	$	18	$	57	$	—	$	179

Table of Contents

BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The Bank retains the servicing rights on certain mortgage loans sold. Total loans serviced by the Company for unrelated third parties were approximately $72.4 million and $65.4 million at June 30, 2026 and December 31, 2025, respectively. At June 30, 2026 and December 31, 2025 the unamortized balance of mortgage servicing rights on loans sold with servicing retained was approximately $145 thousand and $150 thousand, respectively. The estimated fair value of these mortgage servicing rights was in excess of their carrying value at June 30, 2026 and December 31, 2025, and therefore no impairment reserve was necessary. Fees earned for servicing loans totaled $86 thousand and $0 for the six months ended June 30, 2026 and 2025, respectively.

In the ordinary course of business, the Company enters into loan transactions with certain of its directors and executive officers (“Related Parties”). All loans to Related Parties were made at substantially the same terms and conditions at the time of origination as other originated loans to borrowers that were not affiliated with the Company. The aggregate amount outstanding of such loans totaled $10.4 million at June 30, 2026, and $6.8 million at December 31, 2025.

NOTE 5 – FAIR VALUE

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. 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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Securities: The fair values of securities available for sale is determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using loss severity inputs based upon expected cash flows from the underlying assets.

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third party pricing services.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 5 – FAIR VALUE (Continued)

Individually Evaluated Loans: The fair value of individually evaluated loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Because the Bank has a small amount of individually evaluated loans measured at fair value, the impact of unobservable inputs on the Bank’s consolidated financial statements is not material.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):


	Fair Value Measurements Using
	Quoted Prices			Significant
	In Active			Other			Significant
	Markets for			Observable			Unobservable
	Identical Assets			Inputs			Inputs
	(Level 1)			(Level 2)			(Level 3)
June 30, 2026
Assets:
Available-for-sale securities:
U.S. Treasury securities	$	29,585		$	—		$	—
State and political subdivisions		—			27,541			—
MBSs – residential		—			51,132			—
CMOs		—			2,751			47
Corporate securities		—			3,977			—
Total investment securities available-for-sale	$	29,585		$	85,401		$	47

Derivatives	$	—		$	285		$	—

December 31, 2025
Assets:
Available-for-sale securities:
U.S. Treasury securities	$	2,961		$	—		$	—
State and political subdivisions		—			12,019			—
MBSs – residential		—			46,047			—
CMOs		—			—			53
Corporate securities		—			5,482			—
Total investment securities available-for-sale	$	2,961		$	63,548		$	53
Liabilities:
Derivatives	$	—		$	(86)		$	—

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 5 – FAIR VALUE (Continued)

Assets and Liabilities Measured on a Non-Recurring Basis

There were no assets or liabilities measured at fair value on a non-recurring basis as of June 30, 2026 or December 31, 2025.

The carrying values and estimated fair values of financial assets and liabilities as of June 30, 2026 and December 31, 2025 were as follows (in thousands):


	Carrying
	Value			Fair Value			Level 1			Level 2			Level 3
June 30, 2026
Financial assets
Cash and cash equivalents	$	93,141		$	93,141		$	93,141		$	—		$	—
Securities available for sale		115,033			115,033			29,585			85,401			47
FHLB and FRB stock		7,047			N/A			N/A			N/A			N/A
Loans, net of allowance for credit losses		1,096,969			1,076,167			—			—			1,076,167
Accrued interest receivable		4,528			4,528			—			570			3,958
Financial liabilities
Deposits	$	1,199,941		$	1,200,076		$	929,659		$	270,417		$	—
FHLB borrowings		17,298			17,292			—			17,292			—
Junior subordinated debentures		39,936			33,861			—			33,861			—
Accrued interest payable		1,167			1,167			1,167			—			—

December 31, 2025
Financial assets
Cash and cash equivalents	$	28,146		$	28,146		$	28,146		$	—		$	—
Securities available for sale		66,562			66,562			2,961			63,548			53
FHLB and FRB stock		7,908			N/A			N/A			N/A			N/A
Loans, net of allowance for credit losses		794,470			786,241			—			—			786,241
Accrued interest receivable		3,143			3,143			—			310			2,833
Financial liabilities
Deposits	$	765,233		$	765,846		$	618,031		$	147,815		$	—
FHLB borrowings		74,000			74,062			—			74,062			—
Junior subordinated debentures		7,750			7,917			—			7,917			—
Accrued interest payable		902			902			902			—			—

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term investments approximate fair values.

FHLB and FRB Stock: It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on their transferability.

Loans: The fair value of portfolio loans, net of allowance for credit losses is determined using an exit price methodology. The exit price methodology continues to be based on a discounted cash flow analysis, in which projected cash flows are based on contractual cash flows adjusted for prepayments for certain loan types and the use of a discount rate based on expected relative risk of the cash flows.

The discount rate selected considers loan type, maturity date, a liquidity premium, cost to service, and cost of capital, which is a Level 3 for fair value estimate.

Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount). Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 5 – FAIR VALUE (Continued)

FHLB Borrowings: The fair values of the Company’s FHLB borrowings with maturities greater than one year are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements. The fair values of FHLB borrowings with maturities of less than one year approximate their carrying values.

Junior Subordinated Debentures: The fair value is based on current rates for similar financing, and approximates book value.

Accrued Interest Receivable/Payable: The fair values of accrued interest receivable and payable approximate their carrying amounts because of the short-term nature of these financial instruments.

Off-Balance Sheet Instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

NOTE 6 – DEPOSITS

The contractual maturities of time deposits for the periods subsequent to June 30, 2026 are as follows (in thousands):


Years ending December 31,
2026	$	213,950
2027		55,418
2028		515
2029		190
2030 and thereafter		209
	$	270,282

Time deposits that meet or exceed the FDIC Insurance limit of $250,000 at June 30, 2026 and December 31, 2025 were $32.7 million and $28.8 million, respectively. As of June 30, 2026 and December 31, 2025 the Company had brokered CD deposits totaling $85.3 million $60.4 million, respectively.

NOTE 7 – BORROWINGS

The Bank has a borrowing capacity with the Federal Home Loan Bank of New York (FHLB) of up to 30% of total assets. The Bank may utilize this capacity for either short or long-term borrowings. At June 30, 2026, this equated to a borrowing capacity of $418.3 million. All borrowings with the FHLB are collateralized by the Bank’s holdings of FHLB stock, as well as a blanket lien on all residential and certain qualified commercial real estate loans not otherwise pledged.

Short-Term FHLB Borrowings: The short-term borrowing program is based upon either an overnight or thirty-day borrowing period with interest based generally upon a spread above the current Federal funds rate. In addition, short-term borrowings with an original maturity of less than one year are classified in this category. The rates on these borrowings can be either fixed or floating. As of June 30, 2026 and December 31, 2025, short-term FHLB borrowings amounted to $0.0 million and $54.0 million, respectively. During the periods then ended, short-term borrowings averaged $8.9 million and $47.6 million with a weighted average rate of 3.75% and 4.51%, respectively.

Municipal Letter of Credit: The Company utilizes a Municipal Letter of Credit (“MULOC”) from FHLB to collateralize certain municipal deposits at the Company. The balance of this MULOC at June 30, 2026 and December 31, 2025 was $49.0 million and $17.9 million, respectively.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 7 – BORROWINGS (Continued)

Long-Term FHLB Borrowings: Long-term borrowings at June 30, 2026 and December 31, 2025 amounted to $17.3 million and $20.0 million at each period end respectively. Of the $17.3 million of borrowings outstanding at June 30, 2026, $11.0 million with a rate of 4.07% matures in 2027, and $6.3 million with a rate of 3.78% matures in 2027.

NOTE 8 – JUNIOR SUBORDINATED DEBENTURES

The Company issued $7.75 million in subordinated debt during 2018. The proceeds were contributed to the Bank as additional paid in capital, and qualifies as Tier 1 Capital at the Bank Level. The subordinated debt may be included in Tier II Capital (with certain limitations applicable) at the parent Company under current regulatory guidelines and interpretations. The subordinated notes have a fixed interest rate of 5.75%, payable quarterly to the note holders. The subordinated debt matures on September 10, 2028. As of June 30, 2026 and December 31, 2025, $1.45 million was owned by certain current directors of the Company. NBC owned $1.0 million of this issuance, which was eliminated on the effective date of the merger, April 1, 2026. As a result, $6.75 million of this subordinated debt offering remains outstanding as of June 30, 2026.

NBC issued $5.00 million in subordinated debt during 2020, which was assumed by the Company effective April 1, 2026, and qualifies as Tier 1 Capital at the Bank Level. The subordinated debt may be included in Tier II Capital (with certain limitations applicable) at the parent Company under current regulatory guidelines and interpretations. The subordinated notes have a fixed interest rate of 5.50%, payable quarterly to the note holders. The subordinated debt matures on June 30, 2030. As of June 30, 2026, no amount was owned by certain current directors of the Company. The Company owned $1.5 million of this issuance, which was eliminated on the effective date of the merger, April 1, 2026. As a result, $3.50 million of this subordinated debt offering remains outstanding as of June 30, 2026.

NBC issued $4.55 million in subordinated debt during 2023, which was assumed by the Company effective April 1, 2026, and qualifies as Tier 1 Capital at the Bank Level. The subordinated debt may be included in Tier II Capital (with certain limitations applicable) at the parent Company under current regulatory guidelines and interpretations. The subordinated notes have a fixed interest rate of 7.00%, payable quarterly to the note holders. The subordinated debt matures on September 1, 2033. As of June 30, 2026, $2.20 million was owned by certain current directors of the Company.

The Company also issued $26 million in subordinated notes on March 25, 2026. The subordinated notes issued mature on April 1, 2036 and bear interest at a fixed annual rate of 7.375%, payable quarterly in arrears, up to but excluding April 1, 2031. From and including April 1, 2031 to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum initially equal to the then-current three-month Secured Overnight Financing Rate plus 378 basis points, payable quarterly in arrears. The Company is entitled to redeem the Subordinated Notes, in whole or in part, any time on or after April 1, 2031. As of June 30, 2026, $3.10 million was owned by certain current directors of the Company.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 9 – COMMITMENTS AND CONTINGENT LIABILITIES

Off-Balance-Sheet Financing and Concentrations of Credit: The Company is a party to certain financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include the Company’s commitments to extend credit and unused lines of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the consolidated financial statements. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit and unused lines of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments. Unless otherwise noted, the Company does not require collateral or other security to support financial instruments with credit risk.

Contract amounts of financial instruments that represent credit risk as of June 30, 2026 and December 31, 2025 are as follows (in thousands):


		June 30,			December 31,
		2026			2025
Commitments to extend credit		$	73,358		$	34,078
Unused lines of credit			37,565			38,967
Standby letters of credit			506			565
Total		$	111,429		$	73,610

Commitments to extend credit and unused lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain commitments are expected to expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case- by-case basis. The amount of collateral, if any, required by the Company upon the extension of credit is based on management’s credit evaluation of the customer. Mortgage and construction loan commitments are secured by a first lien on real estate.

Commitments to extend credit and unused lines of credit may be written on a fixed-rate basis thus exposing the Company to interest rate risk, given the possibility that market rates may change between commitment and actual extension of credit.

Standby letters of credit are conditional commitments issued by the Company to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under the standby letters of credit represent the maximum potential future payments the Company could be required to make. Typically, these instruments have terms of twelve months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance-sheet instruments. Company policies governing loan collateral apply to standby letters of credit at the time of credit extension. Loan-to-value ratios will generally range from 80% for movable assets, such as inventory, to 100% for liquid assets, such as bank certificates of deposits. The fair value of the Company’s standby letters of credit at June 30, 2026 and December 31, 2025 was not significant.

The Company has no loan commitments with borrowers which are intended to be held for sale if closed. The Company generally makes its determination of whether or not to identify a loan as held for sale at the time that loan commitments are entered into. In order to reduce the interest rate risk associated with the portfolio of loans held for sale, as well as loan commitments with locked interest rates which are intended to be held for sale if closed, the Company enters into agreements to sell loans in the secondary market to unrelated investors. The Company did not have any commitments to sell loans at June 30, 2026 or December 31, 2025.

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BALLSTON SPA BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE 9 – COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

Concentrations of Credit: The Company primarily grants residential, consumer and commercial-related loans to customers located in the New York State counties of Saratoga, Fulton, Montgomery, and northern sections of Albany and Schenectady counties. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon the economic conditions in these areas.

Data Processing: The Company has a data processing agreement with payments based on transaction volume. Total data processing expense related to this contract was approximately $488 thousand and $272 thousand for the three months ended June 30, 2026 and 2025, respectively, and $717 thousand and $550 thousand for the six months ended June 30, 2026 and 2025, respectively.

Dividend Restrictions: The Company’s principal source of cash flow to pay dividends on its common shares, to service its debt and to finance its corporate operations is capital distributions from the Bank. Federal banking law limits the amount of capital distributions that national banks can make to their holding companies without prior regulatory approval. A national bank’s dividend-paying capacity is affected by several factors, including net profits (as defined by statute) for the two previous calendar years and for the current year up to the date of dividend declaration. As of June 30, 2026, the Bank paid the Company a total of $245 thousand in dividends. As of the close of business on June 30, 2026, the Bank had an additional $8.0 million available to pay dividends to the Company, without prior regulatory approval and without affecting its status as “well capitalized” under the FDIC-defined capital categories.

Contingent Liabilities: In the ordinary course of business there are various legal proceedings pending against the Company. Based on consultation with outside counsel, management believes that the aggregate exposure, if any, arising from such litigation would not have a material adverse effect on the Company’s consolidated financial statements.

NOTE 10 – Earnings Per Share (“EPS”)

Basic EPS is based on the weighted average number of common shares actually outstanding. The following schedule shows the Company’s earnings and per share calculations for the periods presented (in thousands, except share and per share data):


		For the three months ended
		June 30,
		2026			2025
Net (Loss) Income		$	(711)		$	1,235
Weighted average number of common shares outstanding			1,100,071			742,663
Basic (loss) earnings per share		$	(0.65)		$	1.66


		For the six months ended
		June 30,
		2026			2025
Net (Loss) Income		$	(467)		$	2,536
Weighted average number of common shares outstanding			921,367			742,663
Basic (loss) earnings per share		$	(0.51)		$	3.41

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NOTE 11 – GOODWILL AND OTHER INTANGIBLES

The activity impacting goodwill as of June 30, 2026 and December 31, 2025 is as follows:


		June 30,			December 31,
(in thousands)		2026			2025
Balance at beginning of period		$	1,595		$	1,595
Acquisition ⁽¹⁾			451			—
Balance at end of period		$	2,046		$	1,595

(1)	In the second quarter 2026, the Company completed its acquisition of NBC and recorded $451 thousand in goodwill. Refer to Note 2 for further details.

The components of other intangible assets as of June 30, 2026 are as follows (there were no other intangible assets as of December 31, 2025):


		Gross						Net
June 30, 2026		Intangible			Accumulated			Intangible
(in thousands)		Assets			Amortization			Assets
Core deposit intangible (non-maturity deposits) ⁽¹⁾		$	7,098		$	(323)		$	6,775
Total		$	7,098		$	(323)		$	6,775

(1)	In the second quarter of 2026, the Company completed its acquisition of NBC and recorded $7.1 million in CDI assets that will amortize over a ten-year period.

The core deposit intangible asset is amortized over an expected life of 10 years using sum of the year’s digits method for amortization expense. Amortization expenses related to intangibles for both the three and six months ended June 30, 2026 and 2025 were $323 thousand and $0, respectively

The estimated aggregate future amortization expense for other intangible assets remaining at June 30, 2026 is as follows:


		Other
		Intangible
(in thousands)		Assets
2026		$	645
2027			1,194
2028			1,065
2029			936
2030			807
2031 and thereafter			2,128
Total		$	6,775

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management discussion and analysis of the Company’s consolidated financial condition as of June 30, 2026 and the results of operations for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with the audited Consolidated Financial Statements, including notes thereto, and the other information therein included in the Company’s Special Financial Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on April 24, 2026, and in conjunction with the Consolidated Statements of Financial Condition as of June 30, 2026, the Consolidated Statements of Income, the Consolidated Statements of Comprehensive Income, the Consolidated Statements of Changes in Stockholders’ Equity and the Consolidated Statements of Cash Flows for the three and six months ended June 30, 2026 and 2025. The Consolidated Statement of Financial Condition as of December 31, 2025 was derived from the audited Consolidated Statements of Financial Condition that was included in the Company’s Special Financial Report on Form 10-K for the year ended December 31, 2025. As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” and the “Company” refer to Ballston Spa Bancorp, Inc., and its consolidated subsidiaries, unless otherwise noted.

Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

●

statements of our goals, intentions and expectations;

●

statements regarding our business plans, prospects, financial condition and performance, growth and operating strategies;

●

statements regarding the quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●

general economic conditions, either nationally or in our market areas, that are worse than expected, including potential recessionary conditions;

●

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, and/or increase the level of defaults, losses and prepayments on loans we have made and make;

●

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of and the methodology calculating the adequacy of the allowance for credit losses;

●

our ability to access cost-effective funding;

●

changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

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●

fluctuations in real estate values and both residential and commercial real estate market conditions;

●

demand for loans and deposits in our market area;

●

our ability to implement and change our business strategy;

●

competition among depository and other financial institutions;

●

adverse changes in the securities or secondary mortgage markets;

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums or changes in the fiscal or monetary policies of the U.S. Treasury or Board of Governors of the Federal Reserve System;

●

the imposition of tariffs or other domestic or international governmental policies and any retaliatory responses;

●

the impact of any federal government shutdown;

●

changes in the quality or composition of our loan or investment portfolios;

●

technological changes that may be more difficult or expensive than expected to implement;

●

the failure to maintain current technologies and/or to successfully implement future information technology enhancements;

●

the inability of third-party providers to perform as expected;

●

a failure or breach of our operational or security systems or infrastructure, including cyberattacks;

●

our ability to manage market risk, credit risk and operational risk;

●

changes in consumer spending, borrowing and savings habits;

●

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

●

the current or anticipated impact of military conflict, terrorism or other geopolitical event;

●

our ability to retain key employees;

●

our compensation expense associated with equity allocated or awarded to our employees; and

●

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS OF BALLSTON SPA BANCORP, INC.

The objective of this section is to help potential investors understand Ballston Spa Bancorp Inc.’s (“Ballston Spa”) views on its results of operations and financial condition. In order to fully understand this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing elsewhere in this report.

Critical Accounting Policies

Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of June 30, 2026, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed in our most recent Special Financial Report on Form 10-K for the year ended December 31, 2025.

Merger Completion with NBC Bancorp, Inc.

On April 1, 2026, we completed our merger with NBC Bancorp, Inc. (“NBC”), the parent company of The National Bank of Coxsackie, and its results of operations are included in the Company’s consolidated results since the date of acquisition. Therefore, the Company’s results for the second quarter and six months ended June 30, 2026 reflect increased average balances, net interest income, non-interest income and non-interest expense compared to its prior quarter and six months ended of 2025 results. After purchase accounting fair value adjustments, the merger added $508.1 million of total assets, including $340.6 million of gross loans, and $480.9 million of total liabilities, primarily consisting of $456.9 million in deposits. The Company recorded goodwill of $451 thousand and a core deposit intangible of $7.1 million related to the acquisition.

Comparison of Financial Condition at June 30, 2026 and December 31, 2025

Total Assets. Total assets increased $435.9 million, or 46.95%, to $1.4 billion at June 30, 2026 from $928.5 million at December 31, 2025 primarily due to the acquisition of NBC.

Cash and Cash Equivalents. Cash and cash equivalents increased $65.0 million, or 231.32%, to $93.1 million at June 30, 2026 from $28.1 million at December 31, 2025. The increase was primarily driven by cash acquired in the NBC acquisition and higher short-term investment balances.

Securities. Securities available for sale increased $48.4 million, or 72.67%, to $115.0 million at June 30, 2026 from $66.6 million at December 31, 2025, due to the acquisition of NBC. During the second quarter, BSNB repositioned the portfolio by selling approximately $50 million of available-for-sale securities from the acquired investment portfolio and redeploying $30 million in to short-term investments. FHLB of NY and FRB stock decreased $0.9 million, or 11.39%, to $7.0 million at June 30, 2026 from $7.9 million at December 31, 2025.

Loans. Loans held for investment, net, increased $302.5 million, or 38.07%, to $1.097 billion at June 30, 2026 from $794.5 million at December 31, 2025. Gross loans increased $306.9 million, or 38.21%, to $1.110 billion at June 30, 2026 from $803.2 million at December 31, 2025. These increases were due primarily to the loan portfolio acquired from NBC, partially offset by the sale of approximately $50 million of acquired mortgage loans during the second quarter. Compared with December 31, 2025, commercial real estate and commercial and industrial loans increased by $192.9 million, residential real estate and HELOCs increased by $107.3 million, and consumer loans increased by $6.1 million As a result of purchase accounting on the acquired loan portfolio, the allowance for credit losses increased $4.4 million to $13.1 million at June 30, 2026 from $8.7 million at December 31, 2025.

Deposits. Deposits increased $434.7 million, or 56.81%, to $1.2 billion at June 30, 2026 from $765.2 million at December 31, 2025, driven by the $456.9 million in acquired deposits related to the NBC acquisition.

Borrowings. Federal Home Loan Bank borrowings decreased $56.7 million to $17.3 million at June 30, 2026 from $74.0 million at December 31, 2025. The decrease was attributable to the repayment of all $54.0 million of short-term FHLB borrowings and a $2.7 million decrease in long-term FHLB borrowings.

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Junior subordinated debentures. Junior subordinated debentures increased $32.1 million, or 411.54%, to $39.9 million at June 30, 2026 from $7.8 million at December 31, 2025. The increase reflected the issuance of additional subordinated debt in the first quarter, as well as subordinated debt liabilities assumed during the NBC acquisition.

Total Shareholders’ Equity. Total shareholders’ equity increased $23.8 million, or 33.47%, to $94.9 million at June 30, 2026 from $71.1 million at December 31, 2025. The increase was primarily driven by the issuance of $27.7 million in common stock for the NBC acquisition, partially offset by a $2.2 million increase in treasury stock.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using month-end average balances, rather than daily average balances. Ballston Spa believes the use of month-end average balances is representative of its operations. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees are immaterial.


		For the Three Months Ended June 30,
		2026							2025
		Average							Average
		Outstanding							Outstanding
		Balance			Interest		Yield/ Rate⁽¹⁾		Balance			Interest		Yield/ Rate⁽¹⁾

		(Dollars in thousands)
Interest-earning assets:
Loans		$	1,136,263		$	15,371	5.43	%	$	772,359		$	9,410	4.89	%
Securities			128,286			1,608	5.03	%		81,623			1,050	5.16	%
Other			71,962			328	1.83	%		20,973			33	0.63	%
Total interest-earning assets			1,336,511			17,307	5.19	%		874,955			10,493	4.81	%
Non-interest-earning assets			62,870							26,490
Total assets		$	1,399,381						$	901,445
Interest-bearing liabilities:
Savings and club accounts		$	168,972			48	0.11	%	$	93,903			18	0.08	%
Interest-bearing demand accounts			499,315			2,865	2.30	%		345,016			1,856	2.16	%
Certificates of deposit			296,885			2,698	3.65	%		135,387			1,391	4.12	%
Total interest-bearing deposits			965,172			5,611	2.33	%		574,306			3,265	2.28	%
Federal Home Loan Bank advances			24,037			262	4.37	%		98,100			819	3.35	%
Other borrowings			40,313			718	7.14	%		7,750			112	5.80	%
Total interest-bearing liabilities			1,029,522			6,591	2.57	%		680,156			4,196	2.47	%
Non-interest-bearing deposits			257,843							144,174
Other non-interest-bearing liabilities			21,064							9,428
Total liabilities			1,308,429							833,758
Equity			90,952							67,687
Total liabilities and equity		$	1,399,381						$	901,445
Net interest income					$	10,716						$	6,297
Net interest rate spread⁽¹⁾							2.63	%						2.34	%
Net interest-earning assets⁽²⁾		$	306,989						$	194,799
Net interest margin⁽³⁾							3.22	%						2.89	%
Average interest-earning assets to interest-bearing liabilities			129.82	%						128.64	%

(1)	Annualized.

(2)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by average total interest-earning assets.

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		For the Six Months Ended June 30,
		2026								2025
		Average								Average
		Outstanding								Outstanding
		Balance			Interest			Yield/ Rate⁽¹⁾		Balance			Interest			Yield/ Rate⁽¹⁾

		(Dollars in thousands)
Interest-earning assets:
Loans		$	955,648		$	25,355		5.35	%	$	768,852		$	18,672		4.90	%
Securities			95,246			2,520		5.34	%		81,315			2,136		5.30	%
Other			48,996			374		1.54	%		3,246			63		3.91	%
Total interest-earning assets			1,099,890			28,249		5.18	%		853,413			20,871		4.93	%
Non-interest-earning assets			56,815								25,743
Total assets		$	1,156,705							$	879,156
Interest-bearing liabilities:
Savings and club accounts		$	128,026			64		0.10	%	$	93,228			36		0.08	%
Interest-bearing demand accounts			458,015			5,127		2.26	%		352,994			3,654		2.09	%
Certificates of deposit			215,114			4,068		3.81	%		132,698			2,729		4.15	%
Total interest-bearing deposits			801,155			9,259		2.33	%		578,920			6,419		2.24	%
Federal Home Loan Bank advances			27,029			620		4.62	%		69,377			1,507		4.38	%
Other borrowings			36,565			866		4.78	%		7,750			223		5.80	%
Total interest-bearing liabilities			864,749			10,745		2.51	%		656,047			8,149		2.51	%
Non-interest-bearing deposits			202,686								146,494
Other non-interest-bearing liabilities			6,124								8,960
Total liabilities			1,073,559								811,501
Equity			83,146								67,655
Total liabilities and equity		$	1,156,705							$	879,156
Net interest income					$	17,504							$	12,722
Net interest rate spread⁽¹⁾								2.67	%							2.43	%
Net interest-earning assets⁽²⁾		$	235,141							$	197,366
Net interest margin⁽³⁾								3.21	%							3.01	%
Average interest-earning assets to interest-bearing liabilities			127.19	%							130.08	%

(1)	Annualized.

(2)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on Ballston Spa’s net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.


	Three Months Ended
	June 30, 2026 vs. 2025
					Total Increase
	Volume		Rate		(Decrease)

	(Dollars in thousands)
Interest-earning assets:
Loans	$	4,448	$	1,513	$	5,961
Securities		441		117		558
Other		345		(50)		295
Total interest-earning assets		5,234		1,580		6,814
Interest-bearing liabilities:
Savings and club accounts		18		12		30
NOW and MMKT accounts		1,032		(23)		1,009
Certificates of deposit		1,663		(356)		1,307
Federal Home Loan Bank advances		187		(744)		(557)
Other borrowings		663		(57)		606
Total interest-bearing liabilities		3,563		(1,168)		2,395
Change in net interest income	$	1,671	$	2,748	$	4,419


	Six Months Ended
	June 30, 2026 vs. 2025
					Total Increase
	Volume		Rate		(Decrease)

	(Dollars in thousands)
Interest-earning assets:
Loans	$	4,916	$	1,767	$	6,683
Securities		306		78		384
Other		371		(60)		311
Total interest-earning assets		5,593		1,785		7,378
Interest-bearing liabilities:
Savings and club accounts		15		13		28
NOW and MMKT accounts		1,413		60		1,473
Certificates of deposit		1,821		(483)		1,338
Federal Home Loan Bank advances		(93)		(796)		(889)
Other borrowings		689		(46)		643
Total interest-bearing liabilities		3,845		(1,252)		2,593
Change in net interest income	$	1,746	$	3,038	$	4,784

Comparison of Operating Results for the Three Months Ended June 30, 2026 and 2025

General. Net income decreased $1.9 million, or 158.33%, to a net loss of $0.7 million for the three months ended June 30, 2026 from $1.2 million of net income for the three months ended June 30, 2025. The decrease was driven by a $7.9 million increase in non-interest expenses, primarily merger expenses, compensation and benefits, other expenses, occupancy and equipment, data processing, and debit card processing, partially offset by a $4.4 million increase in net interest income, a $0.7 million increase in non-interest income, and a $0.2 million decrease in provision for credit losses.

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Interest Income. Interest income increased $6.8 million, or 64.76%, to $17.3 million for the three months ended June 30, 2026 from $10.5 million for the three months ended June 30, 2025, driven primarily by the acquisition of NBC and the Company’s first-quarter subordinated debt issuance. The increase resulted primarily from a $6.0 million, or 63.83%, increase in interest and fees on loans, a $0.5 million increase in income on securities available for sale, and a $0.3 million increase in income on short-term investments.

Interest Expense. Interest expense increased $2.4 million, or 57.14%, to $6.6 million for the three months ended June 30, 2026 from $4.2 million for the three months ended June 30, 2025, driven by the acquisition of NBC. The increase resulted primarily from a $2.4 million, or 75.00%, increase in interest expense on deposits and a $0.6 million, or 600.00%, increase in interest expense on junior subordinated debentures, due to the $26 million in subordinated debt issued in the first quarter of 2026 as well as the subordinated debt liabilities assumed during the acquisition of NBC. These increases were partially offset by a $0.6 million decrease in short-term FHLB borrowings.

Net Interest Income. Net interest income increased $4.4 million, or 69.84%, to $10.7 million for the three months ended June 30, 2026 from $6.3 million for the three months ended June 30, 2025 due to the acquisition of NBC. The increase was primarily attributable to the $6.8 million increase in interest income, partially offset by the $2.4 million increase in interest expense. Net interest income after provision for credit losses increased $4.6 million, or 75.41%, to $10.7 million for the three months ended June 30, 2026 from $6.1 million for the three months ended June 30, 2025.

Provision for credit losses. Ballston Spa establishes provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level Ballston Spa considers necessary to absorb expected credit losses in the loan portfolio that are both probable and reasonably estimable at the balance sheet date. In determining the level of the allowance for credit losses, Ballston Spa considers, among other things, past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of delinquent loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. Ballston Spa assesses the allowance for credit losses and makes provisions for credit losses on a quarterly basis.

Based on Ballston Spa’s evaluation of the above factors, Ballston Spa recorded no provision for credit losses for the three months ended June 30, 2026, compared to $150,000 for the three months ended June 30, 2025, a decrease of $0.2 million, or 100.00%.

Non-interest Income. Non-interest income increased $0.7 million, or 70.00%, to $1.7 million for the three months ended June 30, 2026 from $1.0 million for the three months ended June 30, 2025 due to increased activity from the acquisition of NBC. The increase was primarily due to increases in debit card interchange income, gain on sale and servicing of loans, other income, service charges on deposit accounts and wealth management income.

Non-interest Expense. Non-interest expense increased $7.9 million, or 141.07%, to $13.5 million for the three months ended June 30, 2026 from $5.6 million for the three months ended June 30, 2025 driven by activity related to the acquisition of NBC. The increase was primarily the result of $3.9 million of merger expenses, a $2.2 million, or 62.86%, increase in compensation and benefits, a $0.7 million, or 116.67%, increase in other expenses, and a $0.5 million, or 83.33%, increase in occupancy and equipment. Additional increases included data processing, debit card processing, legal and professional fees, FDIC and OCC assessments, and advertising expenses.

Income Tax Expense. The Company recorded an income tax benefit of $0.4 million for the three months ended June 30, 2026, compared to an income tax expense of $0.3 million for the three months ended June 30, 2025. This income tax benefit is reflective of the net loss recorded in the three months ended June 30, 2026.

Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025

General. Net income decreased $3.0 million, or 120.00%, to a net loss of $0.5 million for the six months ended June 30, 2026 from $2.5 million of net income for the six months ended June 30, 2025. The decrease was driven by an $9.6 million increase in non-interest expenses, primarily merger expenses, compensation and benefits, occupancy and equipment, and other expenses, partially offset by a $4.8 million increase in net interest income and a $0.9 million increase in non-interest income.

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Interest Income. Interest income increased $7.3 million, or 34.93%, to $28.2 million for the six months ended June 30, 2026 from $20.9 million for the six months ended June 30, 2025 driven primarily by the acquisition of NBC. The increase resulted primarily from a $6.7 million, or 35.83%, increase in interest and fees on loans, a $0.3 million increase in income on securities available for sale, and a $0.3 million increase in income on short-term investments. Interest and fees on residential mortgages and home equity loans increased $2.8 million, or 39.44%, to $9.9 million, while interest and fees on commercial and commercial real estate loans increased $3.7 million, or 38.14%, to $13.4 million.

Interest Expense. Interest expense increased $2.6 million, or 32.10%, to $10.7 million for the six months ended June 30, 2026 from $8.1 million for the six months ended June 30, 2025 driven by the acquisition of NBC. The increase resulted primarily from a $3.0 million, or 46.87%, increase in interest expense on deposits and a $0.7 million, or 350.00%, increase in interest expense on junior subordinated debentures, due to the $26 million in subordinated debt issued in the first quarter of 2026 as well as the $8.1 million in subordinated debt liabilities assumed during the acquisition of NBC. These increases were partially offset by decreases of $0.8 million, or 77.78%, in short-term FHLB borrowings, $0.2 million, or 13.33%, in brokered deposits, and $0.1 million, or 16.67%, in long-term FHLB borrowings.

Net Interest Income. Net interest income increased $4.8 million, or 37.80%, to $17.5 million for the six months ended June 30, 2026 from $12.7 million for the six months ended June 30, 2025 due to the acquisition of NBC. The increase was primarily attributable to the $7.4 million increase in interest income, partially offset by the $2.6 million increase in interest expense. Net interest income after provision for credit losses increased $4.9 million, or 39.52%, to $17.3 million for the six months ended June 30, 2026 from $12.4 million for the six months ended June 30, 2025.

Based on Ballston Spa’s evaluation of the above factors, Ballston Spa recorded a provision for credit losses of $180,000 for the six months ended June 30, 2026, compared to $300,000 for the six months ended June 30, 2025, a decrease of $120,000, or 40.00%.

Non-interest Income. Non-interest income increased $0.9 million, or 50.00%, to $2.7 million for the six months ended June 30, 2026 from $1.8 million for the six months ended June 30, 2025 due to increased activity from the acquisition of NBC. The increase was primarily due to increases in debit card interchange income, gain on sale and servicing of loans, other income, service charges on deposit accounts and wealth management income, as well as a gain on securities transactions.

Non-interest Expense. Non-interest expense increased $9.6 million, or 86.49%, to $20.7 million for the six months ended June 30, 2026 from $11.1 million for the six months ended June 30, 2025 driven by activity related to the acquisition of NBC. The increase was primarily the result of $4.6 million of merger expenses, a $2.7 million, or 39.13%, increase in compensation and benefits, a $0.8 million, or 66.67%, increase in occupancy and equipment, and a $0.8 million, or 72.73%, increase in other expenses. Additional increases included debit card processing, legal and professional fees, FDIC and OCC assessments, data processing, and advertising expenses.

Income Tax Expense. The Company recorded an income tax benefit of $0.2 million for the six months ended June 30, 2026, compared to an income tax expense of $0.6 million for the six months ended June 30, 2025. This income tax benefit is reflective of the net loss recorded in the six months ended June 30, 2026.

Market Risk

General. Ballston Spa’s most significant form of market risk is interest rate risk because, as a financial institution, the majority of its assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of Ballston Spa’s operations is to manage interest rate risk and limit the exposure of its financial condition and results of operations to changes in market interest rates. Ballston Spa’s ALCO Committee, which consists of members of management, is responsible for

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evaluating the interest rate risk inherent in its assets and liabilities, for determining the level of risk that is appropriate, given its business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by Ballston Spa’s board of directors. Ballston Spa currently utilizes a third-party modeling program, prepared on a quarterly basis, to evaluate its sensitivity to changing interest rates, given its business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

Ballston Spa has sought to manage its interest rate risk in order to minimize the exposure of its earnings and capital to changes in interest rates. Ballston Spa has implemented the following strategies to manage its interest rate risk:

●

growing target deposit accounts;

●

utilizing Ballston Spa’s investment securities portfolio as part of its balance sheet asset and liability and interest rate risk management strategy to reduce the impact of movements in interest rates on net interest income and economic value of equity, which can create temporary valuation adjustments to equity in Accumulated Other Comprehensive Income; and

●

continuing to price Ballston Spa’s one-to-four family residential real estate loan products in a way that encourages borrowers to select its fixed-rate, longer term loans as opposed to variable-rate shorter term loans.

By following these strategies, Ballston Spa believes that it is better positioned to react to increases and decreases in market interest rates.

Ballston Spa generally does not engage in hedging activities, such as engaging in futures or options, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.

Liquidity and Capital Resources

Liquidity is the ability to fund assets and meet obligations as they come due. Ballston Spa’s primary sources of funds consist of deposit inflows, loan repayments, and repayments from investment securities. In addition, Ballston Spa has the ability to collateralize borrowings in the wholesale markets or borrow advances from the Federal Home Loan Bank of New York. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Ballston Spa’s ALCO Committee is responsible for establishing and monitoring its liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of its customers as well as unanticipated contingencies. Ballston Spa seeks to maintain a ratio of liquid assets (including cash and federal funds sold) as a percentage of total deposits ranging between 1% and 25%. At June 30, 2026, this ratio was 7.76%. Ballston Spa believes that it has enough sources of liquidity to satisfy its short- and long-term liquidity needs as of June 30, 2026.

Ballston Spa regularly adjusts its investments in liquid assets based upon its assessment of:

(i)

expected loan demand;

(ii)

expected deposit flows;

(iii)

yields available on interest-earning deposits and securities; and

(iv)

the objectives of Ballston Spa’s asset/liability management program.

Excess cash is invested generally in interest-earning deposits and short- and intermediate-term securities.

Ballston Spa’s most liquid assets are cash and cash equivalents. The levels of these assets depend on its operating, financing and investing activities during any given period. At June 30, 2026, cash and cash equivalents totaled $93.1 million.

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Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $115.0 million at June 30, 2026.

At June 30, 2026, Ballston Spa had $73.4 million in outstanding loan commitments and $37.6 million of unused lines of credit. Certificates of deposit due within one year of June 30, 2026 totaled $222.2 million, or 18.52% of total deposits. If these deposits do not remain with Ballston Spa, it will be required to seek other sources of funds, including loan sales, other deposit products, including replacement certificates of deposit, securities sold under agreements to repurchase (repurchase agreements) and advances from the Federal Home Loan Bank of New York and other borrowing sources. Depending on market conditions, Ballston Spa may be required to pay higher rates on such deposits or other borrowings than it currently pays on the certificates of deposit due on or after June 30, 2026. Ballston Spa believes, however, based on past experience that a significant portion of such deposits will remain with it. Ballston Spa has the ability to attract and retain deposits by adjusting the interest rates offered.

Ballston Spa’s cash flows are derived from operating activities, investing activities and financing activities as reported in its Consolidated Statements of Cash Flows included in its Consolidated Financial Statements.

Ballston Spa’s primary investing activities are originating and purchasing loans and purchasing mortgage-backed securities. During the six months ended June 30, 2026, Ballston Spa originated $87.1 million of loans. Ballston Spa purchased $39.4 million in investment securities during the six months ended June 30, 2026.

Financing activities consist primarily of activity in deposit accounts. Ballston Spa experienced a net increase in total deposits of $434.7 million for the six months ended June 30, 2026. The increase resulted primarily from the acquisition of NBC. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by Ballston Spa and its local competitors, and by other factors.

Ballston Spa had $17.3 million and $74.0 million in borrowings with the Federal Home Loan Bank of New York at June 30, 2026 and December 31, 2025, respectively. The decrease in Federal Home Loan Bank of New York borrowings was due to an increased level of liquidity stemming from the acquisition of NBC, enabling BSNB to pay down its borrowings.

Ballston Spa National Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At June 30, 2026 and December 31, 2025, Ballston Spa National Bank exceeded all regulatory capital requirements. Ballston Spa National Bank is considered “well capitalized” under regulatory guidelines.

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See tables below for a summary of actual capital amounts (dollars in thousands) and ratios as of June 30, 2026 and December 31, 2025 for the Bank and the Company (on a consolidated basis):


					Required Ratios
					Minimum		Classification
	Actual Capital				Capital		As Well
	Amount		Ratio		Adequacy		Capitalized
June 30, 2026
Tier 1 capital:
Bank	$	125,432	8.74	%	4.00	%	5.00	%
Consolidated		89,064	7.74		N/A		N/A
Tier 1 risk-based capital:
Bank		125,432	12.52		6.00		8.00
Consolidated		89,064	8.89		N/A		N/A
Common equity tier 1 capital:
Bank		125,432	12.52		4.50		6.50
Consolidated		89,064	8.89		N/A		N/A
Total risk-based capital:
Bank		146,799	14.66		8.00		10.00
Consolidated		142,138	14.18		N/A		N/A


	Amount		Ratio		Adequacy		Capitalized
December 31, 2025
Tier 1 capital:
Bank	$	76,603	8.45	%	4.00	%	5.00	%
Consolidated		70,567	7.78		N/A		N/A
Tier 1 risk-based capital:
Bank		76,603	10.63		6.00		8.00
Consolidated		70,567	10.35		N/A		N/A
Common equity tier 1 capital:
Bank		76,603	10.63		4.50		6.50
Consolidated		70,567	10.35		N/A		N/A
Total risk-based capital:
Bank		85,444	11.86		8.00		10.00
Consolidated		87,158	12.79		N/A		N/A

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Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the Notes to the Ballston Spa Bancorp, Inc. unaudited financial statements included in this document.

Impact of Inflation and Changing Prices

Ballston Spa’s consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles (“GAAP”). GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of Ballston Spa’s operations. Unlike industrial companies, Ballston Spa’s assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on its performance than the effects of inflation.

Loan Portfolio Composition. The following table sets forth the composition of Ballston Spa’s loan portfolio by type of loan at the dates indicated.


	At
	June 30, 2026				December 31, 2025
	Amount		Percent		Amount		Percent

	(Dollars in thousands)
Residential real estate	$	420,847	37.96	%	$	318,694	39.71	%
HELOCs		22,241	2.01	%		17,092	2.13	%
Commercial real estate		552,240	49.81	%		370,380	46.16	%
Commercial and industrial		43,631	3.94	%		32,582	4.06	%
Consumer		69,808	6.30	%		63,698	7.94	%
Total gross loans		1,108,767	100.00	%		802,446	100.00	%
Unearned discount and net deferred fees and costs		1,340				773
Total loans		1,110,107				803,219
Allowance for credit losses		(13,138)				(8,749)
Net loans	$	1,096,969			$	794,470

Non-Performing and Problem Assets

When a loan is 15 days past due, Ballston Spa sends the borrower a late charge notice. If the loan delinquency is not corrected, other forms of collections are implemented, including telephone calls and collection letters. Ballston Spa attempts personal, direct contact with the borrower to determine the reason for the delinquency, to ensure that the borrower correctly understands the terms of the loan and to emphasize the importance of making payments on or before the due date. If necessary, subsequent late charges and delinquency notices are issued and the account will be monitored on a regular basis thereafter. By the 90^th day of delinquency, Ballston Spa will send the borrower a final demand for payment and it may refer the loan to legal counsel to commence foreclosure proceedings. Any of Ballston Spa’s loan officers can shorten these time frames in consultation with the senior lending officer.

Generally, loans are placed on non-accrual status when payment of principal or interest 90 days or more delinquent unless the loan is considered well-secured and in the process of collection. Loans are also placed on non-accrual status if collection

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of principal or interest in full is in doubt. When loans are placed on a non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received. The loan may be returned to accrual status if both principal and interest payments are brought current and factors indicating doubtful collection no longer exist, including performance by the borrower under the loan terms for a six-month period. Ballston Spa’s Mortgage Lending Officer reports monitored loans, including all loans rated special mention, substandard, doubtful or loss, to the board of directors on a quarterly basis. In addition, management presents a quarterly loan loss allowance analysis to Ballston Spa’s board of directors.

The following table sets forth Ballston Spa’s loan delinquencies by type and amount at the dates indicated.


		At
		June 30, 2026									December 31, 2025
		30-59			60-89			90 Days			30-59			60-89			90 Days
		Days			Days			or More			Days			Days			or More
		Past Due			Past Due			Past Due			Past Due			Past Due			Past Due

		(In thousands)
Residential real estate		$	1,784		$	1,109		$	909		$	—		$	1,260		$	992
HELOCs			111			—			—			—			—			—
Commercial real estate			3,405			95			—			—			—			328
Commercial and industrial⁽¹⁾			183			—			—			—			—			—
Consumer			245			23			15			227			70			75
Total loans		$	5,728		$	1,227		$	924		$	227		$	1,330		$	1,395

Non-Performing Assets. The following table sets forth information regarding Ballston Spa’s non-performing assets as of June 30, 2026 and December 31, 2025.


		At
		June 30,			December 31,
		2026			2025

		(In thousands)
Non-accrual loans:
Residential real estate		$	1,482		$	331
HELOCs			—			—
Commercial real estate			592			328
Commercial and industrial			—			—
Consumer			3			1
Total non-performing loans		$	2,077		$	660

On the basis of this review of Ballston Spa’s loans, its classified and special mention loans at the dates indicated were as follows:


	At
	June 30,		December 31,
	2026		2025

	(In thousands)
Substandard loans	$	17,205	$	2,198
Doubtful loans		—		—
Loss loans		—		—
Total classified loans	$	17,205	$	2,198
Special mention loans	$	5,730	$	4,884

Classification of Assets. Ballston Spa’s policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that Ballston Spa will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets (or portions

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of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose Ballston Spa to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve Ballston Spa’s close attention, are required to be designated as special mention. As of December 31, 2025, Ballston Spa had $4.9 million in assets designated as special mention.

Allowance for Credit Losses. The allowance for credit losses is the amount estimated by management as necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the balance sheet date. Ballston Spa’s determination as to the classification of its assets and the amount of its loss allowances are subject to review by the OCC, which can require that Ballston Spa establish additional loss allowances. Ballston Spa regularly reviews its asset portfolio to determine whether any assets require classification in accordance with applicable regulations. On the basis of Ballston Spa’s review of its assets at June 30, 2026, Ballston Spa had $17.2 million of assets classified as substandard, and no assets classified as doubtful or loss.

The following table sets forth activity in Ballston Spa’s allowance for credit losses by portfolio class for periods indicated.


		Residential									Commercial
		Real						Commercial			and
March 31, 2026		Estate			HELOCs			Real Estate			Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance		$	2,831		$	71		$	5,390		$	374		$	250		$	8,916
Provision (credit) for credit losses			(433)			(20)			402			63			(12)			—
Loans charged-off			—			—			(93)			—			(23)			(116)
Recoveries			—			—			—			—			16			16
Acquired PCD Loans			97			1			1,408			2			3			1,511
Acquired PSL Loans			1,337			41			1,278			79			76			2,811
June 30, 2026		$	3,832		$	93		$	8,385		$	518		$	310		$	13,138


	Residential						Commercial
	Real				Commercial		and
December 31, 2025	Estate		HELOCs		Real Estate		Industrial		Consumer		Total
Allowance for credit losses:
Beginning balance	$	2,721	$	71	$	5,355	$	375	$	227	$	8,749
Provision (credit) for credit losses		(323)		(20)		438		62		23		180
Loans charged-off		—		—		(94)		—		(50)		(144)
Recoveries		—		—		—		—		31		31
Acquired PCD Loans		97		1		1,408		2		3		1,511
Acquired PSL Loans		1,337		41		1,278		79		76		2,811
June 30, 2026	$	3,832	$	93	$	8,385	$	518	$	310	$	13,138


		Residential									Commercial
		Real						Commercial			and
March 31, 2025		Estate			HELOCs			Real Estate			Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance		$	2,522		$	103		$	5,533		$	318		$	159		$	8,635
Provision (credit) for credit losses			—			(1)			(134)			255			29			149
Loans charged-off			(62)			—			—			(201)			(36)			(299)
Recoveries			—			—			—			—			3			3
June 30, 2025		$	2,460		$	102		$	5,399		$	372		$	155		$	8,488

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		Residential									Commercial
		Real						Commercial			and
December 31, 2024		Estate			HELOCs			Real Estate			Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance		$	2,564		$	104		$	5,396		$	313		$	168		$	8,545
Provision for credit losses			(41)			(2)			3			260			80			300
Loans charged-off			(63)			—			—			(201)			(103)			(367)
Recoveries			—			—			—			—			10			10
June 30, 2025		$	2,460		$	102		$	5,399		$	372		$	155		$	8,488

Allocation of Allowance for credit losses. The following tables set forth the allowance for credit losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.


	At
	June 30, 2026					December 31, 2025
		Percent of					Percent of
		Allowance		Percent			Allowance		Percent
		in Each		of Loans			in Each		of Loans
		Category		in Each			Category		in Each
	Allowance	to Total		Category		Allowance	to Total		Category
	for Loan	Allocated		to Total		for Loan	Allocated		to Total
	Losses	Allowance		Loans		Losses	Allowance		Loans

	(In thousands)
Residential real estate	3,832	29.17	%	37.96	%	2,721	31.10	%	39.71	%
HELOCs	93	0.71	%	2.01	%	71	0.81	%	2.13	%
Commercial real estate	8,385	63.82	%	49.81	%	5,355	61.21	%	46.16	%
Commercial and industrial	518	3.94	%	3.94	%	375	4.29	%	4.06	%
Consumer	310	2.36	%	6.30	%	227	2.59	%	7.94	%
Total allocated allowance	13,138	100.00	%	100.00	%	8,749	100.00	%	100.00	%
Unallocated allowance	—					—
Total	13,138					8,749

Investment Activities

General. The goals of Ballston Spa’s investment policy are to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, and meeting liquidity needs, pledging requirements, and asset/liability management and interest rate risk strategies. Subject to loan demand and Ballston Spa’s interest rate risk analysis, Ballston Spa will increase the balance of its investment securities portfolio when it has excess liquidity.

At June 30, 2026, Ballston Spa’s investment portfolio consisted primarily of securities and obligations issued by U.S. government-sponsored enterprises totaling $29.6 million, securities and obligations issued by New York and its political subdivisions of $27.5 million, residential mortgage-backed securities of $51.1 million, collateralized mortgage obligations totaling $2.8 million and corporate securities of $4.0 million. At June 30, 2026, Ballston Spa also owned $7.0 million of Federal Home Loan Bank of New York stock. As a member of Federal Home Loan Bank of New York, Ballston Spa is required to purchase stock in the Federal Home Loan Bank of New York, which is carried at cost and classified as a restricted investment.

At June 30, 2026, all of Ballston Spa’s available-for-sale securities are carried at fair value through accumulated other comprehensive income.

For additional information regarding Ballston Spa’s investment securities portfolio, see Note 3 to the Notes to Consolidated Financial Statements.

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Deposit Activities and Other Sources of Funds

General. Deposits and loan repayments are the major sources of Ballston Spa’s funds for lending and other investment purposes. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general interest rates and money market conditions.

Deposit Accounts. Deposits are primarily attracted from within Ballston Spa’s market area through the offering of a broad selection of deposit instruments, including non-interest-bearing demand deposits (such as checking accounts), interest-bearing demand accounts (such as NOW accounts), savings accounts, money market accounts and certificates of deposit. As of June 30, 2026, Ballston Spa holds $157.7 million of accounts from a variety of local municipal relationships. As of June 30, 2026 Ballston Spa also has $85.2 million of brokered deposits.

Ballston Spa also offers a variety of deposit accounts designed for the businesses operating in its market area. Ballston Spa’s business banking deposit products include a business checking account designed for small businesses, savings and money market accounts. Ballston Spa offers bill payment services through its online banking system.

Deposit account terms vary according to the minimum balance required, the time period the funds must remain on deposit and the interest rate, among other factors. In determining the terms of its deposit accounts, Ballston Spa considers the rates offered by its competition, the rates on borrowings, its liquidity needs, profitability to Ballston Spa, and customer preferences and concerns. Ballston Spa generally reviews its deposit mix and pricing weekly. Ballston Spa’s deposit pricing strategy has generally been to offer competitive rates on all types of deposit products, and to periodically offer special rates in order to attract deposits of a specific type or term.

The following table sets forth the distribution of total deposits by account type at the dates indicated.


	At
	June 30, 2026						December 31, 2025
					Average						Average
	Amount		Percent		Rate		Amount		Percent		Rate

	(In thousands)
Demand, non-interest bearing	$	259,116	21	%	—	%	$	148,536	19	%	—	%
NOW and money market		491,253	41	%	2.26	%		382,252	50	%	2.01	%
Savings		179,290	15	%	0.10	%		87,243	11	%	0.08	%

Time, $250 and over		44,360	4	%	2.13	%		28,807	4	%	3.87	%
Time, other		225,922	19	%	5.13	%		118,395	16	%	3.81	%
Total deposits	$	1,199,941	100.00	%			$	765,233	100.00	%

As of June 30, 2026 and December 31, 2025, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance), was $32.7 million and $28.8 million, respectively. Ballston Spa has no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance.

Borrowings. Ballston Spa has the ability to utilize advances from the Federal Home Loan Bank of New York to supplement its investable funds. The Federal Home Loan Bank functions as a central reserve bank providing credit for member financial institutions. As a member, Ballston Spa is required to own capital stock in the Federal Home Loan Bank and is authorized to apply for advances on the security of such stock and certain of Ballston Spa’s mortgage loans and other assets (principally securities that are obligations of, or guaranteed by, the United States), provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the Federal Home Loan Bank’s assessment of the institution’s creditworthiness.

At June 30, 2026 and December 31, 2025, Ballston Spa had $17.3 million and $74.0 million, respectively, outstanding advances from the Federal Home Loan Bank of New York. At June 30, 2026, Ballston Spa had access to additional Federal Home Loan Bank advances of up to $348.6 million based on Ballston Spa’s unused qualifying collateral available to support such advances.

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Ballston Spa also has the ability to borrow from the Federal Reserve Bank of New York to supplement its investable funds. All borrowings are secured by pledges of qualifying loans and investment securities and are generally on overnight terms with interest rates quoted at the time of the borrowing. At June 30, 2026 and December 31, 2025, Ballston Spa had no outstanding borrowings with the Federal Reserve Bank of New York. At June 30 2026, Ballston Spa did not have any securities pledged to, and therefore had no borrowing capacity with the Federal Reserve Bank of New York.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the Notes to the Consolidated Financial Statements.

Impact of Inflation and Changing Prices

Our Consolidated Financial Statements and related notes have been prepared in accordance with GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on our performance than the effects of inflation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For information regarding material risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Market Risk.”

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management is responsible for the disclosure controls and procedures of the Company. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be so disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, except as discussed below, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors.

There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” of the Company’s Special Financial Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not have any unregistered sales of equity securities or stock repurchases during the three months ended June 30, 2026.

Item 3. Defaults Upon Senior Securities.

Not applicable

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

During the three months ended June 30, 2026, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Corporation’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

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Item 6. Exhibits.

Exhibit Number		Description
3.1		Certificate of Incorporation of Ballston Spa Bancorp, Inc., as amended (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 (File No. 333-291808) as filed on November 26, 2025)
3.2		Bylaws of Ballston Spa Bancorp, Inc. (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 (File No. 333-291808) filed on November 26, 2025)
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document –the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Ballston Spa Bancorp, Inc.

Date: August 14, 2026	By:	/s/ Christopher R. Dowd
		Christopher R. Dowd
		Chief Executive Officer

Date: August 14, 2026	By:	/s/ James F. Dodd
		James F. Dodd
		Executive Vice President and
		Chief Financial Officer