ENBP 10-Q
ENB Financial Corp (ENBP)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ________________________ to ________________________
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No) | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
Former name, former address, and former fiscal year, if changed since last report Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None. | N/A | N/A |
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.
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 and post such files.)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 | ☐ |
| ☒ | 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 1, 2026, the registrant had
ENB FINANCIAL CORP
INDEX TO FORM 10-Q
June 30, 2026
2
ENB FINANCIAL CORP
Part I - Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| June 30, | December 31, | June 30, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| $ | $ | $ | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | ||||||||||||
| Interest-bearing deposits in other banks | ||||||||||||
| Total cash and cash equivalents | ||||||||||||
| Securities available for sale (at fair value, net of allowance for credit losses of $ | ||||||||||||
| Equity securities (at fair value) | ||||||||||||
| Loans held for sale | ||||||||||||
| Loans (net of unearned income) | ||||||||||||
| Less: Allowance for credit losses | ||||||||||||
| Net loans | ||||||||||||
| Premises and equipment | ||||||||||||
| Other real estate owned | ||||||||||||
| Regulatory stock | ||||||||||||
| Goodwill | ||||||||||||
| Core deposit intangible | ||||||||||||
| Bank owned life insurance | ||||||||||||
| Other assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing | ||||||||||||
| Interest-bearing | ||||||||||||
| Total deposits | ||||||||||||
| Short-term borrowings | ||||||||||||
| Long-term debt | ||||||||||||
| Subordinated debt | ||||||||||||
| Other liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock, par value $ | ||||||||||||
| Shares: Authorized | ||||||||||||
| Issued | ||||||||||||
| Capital surplus | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive loss, net of tax | ( | ) | ( | ) | ( | ) | ||||||
| Less: Treasury stock cost on | ( | ) | ( | ) | ( | ) | ||||||
| Total stockholders' equity | ||||||||||||
| Total liabilities and stockholders' equity | ||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
3
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Interest and fees on loans | ||||||||||||||||
| Interest on securities available for sale | ||||||||||||||||
| Taxable | ||||||||||||||||
| Tax-exempt | ||||||||||||||||
| Interest on deposits at other banks | ||||||||||||||||
| Dividend income | ||||||||||||||||
| Total interest and dividend income | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Interest on deposits | ||||||||||||||||
| Interest on borrowings | ||||||||||||||||
| Total interest expense | ||||||||||||||||
| Net interest income | ||||||||||||||||
| (Release) provision for credit losses | ( | ) | ( | ) | ||||||||||||
| Net interest income after (release) provision for credit losses | ||||||||||||||||
| Other income: | ||||||||||||||||
| Trust and investment services income | ||||||||||||||||
| Service fees | ||||||||||||||||
| Commissions | ||||||||||||||||
| Loss on the sale of debt securities, net | ( | ) | ( | ) | ||||||||||||
| Gain on equity securities, net | ||||||||||||||||
| Gains on sale of mortgages | ||||||||||||||||
| Earnings on bank-owned life insurance | ||||||||||||||||
| Other income | ||||||||||||||||
| Total other income | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries and employee benefits | ||||||||||||||||
| Occupancy | ||||||||||||||||
| Equipment | ||||||||||||||||
| Advertising & marketing | ||||||||||||||||
| Computer software & data processing | ||||||||||||||||
| Shares tax | ||||||||||||||||
| Professional services | ||||||||||||||||
| Core deposit intangible amortization | ||||||||||||||||
| Merger and conversion related expenses | ||||||||||||||||
| Other expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income | ||||||||||||||||
| Per share information: | ||||||||||||||||
| Basic and diluted earnings per share | ||||||||||||||||
| Cash dividends paid per share | ||||||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
4
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net income | ||||||||||||||||
| Other comprehensive income , net of tax: | ||||||||||||||||
| Securities available for sale: | ||||||||||||||||
| Unrealized gains (losses) arising during the period | ( | ) | ||||||||||||||
| Reclassification adjustment for losses included in net income on securities available for sale | ||||||||||||||||
| Reclassification adjustment for losses (gains) realized in net income on fair value hedge | ( | ) | ( | ) | ||||||||||||
| Net unrealized gains (losses) | ( | ) | ||||||||||||||
| Income tax effect | ( | ) | ( | ) | ( | ) | ||||||||||
| Net of tax amount | ( | ) | ||||||||||||||
| Cash flow hedge: | ||||||||||||||||
| Changes in unrealized (losses) gains on cash flow hedge | ( | ) | ( | ) | ||||||||||||
| Reclassification adjustment for losses (gains) included in net income | ( | ) | ( | ) | ||||||||||||
| Income tax effect | ( | ) | ( | ) | ||||||||||||
| Net of tax amount | ( | ) | ( | ) | ||||||||||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Total comprehensive income | ||||||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
5
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Accumulated | ||||||||||||||||||||||||
| Other | Total | |||||||||||||||||||||||
| Common | Capital | Retained | Comprehensive | Treasury | Stockholders' | |||||||||||||||||||
| Stock | Surplus | Earnings | Loss | Stock | Equity | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balances, January 1, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive income net of tax | — | |||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Treasury stock issued - | — | ( | ) | |||||||||||||||||||||
| Cash dividends paid, $ | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive loss net of tax | — | ( | ) | ( | ) | |||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Treasury stock issued - | — | ( | ) | |||||||||||||||||||||
| Cash dividends paid, $ | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Balances, January 1, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive loss net of tax | — | ( | ) | ( | ) | |||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Treasury stock issued - | — | |||||||||||||||||||||||
| Cash dividends paid, $ | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances, March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive income net of tax | — | |||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Treasury stock issued - | — | |||||||||||||||||||||||
| Cash dividends paid, $ | — | ( | ) | ( | ) | |||||||||||||||||||
| Balances, June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
6
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Net amortization expense | ||||||||
| Decrease in interest receivable | ||||||||
| (Decrease) in interest payable | ( | ) | ( | ) | ||||
| (Release) provision for credit losses | ( | ) | ||||||
| Losses on the sale of debt securities, net | ||||||||
| (Gains) on equity securities, net | ( | ) | ( | ) | ||||
| Gains on sale of mortgages | ( | ) | ( | ) | ||||
| Loans originated for sale | ( | ) | ( | ) | ||||
| Proceeds from sales of loans | ||||||||
| Earnings on bank-owned life insurance | ( | ) | ( | ) | ||||
| Depreciation of premises and equipment and amortization of software | ||||||||
| Deferred income tax | ||||||||
| Amortization of deferred fees on subordinated debt | ||||||||
| Stock-based compensation expense | ||||||||
| Other assets and other liabilities, net | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Securities available for sale: | ||||||||
| Proceeds from maturities, calls, and repayments | ||||||||
| Proceeds from sales | ||||||||
| Purchases | ( | ) | ( | ) | ||||
| Equity securities: | ||||||||
| Proceeds from sales | ||||||||
| Purchases | ( | ) | ( | ) | ||||
| Purchase of regulatory bank stock | ( | ) | ( | ) | ||||
| Redemptions of regulatory bank stock | ||||||||
| Proceeds from bank-owned life insurance | ||||||||
| Net (increase) in loans | ( | ) | ( | ) | ||||
| Purchases of premises and equipment, net | ( | ) | ( | ) | ||||
| Net cash paid for acquisition | ( | ) | ||||||
| Purchase of computer software | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Net increase in demand, and savings accounts | ||||||||
| Net (decrease) increase in time deposits | ( | ) | ||||||
| Net proceeds from short-term borrowings | ||||||||
| Repayments of long-term debt | ( | ) | ( | ) | ||||
| Repayment of subordinated debt | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from sale of treasury stock | ||||||||
| Net cash used for financing activities | ( | ) | ( | ) | ||||
| Decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | ||||||||
| Income taxes paid | ||||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Fair value adjustments for securities available for sale | ( | ) | ||||||
| Real estate owned acquired in settlement of loans | ||||||||
| Noncash transactions related to merger: | ||||||||
| Assets acquired, excluding cash | ||||||||
| Liabilities assumed | ||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
7
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Quarterly Report on Form 10-Q for the second quarter of 2026 is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.
The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, Securities and Exchange Commission rules that permit reduced disclosure for interim periods, Article 10 of Regulation S-X, and general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. There have been no material changes to the Corporation’s significant accounting policies for the three and six months ended June 30, 2026. The December 31, 2025 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Corporation’s 2025 audited consolidated financial statements. The unaudited condensed consolidating financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, included in the Corporation’s Annual Report on Form 10-K for the year ending December 31, 2025. All significant intercompany transactions and accounts have been eliminated in consolidation. Certain comparative amounts for the prior year have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.
Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on information available at the time. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
The Corporation’s management has evaluated all activity of the Corporation and concluded that subsequent events are properly reflected in the Corporation’s unaudited condensed consolidated financial statements as required by GAAP.
2. Revenue from Contracts with Customers
The Corporation records revenue from contracts with customers in accordance with Accounting Standards Topic 606, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Corporation must identify contracts with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when the Corporation satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.
The Corporation’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Corporation generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.
8
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
3. Business Acquisition
Effective February 1, 2026, the Corporation completed its previously announced Acquisition of Cecil Bancorp, Inc. (“Cecil”) pursuant to an Agreement and Plan of Stock Acquisition, by and among the Corporation, ENB South Acquisition Subsidiary, Inc. (“Acquisition Subsidiary”), The Ephrata National Bank, Cecil, and Cecil Bank (the “Agreement”). At the effective time of the Acquisition, Acquisition Subsidiary merged with and into Cecil, with Cecil surviving the merger and becoming the wholly-owned subsidiary of the Corporation. Immediately after the merger, Cecil’s board of directors approved, and sole stockholder adopted the complete liquidation and dissolution of Cecil, pursuant to the plan of complete liquidation. Immediately thereafter that, Cecil Bank merged with and into The Ephrata National Bank, a national banking association and the Corporation’s wholly-owned subsidiary, with The Ephrata National Bank as the surviving bank, collectively the Acquisition. Subject to the terms and conditions of the Agreement, as adjusted, each outstanding share of Cecil common stock was converted into the right to receive $
The following table summarizes the actual cash consideration paid for outstanding shares of Cecil’s common stock, including restricted stock that vested upon change in control, and the settlement of stock options (dollars in thousands except per share data):
| $ | ||||||||
| Cash exchange for outstanding Cecil common shares: | ||||||||
| Number of shares outstanding | ||||||||
| Exchange rate per share | $ | |||||||
| Cash exchanged for outstanding shares | ||||||||
| Number of options outstanding | ||||||||
| Exchange rate per option | $ | |||||||
| Exercise price per option | ||||||||
| Difference | ||||||||
| Cash exchanged for outstanding options | ||||||||
| Cash exchanged for outstanding Cecil common shares | ||||||||
Under the acquisition method of accounting, the total Acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of Cecil based on their estimated fair value as of the Acquisition date. The excess of the Acquisition consideration over the fair value of the assets acquired and liabilities assumed, if any, is allocated to goodwill.
9
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The total Acquisition consideration as shown in the table above is allocated to Cecil’s tangible and intangible assets and liabilities based on their fair value as follows (in thousands):
| Cecil Bancorp, Inc. | Cecil Bancorp, Inc. | |||||||||||
| Book Value | Fair Value | Fair Value | ||||||||||
| February 1, 2026 | Adjustments | February 1, 2026 | ||||||||||
| $ | $ | $ | ||||||||||
| Total purchase price consideration | ||||||||||||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||||||||||
| Cash and equivalents | ||||||||||||
| Securities available for sale | ( | ) | ||||||||||
| Loans, gross | ( | ) | ||||||||||
| Allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Loans, net of allowance | ( | ) | ||||||||||
| Premises and equipment | ( | ) | ||||||||||
| Regulatory stock | ||||||||||||
| Core deposit intangible | ||||||||||||
| Operating lease right of use asset | ( | ) | ||||||||||
| Deferred tax assets | ( | ) | ||||||||||
| Other assets | ( | ) | ||||||||||
| Total identifiable assets acquired | ( | ) | ||||||||||
| Deposits | ( | ) | ||||||||||
| Operating lease liability | ( | ) | ||||||||||
| Reserve for unfunded commitments | ( | ) | ||||||||||
| Other liabilities | ||||||||||||
| Total liabilities assumed | ( | ) | ||||||||||
| Total identifiable net assets | ( | ) | ||||||||||
| Goodwill | ||||||||||||
The following discusses the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed from the Acquisition. The Corporation used independent valuation specialists to assist with the fair value determinations.
Securities available for sale: The Corporation decreased the fair value of securities available for sale for the differences between Cecil’s matrix pricing and the third party quoted prices for the securities, as the majority were liquidated shortly after the Acquisition date.
Loans: The Corporation early adopted the provisions of Financial Accounting Standards Board ASU 2025-08, Financial Instruments – Credit Losses (Topic 326). This ASU requires that loans acquired without credit deterioration and deemed “seasoned”, will be considered purchased seasoned loans (“PSLs”). PSLs include all loans acquired in a business combination, which do not have “more than significant” deterioration of credit quality since origination. Loans with more than significant deterioration of credit quality, or purchase credit deteriorated (“PCD”) loans, included loans on nonaccrual status, loans with historical delinquencies since loan origination or having a risk rating of watch, special mention, substandard, doubtful or loss based on the Corporation’s internal risk rating system.
The fair value of loans acquired were estimated using the discounted cash flow method on an individual loan basis. To estimate the value of the loans, each loan’s contractual cash flows were projected, adjusted for expected current market rates, prepayments, and credit losses. Assumptions for credit losses were based on the risk characteristics of each loan. For loans specifically evaluated by the Corporation, credit losses were based on estimated losses identified by the Corporation. The projected cash flows were discounted to present value using a discount rate based on the relative risk of cash flows. An allowance for credit losses was determined for PSL and PCD loans using the same methodology as the Corporation’s other loans. The initial allowance for credit losses determined on a collective basis was allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. These PSL and PCD loans were evaluated on a collective basis and were accounted for using the gross-up approach at Acquisition (i.e., record the loan at its amortized cost and separately record an allowance for expected credit losses). Subsequent changes to the allowance for credit losses will be recorded through the provision for credit loss expense. The component of the fair value mark related to interest rates will be accreted into income over the estimated remaining maturities of the loans.
10
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Of the $
| February 1, | ||||
| 2026 | ||||
| $ | ||||
| Purchased deteriorated loans | ||||
| Par value of acquired loans at acquisition | ||||
| Allowance for credit losses at acquisition | ( | ) | ||
| Non-credit discount at acquisition | ( | ) | ||
| Total acquisition consideration | ||||
In connection with the adoption of ASU 2025-08, the Corporation recorded a $
Premises and equipment: The fair value of bank premises and equipment was valued by obtaining recent market data for similar properties, with adjustments for characteristics of the individual property. The Corporation acquired four branches of which one was owned property. Fair value adjustment will offset depreciation based on an estimated useful life of
Core deposit intangible: The Corporation identified core deposit intangibles based on an income approach, which is based on the present value of cash flows that can be expected to be generated in the future. The core deposit intangible will be amortized based on the sum-of-the-years digit amortization method over the expected life of
Operating lease right of use (“ROU”) assets and lease liabilities: The fair value of the lease ROU assets was measured at an amount equal to the lease liability established at the date of Acquisition and adjusted for favorable or unfavorable lease terms when compared with market terms on a lease-by-lease basis.
Deferred tax assets: The net deferred tax asset was adjusted for the tax effect of other purchase accounting fair value adjustments and expected net assets to be realized of the tax benefit of expected book and tax timing differences.
Other assets: Fair value of other assets and liabilities represent the amounts that are expected to be received or need paid out, with an adjustment for the carrying value of repossessed assets to their net realizable value.
Time deposits: The Corporation recorded an adjustment on time deposits to reflect the fair value of the time deposits assumed, which was determined using a discounted cash flow approach that utilized a discount rate equal to current market interest rates for instruments with similar terms and maturities. The fair value adjustment for time deposits will be amortized over the remaining maturities.
Supplemental Proforma Information
The following table presents supplemental proforma information for the three and six months ended June 30, 2026 and 2025 as if the Acquisition had occurred January 1, 2025. The unaudited proforma includes adjustments on loans acquired, amortization of core deposit intangibles arising from the transaction, depreciation expense on property acquired, lease expense on leases acquired, interest expense on deposits acquired and the related tax effects. The proforma information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Total revenues | ||||||||||||||||
| Net income | ||||||||||||||||
11
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
4. Securities Available for Sale
The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at June 30, 2026 and December 31, 2025, are as follows:
| Gross | Gross | Allowance | ||||||||||||||||||
| Amortized | Unrealized | Unrealized | for Credit | Fair | ||||||||||||||||
| Cost | Gains | Losses | Losses | Value | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| U.S. Treasuries | ( | ) | ||||||||||||||||||
| U.S. government agencies | ( | ) | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ||||||||||||||||||
| Non-agency MBS/CMO | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Total securities available for sale | ( | ) | ||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| U.S. Treasuries | ( | ) | ||||||||||||||||||
| U.S. government agencies | ( | ) | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ||||||||||||||||||
| Non-agency MBS/CMO | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Total securities available for sale | ( | ) | ||||||||||||||||||
The amortized cost and fair value of debt securities available for sale at June 30, 2026, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions (in thousands).
| Amortized | ||||||||
| Cost | Fair Value | |||||||
| $ | $ | |||||||
| Due in one year or less | ||||||||
| Due after one year through five years | ||||||||
| Due after five years through ten years | ||||||||
| Due after ten years | ||||||||
| U.S. agency mortgage-backed securities | ||||||||
| U.S. agency collateralized mortgage obligations | ||||||||
| Non-agency MBS/CMO | ||||||||
| Asset-backed securities | ||||||||
| Total debt securities | ||||||||
Securities available for sale with a par value of $
Proceeds from active sales of debt securities available for sale with gains or losses, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification (in thousands).
12
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Proceeds from sales and calls with gains or losses | ||||||||||||||||
| Gross realized gains | ||||||||||||||||
| Gross realized losses | ( | ) | ( | ) | ||||||||||||
Information pertaining to securities with gross unrealized losses for which an allowance for credit losses has not been recorded at June 30, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous loss position (in thousands):
| Less than 12 months | More than 12 months | Total | ||||||||||||||||||||||
| Gross | Gross | Gross | ||||||||||||||||||||||
| Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
| Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| As of June 30, 2026 | ||||||||||||||||||||||||
| U.S. Treasuries | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. government agencies | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Non-Agency MBS/CMO | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Obligations of states & political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Total unrealized losses on debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||
| U.S. Treasuries | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. government agencies | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Non-Agency MBS/CMO | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Obligations of states & political subdivisions | ( | ) | ( | ) | ||||||||||||||||||||
| Total unrealized losses on debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
In the debt security portfolio, there are 293 and 288 positions carrying unrealized losses at June 30, 2026 and December 31, 2025.
The Corporation evaluates fixed income positions for an allowance for credit losses at least on a quarterly basis, and more frequently when economic and market concerns warrant such evaluation. The Corporation does not intend to sell the securities in an unrealized loss position and is unlikely to be required to sell these securities before a recovery of fair value, which may be maturity. The Corporation concluded that the decline in fair value of these securities was not indicative of a credit loss. No securities in the portfolio required an allowance for credit losses to be recorded in the first six months of 2026 or 2025.
13
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
5. Equity Securities
The following table summarizes the amortized cost, cumulative gross realized gains and losses recognized in earnings, and fair value of equity securities held at June 30, 2026 and December 31, 2025 (in thousands):
| Gross | Gross | |||||||||||||||
| Amortized | Realized | Realized | Fair | |||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| June 30, 2026 | ||||||||||||||||
| CRA-qualified mutual funds | ||||||||||||||||
| Bank stocks | ( | ) | ||||||||||||||
| Total equity securities | ( | ) | ||||||||||||||
| December 31, 2025 | ||||||||||||||||
| CRA-qualified mutual funds | ||||||||||||||||
| Bank stocks | ( | ) | ||||||||||||||
| Total equity securities | ( | ) | ||||||||||||||
The following table presents the net gains and losses on the Corporation’s equity investments recognized in earnings during the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net gains realized on the sale of equity securities during the period | ||||||||||||||||
| Net gains (losses) recognized on equity securities held at reporting date | ||||||||||||||||
| Net gains (losses) recognized on equity securities during the period | ||||||||||||||||
6. Loans and Allowance for Credit Losses
The following table presents the Corporation’s loan portfolio by category of loans as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Agriculture | ||||||||
| Business Loans | ||||||||
| Consumer | ||||||||
| Home Equity | ||||||||
| Non-Owner Occupied Commercial Real Estate | ||||||||
| Residential Real Estate (a) | ||||||||
| Gross loans prior to deferred costs | ||||||||
| Deferred loan costs, net | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total net loans | ||||||||
| (a) |
14
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Age Analysis of Past-Due Loans Receivable
The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | ||||||||||||||||||||||||
| 31-60 | 61-90 | Greater Than | ||||||||||||||||||||||
| Days | Days | 90 Days | Total | Total | ||||||||||||||||||||
| Current | Past Due | Past Due | Past Due | Past Due | Loans | |||||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||
| Home Equity | ||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||
| 31-60 | 61-90 | Greater Than | ||||||||||||||||||||||
| Days | Days | 90 Days | Total | Total | ||||||||||||||||||||
| Current | Past Due | Past Due | Past Due | Past Due | Loans | |||||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||
| Home Equity | ||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Nonperforming Loans
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due
over 90 days still accruing interest as of June 30, 2026 and December 31, 2025, (in thousands):
| Nonaccrual | Nonaccrual | Loans Past | ||||||||||||||||||
| with no | with | Total | Due Over 90 Days | Total | ||||||||||||||||
| June 30, 2026 | ACL | ACL | Nonaccrual | Still Accruing | Nonperforming | |||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | |||||||||||||||
| Business Loans | ||||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Nonaccrual | Nonaccrual | Loans Past | ||||||||||||||||||
| with no | with | Total | Due Over 90 Days | Total | ||||||||||||||||
| December 31, 2025 | ACL | ACL | Nonaccrual | Still Accruing | Nonperforming | |||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | |||||||||||||||
| Business Loans | ||||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
15
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents, by class of loans, the collateral-dependent nonaccrual loans and type of collateral as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | ||||||||||||||||
| Real Estate | Other | None | Total | |||||||||||||
| Agriculture | $ | $ | $ | $ | ||||||||||||
| Business Loans | ||||||||||||||||
| Consumer Loans | ||||||||||||||||
| Home Equity | ||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||
| Residential Real Estate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
| Real Estate | Other | None | Total | |||||||||||||
| Agriculture | $ | $ | $ | $ | ||||||||||||
| Business Loans | ||||||||||||||||
| Consumer Loans | ||||||||||||||||
| Home Equity | ||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||
| Residential Real Estate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Credit Quality Indicators
The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of June 30, 2026 and December 31, 2025. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled or at all. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans.
The Corporation's internally assigned grades for commercial credits are as follows:
| · | Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. |
| · | Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem, if not corrected. |
| · | Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. |
| · | Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. |
| · | Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted. |
16
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of June 30, 2026 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| June 30, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
17
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of December 31, 2025 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
18
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans.
The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of June 30, 2026 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
19
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2025 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | — | |||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | — | |||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Allowance for Credit Losses
The following table presents the activity in the allowance for credit losses (ACL) by portfolio segment for the three months ended June 30, 2026 and June 30, 2025 (in thousands):
| Beginning | Provisions | Ending | ||||||||||||||||||
| Balance | Charge-offs | Recoveries | (Reductions) | Balance | ||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
| Agriculture | ( | ) | ||||||||||||||||||
| Business Loans | ( | ) | ( | ) | ||||||||||||||||
| Consumer Loans | ( | ) | ||||||||||||||||||
| Home Equity | ( | ) | ||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ( | ) | ||||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
20
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
| Beginning | Provisions | Ending | ||||||||||||||||||
| Balance | Charge-offs | Recoveries | (Reductions) | Balance | ||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
| Agriculture | ||||||||||||||||||||
| Business Loans | ( | ) | ||||||||||||||||||
| Consumer Loans | ( | ) | ||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ) | ( | ) | |||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
During the three months ended June 30, 2026, management released $
The following table presents the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2026 and June 30, 2025 (in thousands):
| Initial Allowance | ||||||||||||||||||||||||
| Beginning | on Cecil PCD and PSL | Provisions | Ending | |||||||||||||||||||||
| Balance | Acquired Loans | Charge-offs | Recoveries | (Reductions) | Balance | |||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||
| Business Loans | ) | ( | ) | |||||||||||||||||||||
| Consumer Loans | ( | ) | ||||||||||||||||||||||
| Home Equity | ||||||||||||||||||||||||
| Non-Owner Occupied CRE | ( | ) | ||||||||||||||||||||||
| Residential Real Estate | ( | ) | ||||||||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||
| Beginning | Provisions | Ending | ||||||||||||||||||
| June 30, 2025 | Balance | Charge-offs | Recoveries | (Reductions) | Balance | |||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
| Agriculture | ||||||||||||||||||||
| Business Loans | ( | ) | ||||||||||||||||||
| Consumer Loans | ( | ) | ||||||||||||||||||
| Home Equity | ( | ) | ||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ( | ) | ( | ) | ||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
During the six months ended June 30, 2026, management released $
The ACL is maintained at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers historical loss experience, current conditions, and forecasts of future economic conditions as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate (CRE), and Residential Real Estate. The following are key risks within each portfolio segment:
21
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Agriculture – Loans made to individuals or operating companies within the Agricultural industry. These loans are generally secured by a first lien mortgage on agricultural land. The primary source of repayment is the income and assets of the borrower. The condition of the agriculture industry as well as the condition of the national economy is an important indicator of risk for this segment.
Business Loans —Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The primary source of repayment for these loans is cash flow from the operations of the company. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. This segment also includes loans made to finance construction of buildings or other structures, as well as to finance the Acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.
Consumer - Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes personal loans and lines of credit that may be secured or unsecured. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.
Home Equity– This segment generally includes lines of credit and term loans secured by the equity in the borrower’s residence. The primary source of repayment for these facilities is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.
Non-Owner Occupied CRE - Loans secured by commercial purpose real estate for various purposes such as hotels, retail, multifamily and health care. The primary sources of repayment for these loans are the operations of the individual projects and global cash flows of the debtors. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee.
Residential Real Estate—Loans secured by first liens on 1-4 family residential mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.
The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on the estimation method as of June 30, 2026:
| Agriculture | Business Loans | Consumer Loans | Home Equity | Non-Owner Occupied CRE | Residential Real Estate | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||||
| Ending balance | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
22
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on estimation method as of December 31, 2025:
| Agriculture | Business Loans | Consumer | Home Equity | Non-Owner Occupied CRE | Residential Real Estate | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||||
| Ending balance | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
Modifications to Borrowers Experiencing Financial Difficulty
The Corporation may grant a modification to borrowers in financial distress by providing a temporary reduction in interest rate, or an extension of a loan’s stated maturity date. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral.
The Corporation identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future. There were no modifications of loans to borrowers experiencing financial difficulty that resulted in a concession for the quarter ended June 30, 2026 or for the quarter ended June 30, 2025.
7. Goodwill and Core Deposit Intangible Asset
At June 30, 2026, goodwill was $
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Balance, beginning of period | ||||||||
| Acquired goodwill | ||||||||
| Balance, end of period | ||||||||
Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. The Corporation acquired a core deposit intangible asset of $
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Balance, beginning of period | ||||||||||||||||
| Acquired core deposit intangible | ||||||||||||||||
| Amortization | ( | ) | ( | ) | ||||||||||||
| Balance, end of period | ||||||||||||||||
23
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents future estimated aggregated amortization expense at June 30, 2026:
| $ | ||||
| Year Ending: | ||||
| December 31, 2026 (6 months remaining) | ||||
| December 31, 2027 | ||||
| December 31, 2028 | ||||
| December 31, 2029 | ||||
| December 31, 2030 | ||||
| December 31, 2031 | ||||
| Thereafter | ||||
8. Income Taxes
The Corporation files income tax returns in the , the Commonwealth of Pennsylvania, and the States of Maryland, Florida and New Jersey. Income taxes paid for federal were $
The ability to realize the benefit of deferred tax assets is dependent upon a number of factors, including the generation of future taxable income, the ability to carry back losses to recover taxes paid in previous years, the ability to offset capital losses with capital gains, the reversal of deferred tax liabilities, and certain tax planning strategies. Realization of deferred tax assets associated with net operating loss (NOL) carryforwards is dependent upon generating sufficient taxable income prior to their expiration. Further, in the case of acquisitions, it is impacted by Internal Revenue Code Section 382, which limits the use of NOLs to an annual amount based on the company’s stock immediately before the ownership change, multiplied by the applicable federal long-term tax interest rate.
At June 30, 2026, the Corporation had federal NOL carryforwards of approximately $
U.S. generally accepted accounting principles prescribe a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
There is currently no liability for uncertain tax positions and are no known unrecognized tax benefits. The Corporation recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Income. With few exceptions, the Corporation is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2022.
24
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Income tax expense for the three and six months ended June 30, 2026 and 2025 was as follows (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Current: | ||||||||||||||||
| Federal | ||||||||||||||||
| State | ||||||||||||||||
| Total current | ||||||||||||||||
| Deferred tax expense: | ||||||||||||||||
| Federal | ||||||||||||||||
| State | ( | ) | ( | ) | ||||||||||||
| Total deferred | ||||||||||||||||
| Income tax expense | ||||||||||||||||
Components of the Corporation’s net deferred tax position at June 30, 2026 and December 31, 2025 are as follows (in thousands):
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Deferred tax assets: | ||||||||
| Allowance for credit losses | ||||||||
| Allowance for off-balance sheet extensions of credit | ||||||||
| Interest on nonaccrual loans | ||||||||
| Purchase accounting - loans | ||||||||
| Operating lease liability | ||||||||
| Net operating loss carryforwards | ||||||||
| Net unrealized losses on securities available for sale | ||||||||
| Net unrealized losses on derivatives | ||||||||
| Other | ||||||||
| Total deferred tax assets | ||||||||
| Deferred tax liabilities: | ||||||||
| Premises and equipment | ( | ) | ( | ) | ||||
| Right of use asset | ( | ) | ( | ) | ||||
| Mortgage servicing rights | ( | ) | ( | ) | ||||
| Discount on investment securities | ( | ) | ( | ) | ||||
| Purchase accounting - core deposit intangible | ( | ) | ||||||
| Purchase accounting - time deposits | ( | ) | ||||||
| Net unrealized gains on derivatives | ( | ) | ||||||
| Other | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax assets before valuation allowance | ||||||||
| Valuation allowance | ( | ) | ||||||
| Net deferred tax assets | ||||||||
25
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
9. Deposits
Deposits by major classifications are summarized as follows at June 30, 2026 and December 31, 2025 (in thousands):
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Non-interest bearing demand | ||||||||
| Interest-bearing demand | ||||||||
| Money market deposit accounts | ||||||||
| Savings accounts | ||||||||
| Time deposits $250,000 or less | ||||||||
| Time deposits over $250,000 | ||||||||
| Total deposits | ||||||||
At June 30, 2026, the scheduled maturities of time deposits are as follows (in thousands):
| 2026 (6 months remaining) | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total |
At June 30, 2026, the Bank held $
10. Accumulated Other Comprehensive Loss
The activity in accumulated other comprehensive loss for the three and six months ended June 30, 2026 and 2025 is as follows (in thousands):
| Accumulated Other Comprehensive Loss | ||||||||||||
| Unrealized | ||||||||||||
| Gains (Losses) | ||||||||||||
| on Securities | Unrealized | |||||||||||
| Available-for-Sale | Gains (Losses) | |||||||||||
| net of | on Cash Flow | |||||||||||
| Fair Value Hedge (1) (2) | Hedges (2) | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Balance at April 1, 2026 | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive (losses) gains before reclassifications | ( | ) | ||||||||||
| Amount reclassified from accumulated other comprehensive loss | ||||||||||||
| Period change | ||||||||||||
| Balance at June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||
| Balance at April 1, 2025 | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive gains (losses) before reclassifications | ( | ) | ( | ) | ||||||||
| Amount reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Period change | ( | ) | ( | ) | ( | ) | ||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||
| Balance at January 1, 2026 | ( | ) | ( | ) | ( | ) | ||||||
| Adjustment for change in blended tax rate | ||||||||||||
| Other comprehensive (losses) gains before reclassifications | ||||||||||||
| Amount reclassified from accumulated other comprehensive loss | ||||||||||||
| Period change | ||||||||||||
| Balance at June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||
| Balance at January 1, 2025 | ( | ) | ( | ) | ||||||||
| Other comprehensive gains (losses) before reclassifications | ( | ) | ||||||||||
| Amount reclassified from accumulated other comprehensive loss gains (losses) | ( | ) | ( | ) | ( | ) | ||||||
| Period change | ( | ) | ( | ) | ||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||
(1)
(2)
26
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
11. Derivatives and Hedging Activities
The Corporation utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and other terms of the individual interest rate swap agreements.
Cash Flow Hedges: Two interest rate swaps with notional amounts totaling $
Fair Value Hedges: Thirteen interest rate swaps with notional amounts totaling $
The following table summarizes the notional amounts and fair value of the Corporation’s derivative instruments at June 30, 2026 and December 31, 2025 (in thousands):
| As of June 30, 2026 | As of December 31. 2025 | |||||||||||||||||||||||
| Notional / Contract | Asset | Liability | Notional / Contract | Asset | Liability | |||||||||||||||||||
| Line Item in the Balance Sheet Which | Amount | Fair Value (a) | Fair Value (b) | Amount | Fair Value (a) | Fair Value (b) | ||||||||||||||||||
| the Hedged Item is Included | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Derivatives used for hedging instruments: | ||||||||||||||||||||||||
| Interest rate swap contracts : | ||||||||||||||||||||||||
| Securities available for sale (fair value hedges) | ||||||||||||||||||||||||
| Securities available for sale (fair value hedges) | ||||||||||||||||||||||||
| Short-term borrowings (cash flow hedges) | ||||||||||||||||||||||||
| Total derivatives designated for hedging | ||||||||||||||||||||||||
(a)
(b)
27
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table is a summary of components for interest rate swaps designed as hedging instruments at June 30, 2026 and December 31, 2025 (in thousands):
| Weighted Average Pay Rate | Weighted Average Receive Rate | Weighted Average Maturity (In Years) | ||||||||||
| June 30, 2026 | ||||||||||||
| Cash flow hedge designation | ||||||||||||
| Interest rate swaps-short term borrowings | ||||||||||||
| Fair value hedge designation | ||||||||||||
| Interest rate swaps - available for sale securities | ||||||||||||
| December 31, 2025 | ||||||||||||
| Cash flow hedge designation | ||||||||||||
| Interest rate swaps-short term borrowings | ||||||||||||
| Fair value hedge designation | ||||||||||||
| Interest rate swaps - available for sale securities | ||||||||||||
The following table summarizes the effect of the Corporation’s derivative financial instruments on OCI and net income for the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | Location of Gains (losses) Recognized | ||||||||||||||
| $ | $ | $ | $ | from AOCI into Income | ||||||||||||||
| Derivatives Used for hedging instruments: | ||||||||||||||||||
| Fair value hedges | ( | ) | ( | ) | ||||||||||||||
| Cash flow hedges | ( | ) | ( | ) | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | Location of Gains (losses) Recognized | ||||||||||||||
| $ | $ | $ | $ | in Income | ||||||||||||||
| Derivatives Used for hedging instruments: | ||||||||||||||||||
| Fair value hedges | ( | ) | ||||||||||||||||
The amounts recognized from accumulated other comprehensive income into condensed statement of income represent the amount of cash settlements between the Corporation and the counterparty. The amount recognized directly as interest income on fair value hedges relates to the adjustments required for periodic remeasurements.
The Corporation has agreements with its derivative counterparty that contains a provision where, if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender on its cash flow hedges, then the Corporation could also be declared in default on its derivative obligations. In addition, the Corporation also has agreements with its derivative counterparty that contains a provision where, if the Corporation fails to maintain its status as a well / adequately-capitalized institution, then the counterparty could terminate the derivative positions and the Corporation would be required to settle its obligations under the agreements. As of June 30, 2026, the Corporation had $
28
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
12. Earnings Per Share
The following table presents earnings per share for the three and six months ended June 30, 2026 and 2025 (dollars in thousands, except share data):
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income ($) | ||||||||||||||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Diluted effect of share-based compensation | ||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||
| Per share information: | ||||||||||||||||
| Basic earnings per share ($) | ||||||||||||||||
| Diluted earnings per share ($) | ||||||||||||||||
13. Fair Value Presentation
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. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Corporation.
The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels as follows:
Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date.
Level 2 – significant other observable inputs other than Level 1 prices such as prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3 – at least one significant unobservable input that reflects a Corporation's own assumptions about the assumptions that market participants would use in pricing an asset or liability.
In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Corporation used the following methods and significant assumptions to estimate fair value for instruments measured on a recurring basis:
Investment securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quote prices are not available, fair values are calculated based on market prices of similar level securities (Level 2), using matrix pricing. Matrix pricing is a technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quotes prices (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The Corporation has no securities that are Level 3.
29
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Derivatives and hedging activities: The fair value of derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements.
The following table provides the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, and level within the fair value hierarchy (in thousands):
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| June 30, 2026: | ||||||||||||||||
| Assets | ||||||||||||||||
| U.S. Treasuries | ||||||||||||||||
| U.S. government agencies | ||||||||||||||||
| U.S. agency mortgage-backed securities | ||||||||||||||||
| U.S. agency collateralized mortgage obligations | ||||||||||||||||
| Non-agency MBS/CMO | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Obligations of states & political subdivisions | ||||||||||||||||
| Marketable equity securities | ||||||||||||||||
| Total securities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| December 31, 2025: | ||||||||||||||||
| Assets | ||||||||||||||||
| U.S. Treasuries | ||||||||||||||||
| U.S. government agencies | ||||||||||||||||
| U.S. agency mortgage-backed securities | ||||||||||||||||
| U. S. agency collateralized mortgage obligations | ||||||||||||||||
| Non-agency MBS/CMO | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||
| Marketable equity securities | ||||||||||||||||
| Total securities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
Individually Evaluated Loans: Loans individually evaluated for current expected credit losses include nonaccrual loans and other loans that do not share similar risk characteristics to loans in ACL loan pools, which have been classified as Level 3. Individually evaluated loans with an allocation to the ACL are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of operations. The measurement of loss associated with loans evaluated individually for all loan classes was based on either the observable market price of the loan, the fair value of the collateral or discounted cash flows. For collateral-dependent loans, fair value was measured based on the value of the collateral securing the loan, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The value of the real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Corporation using observable market data. However, if the collateral is a house or building in the process of construction or if management adjusts the appraisal value, then the fair value is considered Level 3. The value of business equipment and other assets is based upon an outside appraisal, if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data.
30
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Mortgage Servicing Rights (MSR): MSRs are evaluated for impairment by comparing the carrying value to the fair value, which is determined through a discounted cash flow (DCF) valuation. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment. Fair value adjustments on the MSRs only occurs if there is an impairment charge. At June 30, 2026, the fair value of the MSRs was $
The following table provides the fair value for each class of assets to be measured and reported at fair value on a nonrecurring basis at June 30, 2026 and December 31, 2025, by level within the fair value hierarchy (in thousands):
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| June 30, 2026 | ||||||||||||||||
| Assets: | ||||||||||||||||
| Individually analyzed loans | ||||||||||||||||
| Total | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||
| Assets: | ||||||||||||||||
| Individually analyzed loans | ||||||||||||||||
| Total | ||||||||||||||||
The Corporation had a total of $
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized level 3 inputs to determine fair value:
| Fair Value | Valuation | Unobservable | Range | ||
| Estimate | Techniques | Input | (Weighted Avg) | ||
| June 30, 2026 | |||||
| Individually analyzed loans | adjustments | ||||
expenses | |||||
| December 31, 2025 | |||||
| Individually analyzed loans | adjustments | ||||
expenses |
(1)
(2)
31
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following tables provide the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 (in thousands):
| Quoted Prices in | ||||||||||||||||||||
| Active Markets | Significant Other | Significant | ||||||||||||||||||
| for Identical | Observable | Unobservable | ||||||||||||||||||
| Carrying | Assets | Inputs | Inputs | |||||||||||||||||
| Amount | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Regulatory stock | ||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||
| Loans, net of allowance | ||||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Demand deposits | ||||||||||||||||||||
| Interest-bearing demand deposits | ||||||||||||||||||||
| Money market deposit accounts | ||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Total deposits | ||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Subordinated debt | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Regulatory stock | ||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||
| Loans, net of allowance | ||||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Demand deposits | ||||||||||||||||||||
| Interest-bearing demand deposits | ||||||||||||||||||||
| Money market deposit accounts | ||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Total deposits | ||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Subordinated debt | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
14. Segment Reporting
The Corporation’s reportable segment is determined by the , who is the designated chief decision maker (“CDM”), based upon information provided by the Corporation’s products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the CDM, who uses such information to review performance of various components of the business, including branches and service offerings, which are then aggregated as operating performance, products, services, and customers are similar and dependent on each other.
32
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
15. Recently Issued Accounting Standards
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Specific disclosures are required for (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities. The amendments in this Update do not change or remove current expense disclosure requirements. However, the amendments affect where this information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. The amendments in ASU 2024-03 apply only to public business entities and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Corporation is currently evaluating the impact of this new guidance on its financial statements.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815), which amends certain aspects of the hedge accounting guidance in ASC 815 to more closely align hedge accounting with the economics of an entity’s risk management activities. The amendments, among other things, provide more flexibility for cash flow hedges and hedging of raw materials and other nonfinancial assets, as well as simplify hedge accounting for flexible debt and foreign currency debt. ASU 2025-09 should be applied prospectively for public business entities for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption is permitted. This Update is not expected to have a significant impact on the Corporation’s financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to clarify interim disclosure requirements, the form and content of interim financial statements, and when ASC Topic 270 applies. The amendments in the ASU provide a list of specific interim disclosures that are required by generally accepted accounting principles (GAAP), which, together with the disclosure principle, represent the complete population of required disclosures in interim reporting periods. The intent of the disclosure principle is to help entities determine whether any disclosures not specified in Topic 270 should be provided in interim reporting periods. ASU 2025-11 may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements for public business entities for interim periods in fiscal years beginning after December 15, 2027. This Update is not expected to have a significant impact on the Corporation’s financial statements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, to address 33 issues that amend the Codification to (1) clarify, (2) correct errors, or (3) make minor improvements that affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. The amendments make the Codification easier to understand and apply. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Corporation is currently evaluating the impact of this new guidance on its financial statements.
33
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis represents management’s view of the financial condition and results of operations of the Corporation. This discussion and analysis should be read in conjunction with the consolidated financial statements and other financial schedules included in this quarterly report, and in conjunction with Corporation’s Annual Report on Form 10-K. The financial condition and results of operations presented are not indicative of future performance.
Forward-Looking Statements
The U.S. Private Securities Litigation Reform Act of 1995 provides safe harbor in regard to the inclusion of forward-looking statements in this document and documents incorporated by reference. Forward-looking statements pertain to possible or assumed future results that are made using current information. These forward-looking statements are generally identified when terms such as “believe,” “estimate,” “anticipate,” “expect,” “project,” “forecast,” and other similar wordings are used. The readers of this report should take into consideration that these forward-looking statements represent management’s expectations as to future forecasts of financial performance, or the likelihood that certain events will or will not occur. Due to the very nature of estimates or predictions, these forward-looking statements should not be construed to be indicative of actual future results. Additionally, management may change estimates of future performance, or the likelihood of future events, as additional information is obtained. This document may also address targets, guidelines, or strategic goals that management is striving to reach but may not be indicative of actual results.
Readers should note that many factors affect this forward-looking information, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference into this document. These factors include, but are not limited to, the following:
| · | General local and national economic conditions, including inflation and concerns about liquidity |
| · | Monetary and interest rate policies of the Federal Reserve Board |
| · | Changes in deposit flows, loan demand, or real estate and investment securities values |
| · | Effects of weak market conditions, specifically the effect on loan customers to repay loans |
| · | Possible impacts of the capital and liquidity requirements of Basel III standards and other regulatory pronouncements |
| · | Effects of short- and long-term federal budget and tax negotiations and their effects on economic and business conditions |
| · | Effects of the failure of the Federal government to reach agreement to raise the debt ceiling and the negative effects on economic or business conditions as a result |
| · | Political changes and their impact on new laws and regulations |
| · | Effects of war, acts of terrorism, military actions, and international and domestic instabilities |
| · | Competitive forces and how it may impact our community banking strategies |
| · | Changes in accounting principles, policies, or guidelines as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standards setters |
| · | Ineffective business strategy due to current or future market and competitive conditions |
| · | Diversion of management’s attention from ongoing business operations and opportunities |
| · | Management’s ability to manage credit risk, liquidity risk, interest rate risk, and fair value risk |
| · | Operation, legal, and reputation risk |
| · | The risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful |
| · | The impact of new laws and regulations concerning taxes, banking, securities and insurance and their application with which the Corporation and its subsidiaries must comply |
| · | Potential impacts from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses |
| · | Effects of economic conditions particularly with regard to the effects of any pandemic, epidemic, or health-related crisis and government and business responses thereto, specifically the effect on loan customers to repay loans |
| · | Effects of acquisition and integration of acquired businesses |
34
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Readers should be aware that if any of the above factors change significantly, the statements regarding future performance could also change materially. The safe harbor provision provides that the Corporation is not required to publicly update or revise forward-looking statements to reflect events or circumstances that arise after the date of this report. Readers should review any changes in risk factors in documents filed by the Corporation periodically with the Securities and Exchange Commission, including Item 1A of Part II of this Quarterly Report on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K.
Results of Operations
Overview
The Corporation recorded net income of $5,704,000 for the three-month period ended June 30, 2026, a $106,000, or 1.8% decrease over the three months ended June 30, 2025. Net income for the six-month period was $9,728,000, a $398,000, or 3.9% decrease over earnings in the six-month period ended June 30, 2025. Basic and diluted earnings per share of common stock were $1.00 for the three months ended June 30, 2026, compared to $1.02 for the same period in 2025, and for the year-to-date period, basic and diluted earnings per share of common stock were $1.71, compared to $1.79 in 2025, or a 4.5% decrease over the comparable six-month period in the previous year.
On February 1, 2026, the Corporation completed its Acquisition of Cecil Bancorp, Inc. (“Cecil”) and its wholly-owned subsidiary, Cecil Bank, which impacted the Corporation’s balance sheet and results of operations for the three and six months ended June 30, 2026 in comparison to the prior year, as it included five months of their activities. The fair value of net assets acquired totaled $24,617,000, including net loans of $147,400,000 and deposits of $186,384,000. Included in net income was $1,240,000 and $3,027,000 of merger and conversion-related expenses, net of taxes, for the three and six months ended June 30, 2026. Adjusted net income (a non-GAAP measure, see separate “Supplemental Reporting of Non-GAAP Measures”) excluding merger and conversion-related charges, was $6,944,000 and $12,755,000, for the three and six months ended June 30, 2026. Adjusted diluted earnings per share (a non-GAAP measure), excluding merger and conversion-related charges, were $1.22 and $2.24 for the three and six months ended June 30, 2026. See supplemental discussion of non-GAAP financial measures.
The Corporation’s net interest income (NII) increased by $3,124,000, or 17.7%, and $5,276,000, or 15.3%, for the three and six months ended June 30, 2026, compared to the same periods in 2025. Interest and fees on loans increased by $4,381,000, or 21.9%, and $7,470,000, or 19.0%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, and was favorably impacted by the addition of Cecil’s loans. Interest income on securities available for sale decreased by $894,000, or 15.7%, and $1,778,000, or 15.6%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, due to lower rates earned on securities as well as lower average balances. Interest expense on deposits declined $316,000, or 4.6%, and $820,000, or 5.9%, for the three and six months ended June 30, 2026 despite the addition of Cecil’s deposits, due to lower market interest rates and management’s strategy to lower the cost of funds, including pricing decisions and calling certain brokered deposits. Interest expense on borrowings increased by $512,000, or 27.3%, and $1,108,000, or 29.5%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, principally due to higher levels of subordinated debt, with newly issued subordinated debt to support the Cecil acquisition at a higher rate than previous issuances.
The Corporation recorded a release of provision for credit losses of $462,000 in the second quarter of 2026, compared to provision expense of $126,000 for the second quarter of 2025. For the year-to-date period, provision release was $484,000, compared to provision expense of $612,000 for the six months ended June 30, 2025. The provision release recorded in 2026 was primarily related to declines in classified assets in the legacy Ephrata National Bank and acquired Cecil loan portfolios, and lowering expected usage of off-balance sheet commitments. The allowance as a percentage of total loans was 1.10% as of June 30, 2026, 1.11% at December 31, 2025, and 1.13% as of June 30, 2025.
Other income increased by $481,000, or 13.4%, and $1,534,000, or 22.2%, for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The primary reasons for the increases were related to increased trust and investment services income and increased service fees due to additional customers and accounts from the Cecil acquisition. In addition, 2025’s year-to-date income was negatively impacted by losses on security transactions due to strategic sales of investment securities to fund higher yielding loan growth.
35
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Total operating expenses increased by $4,344,000, or 31.2%, and $8,309,000, or 29.4%, for the three and six months ended June 30, 2026, compared to the same periods in 2025. The primary driver of higher operating expenses were merger and conversion costs $1,561,000 and $3,718,000 for the three and six months ended June 30, 2026, including severance payments, conversion of Cecil’s operating systems to a unified system, and professional fees to complete the acquisition. Operating expenses also increased due to salary and benefit costs from additional staff including those for the Bank’s four new branches, annual merit increases and higher health insurance costs. Several other categories of expenses increased from the prior year, including occupancy and equipment, computer software and data processing costs, and professional services, with the Cecil acquisition contributing to the increases.
The financial services industry uses two primary performance measurements to gauge performance: return on average assets (ROA) and return on average equity (ROE). ROA measures how efficiently a bank generates income based on the amount of assets or size of a company. ROE measures the efficiency of a company in generating income based on the amount of equity or capital utilized.
| Key Ratios | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Return on Average Assets | 0.95% | 1.06% | 0.83% | 0.93% | ||||||||||||
| Return on Average Equity | 13.73% | 17.24% | 11.85% | 15.15% | ||||||||||||
The lower performance ratios for return on average assets and return on average equity were impacted by the $1,240,000 and $3,027,000 of merger and conversion-related expenses, net of taxes, for the three and six months ended June 30, 2026.
The results of the Corporation’s operations are best explained by addressing, in further detail, the five major sections of the income statement, which are as follows:
| · | Net interest income |
| · | Provision for credit losses |
| · | Other income |
| · | Operating expenses |
| · | Provision for income taxes |
The following discussion analyzes each of these five components.
Net Interest Income (NII)
NII represents the largest portion of the Corporation’s operating income, which consists of NII and non-interest income, and represents 83% - 84% of the total for all periods presented in 2026 and 2025. The overall performance of the Corporation is highly dependent on interest rates and the changes in NII since it comprises such a significant portion of operating income.
The following table shows a summary analysis of NII on a fully taxable equivalent (FTE) basis. For analytical purposes and throughout this discussion, yields, rates, and measurements such as NII, net interest spread, and net yield on interest earning assets are presented on an FTE basis, assuming a 21% tax rate. The FTE NII shown in both tables below will exceed the NII reported on the consolidated statements of income which is not presented on an FTE basis. The amount of FTE adjustment totaled $141,000 and $284,000 for the three and six months ended June 30, 2026, compared to $106,000 and $213,000 for the same periods in 2025.
36
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Total interest income | 29,736 | 26,416 | 57,545 | 51,981 | ||||||||||||
| Total interest expense | 8,955 | 8,759 | 17,835 | 17,547 | ||||||||||||
| Net interest income | 20,781 | 17,657 | 39,710 | 34,434 | ||||||||||||
| Tax equivalent adjustment | 141 | 106 | 284 | 213 | ||||||||||||
| Net interest income (fully taxable equivalent) | 20,922 | 17,763 | 39,994 | 34,647 | ||||||||||||
NII is the difference between interest income earned on assets and interest expense incurred on liabilities. Accordingly, two factors affect NII:
| · | The rates earned on interest-earning assets and paid on interest-bearing liabilities |
| · | The average balance of interest-earning assets and interest-bearing liabilities |
In 2026, the interest rate environment was lower than in the prior year, with the average federal funds rate being approximately 70 basis points lower in 2026 compared to 2025. However, the longer end of the yield curve has seen increases recently, with the average 7-year U.S. Treasury rate increasing from 4.15% for the three months ended June 30, 2025 to 4.25% for the same period in 2026, and 3.97% in the first quarter of 2026.
NII on a fully taxable equivalent basis increased $3,159,000, from $17,763,000 for the three months ended June 30, 2025 to $20,922,000 for the same period in 2026. On a year-to-date basis, NII on fully taxable equivalent basis increased $5,347,000 and totaled $39,994,000 for the six months ended June 30, 2026 compared to the same period in the prior year. The increases in 2026 was the combination of higher average balances and higher rates earned on loans, combined with lower rates paid on interest-bearing liabilities.
During the three and six months ended June 30, 2026, interest income on a taxable equivalent basis increased by $3,355,000 and $5,635,000, as both average balances and rates earned increased on loans. The Acquisition of Cecil and a shift in asset mix to greater percentage of loans to total interest earning assets contributed to the increase in interest income. Contributing to the increase in the yields earned on loans was continued movement from lower yielding residential mortgages to higher yielding business and agricultural loans. Interest expense increased $196,000 and $288,000 for the three and six months ended June 30, 2026 due primarily to higher interest-bearing liabilities balances, offset by lower average rates paid. The acquisition of Cecil contributed to the growth in average deposits, while total borrowings increased as a result of funding of the purchase price of Cecil, coupled with funding needed for asset growth.
As a result of the higher interest earning assets, and shift within the portfolio, combined with discipline managing the cost of funds, the Corporation’s net interest margin increased to 3.60% and 3.49% for the three and six months ended June 30, 2026, compared to 3.29% and 3.24% for the same periods in 2025.
37
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The following table provides an analysis of year-to-date changes in NII on an FTE basis by distinguishing the changes that were a result of average balance fluctuations and those that were a result of interest rate fluctuations (dollars in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||
| Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
| Due To Change In | Due To Change In | |||||||||||||||||||||||
| Net | Net | |||||||||||||||||||||||
| Average | Interest | Increase | Average | Interest | Increase | |||||||||||||||||||
| Balances | Rates | (Decrease) | Balances | Rates | (Decrease) | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||
| Interest on deposits at other banks | (88 | ) | (70 | ) | (158 | ) | (46 | ) | (105 | ) | (151 | ) | ||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| Taxable | (418 | ) | (495 | ) | (913 | ) | (792 | ) | (992 | ) | (1,784 | ) | ||||||||||||
| Tax-exempt | (86 | ) | 116 | 30 | (108 | ) | 130 | 22 | ||||||||||||||||
| Total securities | (504 | ) | (379 | ) | (883 | ) | (900 | ) | (862 | ) | (1,762 | ) | ||||||||||||
| Loans | 3,078 | 1,306 | 4,384 | 5,358 | 2,127 | 7,485 | ||||||||||||||||||
| Regulatory stock | 14 | (2 | ) | 12 | 25 | 38 | 63 | |||||||||||||||||
| Total interest income | 2,500 | 855 | 3,355 | 4,437 | 1,198 | 5,635 | ||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Demand deposits | 488 | (773 | ) | (285 | ) | 449 | (968 | ) | (519 | ) | ||||||||||||||
| Savings deposits | 22 | (21 | ) | 1 | 26 | (54 | ) | (28 | ) | |||||||||||||||
| Time deposits | 1,035 | (1,067 | ) | (32 | ) | 1,331 | (1,604 | ) | (273 | ) | ||||||||||||||
| Total deposits | 1,545 | (1,861 | ) | (316 | ) | 1,806 | (2,626 | ) | (820 | ) | ||||||||||||||
| Borrowings: | ||||||||||||||||||||||||
| Short-term borrowings | 210 | (46 | ) | 164 | 255 | (48 | ) | 207 | ||||||||||||||||
| Long-term debt | (469 | ) | 266 | (203 | ) | (604 | ) | 272 | (332 | ) | ||||||||||||||
| Subordinated debt | 326 | 225 | 551 | 777 | 456 | 1,233 | ||||||||||||||||||
| Total borrowings | 67 | 445 | 512 | 428 | 680 | 1,108 | ||||||||||||||||||
| Total interest expense | 1,612 | (1,416 | ) | 196 | 2,234 | (1,946 | ) | 288 | ||||||||||||||||
| NET INTEREST INCOME | 888 | 2,271 | 3,159 | 2,203 | 3,144 | 5,347 | ||||||||||||||||||
The following tables for the three and six months ended June 30, 2026 and 2025 show a more detailed analysis of NII on an FTE basis with major elements of the Corporation’s balance sheet, which consists of interest earning and non-interest earning assets and interest bearing and non-interest-bearing liabilities (dollars in thousands):
38
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| For the Three Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
| (c) | (c) | |||||||||||||||||||||||
| Average | (c) | Annualized | Average | Annualized | ||||||||||||||||||||
| Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
| $ | $ | % | $ | $ | % | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Federal funds sold and interest | ||||||||||||||||||||||||
| on deposits at other banks | 39,521 | 251 | 2.54 | 52,248 | 409 | 3.14 | ||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| Taxable | 464,212 | 4,239 | 3.65 | 507,374 | 5,152 | 4.06 | ||||||||||||||||||
| Tax-exempt | 136,441 | 707 | 2.07 | 139,639 | 677 | 1.94 | ||||||||||||||||||
| Total securities (d) | 600,653 | 4,946 | 3.29 | 647,013 | 5,829 | 3.60 | ||||||||||||||||||
| Loans (a) | 1,671,820 | 24,434 | 5.85 | 1,455,562 | 20,050 | 5.51 | ||||||||||||||||||
| Regulatory stock | 11,525 | 246 | 8.54 | 10,959 | 234 | 8.55 | ||||||||||||||||||
| Total interest earning assets | 2,323,519 | 29,877 | 5.15 | 2,165,782 | 26,522 | 4.90 | ||||||||||||||||||
| Non-interest earning assets (d) | 77,681 | 42,881 | ||||||||||||||||||||||
| Total assets | 2,401,200 | 2,208,663 | ||||||||||||||||||||||
| LIABILITIES & | ||||||||||||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Demand deposits | 566,238 | 2,507 | 1.78 | 549,835 | 2,792 | 2.04 | ||||||||||||||||||
| Savings deposits | 311,349 | 72 | 0.09 | 286,460 | 71 | 0.10 | ||||||||||||||||||
| Time deposits | 457,304 | 3,990 | 3.50 | 430,094 | 4,022 | 3.75 | ||||||||||||||||||
| Total deposits | 1,334,891 | 6,569 | 1.97 | 1,266,389 | 6,885 | 2.18 | ||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||
| Short-term borrowings | 76,827 | 780 | 4.07 | 60,000 | 616 | 4.16 | ||||||||||||||||||
| Long-term debt | 53,393 | 567 | 4.26 | 76,668 | 770 | 4.07 | ||||||||||||||||||
| Subordinated debt | 61,504 | 1,039 | 6.76 | 39,777 | 488 | 4.98 | ||||||||||||||||||
| Total borrowings | 191,724 | 2,386 | 4.99 | 176,445 | 1,874 | 4.26 | ||||||||||||||||||
| Total interest bearing liabilities | 1,526,615 | 8,955 | 2.35 | 1,442,834 | 8,759 | 2.43 | ||||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 694,765 | 617,774 | ||||||||||||||||||||||
| Other | 13,217 | 12,921 | ||||||||||||||||||||||
| Total liabilities | 2,234,597 | 2,073,529 | ||||||||||||||||||||||
| Stockholders' equity | 166,603 | 135,134 | ||||||||||||||||||||||
| Total liabilities & stockholders' equity | 2,401,200 | 2,208,663 | ||||||||||||||||||||||
| Net interest income (FTE) | 20,922 | 17,763 | ||||||||||||||||||||||
| Net interest spread (b) | 2.80 | 2.47 | ||||||||||||||||||||||
| Effect of non-interest bearing deposits | 0.80 | 0.82 | ||||||||||||||||||||||
| Net yield on interest earning assets (c) | 3.60 | 3.29 | ||||||||||||||||||||||
(a) Includes balances of non-accrual loans and net deferred loan fees and the recognition of any related interest income.
(b) Net interest spread is the arithmetic difference between the yield on interest earning assets and the rate paid on interest bearing liabilities.
(c) Net yield, also referred to as net interest margin, is computed by dividing NII (FTE) by total interest earning assets. Yields and interest income on tax-exempt assets have been computed on a tax-equivalent basis assuming a 21% tax rate, adjusted for interest expense disallowance.
(d) Securities recorded at amortized cost. Unrealized holding gains and losses are included in non-interest earning assets.
39
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| For the Six Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
| (c) | (c) | |||||||||||||||||||||||
| Average | Annualized | Average | Annualized | |||||||||||||||||||||
| Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
| $ | $ | % | $ | $ | % | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Federal funds sold and interest | ||||||||||||||||||||||||
| on deposits at other banks | 43,044 | 473 | 2.22 | 46,687 | 624 | 2.70 | ||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| Taxable | 469,649 | 8,564 | 3.65 | 510,525 | 10,348 | 4.05 | ||||||||||||||||||
| Tax-exempt | 136,749 | 1,404 | 2.05 | 141,734 | 1,382 | 1.95 | ||||||||||||||||||
| Total securities (d) | 606,398 | 9,968 | 3.29 | 652,259 | 11,730 | 3.60 | ||||||||||||||||||
| Loans (a) | 1,637,403 | 46,898 | 5.75 | 1,445,993 | 39,413 | 5.46 | ||||||||||||||||||
| Regulatory stock | 11,492 | 490 | 8.52 | 10,885 | 427 | 7.85 | ||||||||||||||||||
| Total interest earning assets | 2,298,337 | 57,829 | 5.05 | 2,155,824 | 52,194 | 4.84 | ||||||||||||||||||
| Non-interest earning assets (d) | 76,173 | 42,551 | ||||||||||||||||||||||
| Total assets | 2,374,510 | 2,198,375 | ||||||||||||||||||||||
| LIABILITIES & | ||||||||||||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Demand deposits | 558,928 | 4,933 | 1.78 | 541,688 | 5,452 | 2.03 | ||||||||||||||||||
| Savings deposits | 306,476 | 113 | 0.07 | 285,764 | 141 | 0.10 | ||||||||||||||||||
| Time deposits | 459,403 | 7,921 | 3.48 | 426,665 | 8,194 | 3.87 | ||||||||||||||||||
| Total deposits | 1,324,807 | 12,967 | 1.97 | 1,254,117 | 13,787 | 2.22 | ||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||
| Short-term borrowings | 71,112 | 1,443 | 4.09 | 60,107 | 1,236 | 4.15 | ||||||||||||||||||
| Long-term debt | 57,947 | 1,217 | 4.24 | 78,808 | 1,549 | 3.96 | ||||||||||||||||||
| Subordinated debt | 65,011 | 2,208 | 6.79 | 39,757 | 975 | 4.95 | ||||||||||||||||||
| Total borrowings | 194,070 | 4,868 | 5.04 | 178,672 | 3,760 | 4.24 | ||||||||||||||||||
| Total interest bearing liabilities | 1,518,877 | 17,835 | 2.37 | 1,432,789 | 17,547 | 2.47 | ||||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 676,497 | 617,740 | ||||||||||||||||||||||
| Other | 13,613 | 13,101 | ||||||||||||||||||||||
| Total liabilities | 2,208,987 | 2,063,630 | ||||||||||||||||||||||
| Stockholders' equity | 165,523 | 134,745 | ||||||||||||||||||||||
| Total liabilities & stockholders' equity | 2,374,510 | 2,198,375 | ||||||||||||||||||||||
| Net interest income (FTE) | 39,994 | 34,647 | ||||||||||||||||||||||
| Net interest spread (b) | 2.68 | 2.37 | ||||||||||||||||||||||
| Effect of non-interest bearing deposits | 0.81 | 0.87 | ||||||||||||||||||||||
| Net yield on interest earning assets (c) | 3.49 | 3.24 | ||||||||||||||||||||||
(a) Includes balances of nonaccrual loans and the recognition of any related interest income. The year-to-date average balances include net deferred loan costs of $1,781 as of June 30, 2025, and $2,119 as of June 30, 2024. Such fees and costs recognized through income and included in the interest amounts totaled ($48) in 2025, and ($130) in 2024.
(b) Net interest spread is the arithmetic difference between the yield on interest earning assets and the rate paid on interest bearing liabilities.
(c) Net yield, also referred to as net interest margin, is computed by dividing net interest income (FTE) by total interest earning assets.
(d) Securities recorded at amortized cost. Unrealized holding gains and losses are included in non-interest earning assets.
40
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The Corporation’s average balances on securities decreased by $46,360,000, or 7.2%, for the three months ended June 30, 2026, and $45,861,000, or 7.0%, for the six months ended June 30, 2026 compared to the same periods in 2025. The tax equivalent yield on investments decreased by 31 basis points for the quarter-to-date and 31 basis points for the year-to-date period when comparing both years. Interest income on securities decreased by $883,000, or 15.1%, and $1,762,000, or 15.0%, for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The majority of the securities acquired from Cecil were sold shortly after Acquisition date and provided little in average balances for the periods presented. The 31-basis point decline in rate earned on securities is the result of a variable rate securities repricing downward.
Average balances on loans increased by $216,258,000, or 14.9%, for the three months ended June 30, 2026, and $191,410,000, or 13.2%, for the six months ended June 30, 2026, compared to the same periods in the prior year. In addition to the $147,400,000 in loans acquired in the Cecil Acquisition on February 1, 2026, strong loan production experienced in 2025 and 2026 benefited average balances in the current year. Loan yields increased by 34 basis points for the second quarter of 2026 and 29 basis points for the year-to-date period primarily as the result of loans repricing higher, portfolio composition shifting from lower yielding mortgage loans to higher yielding loan types, and the Cecil loans that were marked to fair value, which enhanced the overall yield of the loan portfolio. Interest income on loans increased by $4,384,000, or 21.9%, and $7,485,000, or 19.0%, for the three and six months ended June 30, 2026 as a result of increased loan balances and higher yields earned.
The average balance of interest-bearing deposit accounts increased by $68,502,000, or 5.4%, and $70,690,000, or 5.6%, for the three and six months ended June 30, 2026, compared to the same periods in the prior year. Growth was experienced in all deposit types, principally due to $186,384,000 in deposits acquired in the Cecil Acquisition on February 1, 2026. Despite the growth in average deposit balances, interest expense declined by $316,000 and $820,000 for the three and six months ended June 30, 2026 compared to the same periods in the prior year. The lower expense was the result of discipline in managing the cost of funds, including less reliance on higher costing brokered time deposits which averaged $66,310,000 and $47,772,000 less in the three and six months ended June 30, 2026 compared to 2025. These brokered deposits which were used to fund the Corporation’s leverage strategy with derivatives were called, as cheaper funds became available. The rate paid on interest bearing deposits declined by 21 and 25 basis points for the three and six months ended June 30, 2026.
The Corporation’s average balance on borrowed funds increased by $15,279,000, or 8.7%, for the three months ended June 30, 2026, and $15,398,000, or 8.6%, for the six months ended June 30, 2026, compared to the same periods in 2025. In December 2025, the Corporation issued $42,500,000 in subordinated debt that was used to partially fund the Acquisition of Cecil, as well as allowing for the repayment in February 2026 of the Corporation’s 2020 subordinated debt issuance, which had converted to a floating rate of interest. The interest rate on the newly issued subordinated debt was greater than the interest rate of the amount paid off, resulting in a higher cost for subordinated debt in 2026 compared to 2025. Scheduled repayments of long-term debt in 2025 and the first half of 2026 were replaced with either deposit growth or short-term borrowings and resulted in average balances declining by $23,275,000 and $20,861,000 for the three and six months ended June 30, 2026 compared to the same periods in the prior year. Total interest expense on borrowings increased $512,000 and $1,108,000 for the three and six months ended June 30, 2026 compared to the corresponding periods in the prior year as a result of the higher costing additional subordinated debt.
For the three months ended June 30, 2026, the net interest spread increased by 33 basis points to 2.80%, compared to 2.47% for the three months ended June 30, 2025. For the six months ended June 30, 2026, the net interest spread increased by 31 basis points to 2.68%, compared to 2.37% for the six months ended June 30, 2025. The effect of non-interest bearing funds decreased to 80 basis points for the three months ended June 30, 2026, from 82 basis points for the three months ended June 30, 2025, and decreased to 81 basis points from 87 basis points for the six months ended June 30, 2026, compared to the same periods in 2025. The effect of non-interest bearing funds refers to the benefit gained from deposits on which the Corporation does not pay interest. As rates go higher, the benefit of non-interest-bearing deposits increases because there is greater difference between non-interest-bearing funds and interest-bearing liabilities. The Corporation’s NIM for the second quarter of 2026 was 3.60%, compared to 3.29% for the second quarter of 2025. For the year-to-date period, the Corporation’s NIM was 3.49%, compared to 3.24% for the same period in 2025.
The Asset Liability Committee (ALCO) carefully monitors the NIM because it indicates trends in NII, the Corporation’s largest source of revenue. For more information on the plans and strategies in place to protect the NIM and moderate the impact of changes in rates, refer to Item 7A: Quantitative and Qualitative Disclosures about Market Risk.
41
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Provision for Credit Losses
The provision for credit losses includes a provision for losses on loans, available-for-sale debt securities, and unfunded loan commitments. The provision provides for losses inherent in the financial assets as determined by a quarterly analysis and calculation of various factors related to the financial assets. The amount of the provision reflects the adjustment management determines necessary to ensure the Allowance for Credit Losses (ACL) is adequate to cover any losses inherent in the financial assets.
The Corporation recorded a provision release of $462,000 for the three months ended June 30, 2026 consisting of a provision release related to loans of $248,000, $214,000 in provision release for off-balance sheet credit exposure and $0 related to available for sale securities. For the three months ended June 30, 2025, the Corporation recorded a provision for credit losses of $126,000 consisting of provision related to loans of $65,000, $61,000 for off-balance sheet losses and $0 related to available for sale securities. The Corporation recorded a provision release of $484,000 for the six months ended June 30, 2026 consisting of a provision release related to loans of $140,000, $344,000 in provision release for off-balance sheet credit exposure and $0 related to available for sale securities. For the six months ended June 30, 2025, the Corporation recorded a provision for credit losses of $612,000 consisting of provision related to loans of $491,000, $121,000 for off-balance sheet losses and $0 related to available for sales securities. The provision release recorded for the three and six months ended June 30, 2026 was primarily as a result of declines in classified assets in the legacy Ephrata National Bank and acquired Cecil loan portfolios, less uncertainty in economic conditions, and lowering expected usage of off-balance sheet commitments.
As of June 30, 2026, the allowance as a percentage of total loans was 1.10%, compared to 1.11% and 1.13% at December 31, 2025 and June 30, 2025. More details are provided under Allowance for Credit Losses in the Financial Condition section that follows.
Other Income
Other income for the second quarter of 2026 was $4,062,000, an increase of $481,000, or 13.4%, compared to the $3,581,000 earned during the second quarter of 2025. Other income for the year-to-date period was $8,441,000, an increase of $1,534,000, or 22.2% from the year-to-date period in 2025. The following tables detail the categories that comprise other income:
| Three Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Trust and investment services | 928 | 787 | 141 | 17.9 | ||||||||||||
| Service fees | 953 | 696 | 257 | 36.9 | ||||||||||||
| Commissions | 1,117 | 1,014 | 103 | 10.2 | ||||||||||||
| Net gains (losses) on debt and equity securities | 15 | 48 | (33 | ) | (68.8 | ) | ||||||||||
| Gains on sale of mortgages | 436 | 391 | 45 | 11.5 | ||||||||||||
| Earnings on bank owned life insurance | 304 | 282 | 22 | 7.8 | ||||||||||||
| Other miscellaneous income | 309 | 363 | (54 | ) | (14.9 | ) | ||||||||||
| Total other income | 4,062 | 3,581 | 481 | 13.4 | ||||||||||||
42
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Trust and investment services | 1,985 | 1,651 | 334 | 20.2 | ||||||||||||
| Service fees | 1,923 | 1,462 | 461 | 31.5 | ||||||||||||
| Commissions | 2,175 | 2,026 | 149 | 7.4 | ||||||||||||
| Net gains (losses) on debt and equity securities | 47 | (285 | ) | 332 | (116.5 | ) | ||||||||||
| Gains on sale of mortgages | 948 | 830 | 118 | 14.2 | ||||||||||||
| Earnings on bank owned life insurance | 708 | 553 | 155 | 28.0 | ||||||||||||
| Other miscellaneous income | 655 | 670 | (15 | ) | (2.2 | ) | ||||||||||
| Total other income | 8,441 | 6,907 | 1,534 | 22.2 | ||||||||||||
Trust and investment services income increased by $141,000, or 17.9%, for the quarter and increased $334,000, or 20.2% year-to-date due to increased estate fees, additional wealth management accounts, and favorable market conditions. Service fees increased by $257,000, or 36.9%, for the quarter and increased $461,000, or 31.5% year-to-date due primarily to additional customers and accounts from the Cecil acquisition. Commissions increased by $103,000, or 10.2%, for the quarter and increased $149,000, or 7.4% year-to-date due to increased interchange fees. The Corporation recorded $15,000 of net gains on securities sold in the second quarter of 2026 compared to $48,000 in the second quarter of 2025. For the year-to-date period, the Corporation recorded $47,000 of gains on securities sold compared to losses of $285,000 for the year-to-date period in 2025. Losses on security transactions in 2025 were due to strategic sales of investment securities to fund higher yielding loan growth. Mortgage gains increased by $45,000, or 11.5%, and $118,000, or 14.2%, for the three and six months ended June 30, 2026, compared to the same periods in the prior year. This was primarily a result of higher premiums earned on loans sold with servicing released and continued sales of permanent financing for construction loans originated in the prior year. Earnings on bank owned life insurance were higher by $22,000, or 7.8%, and $155,000, or 28.0%, for the three and six months ended June 30, 2026, compared to the same period in the prior year. This increase in the year-to-date amount was due to death benefits received related to two former directors in 2026. Other miscellaneous income decreased by $54,000, or 14.9%, and $15,000, or 2.2%, for the three and six months ended June 30, 2026, compared to the prior year as a result of sales tax refunds received in the second quarter of 2025.
Operating Expenses
Operating expenses for the second quarter of 2026 were $18,266,000, an increase of $4,344,000, or 31.2%, compared to the $13,922,000 for the second quarter of 2025. For the year-to-date period ended June 30, 2026, operating expenses totaled $36,550,000, an increase of $8,309,000, or 29.4%, compared to the same period in 2025. The following tables detail the categories that comprise operating expenses.
| Three Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Salaries and employee benefits | 9,182 | 8,357 | 825 | 9.9 | ||||||||||||
| Occupancy expenses | 1,180 | 873 | 307 | 35.2 | ||||||||||||
| Equipment expenses | 628 | 324 | 304 | 93.8 | ||||||||||||
| Advertising & marketing expenses | 441 | 375 | 66 | 17.6 | ||||||||||||
| Computer software & data processing expenses | 2,581 | 1,781 | 800 | 44.9 | ||||||||||||
| Bank shares tax | 464 | 382 | 82 | 21.5 | ||||||||||||
| Professional services | 1,080 | 811 | 269 | 33.2 | ||||||||||||
| Core deposit intangible amortization | 125 | — | 125 | 100.0 | ||||||||||||
| Merger and conversion related expenses | 1,561 | — | 1,561 | 100.0 | ||||||||||||
| Other operating expenses | 1,024 | 1,019 | 5 | 0.5 | ||||||||||||
| Total Operating Expenses | 18,266 | 13,922 | 4,344 | 31.2 | ||||||||||||
43
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Salaries and employee benefits | 18,719 | 16,637 | 2,082 | 12.5 | ||||||||||||
| Occupancy expenses | 2,285 | 1,782 | 503 | 28.2 | ||||||||||||
| Equipment expenses | 1,160 | 710 | 450 | 63.4 | ||||||||||||
| Advertising & marketing expenses | 789 | 742 | 47 | 6.3 | ||||||||||||
| Computer software & data processing expenses | 4,670 | 3,600 | 1,070 | 29.7 | ||||||||||||
| Bank shares tax | 914 | 743 | 171 | 23.0 | ||||||||||||
| Professional services | 2,036 | 1,654 | 382 | 23.1 | ||||||||||||
| Core deposit intangible amortization | 208 | — | 208 | |||||||||||||
| Merger and conversion related expenses | 3,718 | — | 3,718 | |||||||||||||
| Other operating expenses | 2,051 | 2,373 | (322 | ) | (13.6 | ) | ||||||||||
| Total Operating Expenses | 36,550 | 28,241 | 8,309 | 29.4 | ||||||||||||
The Acquisition of Cecil led to increased operating expenses as four additional branches in Cecil County, Maryland, were added to the Corporation’s retail network and incremental costs of maintaining two operating systems were required following the Acquisition. The Acquisition also resulted in merger and conversion related expenses of $1,561,000 and $3,718,000 for the three and six months ended June 30, 2026, as the Corporation incurred professional services to complete the merger and employee severance payments were processed. In late June 2026, the Corporation completed the conversion of the former Cecil operating system to a unified platform which should eliminate redundant expenses in future periods.
Salaries and employee benefits are the largest category of operating expenses. For the second quarter of 2026, salaries and benefits increased $825,000, or 9.9%, and for the six months ended June 30, 2026, salaries and benefits increased $2,082,000, or 12.5%, compared to the same periods in 2025. Staffing four additional branches in Cecil County, merit increases, and higher medical insurance costs contributed to the increase. Occupancy and equipment costs were higher by a combined total of $611,000, or 51.0%, and $953,000, or 38.2%, for the three and six months ended June 30, 2026, compared to the prior year as result of costs associated with new lease expense and higher equipment costs related to the acquisition. Advertising and marketing expenses were higher by $66,000, or 17.6%, and $47,000, or 6.3%, for the three and six months ended June 30, 2026, compared to the prior year. This increase was primarily related to advertising and media production costs as the Corporation continues to pursue marketing opportunities in the communities it serves including the recently entered Cecil County market. Computer software and data processing expenses increased by $800,000, or 44.9%, and $1,070,000, or 29.7%, for the three and six months ended June 30, 2026, compared to the same periods in the previous year due to maintaining two operating systems with the Cecil acquisition, evolution of enhanced products and services to meet customers’ needs, and increased transaction volumes. Shares tax expense is based on the Corporation’s level of shareholders’ equity and has increased $82,000, or 21.5%, and $171,000, or 23.0%, for the three and six months ended June 30, 2026 due to growth in the Bank’s shareholder’s equity. Professional services costs increased by $269,000, or 33.2%, and increased by $382,000, or 23.1%, for the quarter and year-to-date periods. The increase is primarily related to higher legal fees as well as increased costs for other outside services. Other operating expenses increased by $5,000, or 0.5%, and decreased by $322,000, or 13.6%, for the three and six months ended June 30, 2026, compared to the same periods in the prior year due primarily to decreased level of fraud-related charge-offs.
Income Taxes
Federal and state income tax expense was $1,335,000 and $1,380,000 for the three months ended June 30, 2026 and 2025, resulting in an effective tax rate of 19.0% for both periods. For the six months ended June 30, 2026 and 2025, income tax expense was $2,357,000 and $2,362,000 for an effective tax rate of 19.5% and 18.9%. Generally, the Corporation’s effective tax rate is less than the 21% federal statutory rate due to tax-exempt income, including interest earned on tax-exempt investment securities and loans, and income from life insurance policies, partially offset by disallowed interest expense, state income taxes, and non-deductible acquisition related expenses. The increase in the year-to-date statutory rate is higher due to state tax expense with the Acquisition of Cecil, and non-deductible acquisition-related expenses.
44
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Financial Condition
Balance Sheet Overview and Liquidity
The Corporation maintains liquid assets at adequate levels in order to meet the needs of our balance sheet. Our primary source of liquidity is core deposits and our available-for-sale investment portfolio, both of which provide more than enough liquidity to fund loans to customers and any other funding needs.
A portion of our liquidity consists of cash and cash equivalents and borrowings. At June 30, 2026, cash and equivalents amounted to $37,145,000, compared to $60,573,000 at December 31, 2025, and $65,269,000 at June 30, 2025. Our primary sources of cash are principal repayments on loans, proceeds from the sales, calls, and maturities of investment securities, principal repayments of mortgage-backed securities and asset-backed securities, and increases in deposit accounts. As of June 30, 2026, the Corporation had outstanding borrowings from the FRB Discount Window of $16,000,000, the FHLB of $113,007,000 and the subordinated debt of $61,535,000.
At June 30, 2026, the Corporation had $660,334,000 in outstanding loan commitments, which included $89,038,000 in firm loan commitments, $543,081,000 in unused lines of credit, and open letters of credit of $28,215,000. Certificates of deposit due within one year totaled $414,538,000, or 97.6% of certificates of deposit. The Corporation believes, based on past experience, that a significant portion of certificates of deposit will remain at the Corporation upon maturity and ample liquidity exists outside of these funds. We have the ability to attract and retain deposits by adjusting the interest rates offered.
As reported in the Consolidated Statements of Cash Flows, our cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows. Net cash provided by operating activities was $10,062,000 for the six months ended June 30, 2026 and $10,372,000 for the six months ended June 30, 2025. Net cash provided by investing activities was $29,790,000 for the six months ended June 30, 2026, reflecting the liquidation of the Cecil securities in 2026 combined with net loan payoffs and net cash used for investing activities was $10,508,000 for the six months ended June 30, 2025. Cash used for financing activities amounted to $63,280,000 and $3,504,000 for 6 months ended June 30, 2026 and 2025. Financing activities in 2026 were influenced by the repayment of subordinated debt and brokered deposits, partially offset by increases in demand and savings accounts.
Investment Securities
The Corporation classifies all of its debt securities as available for sale and reports the portfolio at fair market value. As of June 30, 2026, the Corporation had $568,205,000 of debt and equity securities, compared to $588,949,000 at December 31, 2025, and $601,920,000 at June 30, 2025.
In the third quarter of 2024, the Corporation adopted an investment strategy to add approximately $200,000,000 of investments, both agency and non-agency collateralized mortgage obligations consistent with investment policy credit quality parameters, in order to protect interest income in a rising rate environment. The goal of this strategy was to reduce the interest rate risk that management believes was necessary to address the Corporation’s long-term fixed rate assets. The Corporation paired the investments with off-balance sheet pay-fixed interest rate swaps to mitigate the identified rates-up risk. The leverage strategy was funded initially by callable brokered certificates of deposit and a small portion of short-term FHLB borrowings. The funding was chosen to allow for maximum flexibility to protect against rates-down risk. With this strategy, the Corporation has the ability to call the brokered CDs and replace them at lower market rates or unwind the swaps and offset with gains on the investments. At June 30, 2026, the brokered CDs initially used to fund the strategy have been called and paid off. Pay downs on the securities have resulted in the remaining balance of $175,109,000 at June 30, 2026.
Outside of the strategy discussed above, the largest movements within the securities portfolio were shaped by market factors, such as:
| · | slope of the U.S. Treasury curve and projected forward rates |
| · | interest spread versus U.S. Treasury rates on the various securities |
| · | pricing of the instruments, including supply and demand for the product |
| · | structure of the instruments, including duration and average life |
| · | portfolio weightings versus policy guidelines |
| · | prepayment speeds on mortgage-backed securities and collateralized mortgage obligations |
45
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| · | credit risk of each instrument, risk-based capital considerations of individual securities as well as overall balance sheet factors |
| · | Federal income tax considerations with regard to obligations of tax-free states and political subdivisions. |
Cecil had securities with a fair value of $19,030,000 as of February 1, 2026, the date of Acquisition. The Corporation evaluated these securities in connection with its overall balance sheet and investment strategy of all net assets acquired and elected to sell $17,843,000 of these securities shortly after closing of the transaction.
The Corporation’s U.S. Treasury sector and U.S. government agency sectors stayed relatively flat since December 31, 2025. U.S. Treasuries represent a safe credit at a market appropriate yield which added some diversity to the portfolio. These bonds pay monthly principal and interest, and the Corporation has invested into this sector in conjunction with the investment strategy discussed above. The Corporation began investing in non-agency MBS and CMO instruments in 2022 as a way to achieve a higher yield with bonds that are well protected from a credit standpoint. As of June 30, 2026, this sector’s fair value balances stood at $133,965,000, a decrease of $9,546,000 since December 31, 2025 due to monthly paydowns. There were no concentrations of issuers greater than 10% of the securities portfolio.
The Corporation’s asset-backed securities (ABS) decreased since December 31, 2025, by $3,324,000, or 6.5%. ABS are floating rate student loan pools which are instruments that perform well in a rates-up environment and offset the interest rate risk of the longer fixed-rate municipal bonds. These securities provide a variable rate return above the overnight Federal funds rate in a safe investment with a risk rating very similar to that of U.S. Agency bonds. The asset-backed securities generally provide monthly principal and interest payments to complement the Corporation’s ongoing cash flows. Management views the ABS sector as a safe, higher yielding option than cash, with the qualities of cash in a rates-up environment.
Obligations of state and political subdivisions, or municipal bonds, consist of both tax-free and taxable securities. They carry the longest duration on average of any instrument in the securities portfolio. These instruments also experience significant fair market value gains and losses when interest rates fluctuate, and currently the yield on the portfolio has resulted in unrealized losses. The amortized cost of municipal bonds decreased slightly in the first six months of 2026. Municipal bonds represented 30.4% of the debt securities portfolio as of June 30, 2026, compared to 31.5% as of December 31, 2025. The largest geographical concentrations as of June 30, 2026 were obligations of states and political subdivisions located in the states of Pennsylvania and California.
As of June 30, 2026, the Corporation’s corporate bonds decreased by $1,895,000 or 4.20%, from balances at December 31, 2025. Corporate bonds add diversity to the portfolio and provide strong yields for short maturities; however, by their very nature, corporate bonds carry a higher level of credit risk should the entity experience financial difficulties.
The following table presents investment securities at June 30, 2026 by expected maturity, including scheduled repayments, and the weighted average yield for each maturity presented. Actual maturities may differ from expected maturities because of differences in assumptions on prepayment or call options embedded in the securities. The yields presented are calculated using tax-equivalent interest and the amortized cost (dollars in thousands).
46
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| Within | 1 - 5 | 5 - 10 | Over 10 | |||||||||||||||||||||||||||||||||||||
| 1 Year | Years | Years | Years | Total | ||||||||||||||||||||||||||||||||||||
| % | % | % | % | % | ||||||||||||||||||||||||||||||||||||
| $ | Yield | $ | Yield | $ | Yield | $ | Yield | $ | Yield | |||||||||||||||||||||||||||||||
| U.S. Treasuries | — | — | 14,940 | 1.40 | — | — | — | — | 14,940 | 1.40 | ||||||||||||||||||||||||||||||
| U.S. government agencies | 7,500 | 0.71 | 8,900 | 0.86 | — | — | — | — | 16,400 | 0.79 | ||||||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | 121 | 2.28 | 30,004 | 2.51 | 3,031 | 4.72 | 252 | 2.97 | 33,408 | 2.71 | ||||||||||||||||||||||||||||||
| U.S. agency collateralized mortgage obligations | 863 | 3.20 | 15,669 | 1.97 | 85,491 | 4.53 | — | — | 102,023 | 4.13 | ||||||||||||||||||||||||||||||
| Non Agency MBS/CMO | 1,641 | 5.34 | 24,917 | 5.57 | 29,463 | 4.56 | 80,919 | 4.53 | 136,940 | 4.74 | ||||||||||||||||||||||||||||||
| Asset-backed securities | 1,833 | 5.01 | 29,658 | 4.57 | 16,491 | 4.52 | — | — | 47,982 | 4.57 | ||||||||||||||||||||||||||||||
| Corporate bonds | 16,140 | 1.57 | 18,073 | 2.84 | 10,750 | 3.98 | — | — | 44,963 | 2.66 | ||||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | 4,008 | 2.98 | 74,871 | 1.90 | 50,427 | 2.30 | 60,617 | 2.00 | 189,923 | 2.06 | ||||||||||||||||||||||||||||||
| Total securities available for sale | 32,106 | 1.98 | 217,032 | 2.78 | 195,653 | 3.93 | 141,788 | 3.45 | 586,579 | 3.28 | ||||||||||||||||||||||||||||||
Loans
Net loans outstanding increased by 14.2% to $1,653,016,000 at June 30, 2026 from $1,446,716,000 at June 30, 2025. Net loans increased by 10.1%, from $1,498,859,000 at December 31, 2025. The following table shows the composition of the loan portfolio as of June 30, 2026, December 31, 2025, and June 30, 2025 (in thousands):
| June 30, | December 31, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2025 | ||||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||
| Agriculture | 324,215 | 19.4 | 317,957 | 21.0 | 294,020 | 20.1 | ||||||||||||||||||
| Business Loans | 468,640 | 28.0 | 394,558 | 26.2 | 367,194 | 25.1 | ||||||||||||||||||
| Consumer | 76,057 | 4.6 | 5,703 | 0.4 | 6,332 | 0.4 | ||||||||||||||||||
| Home Equity | 152,235 | 9.1 | 141,369 | 9.3 | 130,971 | 9.0 | ||||||||||||||||||
| Non-Owner Occupied CRE | 186,239 | 11.2 | 169,584 | 11.2 | 164,667 | 11.3 | ||||||||||||||||||
| Residential Real Estate (a) | 461,881 | 27.7 | 484,337 | 31.9 | 498,319 | 34.1 | ||||||||||||||||||
| Total loans | 1,669,267 | 100.0 | 1,513,508 | 100.0 | 1,461,503 | 100.0 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||
| Deferred loan costs, net | 2,201 | 2,237 | 1,756 | |||||||||||||||||||||
| Allowance for credit losses | (18,452 | ) | (16,886 | ) | (16,543 | ) | ||||||||||||||||||
| Total net loans | 1,653,016 | 1,498,859 | 1,446,716 | |||||||||||||||||||||
| (a) | Residential real estate loans do not include mortgage loans serviced for others which totaled $387,947 as of June 30, 2026, $376,287 as of December 31, 2025, and $360,378 at June 30, 2025. |
The growth in the loan portfolio since December 31, 2025, was primarily the result of loans acquired from Cecil of $147,400,000, primarily in the business and consumer loan segments. The June 30, 2026, loan portfolio increased $206,300,000 from June 30, 2025. In addition to the loans acquired from Cecil, strong sales and marketing efforts led to increased balances across most categories of loans. The Corporation’s strategic plan specifically focuses on managed loan growth while maintaining quality of credit standards. The residential real estate segment has declined as management has chosen to reduce the number of mortgage loans in its portfolios due to their long maturity dates and elevated interest rate risk.
In the first six months of 2026, mortgage production decreased 14.6% compared to the first six months of 2025. Purchase money origination constituted 86.9% of the Corporation’s mortgage originations for the six months ended June 30, 2026. The held-for-investment production is 49.5% of total originations with construction-only and construction-permanent loans making up 66.6% of the total held-for-investment production. As of June 30, 2026, adjustable-rate mortgage balances were $316.8 million, representing 68.2% of the 1-4 family residential loan portfolio of the Corporation.
47
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Non-Performing Assets
The following table presents the Corporation’s non-performing assets at June 30, 2026, December 31, 2025, and June 30, 2025 (in thousands):
| June 30, | December 31, | June 30, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| $ | $ | $ | ||||||||||
| Nonaccrual loans | 9,045 | 9,336 | 10,178 | |||||||||
| Loans past due 90 days or more and still accruing | — | — | 99 | |||||||||
| Total non-performing loans | 9,045 | 9,336 | 10,277 | |||||||||
| Other real estate owned | 748 | — | 989 | |||||||||
| Foreclosed assets | 579 | — | — | |||||||||
| Total non-performing assets | 10,372 | 9,336 | 11,266 | |||||||||
| Non-performing assets to net loans | 0.63% | 0.62% | 0.78% | |||||||||
The total balance of non-performing assets decreased by $894,000, or 7.9%, over balances at June 30, 2025, and increased $1,036,000, or 11.1%, from balances at December 31, 2025. The increase over the December 31, 2025 balance was due primarily to foreclosure on a commercial property of $748,000 and $579,000 of foreclosed assets associated with the legacy Cecil portfolio.
Allowance for Credit Losses
The allowance for credit losses (ACL) is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on total loans. Management reviews the adequacy of the ACL on a quarterly basis. The ACL represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The ACL is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Corporation measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, and credit concentrations. Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate. Based on the quarterly calculation, management will adjust the ACL through the provision for credit losses, as necessary.
Strong credit and collateral policies have been instrumental in producing a favorable history of credit losses for the Corporation. The Net Charge-Off table below shows the net charge-offs for each segment of the Corporation’s loan portfolio for the three months ended June 30, 2026 and 2025 (in thousands):
48
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Loans charged-off: | ||||||||
| Agriculture | — | — | ||||||
| Business Loans | 351 | — | ||||||
| Consumer Loans | 6 | 7 | ||||||
| Home Equity | — | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | 84 | ||||||
| Total loans charged-off | 357 | 91 | ||||||
| Recoveries of loans previously charged-off | ||||||||
| Agriculture | — | 24 | ||||||
| Business Loans | 68 | 1 | ||||||
| Consumer Loans | 8 | 7 | ||||||
| Home Equity | — | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | — | ||||||
| Total recoveries | 76 | 32 | ||||||
| Net charge-offs (recoveries) | ||||||||
| Agriculture | — | (24 | ) | |||||
| Business Loans | 283 | (1 | ) | |||||
| Consumer Loans | (2 | ) | — | |||||
| Home Equity | — | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | 84 | ||||||
| Total net charge-offs | 281 | 59 | ||||||
49
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The Net Charge-Off table below shows the net charge-offs for each segment of the Corporation’s loan portfolio for the six months ended June 30, 2026 and 2025 (in thousands):
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Loans charged-off: | ||||||||
| Agriculture | — | — | ||||||
| Business Loans | 351 | — | ||||||
| Consumer Loans | 49 | 34 | ||||||
| Home Equity | — | 3 | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | 84 | ||||||
| Total loans charged-off | 400 | 121 | ||||||
| Recoveries of loans previously charged-off | ||||||||
| Agriculture | — | 25 | ||||||
| Business Loans | 98 | 3 | ||||||
| Consumer Loans | 10 | 23 | ||||||
| Home Equity | — | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | — | ||||||
| Total recoveries | 108 | 51 | ||||||
| Net charge-offs (recoveries) | ||||||||
| Agriculture | — | (25 | ) | |||||
| Business Loans | 253 | (3 | ) | |||||
| Consumer Loans | 39 | 11 | ||||||
| Home Equity | — | 3 | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | 84 | ||||||
| Total net charge-offs | 292 | 70 | ||||||
Management regularly reviews the overall risk profile of the loan portfolio and the impact that current economic trends have on the Corporation’s loans. The financial industry typically evaluates the quality of loans on a scale with “unclassified” representing healthy loans, “special mention” being the first indication of credit concern, and several successive classified ratings indicating further credit declines of “substandard,” “doubtful,” and, ultimately, “loss.”
The Corporation’s level of classified loans was $28,989,000 at June 30, 2026, compared to $35,111,000 at December 31, 2025 and $35,100,000 at June 30, 2025. Total classified loans have decreased from December 31, 2025 due to the payoff of several classified loans that reduced their loan balances
Deposits
The Corporation’s total ending deposits at June 30, 2026 increased by $143,607,000, or 7.7%, from December 31, 2025 and by $120,442,000, or 6.4%, from June 30, 2025. Customer deposits are the Corporation’s primary source of funding for loans and securities. The growth in each category of deposits was primarily the result of the $186,384,000 of deposits that were acquired in the Acquisition of Cecil. Brokered CDs totaled $3,749,000 at June 30, 2026, a decrease of $64,293,000 from December 31, 2025 and $93,240,000 from June 30, 2025. The Corporation used excess funds to call certain brokered deposits, to assist in managing the Corporation’s cost of funds.
As of June 30, 2026 and December 31, 2025, the total uninsured deposits of the Corporation were approximately $243,946,000 and $258,136,000, or 12.1% and 13.8%, of total deposits. Total uninsured deposits is calculated based on regulatory reporting requirements and reflects the portion of any deposit of a customer at an insured depository institution that exceeds the applicable FDIC insurance coverage for that depositor at that institution and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regime.
50
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The Deposits by major classification table, shown below, provides the balances of each category for June 30, 2026, December 31, 2025, and June 30, 2025 (in thousands):
| June 30 | December 31, | June 30 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| $ | $ | $ | ||||||||||
| Non-interest bearing demand | 706,839 | 649,090 | 628,757 | |||||||||
| Interest bearing demand | 396,076 | 375,938 | 375,556 | |||||||||
| Money market deposit accounts | 177,818 | 162,715 | 166,909 | |||||||||
| Savings accounts | 311,547 | 283,207 | 288,492 | |||||||||
| Time deposits | 424,688 | 402,411 | 436,812 | |||||||||
| Total deposits | 2,016,968 | 1,873,361 | 1,896,526 | |||||||||
The growth and mix of deposits is often driven by several factors including:
| · | Acquisition of other banks |
| · | Convenience and service provided |
| · | Current rates paid on deposits relative to competitor rates |
| · | Level of and perceived direction of interest rates |
| · | Financial condition and perceived safety of the institution |
| · | Possible risks associated with other investment opportunities |
| · | Level of fees on deposit products |
Borrowings
Total borrowings were $190,542,000, $209,251,000, and $175,618,000 as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively. Short-term borrowings at June 30, 2026 include $16,000,000 in borrowings from the Federal Reserve Bank’s discount window to assist with liquidity needs. Short-term borrowings with the Federal Home Loan Bank (FHLB) were $60,000,000 million as of June 30, 2026, December 31, 2025, and June 30, 2025. Long-term borrowings with the Federal Home Loan Bank (FHLB) decreased to $53,007,000 at June 30, 2026 from $67,838,000 at December 31, 2025. These borrowings are used as a secondary source of funding and to assist with managing interest rate risk. As of June 30, 2026, all the borrowings of FHLB were fixed-rate loans. The Corporation continues to be well under the FHLB maximum borrowing capacity which is $794,421,000 as of June 30, 2026.
In addition to the long-term advances funded through the FHLB, the Corporation has completed three separate subordinated debt offerings in 2020, 2022 and 2025. Total subordinated debt outstanding at June 30, 2026 and December 31, 2025 was $61,535,000 and $81,413,000. The purpose of the subordinated debt offerings was to fund Bank growth, as the proceeds raised are considered Tier 2 capital for the Corporation, and portions of the cash proceeds were contributed as Tier 1 capital to the Bank. Each of the notes has a fixed rate of interest for the first five years and then converts to a floating rate of interest for the last five years. After the fixed rate period, the Corporation can redeem the notes at par. In December 2025, the Corporation issued new subordinated debt with proceeds, net of costs, totaling $41,500,000. The proceeds from the notes were to partially fund the Acquisition of Cecil, and to redeem the entire 2020 issuance of $20,000,000, which had converted to a floating rate of interest higher than its initial fixed rate. The 2020 issuance was redeemed in the first quarter of 2026.
Stockholders’ Equity
Total stockholders’ equity increased $10,466,000 from $161,054,000 at December 31, 2025 to $171,520,000 at June 30, 2026. The primary reason for the increase in stockholders’ equity was net income of $9,728,000 less dividends declared of $2,046,000 for the six months ended June 30, 2026. In addition, market conditions led to $2,275,000 of other comprehensive income for the six months ended June 30, 2026, primarily in appreciation in securities available for sale.
Federal regulatory authorities require banks to meet minimum capital levels. The Corporation, as well as the Bank, as the solely owned subsidiary of the Corporation, maintains capital ratios well above those minimum levels. The risk-weighted capital ratios are calculated by dividing capital, as defined, by total risk-weighted assets. Regulatory guidelines determine the risk-weighted assets by assigning assets to specific risk-weighted categories. Tier 2 capital includes the inclusion of the allowance for credit losses and reserve for off-balance sheet, and for the holding company, subordinated debt.
51
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The following tables reflect the capital ratios for the Corporation and Bank compared to the regulatory capital requirements.
| REGULATORY CAPITAL RATIOS: | ||||||||||||
| Regulatory Requirements | ||||||||||||
| Adequately | Well | |||||||||||
| As of June 30, 2026 | Capital Ratios | Capitalized | Capitalized | |||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 14.8% | N/A | N/A | |||||||||
| Bank | 14.3% | 8.0% | 10.0% | |||||||||
| Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.2% | N/A | N/A | |||||||||
| Bank | 13.2% | 6.0% | 8.0% | |||||||||
| Common Equity Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.2% | N/A | N/A | |||||||||
| Bank | 13.2% | 4.5% | 6.5% | |||||||||
| Tier 1 Capital to Average Assets | ||||||||||||
| Consolidated | 7.4% | N/A | N/A | |||||||||
| Bank | 9.6% | 4.0% | 5.0% | |||||||||
| As of December 31, 2025 | ||||||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 17.8% | N/A | N/A | |||||||||
| Bank | 15.0% | 8.0% | 10.0% | |||||||||
| Tier I Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.5% | N/A | N/A | |||||||||
| Bank | 13.9% | 6.0% | 8.0% | |||||||||
| Common Equity Tier I Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.5% | N/A | N/A | |||||||||
| Bank | 13.9% | 4.5% | 6.5% | |||||||||
| Tier I Capital to Average Assets | ||||||||||||
| Consolidated | 8.1% | N/A | N/A | |||||||||
| Bank | 9.8% | 4.0% | 5.0% | |||||||||
| As of June 30, 2025 | ||||||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 15.0% | N/A | N/A | |||||||||
| Bank | 14.8% | 8.0% | 10.0% | |||||||||
| Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.2% | N/A | N/A | |||||||||
| Bank | 13.6% | 6.0% | 8.0% | |||||||||
| Common Equity Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.2% | N/A | N/A | |||||||||
| Bank | 13.6% | 4.5% | 6.5% | |||||||||
| Tier 1 Capital to Average Assets | ||||||||||||
| Consolidated | 7.7% | N/A | N/A | |||||||||
| Bank | 9.3% | 4.0% | 5.0% | |||||||||
As of June 30, 2026, the Bank’s Tier 1 Leverage Ratio stood at 9.6% while the Corporation’s Tier 1 Leverage Ratio was 7.4%. On February 1, 2026, the Corporation completed its Acquisition of Cecil Bancorp, Inc. in an all-cash transaction. The additional average assets and risk-weighted assets that Cecil contributed to combined assets was the primary reason the Corporation and Bank’s capital ratios are lower as no additional capital was issued in connection with the transaction. Additionally, intangible assets including goodwill and core deposit intangible, combined with net operating loss carryforwards are not eligible to be included in regulatory capital.
52
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Off-Balance Sheet Arrangements
In the normal course of business, the Corporation typically has off-balance sheet arrangements related to loan funding commitments. These arrangements may impact the Corporation’s financial condition and liquidity if they were to be exercised within a short period of time. As discussed in the following liquidity section, the Corporation has in place sufficient liquidity alternatives to meet these obligations. The following table presents information on the commitments by the Corporation as of June 30, 2026 (dollars in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Commitments to extend credit: | ||||||||
| Revolving home equity | 303,379 | 283,905 | ||||||
| 1-4 family residential contruction loans | 11,202 | 14,859 | ||||||
| Commercial real estate, other construction and land development loans | 77,836 | 53,286 | ||||||
| Commercial and industrial loans | 112,877 | 101,425 | ||||||
| Other | 126,825 | 122,455 | ||||||
| Standby letters of credit | 28,215 | 27,104 | ||||||
| Total | 660,334 | 603,034 | ||||||
Supplemental Reporting of Non-GAAP measures
Management believes providing certain “non-GAAP” financial information will assist readers in their understanding of the effect on recent financial results from non-recurring charges and the impact of intangible assets on our book value per share that resulted from our recent Acquisition of Cecil.
Tangible book value per common share and impact of the merger and conversion-related expenses on net income and associated ratios, as used by the Corporation in this supplemental reporting presentation, are determined by methods other than those in accordance with generally accepted accounting principles (“GAAP”). While the Corporation’s management believes this information is a useful supplement to the GAAP-based measures reported, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following table presents the computation of each non-GAAP based measure shown together with its most directly comparable GAAP-based measure (dollars in thousands, except per share data):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Tangible Book Value per Common Share | ||||||||
| Stockholders' equity (most directly comparable GAAP-based measure) | 171,520 | 161,054 | ||||||
| Less: Goodwill | 6,712 | — | ||||||
| Core deposit intangible | 2,538 | — | ||||||
| Related tax effect | (568 | ) | — | |||||
| Total | 8,682 | — | ||||||
| Tangible common equity (non-GAAP) | 162,838 | 161,054 | ||||||
| Common shares outstanding | 5,715 | 5,693 | ||||||
| Book value per share (most directly comparable GAAP-based measure) | 30.01 | 28.29 | ||||||
| Intangible assets per share | 1.52 | — | ||||||
| Tangible book value per share (non-GAAP) | 28.49 | 28.29 | ||||||
53
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Adjusted Net Income and Adjusted Diluted Earnings Per Share | ||||||||||||||||
| Net income (most directly comparable GAAP-based measure) | 5,704 | 5,810 | 9,728 | 10,126 | ||||||||||||
| Plus: Merger and conversion related expenses | 1,561 | — | 3,718 | — | ||||||||||||
| Less: Related tax effect | (321 | ) | — | (691 | ) | — | ||||||||||
| Adjusted net income (non-GAAP) | 6,944 | 5,810 | 12,755 | 10,126 | ||||||||||||
| Weighted average diluted shares outstanding | 5,706 | 5,673 | 5,700 | 5,663 | ||||||||||||
| Diluted earnings per share (most directly comparable GAAP-based measure) | 1.00 | 1.02 | 1.71 | 1.79 | ||||||||||||
| Diluted earnings per share, adjusted (non-GAAP) | 1.22 | 1.02 | 2.24 | 1.79 | ||||||||||||
| Efficiency ratio | ||||||||||||||||
| Operating expenses (most directly comparable GAAP-based measure) | 18,266 | 13,922 | 36,550 | 28,241 | ||||||||||||
| Less: Merger and conversion-related expenses | (1,561 | ) | — | (3,718 | ) | — | ||||||||||
| Adjusted operating expenses | 16,705 | 13,922 | 32,832 | 28,241 | ||||||||||||
| Net interest income on a tax-equivalent basis | 20,922 | 17,763 | 39,994 | 34,647 | ||||||||||||
| Other operating income (most directly comparable GAAP-based measure) | 4,062 | 3,581 | 8,441 | 6,907 | ||||||||||||
| Total revenues | 24,984 | 21,344 | 48,435 | 41,554 | ||||||||||||
| Less: Realized gains (losses) on sales of securities | 8 | (2 | ) | 10 | (286 | ) | ||||||||||
| Total revenues, as adjusted | 24,976 | 21,346 | 48,425 | 41,840 | ||||||||||||
| Efficiency ratio on GAAP basis (most directly comparable GAAP based measure) | 73.1% | 65.2% | 75.5% | 68.0% | ||||||||||||
| Efficiency ratio, as adjusted | 66.9% | 65.2% | 67.8% | 67.5% | ||||||||||||
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a financial institution, the Corporation is subject to four primary market risks: Credit risk, liquidity risk, interest rate risk, and fair value risk. The Board of Directors has established an Asset Liability Management Committee (ALCO) to measure, monitor, and manage these four primary market risks. The Asset Liability Policy has instituted guidelines for all of these primary risks, as well as other financial performance measurements with target ranges. The Asset Liability goals and guidelines are consistent with the Corporation’s Strategic Plan goals.
For discussion on credit risk, refer to the sections on non-performing assets, allowance for credit losses, Note 6, to the Consolidated Financial Statements.
Liquidity
Liquidity refers to having an adequate supply of cash available to meet business needs. Financial institutions must ensure that there is adequate liquidity to meet a variety of funding needs, at an advantageous cost. Funding new loans and covering deposit withdrawals are the primary liquidity needs of the Corporation. The Corporation uses a variety of funding sources to meet liquidity needs, such as: Deposits, loan repayments, paydowns, maturities, and sales of investment securities, borrowings, and current earnings.
Management utilizes a number of important liquidity measurements that management believes have advantages over, and give better clarity to, the Corporation’s present and projected liquidity. These measurements are evaluated quarterly through the ALCO process. There are a number of key ratios measured that involve liquidity, non-core funding sources, and contingency funding with each ratio assigned a risk level of low, moderate, or high.
As of June 30, 2026, the Corporation was in the low-risk range for all of the above measurements except for one ratio that fell in the moderate-risk range: investment securities as a percentage of total assets. The investment securities as a percentage of total assets has decreased from year end 2025. While this measurement falls in management’s moderate risk level, it is related to a specific leverage strategy and was measured and documented risk that was accepted as part of a derivative strategy that enhanced net interest income.
The Corporation’s liquidity measurements are tracked and reported quarterly by management to both observe trends and ensure the measurements stay within desired ranges. Management is confident that a sufficient amount of internal and external liquidity exists to provide for unanticipated liquidity needs.
Interest Rate Risk and Fair Value Risk
Identifying the interest rate risk of the Corporation’s interest earning assets and interest-bearing liabilities is essential to managing net interest margin and net interest income. In addition to the impact on earnings, management is also concerned about how much the value of the Corporation’s assets might fall or rise given an increasing or decreasing interest rate environment. Interest rate sensitivity analysis (IRSA) measures the impact of a change in interest rates on the net interest income and net interest margin of the Corporation, while net portfolio value (NPV) analysis measures the change in the Corporation’s capital fair value, given interest rate fluctuations. Therefore, the two primary approaches to measuring the impact of interest rate changes on the Corporation’s earnings and fair value are referred to as:
| · | Changes in net interest income |
| · | Changes in net portfolio value |
The Corporation’s asset liability model is able to perform dynamic forecasting based on a wide range of assumptions provided. The model is flexible and can be used for many types of financial projections. The Corporation uses financial modeling to forecast balance sheet growth and earnings. The results obtained through the use of forecasting models are based on a variety of factors. Both earnings and balance sheet forecasts make use of maturity and repricing schedules to determine the changes to the Corporation’s balance sheet over the course of time.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
Additionally, there are many assumptions that factor into the results. These assumptions include, but are not limited to:
| · | Projected interest rates |
| · | Timing of interest rate changes |
| · | Slope of the U.S. Treasury curve |
| · | Spreads available on securities over the U.S. Treasury curve |
| · | Prepayment speeds on loans held and mortgage-backed securities |
| · | Anticipated calls on securities with call options |
| · | Deposit and loan balance fluctuations |
| · | Competitive pressures affecting loan and deposit rates |
| · | Economic conditions |
| · | Consumer reaction to interest rate changes |
For the interest rate sensitivity analysis and net portfolio value analysis shown below, results are based on a static balance sheet reflecting no projected growth from balances as of June 30, 2026, and December 31, 2025. While it is unlikely that the balance sheet will not grow at all, management considers a static analysis of this sort to be the most conservative and most accurate means to evaluate fair value and future interest rate risk. The static balance sheet approach is used to reduce the number of variables in calculating the model’s accuracy in predicting future net interest income. It is appropriate to pull out various balance sheet growth scenarios, which could be utilized to compensate for a declining margin. By testing the model using a base model assuming no growth, this variable is eliminated and management can focus on predicted net interest income based on the current existing balance sheet.
As a result of the many assumptions, this information should not be relied upon to predict future results. Additionally, both of the analyses shown below do not consider any action that management could take to minimize or offset the negative effect of changes in interest rates. These tools are used to assist management in identifying possible areas of risk in order to address them before a greater risk is posed.
Changes in Net Interest Income
The changes in net interest income reflect how much the Corporation’s net interest income would be expected to increase or decrease given a change in market interest rates. The changes in net interest income shown are measured over a one-year time horizon and assume an immediate rate change on the rate sensitive assets and liabilities. This is considered the more important measure of interest rate sensitivity due to the immediate effect that rate changes may have on the overall performance of the Corporation. The following table takes into consideration when financial instruments would most likely reprice and the duration of the pricing change. It is important to emphasize that the information shown in the table is an estimate based on hypothetical changes in market interest rates.
| 2026 | 2025 | Policy | ||||||||||
| Percentage | Percentage | Guidelines | ||||||||||
| Change | Change | % | ||||||||||
| 400 basis point rise | (1.8 | ) | 2.9 | (24.00 | ) | |||||||
| 300 basis point rise | (0.8 | ) | 2.4 | (20.00 | ) | |||||||
| 200 basis point rise | 0.0 | 1.7 | (16.00 | ) | ||||||||
| 100 basis point rise | 0.4 | 0.3 | (12.00 | ) | ||||||||
| Base rate scenario | — | — | — | |||||||||
| 100 basis point decline | (2.5 | ) | (4.1 | ) | (12.00 | ) | ||||||
| 200 basis point decline | (6.5 | ) | (9.7 | ) | (16.00 | ) | ||||||
| 300 basis point decline | (11.1 | ) | (15.0 | ) | (20.00 | ) | ||||||
| 400 basis point decline | (14.0 | ) | (19.1 | ) | (24.00 | ) | ||||||
This table shows the effect of an immediate interest rate shock over a one-year period on the Corporation's net interest income.
Base rate is the Prime rate.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
As of June 30, 2026, the above analysis shows a neutral or negative impact to the Corporation’s net interest income in all rate scenarios. The Fed has cut rates in 2024 and 2025 as inflation slowed. The Corporation is now experiencing a reduction in the cost of funds on the liability side in pricing its deposits. Net interest income would decrease if rates were lower with the repricing of variable rate loans and securities moving immediately as Prime moves. The Corporation is asset sensitive in the short-term and in the long-term. The analysis above focuses on immediate rate movements, referred to as rate shocks, and measured over the course of one year.
In all of the down rates scenarios, modeled levels of net interest income improved compared to the results as of December 31, 2025. As rates rise, assets with the ability to reprice off a key benchmark rate will generally reprice by the full amount of the Federal Reserve’s rate movement. In the current environment, deposit rate changes have been slow and steady as the Fed has decreased rates slowly. Asset yields, however, decline at a faster pace which has resulted in the pressure on net interest income shown above. The analysis above assumes no growth of the Corporation’s balance sheet and no change in the mix of earning assets.
The assumptions and analysis of interest rate risk are based on historical experience during varied economic cycles. Management believes these assumptions to be appropriate; however, actual results could vary significantly. Management uses this analysis to identify trends in interest rate sensitivity and determine if action is necessary to mitigate asset liability risk.
Changes in Net Portfolio Value (NPV)
The change in NPV gives a long-term view of the exposure to changes in interest rates. The NPV is calculated by discounting the future cash flows to the present value based on current market rates. The NPV is the mathematical equivalent of the present value of assets minus the present value of liabilities.
The table below indicates the changes in the Corporation’s NPV as of June 30, 2026 and December 31, 2025. As part of the Asset Liability Policy, the Board of Directors has established risk measurement guidelines to protect the Corporation against decreases in the NPV and net interest income in the event of the interest rate changes described below.
As of June 30, 2026, the Corporation was within guidelines for all up-rate scenarios but was outside of guidelines for the down-300 and down-400 basis point rate scenarios. The positive impact of higher rates on both loans and securities was up from December 31, 2025. On the liability side of the Corporation’s balance sheet, the value of non-interest bearing deposit accounts only becomes more and more valuable as interest rates rise, which is reflected in NPV as a decrease in liabilities. These deposits have always been highly favorable in a rising rate environment as these balances are more valuable to the Corporation. However, with higher rates on interest bearing checking, NOW, and money market accounts, the benefit of these deposits in a rising rate environment has declined. As interest rates increase, the discount rate used to value the Corporation’s interest bearing accounts increases, causing a lower net present value. This improves the modeling of the Corporation’s fair value risk as the liability amounts decrease, causing the net present value or fair value of the Corporation’s balance sheet to increase.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
In 2025, deposit growth was relatively flat; however, deposit pricing was lowered throughout the year to maximize profit margins. This reduction in deposit costs resulted in an improvement in the net portfolio value in all the down rate scenarios. The much higher complement of long modeling deposits caused the changes in net portfolio value to be more exaggerated in both the up and down-rate scenarios as of June 30, 2026 and December 31, 2025.
CHANGES IN NET PORTFOLIO VALUE
| 2026 | 2025 | Policy | ||||||||||
| Percentage | Percentage | Guidelines | ||||||||||
| Change | Change | % | ||||||||||
| 400 basis point rise | 6.8 | 6.9 | (35.00 | ) | ||||||||
| 300 basis point rise | 7.3 | 7.4 | (30.00 | ) | ||||||||
| 200 basis point rise | 6.6 | 6.8 | (25.00 | ) | ||||||||
| 100 basis point rise | 4.4 | 4.5 | (20.00 | ) | ||||||||
| Base rate scenario | — | — | — | |||||||||
| 100 basis point decline | (7.7 | ) | (7.9 | ) | (20.00 | ) | ||||||
| 200 basis point decline | (19.5 | ) | (20.4 | ) | (25.00 | ) | ||||||
| 300 basis point decline | (36.9 | ) | (38.8 | ) | (30.00 | ) | ||||||
| 400 basis point decline | (60.8 | ) | (61.5 | ) | (35.00 | ) | ||||||
This table shows the effect of an immediate interest rate shock on the net portfolio value of the Corporation's assets and liabilities. Base rate is the Prime rate.
The results as of June 30, 2026, indicate that the Corporation’s net portfolio value would experience valuation gains in all up-rate scenarios with a gain of 6.8% in the rates-up 400 basis point scenario, and gains of 7.3%, 6.6% and 4.4%, in the rates-up 300, rates-up 200 and 100 basis point scenarios, respectively. A valuation gain indicates that the value of the Corporation’s assets is declining at a slower pace than the decrease in the value of the Corporation’s liabilities. Even though the Corporation has some longer-term assets such as residential mortgages and municipal securities which show declines in value as interest rates increase further, the large balances of core deposits more than offsets this fair value exposure of the longer-term assets.
The changes in net portfolio value do show exposure in the down-rate scenarios with the 300 and 400 rate scenarios that are outside of policy guidelines. A valuation loss indicates that the value of the Corporation’s assets is declining at a faster pace than the decrease in the value of the Corporation’s liabilities. Even outside of the interest rate environment, the Corporation’s exposure to valuation changes could change going forward if the mix of the Corporation’s deposits change, which would impact the average life of those deposits. The Board of Directors monitors this policy exception on a quarterly basis, and measures the risk against expected market conditions at the time, including the likelihood of rates decreasing 300 or 400 basis points in a short period of time.
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ENB FINANCIAL CORP
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer (Principal Executive Officer) and Treasurer (Principal Financial Officer), of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures (as such term as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer (Principal Executive Officer) along with the Treasurer (Principal Financial Officer) concluded that the Corporation’s disclosure controls and procedures as of June 30, 2026, are effective to ensure that information required to be disclosed in the reports that the company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
(b) Changes in Internal Controls.
There have been no changes in the Corporation’s internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
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ENB FINANCIAL CORP
PART II – OTHER INFORMATION
June 30, 2026
Item 1. Legal Proceedings
Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position or results of operations of the Corporation or its subsidiaries taken as a whole. There are no proceedings pending other than ordinary routine litigation incident to the business of the Corporation. In addition, no material proceedings are pending, are known to be threatened, or contemplated against the Corporation by governmental authorities.
Item 1A. Risk Factors
The Corporation continually monitors the risks related to the Corporation’s business, other events, the Corporation’s Common Stock, and the Corporation’s industry. There have been no material changes in risk factors applicable to the Corporation from those disclosed in "Risk Factors" in Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases
The following table details the Corporation’s purchase of its own common stock during the three months ended June 30, 2026.
| Issuer Purchase of Equity Securities | ||||||||||||||||
| Total Number of | Maximum Number | |||||||||||||||
| Total Number | Average | Shares Purchased | of Shares that May | |||||||||||||
| of Shares | Price Paid | as Part of Publicly | Yet be Purchased | |||||||||||||
| Period | Purchased | Per Share | Announced Plans * | Under the Plan * | ||||||||||||
| April 2026 | — | — | — | 185,000 | ||||||||||||
| May 2026 | — | — | — | 185,000 | ||||||||||||
| June 2026 | — | — | — | 185,000 | ||||||||||||
| Total | — | |||||||||||||||
* On October 16, 2024, the Board of Directors of the Corporation approved a plan to repurchase, in the open market and privately renegotiated transactions, up to 200,000 shares of its outstanding common stock. This plan replaces the 2020 plan. As of June 30, 2026, 15,000 shares had been purchased under this plan.
Item 3. Defaults Upon Senior Securities – Nothing to Report
Item 4. Mine Safety Disclosures – Not Applicable
Item 5. Other Information
During the three months ended June 30, 2026, no director or officer of the Corporation
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ENB FINANCIAL CORP
Item 6. Exhibits:
| 3 (i) | Articles of Incorporation of the Registrant, as amended. (Incorporated herein by reference to Exhibit 3.1 of the Corporation’s Form 8-K filed with the SEC on June 7, 2019.) |
| 3 (ii) | Bylaws of the Registrant, as amended. (Incorporated herein by reference to Exhibit 3.2 of the Corporation’s Form 8-K filed with the SEC on July 21, 2021.) |
| 10.1 | Form of Deferred Income Agreement. (Incorporated herein by reference to Exhibit 10.1 of the Corporation’s Form 10-Q, filed with the SEC on August 13, 2008.) |
| 10.2 | 2022 Employee Stock Purchase Plan (incorporated herein by reference to Appendix A to the Corporation’s Definitive Proxy Statement, filed with the SEC on April 4, 2022.) |
| 10.3 | 2020 Non-Employee Directors’ Stock Plan (Incorporated herein by reference to Exhibit 99.1 of the Corporation’s Form S-8 filed with the SEC on June 3, 2020.) |
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ENB FINANCIAL CORP
| 31.1 | Section 302 Chief Executive Officer Certification (Required by Rule 13a-14(a)/15a-14(a)). |
| 31.2 | Section 302 Principal Financial Officer Certification (Required by Rule 13a-14(a)/15a-14(a)). |
| 32.1 | Section 1350 Chief Executive Officer Certification (Required by Rule 13a-14(b)). |
| 32.2 | Section 1350 Principal Financial Officer Certification (Required by Rule 13a-14(b)). |
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ENB FINANCIAL CORP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
| ENB Financial Corp | ||
| (Registrant) | ||
| Dated: August 14, 2026 | By: | /s/ Jeffrey S. Stauffer |
| Jeffrey S. Stauffer | ||
| Chairman of the Board | ||
| Chief Executive Officer and President | ||
| Principal Executive Officer | ||
| Dated: August 14, 2026 | By: | /s/ Douglas P. Barton |
| Douglas P. Barton | ||
| Treasurer | ||
| Principal Financial Officer | ||
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