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:

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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:

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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.

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:

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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.

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.

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