[10-Q] John Marshall Bancorp, Inc. Quarterly Earnings Report

Q: How did JMSB perform in Q3 2025?

Q3 2025 net income was $5.4 million with diluted EPS of $0.38 , compared to $4.2 million and $0.30 in Q3 2024.

Q: What were JMSB’s key balance sheet totals at September 30, 2025?

Total assets were $2.325 billion , loans (net) were $1.918 billion , and deposits were $1.969 billion .

Q: What was JMSB’s net interest income in Q3 2025?

Net interest income was $15.6 million for the quarter.

Q: How are credit metrics trending for JMSB?

The allowance for loan credit losses was $19.7 million , and there were no past-due or nonaccrual loans at quarter end.

Q: How did unrealized securities positions affect equity?

Accumulated other comprehensive loss improved to $7.8 million from $10.7 million at year-end, reflecting moderated unrealized losses.

Q: What were JMSB’s nine-month 2025 results?

For the nine months, net income was $15.3 million with diluted EPS of $1.07 .

Q: How much brokered funding does JMSB use?

Brokered deposits totaled $302.0 million , primarily within time deposits.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

John Marshall Bancorp (JMSB) reported stronger quarterly results. For Q3 2025, net income was $5.4 million and diluted EPS was $0.38, up from $4.2 million and $0.30 a year ago. Net interest income rose to $15.6 million as deposit costs eased versus last year, while the provision for credit losses was $356 thousand. Noninterest income was $653 thousand and noninterest expense was $9.0 million.

Balance sheet growth continued. Total assets reached $2.325 billion, loans (net) were $1.918 billion, and deposits were $1.969 billion at September 30, 2025. Brokered deposits were $302.0 million. The allowance for loan credit losses was $19.7 million, and there were no past-due or nonaccrual loans at quarter end; a single $10.0 million past-due loan from year-end 2024 paid off in January 2025.

Capital and securities improved. Shareholders’ equity increased to $259.7 million, with accumulated other comprehensive loss narrowing to $7.8 million as unrealized losses on securities moderated. For the nine months, net income was $15.3 million and diluted EPS was $1.07. Federal Home Loan Bank advances were $56.0 million.

Insights

Solid quarter: higher earnings, stronger liquidity, stable credit, and improved AOCI; funding mix bears watching.

John Marshall Bancorp delivered higher profitability and balance sheet growth. Q3 net income rose to $5.4M from $4.2M, with EPS at $0.38. Net interest income increased to $15.6M (from $13.2M) as deposit and borrowing costs fell, driving nine‑month NII to $44.6M. Assets reached $2.32B, loans grew to $1.93B, and deposits to $1.97B.

Credit quality appears clean. There were no past due or nonaccrual loans at Sep 30, 2025; a single past-due credit at year‑end 2024 paid off in Jan 2025. The allowance for loan credit losses increased modestly to $19.7M, with a $0.36M Q3 provision. Liquidity improved: cash and equivalents rose to $163.6M. AOCI loss narrowed to $(7.8)M from $(10.7)M as available‑for‑sale unrealized losses improved, lifting equity to $259.7M.

Funding mix is a key dependency. Brokered deposits increased to $302.0M and time deposits to $755.2M; Federal Home Loan Bank advances held at $56.0M. Noninterest income softened year‑to‑date, while expenses rose, partly offsetting spread gains. Watch deposit betas and brokered concentrations, AOCI sensitivity to rates, and swap notional of $71.1M. Next checkpoints: full‑year results and credit metrics through Q4 2025, and any shifts in deposit mix or securities valuations.

11/14/2025 - 09:06 AM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41315

John Marshall Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Virginia

81-5424879

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1943 Isaac Newton Square East

Suite 100

Reston, VA 20190

(Address of Principal Executive Offices)

(703) 584-0840

(Registrant’s telephone number)

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


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, $0.01 par value per share	JMSB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☐

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2025, there were 14,175,540 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS

		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	3

	Consolidated Statements of Income for the three and nine months ended September 30, 2025 and September 30, 2024 (Unaudited)	4

	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and September 30, 2024 (Unaudited)	5

	Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2025 and September 30, 2024 (Unaudited)	6

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and September 30, 2024 (Unaudited)	8

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	58

Item 4.	Controls and Procedures	58

Part II	Other Information

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	59

Item 5.	Other Information	59

Item 6.	Exhibits	59

Signatures		60

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

JOHN MARSHALL BANCORP, INC.

Consolidated Balance Sheets

(In thousands, except share and per share data)


	September 30, 2025		December 31, 2024
Assets	(Unaudited)
Cash and due from banks	$	8,867	$	5,945
Interest-bearing deposits in other banks		154,778		116,524
Total cash and cash equivalents		163,645		122,469
Securities available-for-sale, at fair value		116,378		130,257
Securities held-to-maturity at amortized cost, fair value of $77,647 and $76,270 as of September 30, 2025 and December 31, 2024, respectively		89,291		92,009
Less: Allowance for investment credit losses		—		—
Securities held-to-maturity, net		89,291		92,009
Restricted securities, at cost		7,641		7,634
Equity securities, at fair value		2,809		2,832
Loans, net of unearned income		1,938,108		1,872,173
Less: Allowance for loan credit losses		(19,714)		(18,715)
Loans, net		1,918,394		1,853,458
Bank premises and equipment, net		1,424		1,318
Accrued interest receivable		5,819		5,996
Right of use assets		4,583		5,013
Other assets		14,560		13,961
Total assets	$	2,324,544	$	2,234,947
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand deposits	$	446,925	$	433,288
Interest-bearing demand deposits		727,295		705,097
Savings deposits		39,427		44,367
Time deposits		755,181		709,663
Total deposits		1,968,828		1,892,415
Federal Home Loan Bank advances		56,000		56,000
Subordinated debt		24,854		24,791
Accrued interest payable		1,869		2,394
Lease liabilities		4,941		5,369
Other liabilities		8,360		7,364
Total liabilities	$	2,064,852	$	1,988,333
Commitments and contingencies (Note 7)
Shareholders’ Equity
Preferred stock, par value $0.01 per share; authorized 1,000,000 shares; none issued	$	—	$	—
Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued		—		—
Common stock, voting, par value $0.01 per share; authorized 30,000,000 shares; issued and outstanding, 14,216,781 shares at September 30, 2025, including 51,085 unvested shares, 14,269,469 shares at December 31, 2024, including 54,388 unvested shares		142		142
Additional paid-in capital		96,311		97,173
Retained earnings		170,998		159,951
Accumulated other comprehensive loss		(7,759)		(10,652)
Total shareholders’ equity	$	259,692	$	246,614
Total liabilities and shareholders’ equity	$	2,324,544	$	2,234,947

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

JOHN MARSHALL BANCORP, INC.

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Interest and Dividend Income
Interest and fees on loans	$	26,191	$	24,306	$	76,218	$	71,289
Interest on investment securities, taxable		1,043		1,138		3,145		3,602
Interest on investment securities, tax-exempt		9		9		27		27
Dividends		119		97		363		262
Interest on deposits in banks		1,583		2,878		4,339		6,958
Total interest and dividend income	$	28,945	$	28,428	$	84,092	$	82,138
Interest Expense
Deposits	$	12,424	$	14,102	$	36,725	$	41,484
Federal funds purchased		—		—		2		2
Federal Home Loan Bank advances		572		174		1,696		174
Federal Reserve Bank borrowings		—		647		—		2,451
Subordinated debt		349		349		1,047		1,047
Total interest expense	$	13,345	$	15,272	$	39,470	$	45,158
Net Interest Income	$	15,600	$	13,156	$	44,622	$	36,980
Provision for (recovery of) credit losses		356		400		1,064		(667)
Net interest income after provision for (recovery of) credit losses	$	15,244	$	12,756	$	43,558	$	37,647
Non-interest Income
Service charges on deposit accounts	$	87	$	84	$	255	$	260
Other service charges and fees		135		160		429		474
Insurance commissions		58		64		304		357
Gain on sale of government guaranteed loans		106		160		203		509
Non-qualified deferred compensation plan asset gains, net		158		139		364		298
Other income		109		10		110		92
Total non-interest income	$	653	$	617	$	1,665	$	1,990
Non-interest Expenses
Salaries and employee benefits	$	5,693	$	4,897	$	15,971	$	14,583
Occupancy expense of premises		405		444		1,218		1,343
Furniture and equipment expenses		329		304		959		902
Other operating expenses		2,607		2,386		7,446		7,035
Total non-interest expenses	$	9,034	$	8,031	$	25,594	$	23,863
Income before income taxes	$	6,863	$	5,342	$	19,629	$	15,774
Income Tax Expense		1,459		1,107		4,312		3,430
Net income	$	5,404	$	4,235	$	15,317	$	12,344
Earnings per share, basic	$	0.38	$	0.30	$	1.07	$	0.87
Earnings per share, diluted	$	0.38	$	0.30	$	1.07	$	0.87

The accompanying notes are an integral part of these consolidated financial statements.

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JOHN MARSHALL BANCORP, INC.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Net Income	$	5,404	$	4,235	$	15,317	$	12,344
Other comprehensive income:
Unrealized gains on available-for-sale securities, net of tax of $196 and $893 for the three months ended September 30, 2025 and September 30, 2024, respectively. Unrealized gains on available-for-sale securities, net of tax of $775 and $823 for the nine months ended September 30, 2025 and September 30, 2024, respectively.		736		3,357		2,914		3,097
Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax of $(2) and $(5) for the three months ended September 30, 2025 and September 30, 2024, respectively. Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax of $(6) and $(16) for the nine months ended September 30, 2025 and September 30, 2024, respectively.		(6)		(17)		(21)		(61)
Total other comprehensive income	$	730	$	3,340	$	2,893	$	3,036
Total comprehensive income	$	6,134	$	7,575	$	18,210	$	15,380

The accompanying notes are an integral part of these consolidated financial statements.

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JOHN MARSHALL BANCORP, INC.

Consolidated Statements of Shareholders’ Equity

For the Three Months Ended September 30, 2025 and 2024

(In thousands, except share and per share data)

(Unaudited)


								Accumulated
								Other		Total
				Additional Paid- In		Retained		Comprehensive		Shareholders’
	Shares	Common Stock		Capital		Earnings		(Loss)		Equity
Balance, June 30, 2024	14,183,600	$	142	$	96,817	$	150,942	$	(12,555)	$	235,346
Net income	—		—		—		4,235		—		4,235
Other comprehensive income	—		—		—		—		3,340		3,340
Cash dividends attributable to changes in common shares through the record date	—		—		—		(3)		—		(3)
Exercise of stock options, net of 6,026 shares surrendered	9,324		—		68		—		—		68
Share-based compensation	—		—		132		—		—		132
Balance, September 30, 2024	14,192,924	$	142	$	97,017	$	155,174	$	(9,215)	$	243,118

Balance, June 30, 2025	14,181,356	$	142	$	96,485	$	165,594	$	(8,489)	$	253,732
Net income	—		—		—		5,404		—		5,404
Other comprehensive income	—		—		—		—		730		730
Repurchase of common stock	(15,660)		—		(294)		—		—		(294)
Share-based compensation	—		—		120		—		—		120
Balance, September 30, 2025	14,165,696	$	142	$	96,311	$	170,998	$	(7,759)	$	259,692

The accompanying notes are an integral part of these consolidated financial statements.

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JOHN MARSHALL BANCORP, INC.

Consolidated Statements of Shareholders’ Equity

For the Nine Months Ended September 30, 2025 and 2024

(In thousands, except share and per share data)

(Unaudited)


								Accumulated
								Other		Total
				Additional Paid- In		Retained		Comprehensive		Shareholders’
	Shares	Common Stock		Capital		Earnings		(Loss)		Equity
Balance, December 31, 2023	14,101,215	$	141	$	95,636	$	146,388	$	(12,251)	$	229,914
Net income	—		—		—		12,344		—		12,344
Other comprehensive income	—		—		—		—		3,036		3,036
Repurchase of common stock	(3,003)		—		(49)		—		—		(49)
Dividend declared on common stock ($0.25 per share)	—		—		—		(3,558)		—		(3,558)
Exercise of stock options, net of 6,449 shares surrendered	92,038		1		1,036		—		—		1,037
Restricted stock vesting, net of 141 shares surrendered	2,674		—		(3)		—		—		(3)
Share-based compensation	—		—		397		—		—		397
Balance, September 30, 2024	14,192,924	$	142	$	97,017	$	155,174	$	(9,215)	$	243,118

Balance, December 31, 2024	14,215,081	$	142	$	97,173	$	159,951	$	(10,652)	$	246,614
Net income	—		—		—		15,317		—		15,317
Other comprehensive income	—		—		—		—		2,893		2,893
Repurchase of common stock	(95,103)		—		(1,651)		—		—		(1,651)
Dividend declared on common stock ($0.30 per share)	—		—		—		(4,270)		—		(4,270)
Exercise of stock options, net of 12,683 shares surrendered	43,541		—		446		—		—		446
Restricted stock vesting, net of 798 shares surrendered	2,177		—		(15)		—		—		(15)
Share-based compensation	—		—		358		—		—		358
Balance, September 30, 2025	14,165,696	$	142	$	96,311	$	170,998	$	(7,759)	$	259,692

The accompanying notes are an integral part of these consolidated financial statements.

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JOHN MARSHALL BANCORP, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine months ended
	September 30,
	2025		2024
Cash Flows from Operating Activities
Net income	$	15,317	$	12,344
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation		380		334
Right of use asset amortization		780		890
Provision for (recovery of) credit losses		1,064		(667)
Share-based compensation expense		358		397
Net accretion of securities		(146)		(232)
Fair value adjustment on equity securities		(364)		(298)
Amortization of debt issuance costs		63		62
Net loss (gain) on premises and equipment		3		(1)
Deferred tax benefit		(337)		(160)
Gain on sale of government guaranteed loans		(203)		(509)
Changes in assets and liabilities:
Decrease in accrued interest receivable		177		453
Decrease (increase) in other assets		(1,009)		3,085
Decrease in accrued interest payable		(525)		(2,255)
Increase (decrease) in other liabilities		152		(1,682)
Net cash provided by operating activities	$	15,710	$	11,761
Cash Flows from Investing Activities
Net (increase) decrease in loans	$	(68,379)	$	11,898
Proceeds from sale of government guaranteed loans originally classified as held for investment		2,649		5,982
Purchase of available-for-sale securities		(13,987)		—
Proceeds from maturities, calls and principal repayments of available-for-sale securities		31,755		29,549
Proceeds from maturities, calls and principal repayments of held-to-maturity securities		2,637		2,512
Net purchases of restricted securities		(6)		(2,618)
Net sales of equity securities		363		392
Proceeds from sale of premises and equipment		47		—
Purchases of bank premises and equipment		(536)		(231)
Net cash (used in) provided by investing activities	$	(45,457)	$	47,484
Cash Flows from Financing Activities
Net increase in deposits	$	76,413	$	29,550
Net proceeds of Federal Home Loan Bank advances		—		56,000
Repayment of Federal Reserve Bank borrowings		—		(54,000)
Cash dividends paid		(4,270)		(3,558)
Repayment of federal funds purchased		—		(10,000)
Issuance of common stock for share options exercised		446		1,037
Repurchase of shares for tax withholding on share-based compensation		(15)		(3)
Repurchase of common stock		(1,651)		(49)
Net cash provided by financing activities	$	70,923	$	18,977
Net increase in cash and cash equivalents	$	41,176	$	78,222
Cash and cash equivalents, beginning of period		122,469		99,005
Cash and cash equivalents, end of period	$	163,645	$	177,227
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	39,932	$	47,351
Income taxes		4,157		—
Supplemental Disclosures of Noncash Transactions
Unrealized gain on securities available-for-sale	$	3,690	$	3,920
Right of use asset obtained in exchange for new operating lease liability		350		538

The accompanying notes are an integral part of these consolidated financial statements.

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JOHN MARSHALL BANCORP, INC.

Notes to Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(Unaudited)

Note 1— Nature of Business and Summary of Significant Accounting Policies

Nature of Banking Activities

John Marshall Bancorp, Inc. (the “Company”), headquartered in Reston, Virginia, became the registered bank holding company under the Bank Holding Company Act of 1956 for its wholly-owned subsidiary, John Marshall Bank (the “Bank”), on March 1, 2017. This reorganization was completed through a one-for-one share exchange in which the Bank’s shareholders received one share of voting common stock of the Company in exchange for each share of the Bank’s voting common stock. The Company was formed on April 21, 2016 under the laws of the Commonwealth Virginia. The Bank was formed on April 5, 2005 under the laws of the Commonwealth of Virginia and was chartered as a bank on February 9, 2006, by the Virginia Bureau of Financial Institutions. The Bank is a member of the Federal Reserve System and is subject to the rules and regulations of the Virginia Bureau of Financial Institutions, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”). The Bank opened for business on April 17, 2006 and provides banking services to its customers primarily in the Washington, D.C. metropolitan area.

Basis of Presentation

The accounting and reporting policies of John Marshall Bancorp, Inc. conform to generally accepted accounting principles in the United States of America (“GAAP”) and reflect practices of the banking industry. The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and with applicable quarterly reporting regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all of the information and notes required by GAAP for complete financial statements. As such, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2024, included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 28, 2025.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan credit losses.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for any other interim period or for the full year. All amounts and disclosures included in this quarterly report as of December 31, 2024, were derived from the Company’s audited consolidated financial statements.

Significant Accounting Policies and Estimates

Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported.

The Company's significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 1 of the audited financial statements and notes for the year ended December 31, 2024 and are contained in the

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Company's 2024 Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2024.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company will apply the guidance in ASU 2023-09 for annual periods beginning after December 15, 2024, and will enhance its income tax disclosures in accordance with the requirements. The adoption will be applied prospectively and is not anticipated to have a material impact on the Company’s Consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. In January 2025, the FASB issued ASU 2025-01, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.” ASU 2025-01 amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. Early adoption of ASU 2024-03 is permitted. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its Consolidated financial statements.

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Note 2— Investment Securities

Available-for-Sale

As of September 30, 2025, 96.3% of the Company’s available-for-sale investment portfolio was covered by the explicit or implied guarantee of the United States government or one of its agencies and 3.7% was rated investment grade or higher. All available-for-sale securities were current with no securities past due or on nonaccrual as of September 30, 2025 or December 31, 2024.

The following tables summarize the amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses at September 30, 2025 and December 31, 2024.


	September 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		(Losses)		Value
Available-for-sale
U.S. Treasuries	$	17,231	$	—	$	(239)	$	16,992
U.S. government and federal agencies		5,989		—		(182)		5,807
Corporate bonds		3,000		—		(189)		2,811
U.S. agency collateralized mortgage obligations		33,713		6		(5,535)		28,184
Tax-exempt municipal		1,378		—		(164)		1,214
Taxable municipal		270		—		—		270
U.S. agency mortgage-backed		64,692		108		(3,700)		61,100
Total Available-for-sale Securities	$	126,273	$	114	$	(10,009)	$	116,378


	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		(Losses)		Value
Available-for-sale
U.S. Treasuries	$	27,920	$	—	$	(783)	$	27,137
U.S. government and federal agencies		10,966		—		(385)		10,581
Corporate bonds		3,000		—		(261)		2,739
U.S. agency collateralized mortgage obligations		36,032		—		(6,421)		29,611
Tax-exempt municipal		1,379		—		(208)		1,171
Taxable municipal		270		—		(7)		263
U.S. agency mortgage-backed		64,274		—		(5,519)		58,755
Total Available-for-sale Securities	$	143,841	$	—	$	(13,584)	$	130,257

The Company did not sell or recognize any gain or loss for any securities for the three and nine months ended September 30, 2025 and 2024.

Available-for-sale securities having a market value of $50.4 million and $48.8 million at September 30, 2025 and December 31, 2024, respectively, were pledged to secure public deposits. These securities had an amortized cost of $54.1 million and $52.5 million at September 30, 2025 and December 31, 2024, respectively.

The following tables summarize the fair value of securities available-for-sale at September 30, 2025 and December 31, 2024 and the corresponding amounts of gross unrealized losses. Management uses the valuations as of month-end in determining when securities are

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in an unrealized loss position. Therefore, a security’s market value could have exceeded its amortized cost on other days during the prior twelve-month period.


	September 30, 2025
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Available-for-sale
U.S. Treasuries	$	—	$	—	$	16,992	$	(239)	$	16,992	$	(239)
U.S. government and federal agencies		—		—		5,807		(182)		5,807		(182)
Corporate bonds		—		—		2,811		(189)		2,811		(189)
U.S. agency collateralized mortgage obligations		—		—		27,364		(5,535)		27,364		(5,535)
Tax-exempt municipal		—		—		1,214		(164)		1,214		(164)
Taxable municipal		—		—		270		—		270		—
U.S. agency mortgage-backed		—		—		49,300		(3,700)		49,300		(3,700)
Total Available-for-sale Securities	$	—	$	—	$	103,758	$	(10,009)	$	103,758	$	(10,009)


	December 31, 2024
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Available-for-sale
U.S. Treasuries	$	—	$	—	$	27,137	$	(783)	$	27,137	$	(783)
U.S. government and federal agencies		—		—		10,581		(385)		10,581		(385)
Corporate bonds		—		—		2,739		(261)		2,739		(261)
U.S. agency collateralized mortgage obligations		—		—		29,611		(6,421)		29,611		(6,421)
Tax-exempt municipal		—		—		1,171		(208)		1,171		(208)
Taxable municipal		—		—		263		(7)		263		(7)
U.S. agency mortgage-backed		—		—		58,755		(5,519)		58,755		(5,519)
Total Available-for-sale Securities	$	—	$	—	$	130,257	$	(13,584)	$	130,257	$	(13,584)

The Company had 138 and 147 securities in an unrealized loss position for 12 months or longer as of September 30, 2025 and December 31, 2024, respectively. The Company has evaluated available-for-sale securities in an unrealized loss position for credit related impairment at September 30, 2025 and December 31, 2024 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. As such, there was no allowance for credit losses on available-for-sale securities at September 30, 2025.

The table below summarizes the contractual maturities of our available-for-sale investment securities as of September 30, 2025. Issuers may have the right to call or prepay certain obligations, and as such, the expected maturities of our securities may occur sooner than the scheduled contractual maturities presented below.


	September 30, 2025
	Amortized		Fair
(Dollars in thousands)	Cost		Value
Available-for-sale
Due in one year or less	$	22,701	$	22,433
Due after one year through five years		17,737		17,223
Due after five years through ten years		34,275		33,479
Due after ten years		51,560		43,243
Total Available-for-sale Securities	$	126,273	$	116,378

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In the prevailing rate environments as of both September 30, 2025 and December 31, 2024, the Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years in each instance.

Held-to-Maturity

As of September 30, 2025, 93.3% of the Company’s held-to-maturity investment portfolio was covered by the explicit or implied guarantee of the United States government or one of its agencies and 6.7% was rated investment grade or higher. All held-to-maturity securities were current with no securities past due or on nonaccrual as of September 30, 2025 or December 31, 2024.

The following tables summarize the amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrealized losses at September 30, 2025 and December 31, 2024, respectively.


	September 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		(Losses)		Value
Held-to-maturity
U.S. Treasuries	$	6,002	$	—	$	(360)	$	5,642
U.S. government and federal agencies		35,323		—		(3,206)		32,117
U.S. agency collateralized mortgage obligations		16,567		—		(3,143)		13,424
Taxable municipal		6,028		—		(800)		5,228
U.S. agency mortgage-backed		25,371		—		(4,135)		21,236
Total Held-to-maturity Securities	$	89,291	$	—	$	(11,644)	$	77,647


	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		(Losses)		Value
Held-to-maturity
U.S. Treasuries	$	6,001	$	—	$	(583)	$	5,418
U.S. government and federal agencies		35,349		—		(4,743)		30,606
U.S. agency collateralized mortgage obligations		17,805		—		(3,948)		13,857
Taxable municipal		6,041		—		(1,089)		4,952
U.S. agency mortgage-backed		26,813		—		(5,376)		21,437
Total Held-to-maturity Securities	$	92,009	$	—	$	(15,739)	$	76,270

Held-to-maturity securities having a market value of $46.1 million and $43.0 million at September 30, 2025 and December 31, 2024, respectively, were pledged to secure public deposits. These securities had an amortized cost of $51.1 million and $50.0 million at September 30, 2025 and December 31, 2024, respectively.

The Company evaluates the credit risk of its held-to-maturity securities on at least a quarterly basis. The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a probability of default/loss given default methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. The Company’s held-to-maturity securities with credit risk were comprised of municipal bonds and had a credit rating of AA or better as of September 30, 2025. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2025 or December 31, 2024.

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The table below summarizes the contractual maturities of our held-to-maturity investment securities as of September 30, 2025. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities may occur sooner than the scheduled contractual maturities presented below.


	September 30, 2025
	Amortized		Fair
(Dollars in thousands)	Cost		Value
Held-to-maturity
Due in one year or less	$	—	$	—
Due after one year through five years		33,496		31,110
Due after five years through ten years		16,493		14,385
Due after ten years		39,302		32,152
Total Held-to-maturity Securities	$	89,291	$	77,647

In the prevailing rate environments as of September 30, 2025 and December 31, 2024, the Company’s held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.4 years and 6.0 years, respectively.

Restricted Securities

The table below summarizes the carrying amount of restricted securities as of September 30, 2025 and December 31, 2024.


(Dollars in thousands)	September 30, 2025		December 31, 2024
Federal Reserve Bank Stock	$	3,339	$	3,327
Federal Home Loan Bank Stock		4,242		4,247
Community Bankers’ Bank Stock		60		60
Total Restricted Securities	$	7,641	$	7,634

Equity Securities

The Company held equity securities with readily determinable fair values totaling $2.8 million at September 30, 2025 and December 31, 2024 in each instance. These securities consist of mutual funds held in a trust and were obtained for the purpose of economically hedging changes in the Company’s nonqualified deferred compensation liability. Changes in the fair value of these securities are reflected in earnings. Gains of $158 thousand and $139 thousand were recorded in non-interest income in the Consolidated Statements of Income for the three months ended September 30, 2025 and September 30, 2024, respectively. Gains of $364 thousand and $298 thousand were recorded in non-interest income in the Consolidated Statements of Income for the nine months ended September 30, 2025 and 2024, respectively.

Note 3— Loans

The following table presents the composition of the Company’s loan portfolio as of September 30, 2025 and December 31, 2024.


(Dollars in thousands)	September 30, 2025		December 31, 2024
Real Estate Loans:
Commercial	$	1,191,151	$	1,181,090
Construction and land development		193,444		164,988
Residential		501,104		472,932
Commercial - Non-Real Estate:
Commercial loans		46,610		47,736
Consumer - Non-Real Estate:
Consumer loans		1,029		906
Total Gross Loans	$	1,933,338	$	1,867,652
Allowance for loan credit losses		(19,714)		(18,715)
Net deferred loan costs		4,770		4,521
Total net loans	$	1,918,394	$	1,853,458

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Portfolio Segments

The Company currently manages its loan products and the respective exposure to credit losses by the following specific portfolio segments which are levels at which the Company develops and documents its systematic methodology to determine the allowance for loan credit losses attributable to each respective portfolio segment. These segments are:

●

Real estate - commercial loans – The real estate commercial loans category contains commercial mortgage loans secured by owner occupied, non-owner occupied, and multifamily real estate.

●

Real estate - construction and land development loans – The real estate construction and land development loans category contains residential and commercial construction loan financing to builders and developers and to consumers building their own homes.

●

Real estate - residential loans – The real estate residential mortgage loans category contains permanent mortgage loans principally to consumers secured by residential real estate.

●

Commercial loans – The commercial loans category contains business purpose loans made to provide funds for the financing of equipment, receivables, contract administration expenses, and other general corporate needs of commercial businesses.

●

Consumer loans – The consumer loans category contains personal loans such as installment loans and lines of credit.

Loan Servicing Rights

Under the U.S Small Business Administration (“SBA”) 7(a) program, the Bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as well as the servicing on such loans, for which it is paid a fee. The Company generally offers SBA 7(a) loans within a range of $50 thousand to $2.0 million. SBA 7(a) loans are fixed or adjustable-rate loans based on the Prime Rate. Under the SBA 7(a) program, the loans carry an SBA guaranty for up to 85% of the loan. Typical maturities for this type of loan vary but can be up to ten years. The Company holds rights to service the guaranteed portion of SBA loans sold in the secondary market. Management has elected the amortization method to account for loan servicing rights. The loan servicing spread is generally a minimum of 1.00% on all SBA 7(a) loans.

Loan servicing rights are capitalized at estimated fair value when acquired through the origination of loans that are subsequently sold with the servicing rights retained. Loan servicing rights are amortized to servicing income on loans sold approximately in proportion to and over the period of estimated net servicing income. The value of loan servicing rights at the date of the sale of loans is estimated based on the discounted present value of expected future cash flows using key assumptions for servicing income and costs and expected prepayment rates on the underlying loans.

The carrying value of loan servicing rights are periodically evaluated for impairment by comparing actual cash flows and estimated future cash flows from the loan servicing assets to those estimated at the time that the loan servicing assets were originated. Fair values are estimated using discounted expected future cash flows based on current market rates of interest. For purposes of measuring impairment, the loan servicing rights must be stratified by one or more predominant risk characteristics of the underlying loans. The Company stratifies its capitalized loan servicing rights based on product type and term of the underlying loans. The amount of impairment recognized is the amount, if any, by which the amortized cost of the loan servicing rights exceeds their carrying value. Impairment, if deemed temporary, is recognized through a valuation allowance to the extent that fair value is less than the recorded amount.

At September 30, 2025 and December 31, 2024, the Bank’s SBA 7(a) loan servicing portfolio, which is not included in the Company’s consolidated financial statements, totaled $8.4 million and $6.4 million, respectively. At September 30, 2025 and December 31, 2024, SBA servicing rights of $119 thousand and $97 thousand were recorded in other assets in the Consolidated Balance Sheets, respectively. There was no valuation allowance on loan servicing rights at September 30, 2025 or December 31, 2024.

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Note 4— Allowance for Loan Credit Losses

The following tables present the activity in the allowance for loan credit losses for the nine months ended September 30, 2025 and 2024.


	September 30, 2025
	Real Estate
			Construction &
			Land
Dollars in thousands	Commercial		Development		Residential		Commercial		Consumer		Total
Beginning balance, December 31, 2024	$	11,732	$	1,761	$	4,594	$	548	$	80	$	18,715
Charge-offs		—		—		—		—		—		—
Recoveries		—		—		—		2		—		2
Provision for (recovery of) credit losses		101		513		373		17		(7)		997
Ending balance, September 30, 2025	$	11,833	$	2,274	$	4,967	$	567	$	73	$	19,714


	September 30, 2024
	Real Estate
			Construction &
			Land
Dollars in thousands	Commercial		Development		Residential		Commercial		Consumer		Total
Beginning balance, December 31, 2023	$	12,841	$	1,787	$	4,323	$	495	$	97	$	19,543
Charge-offs		—		—		—		—		—		—
Recoveries		—		—		—		2		—		2
Provision for (recovery of) credit losses		(1,286)		(90)		319		37		(44)		(1,064)
Ending balance, September 30, 2024	$	11,555	$	1,697	$	4,642	$	534	$	53	$	18,481

There were no collateral dependent or individually evaluated loans as of September 30, 2025. There was one collateral dependent loan totaling $10.0 million in outstanding principal that was individually evaluated as of December 31, 2024. Management concluded that the real estate secured collateral value of the loan, net of the estimated cost to sell, exceeded the carrying value of the loan and no reserve was necessary. The loan paid off, in full, on January 7, 2025.

Delinquency Information

The following tables present a summary of past due and nonaccrual loans by segment as of September 30, 2025 and December 31, 2024.


	September 30, 2025
	30-59 Days		60-89 Days		90 Days or								90 Days or More
	Past		Past		More		Total Past				Total		Past Due and		Nonaccrual
(Dollars in thousands)	Due		Due		Past Due		Due		Current		Loans		Still Accruing		Loans
Real Estate Loans
Commercial	$	—	$	—	$	—	$	—	$	1,191,151	$	1,191,151	$	—	$	—
Construction and land development		—		—		—		—		193,444		193,444		—		—
Residential		—		—		—		—		501,104		501,104		—		—
Commercial		—		—		—		—		46,610		46,610		—		—
Consumer		—		—		—		—		1,029		1,029		—		—
Total Loans	$	—	$	—	$	—	$	—	$	1,933,338	$	1,933,338	$	—	$	—


	December 31, 2024
	30-59 Days		60-89 Days		90 Days or								90 Days or More
	Past		Past		More		Total Past				Total		Past Due and		Nonaccrual
(Dollars in thousands)	Due		Due		Past Due		Due		Current		Loans		Still Accruing		Loans
Real Estate Loans
Commercial	$	—	$	—	$	9,978	$	9,978	$	1,171,112	$	1,181,090	$	9,978	$	—
Construction and land development		—		—		—		—		164,988		164,988		—		—
Residential		—		—		—		—		472,932		472,932		—		—
Commercial		—		—		—		—		47,736		47,736		—		—
Consumer		—		—		—		—		906		906		—		—
Total Loans	$	—	$	—	$	9,978	$	9,978	$	1,857,674	$	1,867,652	$	9,978	$	—

The $10.0 million of 90 Days or More Past Due and Still Accruing as of December 31, 2024 was comprised of one loan. The loan paid off, in full, on January 7, 2025.

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Credit Quality Indicators

The Company assesses credit quality indicators based on internal risk rating of loans. Each loan is evaluated at least annually with more frequent evaluation of more severely criticized loans. The indicators that determine the rating for loans as of the date presented are based on the most recent credit review performed. Internal risk rating definitions are:

Pass: These include satisfactory loans that have acceptable levels of risk.

Special Mention: Loans classified as special mention have a potential weakness that requires close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. These credits do not expose the Company to sufficient risk to warrant further adverse classification.

Substandard: A substandard asset is inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard asset with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be received in the future.

The Company has a portfolio of smaller homogenous loans that are not individually risk rated and include residential permanent and construction mortgages, home equity lines of credit, and consumer installment loans. For these loans, management uses payment status as the primary credit quality indicator. The payment status of these loans is then translated into an internal risk rating. The following table summarizes the translation of past due status to risk rating for loans that are not individually risk rated.


		Internal
Days Past Due		Risk Rating
0 - 29 days		Pass
30-59 days		Special Mention
60-89 days		Substandard
90-119 days		Doubtful
120+ days		Loss

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The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of September 30, 2025.


	Term Loans by Year of Origination
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving		Total
Real Estate Loans - Commercial
Pass	$	93,525	$	151,442	$	66,136	$	261,725	$	161,280	$	431,877	$	3,573	$	1,169,558
Special mention		—		—		—		21,593		—		-		—		21,593
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Commercial	$	93,525	$	151,442	$	66,136	$	283,318	$	161,280	$	431,877	$	3,573	$	1,191,151

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real Estate Loans - Construction and land development
Pass	$	44,668	$	67,995	$	24,359	$	14,887	$	773	$	13,355	$	26,320	$	192,357
Special mention		—		—		—		—		—		1,087		—		1,087
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Construction and land development	$	44,668	$	67,995	$	24,359	$	14,887	$	773	$	14,442	$	26,320	$	193,444

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real Estate Loans - Residential
Pass	$	60,612	$	28,598	$	63,087	$	102,094	$	110,366	$	110,092	$	26,255	$	501,104
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Residential	$	60,612	$	28,598	$	63,087	$	102,094	$	110,366	$	110,092	$	26,255	$	501,104

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	7,069	$	5,470	$	3,484	$	4,648	$	713	$	6,575	$	18,651	$	46,610
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial Loans	$	7,069	$	5,470	$	3,484	$	4,648	$	713	$	6,575	$	18,651	$	46,610

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	438	$	533	$	39	$	—	$	—	$	—	$	19	$	1,029
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Consumer Loans	$	438	$	533	$	39	$	—	$	—	$	—	$	19	$	1,029

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2024.


	Term Loans by Year of Origination
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving		Total
Real Estate Loans - Commercial
Pass	$	133,591	$	66,453	$	287,181	$	176,424	$	116,364	$	362,135	$	1,474	$	1,143,622
Special mention		—		—		12,702		—		—		14,788		—		27,490
Substandard		—		—		—		9,978		—		—		—		9,978
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Commercial	$	133,591	$	66,453	$	299,883	$	186,402	$	116,364	$	376,923	$	1,474	$	1,181,090

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real Estate Loans - Construction and land development
Pass	$	64,826	$	40,190	$	17,635	$	4,395	$	2,254	$	11,974	$	22,613	$	163,887
Special mention		—		—		—		—		—		1,101		—		1,101
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Construction and land development	$	64,826	$	40,190	$	17,635	$	4,395	$	2,254	$	13,075	$	22,613	$	164,988

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Real Estate Loans - Residential
Pass	$	31,815	$	71,489	$	110,724	$	114,991	$	81,482	$	39,868	$	22,563	$	472,932
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Real Estate Loans - Residential	$	31,815	$	71,489	$	110,724	$	114,991	$	81,482	$	39,868	$	22,563	$	472,932

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	13,622	$	4,628	$	5,770	$	1,351	$	1,323	$	7,032	$	14,010	$	47,736
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial Loans	$	13,622	$	4,628	$	5,770	$	1,351	$	1,323	$	7,032	$	14,010	$	47,736

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	812	$	72	$	—	$	—	$	—	$	3	$	19	$	906
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Consumer Loans	$	812	$	72	$	—	$	—	$	—	$	3	$	19	$	906

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Revolving loans that are converted to term loans are treated as new originations in both tables above and are presented by year of origination.

Modifications with Borrowers Experiencing Financial Difficulty

The allowance for loan credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination. The starting point for the estimate of the allowance for loan credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company may provide concessions to borrowers experiencing financial difficulty to minimize the economic loss and improve long-term loan performance and collectability. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. The Company did not make

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any loan modifications to borrowers experiencing financial difficulty during the the nine months ended September 30, 2025 and 2024. There were also no instances of defaults on loans that occurred during the the nine months ended September 30, 2025 and 2024 for loans that had been modified during the previous 12 months. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance because of the measurement methodologies used to estimate the allowance, a change to the allowance is generally not recorded upon modification.

Unfunded Commitments

The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments of $1.2 million at both September 30, 2025 and December 31, 2024 is separately classified within Other Liabilities on the Consolidated Balance Sheets. The provision for credit losses recorded during the nine months ended September 30, 2025 was primarily due to an increase in unfunded commitments.

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the nine months ended September 30, 2025 and 2024.


	Allowance for Credit Losses
(Dollars in thousands)	Unfunded Commitments
Beginning balance, December 31, 2024	$	1,083
Provision for credit losses		67
Ending balance, September 30, 2025	$	1,150



	Allowance for Credit Losses
(Dollars in thousands)	Unfunded Commitments
Beginning balance, December 31, 2023	$	620
Provision for credit losses		397
Ending balance, September 30, 2024	$	1,017

Note 5— Derivatives

The Company enters into interest rate swap agreements (“swaps”) with commercial loan customers to provide a facility for customers to manage their interest rate risk. These swaps are matched in exact offsetting terms with swaps that the Company enters into with an independent third party. These swaps qualify as derivatives, but are not designated as hedging instruments.

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The following tables summarize the Company’s swaps at September 30, 2025 and December 31, 2024.


	September 30, 2025
				Estimated	Weighted Average
		Notional		Fair	Years to	Receive		Pay
(Dollars in thousands)		Amount		Value	Maturity	Rate		Rate
Interest rate swap agreements:
Pay fixed/receive variable swaps	$	35,533	$	250	2.9 years	6.01	%	4.95	%
Pay variable/receive fixed swaps		35,533		(250)	2.9 years	4.95	%	6.01	%
Total interest rate swap agreements	$	71,066	$	—	2.9 years	5.48	%	5.48	%


	December 31, 2024
				Estimated	Weighted Average
		Notional		Fair	Years to	Receive		Pay
(Dollars in thousands)		Amount		Value	Maturity	Rate		Rate
Interest rate swap agreements:
Pay fixed/receive variable swaps	$	24,195	$	549	2.7 years	6.12	%	4.09	%
Pay variable/receive fixed swaps		24,195		(549)	2.7 years	4.09	%	6.12	%
Total interest rate swap agreements	$	48,390	$	—	2.7 years	5.11	%	5.11	%

The estimated fair value of the swaps at September 30, 2025 and December 31, 2024 was recorded in other assets and liabilities in the Consolidated Balance Sheets. The associated net gains and losses on the swaps are recorded in other income in the Consolidated Statements of Income.

Note 6— Deposits and Borrowings

The following tables show the components of the Company’s funding sources.


(Dollars in thousands)	September 30, 2025		December 31, 2024
Deposits:
Non-interest bearing demand deposits⁽¹⁾	$	446,925	$	433,288
Interest-bearing demand deposits⁽¹⁾		727,295		705,097
Savings deposits		39,427		44,367
Time deposits⁽²⁾		755,181		709,663
Total Deposits	$	1,968,828	$	1,892,415

(1)

Overdraft demand deposits reclassified to loans totaled $12 thousand at September 30, 2025 and $1 thousand December 31, 2024.

(2)

The aggregate amount of certificates of deposit with a minimum denomination of $250,000 was $337.8 million and $315.5 million at September 30, 2025 and December 31, 2024, respectively.

The Company obtains certain deposits through the efforts of third-party brokers. Brokered deposits totaled $302.0 million and $276.4 million at September 30, 2025 and December 31, 2024, respectively, and were included primarily in time deposits on the Company’s Consolidated Balance Sheets. At September 30, 2025, there were no depositors that represented 5% or more of the Company’s total deposits.

The following table presents the carrying value and interest rate ranges for the Company’s long-term debt as of September 30, 2025 and December 31, 2024.


						September 30, 2025		December 31, 2024
(Dollars in thousands)	Stated Interest Rate Range		Weighted-Average Interest Rate			Carrying Value		Carrying Value
Long-term Debt:
FHLB advances	3.91% - 4.14	%		3.99	%	$	56,000	$	56,000
Subordinated debt	5.25	%		5.25	%		24,854		24,791
Total Long-term Debt						$	80,854	$	80,791

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The Company completed a private placement of a $25.0 million fixed-to-floating subordinated note on June 15, 2022. Subject to limited exceptions permitting earlier redemption, the note is callable, in whole or in part, commencing July 1, 2027. Unless redeemed earlier, the note will mature on July 1, 2032. The note bears interest at a fixed rate of 5.25% to but excluding July 1, 2027, and will bear interest at a floating rate equal to the three-month Secured Overnight Financing Rate plus 245 basis points thereafter. The note is carried at its principal amount, less unamortized issuance costs.

The Company, from time to time, uses Federal Home Loan Bank of Atlanta (“FHLB”) advances as a source of funding and to manage interest rate risk. FHLB advances are secured by a blanket floating lien on all real estate mortgage loans secured by 1-to-4 family residential, multi-family and commercial real estate properties. On September 3, 2024, the Company took out three fixed interest rate advances with terms of 18, 24, and 36 months. The interest rates on the advances range from 3.91% to 4.14%. At September 30, 2025, these three outstanding FHLB advances totaled $56.0 million. Available borrowing capacity based on collateral value amounted to approximately $446.9 million as of September 30, 2025.

The Company also has the capacity to borrow up to $115.5 million at the Federal Reserve discount window of which none had been drawn upon at September 30, 2025. The Bank had loans pledged at the Federal Reserve discount window totaling $163.0 million as of September 30, 2025.

The Company also has federal funds lines of credit with correspondent banks available for overnight borrowing of $110 million as of September 30, 2025. None of the federal funds lines of credit were drawn upon as of September 30, 2025.

The following table shows the carrying amount of the Company’s time deposits by contractual maturity as of September 30, 2025.


(Dollars in thousands)	September 30, 2025
2025	$	126,425
2026		429,537
2027		160,632
2028		36,170
2029		1,173
Thereafter		1,244
Total	$	755,181

Note 7— Commitments and Contingencies

The Company is party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

The following table summarizes the contract or notional amount of the Company’s exposure to off-balance sheet risk as of September 30, 2025 and December 31, 2024.


(Dollars in thousands)	September 30, 2025		December 31, 2024
Commitments to extend credit	$	321,414	$	316,249
Standby letters of credit	$	9,942	$	10,767

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral

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obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, income-producing commercial properties, and other real estate properties.

Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not be drawn upon to the total extent to which the Company is committed.

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Note 8— Fair Value Measurements

Determination of Fair Value

The Company determines the fair values of its financial instruments based on the fair value hierarchy established by Accounting Standards Codification (“ASC”) Topic 820 – Fair Value Measurement, which defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market and in an orderly transaction between market participants on the measurement date.

The fair value measurements and disclosures topic specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

Fair Value Hierarchy

In accordance with this guidance, the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 - Valuation is based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Assets Measured at Fair Value on a Recurring Basis

In accordance with ASC Topic 820, the following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a recurring basis in the financial statements.

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Securities Available-for-sale and Equity Securities

Securities available-for-sale and equity securities with readily determinable fair values are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data (Level 2). If the inputs used to provide the evaluation for certain securities are unobservable and/or there is little, if any, market activity then the security would fall to the lowest level of the hierarchy (Level 3).

The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third-party portfolio accounting service vendor for valuation of its portfolio of debt securities. The vendor’s primary source for security valuation is ICE Data Services, which evaluates securities based on market data. ICE Data Services utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs.

The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance and rating to incorporate additional spreads to the industry benchmark curves.

Interest Rate Swap Agreements

Interest rate swap agreements are measured by alternative pricing sources using a discounted cash flow method that incorporates current market interest rates. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These characteristics classify interest rate swap agreements as Level 2 in the fair value hierarchy.

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The following tables summarize the fair value of assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024.


			Fair Value Measurements at September 30, 2025 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	Balance as of		Identical Assets		Observable Inputs		Inputs
(Dollars in thousands)	September 30, 2025		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available-for-sale:
U.S. Treasuries	$	16,992	$	—	$	16,992	$	—
U.S. government and federal agencies		5,807		—		5,807		—
Corporate bonds		2,811		—		2,811		—
U.S. agency collateralized mortgage obligations		28,184		—		28,184		—
Tax-exempt municipal		1,214		—		1,214		—
Taxable municipal		270		—		270		—
U.S. agency mortgage-backed		61,100		—		61,100		—
Equity securities, at fair value		2,809		2,809		—		—
Interest rate swap agreements		250		—		250		—
Total assets at fair value	$	119,437	$	2,809	$	116,628	$	—

Liabilities:
Interest rate swap agreements	$	250	$	—	$	250	$	—
Total liabilities at fair value	$	250	$	—	$	250	$	—


			Fair Value Measurements at December 31, 2024 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	Balance as of		Identical Assets		Observable Inputs		Inputs
(Dollars in thousands)	December 31, 2024		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available-for-sale:
U.S. Treasuries	$	27,137	$	—	$	27,137	$	—
U.S. government and federal agencies		10,581		—		10,581		—
Corporate bonds		2,739		—		2,739		—
Collateralized mortgage obligations		29,611		—		29,611		—
Tax-exempt municipal		1,171		—		1,171		—
Taxable municipal		263		—		263		—
Mortgage-backed		58,755		—		58,755		—
Equity securities, at fair value		2,832		2,832		—		—
Interest rate swap agreements		549		—		549		—
Total assets at fair value	$	133,638	$	2,832	$	130,806	$	—

Liabilities:
Interest rate swap agreements	$	549	$	—	$	549	$	—
Total liabilities at fair value	$	549	$	—	$	549	$	—

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Assets Measured at Fair Value on a Non-recurring Basis

Under certain circumstances, the Company makes adjustments to fair value for assets and liabilities although they are not measured at fair value on an ongoing basis. The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a non-recurring basis in the financial statements:

Collateral Dependent Loans

In accordance with ASC 326, loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. The measurement of loss associated with collateral dependent loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Company’s collateral is real estate. The value of real estate collateral is determined utilizing a market valuation approach based on an appraisal, of one year or less, conducted by an independent, licensed appraiser using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if an appraisal of the property is more than one-year-old and not solely based on observable market comparables, or management determines the fair value of the collateral is further impaired below the appraised value, then a Level 3 valuation is considered to measure the fair value. The value of business equipment is based upon an outside appraisal, of one year or less, if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income. The Company had no collateral dependent loans with a recorded reserve as of September 30, 2025. The Company had one collateral dependent loan totaling $10.0 million in outstanding principal with no recorded reserve as of December 31, 2024. The loan paid off, in full, on January 7, 2025.

Other Real Estate Owned (“OREO”)

OREO is carried at the lower of cost or fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value using observable market data, the Company records the property as Level 2. When an appraised value using observable market data is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the property as Level 3 valuation. Any fair value adjustments are recorded in the period incurred and expensed against current earnings. The Company had no OREO as of September 30, 2025 or December 31, 2024.

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The following tables present the carrying value and estimated fair value, including the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2025 and December 31, 2024.


			Fair Value Measurements at September 30, 2025 Using
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	Carrying Value as of		Assets		Observable Inputs		Inputs		Fair Value as of
(Dollars in thousands)	September 30, 2025		(Level 1)		(Level 2)		(Level 3)		September 30, 2025
Assets:
Cash and cash equivalents	$	163,645	$	163,645	$	—	$	—	$	163,645
Securities:
Available-for-sale		116,378		—		116,378		—		116,378
Held-to-maturity		89,291		—		77,647		—		77,647
Equity securities, at fair value		2,809		2,809		—		—		2,809
Restricted securities, at cost		7,641		—		7,641		—		7,641
Loans, net of allowance		1,918,394		—		—		1,842,608		1,842,608
Interest rate swap agreements		250		—		250		—		250
Accrued interest receivable		5,819		—		5,819		—		5,819
Liabilities:
Time deposits	$	755,181	$	—	$	757,841	$	—	$	757,841
Other deposits		1,213,647		1,213,647		—		—		1,213,647
Federal Home Loan Bank advances		56,000		—		55,979		—		55,979
Subordinated debt		24,854		—		—		22,378		22,378
Interest rate swap agreements		250		—		250		—		250
Accrued interest payable		1,869		—		1,869		—		1,869


			Fair Value Measurements at December 31, 2024 Using
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	Carrying Value as of		Assets		Observable Inputs		Inputs		Fair Value as of
(Dollars in thousands)	December 31, 2024		(Level 1)		(Level 2)		(Level 3)		December 31, 2024
Assets:
Cash and cash equivalents	$	122,469	$	122,469	$	—	$	—	$	122,469
Securities:
Available-for-sale		130,257		—		130,257		—		130,257
Held-to-maturity		92,009		—		76,270		—		76,270
Equity securities, at fair value		2,832		2,832		—		—		2,832
Restricted securities, at cost		7,634		—		7,634		—		7,634
Loans, net of allowance		1,853,458		—		—		1,749,721		1,749,721
Interest rate swap agreements		549		—		549		—		549
Accrued interest receivable		5,996		—		5,996		—		5,996
Liabilities:
Time deposits	$	709,663	$	—	$	712,366	$	—	$	712,366
Other deposits		1,182,752		1,182,752		—		—		1,182,752
Federal Home Loan Bank advances		56,000		—		56,000		—		56,000
Subordinated debt		24,791		—		—		22,126		22,126
Interest rate swap agreements		549		—		549		—		549
Accrued interest payable		2,394		—		2,394		—		2,394

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Note 9— Earnings per Common Share

Earnings per common share is calculated in accordance with ASC 260 - Earnings Per Share, which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.

Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of voting common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table summarizes the computation of earnings per share for the three and nine months ended September 30, 2025 and 2024.


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Earnings per common share - basic:
Income available to common shareholders (in thousands):
Net income	$	5,404	$	4,235	$	15,317	$	12,344
Less: Income attributable to unvested restricted stock awards		(19)		(14)		(55)		(40)
Net income available to common shareholders	$	5,385	$	4,221	$	15,262	$	12,304

Weighted average shares outstanding:
Common shares outstanding, including unvested restricted stock		14,223,765		14,233,612		14,256,539		14,209,916
Less: Unvested restricted stock		(50,812)		(45,921)		(51,182)		(45,855)
Weighted-average common shares outstanding - basic		14,172,953		14,187,691		14,205,357		14,164,061

Earnings per common share - basic	$	0.38	$	0.30	$	1.07	$	0.87

Earnings per common share - diluted:
Income available to common shareholders (in thousands):
Net income	$	5,404	$	4,235	$	15,317	$	12,344
Less: Income attributable to unvested restricted stock awards		(19)		(14)		(55)		(40)
Net income available to common shareholders	$	5,385	$	4,221	$	15,262	$	12,304

Weighted average shares outstanding:
Common shares outstanding, including unvested restricted stock		14,223,765		14,233,612		14,256,539		14,209,916
Less: Unvested restricted stock		(50,812)		(45,921)		(51,182)		(45,855)
Plus: Effect of dilutive options		—		26,896		6,525		34,272
Weighted-average common shares outstanding - diluted		14,172,953		14,214,587		14,211,882		14,198,333

Earnings per common share - diluted	$	0.38	$	0.30	$	1.07	$	0.87

Outstanding options to purchase common stock were considered in the computation of diluted earnings per share for the periods presented. All stock options outstanding during the three and nine months ended September 30, 2025 and September 30, 2024 were included in computing diluted earnings per share for the three and nine months ended September 30, 2025 and 2024, respectively, as none had anti-dilutive effects.

Note 10— Stock Based Compensation Plan

The Company’s share-based compensation plan, approved by stockholders on June 17, 2025 (“2025 Plan”), provides for the grant of share-based awards in the form of incentive stock options, non-incentive stock options, restricted stock awards and restricted stock units to directors and employees. The Company reserved 425,000 shares of voting common stock for issuance under the 2025 Plan, of which 423,250 was available for grant in future periods as of September 30, 2025. Stock options to be granted under the 2025 Plan typically

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vest over five years and expire 10 years from the grant date. Under the 2025 Plan, the exercise price of options may not be less than 100% of fair market value at the grant date with a maximum term for an option award of 10 years from the grant date. The Company’s Compensation Committee administers the 2025 Plan and has the authority to determine the terms and conditions of each award thereunder.

The Company’s previous share-based compensation plan, the 2015 Stock Option Plan (“2015 Plan”), provided for the grant of share-based awards in the form of incentive stock options, non-incentive stock options, restricted stock and restricted stock units to directors and employees. The 2015 Plan provided for awards of up to 976,211 shares of voting common stock. The 2015 Plan expired on April 28, 2025 and was replaced by the 2025 Plan. Share-based awards outstanding prior to April 28, 2025 were granted under the 2015 Plan and are subject to the provisions of the 2015 Plan.

The table below provides a summary of the stock options activity for the nine months ended September 30, 2025.


	September 30, 2025
		Weighted Average		Aggregate Intrinsic
	Shares	Exercise Price		Value
Outstanding at January 1, 2025	58,660	$	11.77
Granted	—		—
Exercised	(56,224)		11.77
Forfeited or expired	(2,436)		11.77
Outstanding at September 30, 2025	—		—	$	—
Exercisable September 30, 2025	—	$	—	$	—

The aggregate intrinsic value of stock options in the table above represents the total amount by which the current market value of the underlying stock exceeds the exercise price of the option that would have been received by the Company had all option holders exercised their options on September 30, 2025. The intrinsic value of options exercised was $0 and $253 thousand for the three and nine months ended September 30, 2025, respectively, and $106 thousand and $677 thousand for the three and nine months ended September 30, 2024, respectively. These amounts and the intrinsic values noted above change based on changes in the market value of the Company’s voting common stock.

There were no options granted during the three and nine months ended September 30, 2025 and 2024.

The Company did not record any share-based compensation expense applicable to the Company’s share-based compensation plans for stock options during the three and nine months ended September 30, 2025 and 2024.

The Company does not have any unrecognized share-based compensation expense related to nonvested options as of September 30, 2025.

The table below provides a summary of the restricted stock awards activity for the nine months ended September 30, 2025.


	September 30, 2025
		Weighted Average
	Shares	Grant Date Fair Value
Nonvested at January 1, 2025	54,388	$	21.97
Granted	3,000		19.32
Vested	(2,975)		16.31
Forfeited	(3,328)		22.66
Nonvested at September 30, 2025	51,085		22.10

Compensation expense for restricted stock grants is recognized over the vesting period of the awards based on the fair value of the Company’s voting common stock at issue date. The fair value of the stock was determined using the closing stock price on the day of grant. The restricted stock grants vest over two to five years. The Company awarded restricted stock grants for 1,750 shares of common stock during the nine months ended September 30, 2024.

Share-based compensation expense applicable to the Company’s share-based compensation plans for restricted stock grants was $120 thousand and $132 thousand for the three months ended September 30, 2025 and September 30, 2024, respectively. The total fair value of the shares, which vested during the three months ended September 30, 2025 and September 30, 2024, was $0 at each instance.

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Share-based compensation expense applicable to the Company’s share-based compensation plans for restricted stock grants was $358 thousand and $397 thousand for the nine months ended September 30, 2025 and 2024, respectively. The total fair value of the shares, which vested during the nine months ended September 30, 2025 and 2024, was $56 thousand at each instance.

Unrecognized share-based compensation expense related to nonvested restricted stock grants amounted to $738 thousand as of September 30, 2025. This amount is expected to be recognized over a weighted-average period of 1.86 years.

Note 11— Regulatory Capital

The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Securities Exchange Act of 1934, as amended (“Exchange Act”). As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory capital requirements.

The Bank is subject to capital adequacy standards adopted by the Federal Reserve, including the capital rules that implemented the Basel III regulatory capital reforms developed by the Basel Committee on Banking Supervision. Failure to meet minimum capital requirements can initiate certain mandatory – possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Management believes that the Bank met all capital adequacy requirements to which it was subject as of September 30, 2025 and December 31, 2024.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, common equity Tier 1 to risk-weighted assets, and Tier 1 capital to average assets.

In addition to the minimum regulatory capital required for capital adequacy purposes, the Bank is required to maintain a minimum capital conservation buffer above those minimums in the form of common equity. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and discretionary compensation paid to certain officers, based on the amount of the shortfall. The capital conservation buffer was 2.5% at September 30, 2025, and is applicable for the common equity Tier 1, Tier 1, and total capital ratios.

As of September 30, 2025, the most recent notification from the Federal Reserve Bank of Richmond (“Federal Reserve Bank”) categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the institution must maintain minimum total risk-based, common equity Tier 1, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s category.

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The table below provides a summary of the Bank’s capital ratios as of September 30, 2025 and December 31, 2024.


									Minimum To Be Well
					Minimum				Capitalized Under Prompt
					Capital Requirement⁽¹⁾				Corrective Action
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2025
Total capital (to risk weighted assets)	$	310,363	16.6	%	$	196,735	10.5	%	$	187,367	10.0	%
Tier 1 capital (to risk weighted assets)		290,073	15.5	%		159,262	8.5	%		149,893	8.0	%
Common equity tier 1 capital (to risk weighted assets)		290,073	15.5	%		131,157	7.0	%		121,788	6.5	%
Tier 1 capital (to average assets)		290,073	12.7	%		91,447	4.0	%		114,309	5.0	%

As of December 31, 2024
Total capital (to risk weighted assets)	$	295,119	16.2	%	$	191,088	10.5	%	$	181,989	10.0	%
Tier 1 capital (to risk weighted assets)		276,468	15.2	%		154,690	8.5	%		145,591	8.0	%
Common equity tier 1 capital (to risk weighted assets)		276,468	15.2	%		127,392	7.0	%		118,293	6.5	%
Tier 1 capital (to average assets)		276,468	12.4	%		89,438	4.0	%		111,798	5.0	%

(1)Including capital conservation buffer.

Note 12— Revenue

Certain of the Company’s non-interest revenue streams are derived from short-term contacts associated with services provided to deposit account holders as well as other ancillary services, which are accounted for in accordance with ASC 606 – Revenue Recognition. For most of these revenue streams, the duration of the contract does not extend beyond the services performed. Due to the short duration of most customer contracts that generate non-interest income, no significant judgments must be made in the determination of the amount and timing of revenue recognized.

The following table shows the components of non-interest income for the three and nine months ended September 30, 2025 and 2024.


	Three months ended				Nine months ended
	September 30,				September 30,
(Dollars in thousands)	2025		2024		2025		2024
Service charges on deposit accounts ⁽¹⁾
Overdrawn account fees	$	24	$	18	$	65	$	61
Account service fees		63		66		190		199
Other service charges and fees ⁽¹⁾
Interchange income		82		91		249		271
Other charges and fees		53		69		180		203
Net gain (loss) on premises and equipment ⁽¹⁾		—		1		(3)		1
Insurance commissions ⁽¹⁾		58		64		304		357
Gain on sale of government guaranteed loans		106		160		203		509
Non-qualified deferred compensation plan asset gains, net		158		139		364		298
Other operating income ⁽²⁾		109		9		113		91
Total non-interest income	$	653	$	617	$	1,665	$	1,990

(1)	Income within the scope of ASC 606.

(2)

Includes other operating income within the scope of ASC 606 amounting to $8 thousand and $12 thousand for the three and nine months ended September 30, 2025, respectively. Includes other operating income of $101 thousand and $101 thousand related to swap fee income on a back-to-back loan swaps for the three and nine months ended September 30, 2025, respectively, which is outside the scope of ASC 606. Includes other operating income within the scope of ASC 606 amounting to $9 and $27 thousand for the three and nine months ended September 30, 2024, respectively. Includes other operating income of $0 and $64 thousand related to swap fee income on a back-to-back loan swaps for the three and nine months ended September 30, 2024, respectively, which is outside the scope of ASC 606.

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A description of the Company’s revenue streams accounted for under ASC 606 follows:

Service charges on deposit accounts

Service charges on deposit accounts consist of overdrawn account fees and account service fees. Overdrawn account fees are recognized at the point in time that the overdraft occurs. Account service fees consist primarily of account analysis and other maintenance fees and are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Payment for service charges on deposit accounts is received immediately or in the following month through a direct charge to customers’ accounts.

Other service charges and fees

Other service charges and fees are primarily comprised of interchange income and other charges and fees. Interchange income is earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. Other charges and fees include revenue from processing wire transfers, cashier’s checks, and other transaction-based services. The Company’s performance obligation for these charges and fees is largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Net gains (losses) on premises and equipment

The Company records a gain or loss on the disposition of premises and equipment when control of the property transfers or is involuntarily converted to a monetary asset (e.g., insurance proceeds). This income is reflected in other operating income on the Company’s Consolidated Statements of Income.

Insurance commissions

The Company performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated in the form of a commission for placement of an insurance policy based on a percentage of premiums issued and maintained during the period. Revenue is recognized when received.

Note 13— Other Operating Expenses

The following table shows the components of other operating expenses for the three and nine months ended September 30, 2025 and 2024.


	Three months ended				Nine months ended
	September 30,				September 30,
(Dollars in thousands)	2025		2024		2025		2024
Advertising expense	$	154	$	96	$	311	$	290
Data processing		566		538		1,734		1,595
FDIC insurance		250		250		722		730
Professional fees		280		256		806		750
State franchise tax		641		574		1,879		1,718
Director costs		169		192		508		593
Other operating expenses		547		480		1,486		1,359
Total other operating expenses	$	2,607	$	2,386	$	7,446	$	7,035

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Note 14— Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss), by category, net of tax for the nine months ended September 30, 2025 and 2024.


	September 30, 2025
			Unrealized Gains on
			Securities Transferred from
	Unrealized Loss on		Available-for-sale to		Accumulated Other
(Dollars in thousands)	Available-for-sale Securities		Held-to-maturity		Comprehensive Loss
Beginning balance, January 1, 2025	$	(10,732)	$	80	$	(10,652)
Net change during the period		2,914		(21)		2,893
Ending Balance, September 30, 2025	$	(7,818)	$	59	$	(7,759)


	September 30, 2024
			Unrealized Gains on
			Securities Transferred from
	Unrealized Loss on		Available-for-sale to		Accumulated Other
(Dollars in thousands)	Available-for-sale Securities		Held-to-maturity		Comprehensive (Loss)
Beginning balance, January 1, 2024	$	(12,400)	$	149	$	(12,251)
Net change during the period		3,097		(61)		3,036
Ending Balance, September 30, 2024	$	(9,303)	$	88	$	(9,215)

The Company did not have any items reclassified out of accumulated other comprehensive income (loss) to net income during the nine months ended September 30, 2025 and 2024.

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

The following discussion and analysis of the consolidated financial condition and results of operations of the Company and its subsidiary should be read in conjunction with the consolidated financial statements and related notes presented in Item 1, Financial Statements, of this Form 10-Q. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate results of operations or trends in operations for any future periods.

Use of Non-GAAP Financial Measures

This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this report consist of tax-equivalent net interest income and tax-equivalent net interest margin.

These disclosures should not be viewed as a substitute for or more important than financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.

Cautionary Note on Forward-Looking Statements

In addition to historical information, this Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition and results of operations. Factors that could have a material adverse effect on the operations of the Company and the Bank include, but are not limited to, the following:

●

the concentration of our business in the Washington, D.C. metropolitan area and the effect of changes in the economic, political and environmental conditions on this market, including the ongoing shutdown of the U.S. Government and potential reductions in spending by the U.S. Government and related reductions in the federal workforce;

●

adequacy of our allowance for loan credit losses, allowance for unfunded commitments credit losses, and allowance for credit losses associated with our held-to-maturity and available-for-sale securities portfolios;

●

deterioration of our asset quality;

●

future performance of our loan portfolio with respect to recently originated loans;

●

the level of prepayments on loans and mortgage-backed securities;

●

liquidity, interest rate and operational risks associated with our business;

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●

changes in our financial condition or results of operations that reduce capital;

●

our ability to maintain existing deposit relationships or attract new deposit relationships;

●

changes in consumer spending, borrowing and savings habits;

●

inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments;

●

changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve;

●

additional risks related to new lines of business, products, product enhancements or services;

●

increased competition with other financial institutions and fintech companies;

●

adverse changes in the securities markets;

●

changes in the financial condition or future prospects of issuers of securities that we own;

●

our ability to maintain an effective risk management framework;

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements;

●

compliance with legislative or regulatory requirements;

●

results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take similar actions;

●

potential claims, damages, and fines related to litigation or government actions;

●

the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting;

●

geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad;

●

the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business;

●

public health events (such as the COVID-19 pandemic) and governmental and societal responses thereto;

●

technological risks and developments, and cyber threats, attacks, or events;

●

changes in accounting policies and practices;

●

our ability to successfully capitalize on growth opportunities;

●

our ability to retain key employees;

●

deteriorating economic conditions, either nationally or in our market area, including higher unemployment and lower real estate values;

●

implications of our status as a smaller reporting company and as an emerging growth company; and

●

other factors discussed in Item 1A. Risk Factors in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 28, 2025.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary note.

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Overview

We are a bank holding company headquartered in Reston, Virginia primarily serving the Washington, D.C. metropolitan area. The material business operations of our organization are performed through the Bank. As a result, the discussion and analysis within this section primarily relate to activities conducted at the Bank.

As with most community banks, the Bank derives a significant portion of its income from interest received on loans and investments. The Bank’s primary source of funding is deposits, both interest-bearing and non-interest-bearing. To account for credit risk inherent in all loans, the Bank maintains an allowance for loan credit losses to absorb lifetime losses on existing loans. The Bank establishes and maintains this allowance by recording a provision for credit losses against earnings. In addition to net interest income, the Bank also generates income through service charges on deposits, insurance commission income, merchant services fee income, swap fee income and gain on sale of the guaranteed portion of SBA 7(a) loans. In order to maintain its operations, the Bank incurs various operating expenses which are further described within the “Results of Operations” later in this section.

As of September 30, 2025, the Company had total consolidated assets of $2.32 billion, total loans net of unearned income of $1.94 billion, total deposits of $1.97 billion and total shareholders’ equity of $259.7 million.

Critical Accounting Policies and Estimates

The Company’s accounting and reporting policies conform to GAAP, as well as general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported.

Our most significant accounting policies are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to our audited financial statements for the year ended December 31, 2024, included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 28, 2025.

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Selected Financial Data

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of September 30, 2025 and 2024 and the selected income statement data for the three and nine months ended September 30, 2025 and 2024 have been derived from our consolidated financial statements.


	As of or for the Three Months Ended						As of or for the Nine Months Ended
(Dollars in thousands, except per share data)	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
Balance Sheet Data:
Loans, net of unearned income	$	1,938,108		$	1,842,598		$	1,938,108		$	1,842,598
Allowance for loan credit losses		19,714			18,481			19,714			18,481
Total assets		2,324,544			2,274,363			2,324,544			2,274,363
Deposits		1,968,828			1,936,150			1,968,828			1,936,150
Shareholders’ equity		259,692			243,118			259,692			243,118
Asset Quality Data:
Net (charge-offs) recoveries to average total loans, net of unearned income		0.00	%		0.00	%		0.00	%		0.00	%
Allowance for loan credit losses to nonperforming loans		N/M			N/M			N/M			N/M
Allowance for loan credit losses to total gross loans net of unearned income		1.02	%		1.00	%		1.02	%		1.00	%
Non-performing assets to total assets		0.00	%		0.00	%		0.00	%		0.00	%
Non-performing loans to total loans		0.00	%		0.00	%		0.00	%		0.00	%
Capital Ratios (Bank level):
Equity-to-total assets ratio		12.1	%		11.6	%		12.1	%		11.6	%
Total risk-based capital ratio		16.6	%		16.3	%		16.6	%		16.3	%
Tier 1 risk-based capital ratio		15.5	%		15.3	%		15.5	%		15.3	%
Common equity tier 1 ratio		15.5	%		15.3	%		15.5	%		15.3	%
Leverage ratio		12.7	%		11.9	%		12.7	%		11.9	%
Income Statement Data:
Interest and dividend income	$	28,945		$	28,428		$	84,092		$	82,138
Interest expense		13,345			15,272			39,470			45,158
Net interest income	$	15,600		$	13,156		$	44,622		$	36,980
Provision for (recovery of) credit losses		356			400			1,064			(667)
Non-interest income		653			617			1,665			1,990
Non-interest expense		9,034			8,031			25,594			23,863
Income before taxes	$	6,863		$	5,342		$	19,629		$	15,774
Income tax expense		1,459			1,107			4,312			3,430
Net income	$	5,404		$	4,235		$	15,317		$	12,344
Per Share Data and Shares Outstanding:
Weighted average common shares (basic)		14,172,953			14,187,691			14,205,357			14,164,061
Weighted average common shares (diluted)		14,172,953			14,214,586			14,211,882			14,198,333
Common shares outstanding		14,216,781			14,238,677			14,216,781			14,238,677
Earnings per share, basic	$	0.38		$	0.30		$	1.07		$	0.87
Earnings per share, diluted	$	0.38		$	0.30		$	1.07		$	0.87
Book value per share	$	18.27		$	17.07		$	18.27		$	17.07
Performance Ratios:
Return on average assets ("ROAA")⁽¹⁾		0.94	%		0.73	%		0.91	%		0.73	%
Return on average equity ("ROAE")⁽²⁾		8.31	%		7.00	%		8.05	%		6.97	%
Net interest margin		2.72	%		2.30	%		2.66	%		2.20	%
Tax-equivalent net interest margin (Non-GAAP)⁽³⁾		2.73	%		2.30	%		2.67	%		2.20	%
Non-interest expense to average assets⁽⁴⁾		1.57	%		1.39	%		1.52	%		1.41	%
Efficiency ratio⁽⁵⁾		55.6	%		58.3	%		55.3	%		61.2	%

N/M – Not meaningful

(1)	ROAA is calculated by dividing year-to-date net income annualized by year-to-date average assets.

(2)	ROAE is calculated by dividing year-to-date net income annualized by year-to-date average equity.

(3)	Tax-equivalent net interest margin for all periods presented is reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(4)	Non-interest expense to average assets is calculated by dividing year-to-date annualized non-interest expense by year-to-date average assets.

(5)	The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.

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Results of Operations - Nine months ended September 30, 2025 and September 30, 2024

Overview

The Company reported net income of $15.3 million for the nine months ended September 30, 2025, an increase of $3.0 million or 24.1% when compared to the nine months ended September 30, 2024. Diluted earnings per common share were $1.07 for the nine months ended September 30, 2025, compared to diluted earnings per common share of $0.87 for the nine months ended September 30, 2024, representing a 23.0% increase.

Net interest income for the nine months ended September 30, 2025 increased $7.6 million or 20.7% compared to the same period of 2024, driven primarily by the decrease in rates of interest-bearing liabilities coupled with increases in average balances and yields of the loan portfolio.

The Company recorded a $1.1 million provision for credit losses for the nine months ended September 30, 2025 compared to a $0.7 million recovery of credit losses for the nine months ended September 30, 2024. Additional discussion of the provision for credit losses is included below under the heading Provision for Credit Losses.

Non-interest income decreased $325 thousand during the nine months ended September 30, 2025 compared to the same period of 2024. The decrease was primarily driven by a $306 thousand decrease on the recorded gain on sale of the government guaranteed portion of the SBA 7(a) loans due to decreased sale activity along with a $53 thousand decrease in insurance commissions. These decreases were partially offset by a $66 thousand increase to the mark-to-market adjustments on the Company’s nonqualified deferred compensation plan and a $37 thousand increase in swap fee income.

Non-interest expense increased $1.7 million or 7.3% for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in non-interest expense was predominantly due to a $1.4 million or 9.5% increase in salaries and employee benefits as the Company hired six business development officers during the preceding twelve months and incurred higher incentive compensation expense tied to performance. Other expenses increased $411 thousand or 5.8% for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Increases in other expenses were primarily in data processing, state franchise tax and other general operating expenses. Furniture and equipment expenses increased $57 thousand or 6.3% for the nine months ended September 30, 2025 compared to the same period in 2024. The increase was due to investment and maintenance in technology. These increases were partially offset by a decrease in the Company’s occupancy expense, which declined by $125 thousand or 9.3% for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, as a result of the negotiation of more favorable rents on three branch locations.

The ROAA for the nine months ended September 30, 2025 and 2024 was 0.91% and 0.73%, respectively. The ROAE for the nine months ended September 30, 2025 and 2024 was 8.05% and 6.97%, respectively.

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Net Interest Income and Net Interest Margin

The following table presents the average balance for each principal balance sheet category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the nine months ended September 30, 2025 and 2024.

Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities


	For the Nine Months Ended						For the Nine Months Ended
	September 30, 2025						September 30, 2024
			Interest Income /		Average				Interest Income /		Average
(Dollars in thousands)	Average Balance		Expense		Rate		Average Balance		Expense		Rate
Assets:
Securities:
Taxable	$	226,070	$	3,508	2.07	%	$	257,272	$	3,864	2.01	%
Tax-exempt⁽¹⁾		1,379		34	3.30	%		1,379		34	3.29	%
Total securities	$	227,449	$	3,542	2.08	%	$	258,651	$	3,898	2.01	%
Loans, net of unearned income⁽²⁾:
Taxable		1,866,217		75,818	5.43	%		1,802,807		70,858	5.25	%
Tax-exempt⁽¹⁾		16,900		507	4.01	%		18,901		546	3.86	%
Total loans, net of unearned income	$	1,883,117	$	76,325	5.42	%	$	1,821,708	$	71,404	5.24	%
Interest-bearing deposits in other banks	$	129,942	$	4,339	4.46	%	$	168,979	$	6,958	5.50	%
Total interest-earning assets	$	2,240,508	$	84,206	5.03	%	$	2,249,338	$	82,260	4.88	%
Total non-interest earning assets		13,718						16,133
Total assets	$	2,254,226					$	2,265,471
Liabilities & Shareholders’ Equity:
Interest-bearing deposits:
NOW accounts	$	347,468	$	6,018	2.32	%	$	312,255	$	6,533	2.79	%
Money market accounts		346,041		7,018	2.71	%		340,362		8,190	3.21	%
Savings accounts		42,853		331	1.03	%		50,060		529	1.41	%
Time deposits		730,532		23,358	4.27	%		773,537		26,232	4.53	%
Total interest-bearing deposits	$	1,466,894	$	36,725	3.35	%	$	1,476,214	$	41,484	3.75	%
Federal funds purchased		61		2	4.38	%		37		2	7.22	%
Subordinated debt		24,820		1,047	5.64	%		24,737		1,047	5.65	%
Federal Reserve Bank borrowings		—		—	N/M			68,543		2,451	4.78	%
Federal Home Loan Bank advances		56,000		1,696	4.05	%		5,723		174	4.06	%
Total interest-bearing liabilities	$	1,547,775	$	39,470	3.41	%	$	1,575,254	$	45,158	3.83	%
Demand deposits		434,238						436,147
Other liabilities		17,729						17,489
Total liabilities	$	1,999,742					$	2,028,890
Shareholders’ equity	$	254,484					$	236,581
Total liabilities and shareholders’ equity	$	2,254,226					$	2,265,471
Tax-equivalent net interest income and spread (Non-GAAP)⁽¹⁾			$	44,736	1.62	%			$	37,102	1.06	%
Less: tax-equivalent adjustment				114						122
Net interest income and spread (GAAP)			$	44,622	1.61	%			$	36,980	1.05	%

Interest income/earnings assets					5.02	%					4.88	%
Interest expense/earning assets					2.36	%					2.68	%
Net interest margin					2.66	%					2.20	%

Tax-equivalent interest income/earnings assets (Non-GAAP)⁽¹⁾					5.03	%					4.88	%
Interest expense/earning assets					2.36	%					2.68	%
Tax-equivalent net interest margin (Non-GAAP)⁽³⁾					2.67	%					2.20	%

N/M – Not meaningful

(1)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2)	The Company did not have any loans on nonaccrual as of September 30, 2025 or September 30, 2024.

(3)

Tax-equivalent net interest margin adjusts for differences in tax treatment of interest income sources. The entire tax-equivalent adjustment is attributable to interest income on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the tax-equivalent components.

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Tax-equivalent net interest margin as presented above is calculated by dividing tax-equivalent net interest income by total average earning assets. Net interest income, on a tax-equivalent basis, is a financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes. Tax-equivalent net interest income is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The following table, “Tax-Equivalent Net Interest Income,” reconciles net interest income to tax-equivalent net interest income, which is a non-GAAP measure.

Tax-Equivalent Net Interest Income


	Nine months ended
	September 30,
(Dollars in thousands)	2025		2024
GAAP Financial Measurements:
Interest Income - Loans	$	76,218	$	71,289
Interest Income - Securities and Other Interest-Earning Assets		7,874		10,849
Interest Expense - Deposits		36,725		41,484
Interest Expense - Borrowings		2,745		3,674
Total Net Interest Income (GAAP)	$	44,622	$	36,980

Non-GAAP Financial Measurements:
Add: Tax Benefit on Tax-Exempt Interest Income - Loans		107		115
Add: Tax Benefit on Tax-Exempt Interest Income - Securities		7		7
Total Tax Benefit on Tax-Exempt Interest Income ⁽¹⁾	$	114	$	122
Tax-Equivalent Net Interest Income (Non-GAAP)	$	44,736	$	37,102

(1)Tax benefit was calculated using the federal statutory tax rate of 21%.

Net interest income increased $7.6 million or 20.6% on a fully tax-equivalent basis for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase in fully tax-equivalent net interest income was driven by the decrease in the cost of interest-bearing deposits combined with the increases in average balances and yields of the loan portfolio.

On a fully tax-equivalent basis, the net interest margin was 2.67% for the nine months ended September 30, 2025, compared to 2.20% for the nine months ended September 30, 2024. The 47 basis points increase in net interest margin was due to a combination of a 42 basis points decrease in the cost of interest-bearing liabilities and a 15 basis points increase in yields in interest-earning assets coupled with higher average loan balances and lower average borrowing balances.

The cost of interest-bearing liabilities was 3.41% for the nine months ended September 30, 2025 compared to 3.83% for the nine months ended September 30, 2024. Rates declined across all deposit categories, most notably in time deposits, money market accounts and NOW deposit accounts, which declined 26 basis points, 50 basis points and 47 basis points, respectively. Total cost of borrowings declined from 4.96% in the prior year period to 4.54% in the current year period, mainly as a result of the payoff of higher cost Bank Term Funding Program borrowings in September 2024, which were partially refinanced with lower cost FHLB advances. Average interest-bearing liabilities declined $27.5 million during the current period as compared to the prior year period, primarily driven by lower average balances of borrowings.

The loan portfolio’s yield for the nine months ended September 30, 2025 was 5.42% compared to 5.24% for the nine months ended September 30, 2024. The increase of 18 basis points was primarily attributable to an increase in yield on the Company’s variable rate loans as a result of an increase in interest rates subsequent to September 30, 2024 coupled with a higher weighted average yield on loans originated since the first nine months of 2024. Average loans increased $61.4 million between the nine months ended September 30, 2025 and 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

The yield on interest-bearing deposits due from banks for the nine months ended September 30, 2025 was 4.46% compared to 5.50% for the nine months ended September 30, 2024. The decrease of 104 basis points was due to three fed funds rate cuts totaling 75 basis points, which occurred after September 30, 2024.

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The following table presents the effects of changing rates and volumes on tax-equivalent net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume.

Rate/Volume Analysis


	For the Nine Months Ended September 30,
	2025 and 2024
	Increase
	(Decrease) Due to
(Dollars in thousands)	Volume		Rate		Total Increase (Decrease)
Interest-earning Assets:
Securities:
Taxable	$	(481)	$	125	$	(356)
Tax-exempt⁽¹⁾		—		—		—
Total securities	$	(481)	$	125	$	(356)
Loans, net of unearned income:
Taxable		2,575		2,385		4,960
Tax-exempt⁽¹⁾		(60)		21		(39)
Total loans, net of unearned income⁽²⁾	$	2,515	$	2,406	$	4,921
Interest-bearing deposits in other banks	$	(1,309)	$	(1,310)	$	(2,619)
Total interest-earning assets	$	725	$	1,221	$	1,946
Interest-bearing Liabilities:
Interest-bearing deposits:
NOW accounts	$	664	$	(1,179)	$	(515)
Money market accounts		284		(1,456)		(1,172)
Savings accounts		(55)		(143)		(198)
Time deposits		(1,279)		(1,595)		(2,874)
Total interest-bearing deposits	$	(386)	$	(4,373)	$	(4,759)
Federal funds purchased		—		—		—
Subordinated debt		4		(4)		—
Federal Reserve Bank borrowings		(2,451)		—		(2,451)
Federal Home Loan Bank advances		1,522		—		1,522
Total interest-bearing liabilities	$	(1,311)	$	(4,377)	$	(5,688)
Change in tax-equivalent net interest income (Non-GAAP)	$	2,036	$	5,598	$	7,634

(1)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2)The Company did not have any loans on nonaccrual as of September 30, 2025 or September 30, 2024.

Interest Income

Interest income increased by $1.9 million or 2.4% to $84.2 million on a fully tax-equivalent basis for the nine months ended September 30, 2025 compared to $82.3 million for the nine months ended September 30, 2024, driven by both an increase in rates and volume on interest-earning assets, primarily attributable to the Company’s loan portfolio.

Fully tax-equivalent interest income on loans increased by approximately $4.9 million or 6.9% as a result of increases in rates and volume. Average loans increased $61.4 million between the nine months ended September 30, 2025 and 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

Fully tax-equivalent interest income on investment securities decreased by approximately $356 thousand or 9.1%, as a result of a decrease in volume. Average investment securities decreased approximately $31.2 million between the nine months ended September 30, 2025 and 2024, primarily due to maturities and the amortization of the portfolio.

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Interest income on interest-bearing deposits in other banks decreased by $2.6 million or 37.6% as a result of lower yield and a decline in volume. The lower yield was directly related to three fed funds rate cuts totaling 75 basis points since September 30, 2024. Average interest-bearing deposits in other banks decreased approximately $39.0 million between the nine months ended September 30, 2025 and 2024, mainly due to funding of new loan originations and lower average balance of borrowings.

Interest Expense

Interest expense decreased by $5.7 million to $39.5 million for the nine months ended September 30, 2025 compared to $45.2 million for the nine months ended September 30, 2024, primarily due to a decrease in rates on deposits and a decrease in volume of borrowings. The decrease in rates on deposits was mainly a result of the repricing of the Company’s time deposits maturing subsequent to September 30, 2024 as a result of lower benchmark interest rates. The decrease in volume of borrowings was primarily a result of the Company’s payoff of higher cost Federal Reserve Bank’s Bank Term Funding Program borrowings in September 2024, which were partially refinanced with lower cost FHLB advances.

Provision for Credit Losses

The Company recorded a $1.1 million provision for credit losses for the nine months ended September 30, 2025 compared to a $0.7 million recovery of provision for credit losses for the nine months ended September 30, 2024. The provision for credit losses for the nine months ended September 30, 2025 that is directly attributable to the funded and unfunded loan portfolios was $997 thousand and $67 thousand, respectively.

The provision for credit losses during the nine months ended September 30, 2025 was primarily a result of changes in the composition and growth of the loan portfolio, updated economic forecasts used in the quantitative portion of the model and an assessment of management’s considerations of qualitative factors. See “Asset Quality” below for additional information on the credit quality of the loan portfolio.

Non-interest Income

The Company’s recurring sources of non-interest income consist primarily of interchange income, gains on sale of government guaranteed loans, service charges on deposit accounts and insurance commissions. Generally speaking, loan fees are included in interest income on the loan portfolio and not reported as non-interest income.

The following table summarizes non-interest income for the nine months ended September 30, 2025 and 2024.


	Nine months ended
	September 30,
(Dollars in thousands)	2025		2024			$ Change	% Change
Service charges on deposit accounts
Overdrawn account fees	$	65	$	61	$	4	6.6	%
Account service fees		190		199		(9)	(4.5)	%
Other service charges and fees
Interchange income		249		271		(22)	(8.1)	%
Other charges and fees		180		203		(23)	(11.3)	%
Net gain (loss) on premises and equipment		(3)		1		(4)	N/M
Insurance commissions		304		357		(53)	(14.8)	%
Gain on sale of government guaranteed loans		203		509		(306)	(60.1)	%
Non-qualified deferred compensation plan asset gains, net		364		298		66	22.1	%
Other operating income		113		91		22	24.2	%
Total non-interest income	$	1,665	$	1,990	$	(325)	(16.3)	%

N/M – Not meaningful

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partially offset by a $66 thousand increase to the mark-to-market adjustments on the Company’s nonqualified deferred compensation plan and a $37 thousand increase in customer swap fee income.

Non-interest Expense

Generally, non-interest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing banking services. The largest component of non-interest expense is salaries and employee benefits. Non-interest expense also includes operational expenses, such as occupancy and equipment expenses, data processing expenses, professional fees, advertising expenses and other general and administrative expenses, including FDIC assessments, and Virginia state franchise taxes.

The following table summarizes non-interest expense for the nine months ended September 30, 2025 and 2024.


	Nine months ended
	September 30,
(Dollars in thousands)	2025		2024			$ Change	% Change
Salaries and employee benefits expense	$	15,971	$	14,583	$	1,388	9.5	%
Occupancy expense of premises		1,218		1,343		(125)	(9.3)	%
Furniture and equipment expenses		959		902		57	6.3	%
Advertising expense		311		290		21	7.2	%
Data processing		1,734		1,595		139	8.7	%
FDIC insurance		722		730		(8)	(1.1)	%
Professional fees		806		750		56	7.5	%
State franchise tax		1,879		1,718		161	9.4	%
Bank insurance		183		179		4	2	%
Vendor services		490		474		16	3.4	%
Supplies, printing, and postage		106		109		(3)	(2.8)	%
Director costs		508		593		(85)	(14.3)	%
Other operating expenses		707		597		110	18.4	%
Total non-interest expense	$	25,594	$	23,863	$	1,731	7.3	%

Non-interest expense increased $1.7 million or 7.3% during the nine months ended September 30, 2025 compared to the same period in 2024. The increase was primarily due to a $1.4 million increase in salaries and employee benefits, as a result of the Company hiring six business development officers in the preceding twelve months and an increase in incentive compensation tied to performance. The hiring of additional business development officers is an investment in the Bank’s future growth. As in the past, management expects these staffing additions will lead to subsequent increases in revenues. Incentive compensation expense accruals can fluctuate significantly from period to period, based upon the Company’s financial performance and condition measured against, among other evaluation criteria, our strategic plan and budget. State franchise taxes increased by $161 thousand due to a higher assessment base, mainly a result of the growth of the Company’s shareholder’s equity during the period. The $139 thousand increase in data processing was primarily due to contractual increases and volume-based activity. These increases were partially offset by a decrease in the Company’s occupancy expense, which declined by $125 thousand during the period due to the negotiation of more favorable rents on three branch locations.

Income Taxes

Income tax expense increased $882 thousand or 25.7% to $4.3 million for the nine months ended September 30, 2025 compared to $3.4 million for the nine months ended September 30, 2024. Our effective tax rate for the nine months ended September 30, 2025 increased to 22.0% compared to 21.7% for the same period ended September 30, 2024.

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Results of Operations – Three Months Ended September 30, 2025 and September 30, 2024

Overview

The Company reported net income of $5.4 million for the three months ended September 30, 2025, an increase of $1.2 million or 27.6% when compared to $4.2 million for the three months ended September 30, 2024. Diluted earnings per common share were $0.38 for the three months ended September 30, 2025, compared to diluted earnings per common share of $0.30 for the three months ended September 30, 2024, an increase of 26.7%.

Net interest income for the three months ended September 30, 2025 increased $2.4 million or 18.6% to $15.6 million compared to $13.2 million for the three months ended September 30, 2024, driven primarily by the lower cost of interest-bearing deposits coupled with higher average balances and yields of loans. During the same period, interest income increased $0.5 million or 1.8%, driven by higher interest income on loans, while interest expense declined by $1.9 million or 12.6%, predominantly due to lower interest expense on time deposits, money market accounts, and borrowings. The annualized net interest margin for the three months ended September 30, 2025 was 2.72% as compared to 2.30% for the same period in 2024. The annualized tax-equivalent net interest margin (Non-GAAP) for the three months ended September 30, 2025 was 2.73% as compared to 2.30% for the same period in 2024.

The Company recorded a $356 thousand provision for credit losses for the three months ended September 30, 2025 compared to a provision for credit losses of $400 thousand for the three months ended September 30, 2024. Additional discussion of the provision for credit losses is included below under the heading Provision for Credit Losses.

Non-interest income increased $36 thousand during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This increase was primarily attributable to a $101 thousand increase in customer swap fee income, partially offset by a $54 thousand reduction in gains recorded on sales of the guaranteed portions of SBA 7(a) loans due to lower sale activity.

Non-interest expense increased $1.0 million or 12.5% during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a $796 thousand or 16.3% increase in salaries and employee benefits, as discussed in the year-to-date results above. Other expenses grew due to a combination of higher state franchise taxes and general operating expenses. These increases were partially offset by lower occupancy expense, resulting from the negotiation of more favorable rents on three branch locations.

The ROAA for the three months ended September 30, 2025 and September 30, 2024 was 0.94% and 0.73%, respectively. The ROAE for the three months ended September 30, 2025 and September 30, 2024 was 8.31% and 7.00%, respectively.

Net Interest Income and Net Interest Margin

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Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities


	For the Three Months Ended						For the Three Months Ended
	September 30, 2025						September 30, 2024
			Interest Income /		Average				Interest Income /		Average
(Dollars in thousands)	Average Balance		Expense		Rate		Average Balance		Expense		Rate
Assets:
Securities:
Taxable	$	220,424	$	1,162	2.09	%	$	247,975	$	1,235	1.98	%
Tax-exempt⁽¹⁾		1,378		11	3.17	%		1,379		11	3.17	%
Total securities	$	221,802	$	1,173	2.10	%	$	249,354	$	1,246	1.99	%
Loans, net of unearned income⁽²⁾:
Taxable		1,894,756		26,047	5.45	%		1,801,422		24,173	5.34	%
Tax-exempt⁽¹⁾		17,519		182	4.12	%		17,050		168	3.92	%
Total loans, net of unearned income	$	1,912,275	$	26,229	5.44	%	$	1,818,472	$	24,341	5.33	%
Interest-bearing deposits in other banks	$	141,309	$	1,583	4.44	%	$	209,601	$	2,878	5.46	%
Total interest-earning assets	$	2,275,386	$	28,985	5.06	%	$	2,277,427	$	28,465	4.97	%
Total non-interest earning assets		13,966						14,958
Total assets	$	2,289,352					$	2,292,385
Liabilities & Shareholders’ Equity:
Interest-bearing deposits:
NOW accounts	$	354,918	$	2,057	2.30	%	$	319,463	$	2,321	2.89	%
Money market accounts		350,431		2,418	2.74	%		374,141		3,068	3.26	%
Savings accounts		43,401		120	1.10	%		45,980		168	1.45	%
Time deposits		741,797		7,829	4.19	%		738,680		8,545	4.60	%
Total interest-bearing deposits	$	1,490,547	$	12,424	3.31	%	$	1,478,264	$	14,102	3.80	%
Federal funds purchased		1		—	N/M			—		—	N/M
Subordinated debt		24,841		349	5.57	%		24,758		349	5.61	%
Federal Reserve Bank borrowings		—		—	N/M			53,565		647	4.81	%
Federal Home Loan Bank advances		56,001		572	4.05	%		17,044		174	4.06	%
Total interest-bearing liabilities	$	1,571,390	$	13,345	3.37	%	$	1,573,631	$	15,272	3.86	%
Demand deposits		443,909						461,337
Other liabilities		16,060						16,808
Total liabilities	$	2,031,359					$	2,051,776
Shareholders’ equity	$	257,993					$	240,609
Total liabilities and shareholders’ equity	$	2,289,352					$	2,292,385
Tax-equivalent net interest income and spread (Non-GAAP)⁽¹⁾			$	15,640	1.69	%			$	13,193	1.11	%
Less: tax-equivalent adjustment				40						37
Net interest income and spread (GAAP)			$	15,600	1.68	%			$	13,156	1.11	%

Interest income/earnings assets					5.05	%					4.97	%
Interest expense/earning assets					2.33	%					2.67	%
Net interest margin					2.72	%					2.30	%

Tax-equivalent interest income/earnings assets (Non-GAAP)⁽¹⁾					5.06	%					4.97	%
Interest expense/earning assets					2.33	%					2.67	%
Tax-equivalent net interest margin (Non-GAAP)⁽³⁾					2.73	%					2.30	%

N/M – Not meaningful

(1)	Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2)	The Company did not have any loans on nonaccrual as of September 30, 2025 or September 30, 2024.

(3)

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Tax-Equivalent Net Interest Income


	Three months ended
	September 30,
(Dollars in thousands)	2025		2024
GAAP Financial Measurements:
Interest Income - Loans	$	26,191	$	24,306
Interest Income - Securities and Other Interest-Earning Assets		2,754		4,122
Interest Expense - Deposits		12,424		14,102
Interest Expense - Borrowings		921		1,170
Total Net Interest Income (GAAP)	$	15,600	$	13,156

Non-GAAP Financial Measurements:
Add: Tax Benefit on Tax-Exempt Interest Income - Loans		38		35
Add: Tax Benefit on Tax-Exempt Interest Income - Securities		2		2
Total Tax Benefit on Tax-Exempt Interest Income ⁽¹⁾	$	40	$	37
Tax-Equivalent Net Interest Income (Non-GAAP)	$	15,640	$	13,193

(1) Tax benefit was calculated using the federal statutory tax rate of 21%.

Tax-equivalent net interest income increased $2.4 million or 18.6% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, driven primarily by the lower rates on interest-bearing deposits and an increase in loan yields coupled with the increase in the average balance of loans and the reduction in the average balance of borrowings.

On a fully tax-equivalent basis, the net interest margin was 2.73% for the three months ended September 30, 2025, compared to 2.30% for the three months ended September 30, 2024. The 43 basis points increase in net interest margin was primarily due to a 49 basis points reduction in rates on interest-bearing deposits and an 11 basis points increase in yields on the Company’s loans. In addition, average loans increased $93.8 million between the three months ended September 30, 2025 and the three months ended September 30, 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

The loan portfolio’s yield for the three months ended September 30, 2025 was 5.44% compared to 5.33% for the three months ended September 30, 2024. The increase of 11 basis points was primarily attributable to increase in yields on the Company’s commercial real estate and residential mortgage portfolios along with higher average loan balances.

The yield on interest-bearing deposits due from banks for the three months ended September 30, 2025 was 4.44% compared to 5.46% for the three months ended September 30, 2024. The decrease of 102 basis points was directly attributable to three fed funds rate cuts totaling 75 basis points over the preceding twelve months.

The cost of interest-bearing liabilities was 3.37% for the three months ended September 30, 2025 compared to 3.86% for the three months ended September 30, 2024. Rates declined across all deposit categories, predominantly within time deposits, money market accounts and NOW accounts, which declined 41 basis points, 52 basis points and 59 basis points, respectively. Total cost of borrowings declined from 4.88% for the prior year quarter to 4.52% in the most recent quarter, mainly as a result of the payoff of higher cost Bank Term Funding Program borrowings in September 2024, which were partially refinanced with lower cost FHLB advances.

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Rate/Volume Analysis


	For the Three Months Ended September 30,
	2025 and 2024
	Increase
	(Decrease) Due to
(Dollars in thousands)	Volume		Rate		Total Increase (Decrease)
Interest-earning Assets:
Securities:
Taxable	$	(145)	$	72	$	(73)
Tax-exempt⁽¹⁾		—		—		—
Total securities	$	(145)	$	72	$	(73)
Loans, net of unearned income:
Taxable		1,283		591		1,874
Tax-exempt⁽¹⁾		5		9		14
Total loans, net of unearned income⁽²⁾	$	1,288	$	600	$	1,888
Interest-bearing deposits in other banks	$	(767)	$	(528)	$	(1,295)
Total interest-earning assets	$	376	$	144	$	520
Interest-bearing Liabilities:
Interest-bearing deposits:
NOW accounts	$	205	$	(469)	$	(264)
Money market accounts		(84)		(566)		(650)
Savings accounts		(7)		(41)		(48)
Time deposits		61		(777)		(716)
Total interest-bearing deposits	$	175	$	(1,853)	$	(1,678)
Federal funds purchased		—		—		—
Subordinated debt		—		—		—
Federal Reserve Bank borrowings		(647)		—		(647)
Federal Home Loan Bank advances		398		—		398
Total interest-bearing liabilities	$	(74)	$	(1,853)	$	(1,927)
Change in tax-equivalent net interest income (Non-GAAP)	$	450	$	1,997	$	2,447

(1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2) The Company did not have any loans on nonaccrual as of September 30, 2025 or September 30, 2024.

Interest Income

Interest income increased by $0.5 million or 1.8% to $29.0 million on a fully tax-equivalent basis for the three months ended September 30, 2025 compared to $28.5 million for the three months ended September 30, 2024, driven primarily by higher average balances and yields on the Company’s loan portfolio.

Fully tax-equivalent interest income on loans increased by $1.9 million or 7.8% as a result of volume and rates increases. Average loans increased $93.8 million between the three months ended September 30, 2025 and the three months ended September 30, 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

Fully tax-equivalent interest income on investment securities decreased by $73 thousand or 5.9% primarily as a result of a decrease in volume. Average investment securities decreased $27.6 million between the three months ended September 30, 2025 and September 30, 2024 mainly due to maturities and amortization.

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Interest income on interest-bearing deposits in other banks decreased by $1.3 million as a result of decreases in rates and volume. Average interest-bearing deposits in other banks decreased $68.3 million between the three months ended September 30, 2025 and September 30, 2024.

Interest Expense

Interest expense decreased by $1.9 million to $13.3 million for the three months ended September 30, 2025 compared to $15.3 million for the three months ended September 30, 2024, primarily due to a decrease in rates on deposits and, to a lesser extent, the decrease in volume of borrowings. The decrease in rates on deposits was mainly a result of the repricing of the Company’s deposit accounts in conjunction with the decrease in benchmark interest rates that took place starting in September of 2024.

Provision for Credit Losses

The Company recorded a $356 thousand provision for credit losses for the three months ended September 30, 2025 compared to a provision for credit losses of $400 thousand for the three months ended September 30, 2024. The provision for credit losses for the three months ended September 30, 2025 that is directly attributable to the funded and unfunded loan portfolios was $415 thousand and a recovery of $59 thousand, respectively.

The provision for credit losses during the three months ended September 30, 2025 was directly attributable to the growth in the Company’s loan portfolio quarter-over-quarter, changes in the composition of the loan portfolio, and considerations of qualitative factors.

See “Asset Quality” section below for additional information on the credit quality of the loan portfolio.

Non-interest Income

The following table summarizes non-interest income for the three months ended September 30, 2025 and September 30, 2024.


	Three months ended
	September 30,
(Dollars in thousands)	2025		2024			$ Change	% Change
Service charges on deposit accounts
Overdrawn account fees	$	24	$	18	$	6	33.3	%
Account service fees		63		66		(3)	(4.5)	%
Other service charges and fees
Interchange income		82		91		(9)	(9.9)	%
Other charges and fees		53		69		(16)	(23.2)	%
Net gains on premises and equipment		—		1		(1)	(100.0)	%
Insurance commissions		58		64		(6)	(9.4)	%
Gain on sale of government guaranteed loans		106		160		(54)	(33.8)	%
Non-qualified deferred compensation plan asset gains, net		158		139		19	13.7	%
Other operating income		109		9		100	1,111.1	%
Total non-interest income	$	653	$	617	$	36	5.8	%

Non-interest income was $653 thousand for the three months ended September 30, 2025 compared to $617 thousand for the same period in the prior year. The $36 thousand increase in non-interest income was primarily attributable to a $101 thousand increase in customer swap fee income, partially offset by a $54 thousand reduction in gains recorded on sales of the guaranteed portions of SBA 7(a) loans due to lower sale activity.

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Non-interest Expense

The following table summarizes non-interest expense for the three months ended September 30, 2025 and September 30, 2024.


	Three months ended
	September 30,
(Dollars in thousands)	2025		2024			$ Change	% Change
Salaries and employee benefits expense	$	5,693	$	4,897	$	796	16.3	%
Occupancy expense of premises		405		444		(39)	(8.8)	%
Furniture and equipment expenses		329		304		25	8.2	%
Advertising expense		154		96		58	60.4	%
Data processing		566		538		28	5.2	%
FDIC insurance		250		250		—	—	%
Professional fees		280		256		24	9.4	%
State franchise tax		641		574		67	11.7	%
Bank insurance		63		58		5	8.6	%
Vendor services		151		167		(16)	(9.6)	%
Supplies, printing, and postage		45		40		5	12.5	%
Director costs		169		192		(23)	(12.0)	%
Other operating expenses		288		215		73	34.0	%
Total non-interest expense	$	9,034	$	8,031	$	1,003	12.5	%

Non-interest expense increased $1.0 million or 12.5% during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily as a result of an increase in salaries and employee benefits expense, as discussed in the year-to-date results above. State franchise taxes increased by $67 thousand due to a higher assessment base, mainly a result of the growth of the Company’s shareholder’s equity during the period. Occupancy expense declined by $39 thousand, resulting from the negotiation of more favorable rents on three branch locations.

Income Taxes

Income tax expense increased $352 thousand to $1.5 million for the three months ended September 30, 2025 compared to $1.1 million for the three months ended September 30, 2024. Our effective tax rate for the three months ended September 30, 2025 was 21.3% compared to 20.7% for the same period ended September 30, 2024.

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Discussion and Analysis of Financial Condition

Assets, Liabilities, and Shareholders’ Equity

The Company’s total assets increased $89.6 million or 4.0% to $2.32 billion at September 30, 2025 compared to $2.23 billion at December 31, 2024. The increase in total assets was predominantly attributable to increases in the Company’s loan portfolio and interest-bearing deposits in banks, which grew by $65.9 million or 3.5% and $38.3 million or 32.8% during the year, respectively, partially offset by a $16.6 million decrease in available-for-sale and held-to-maturity investment securities.

The Company’s total liabilities increased $76.5 million or 3.8% to $2.06 billion at September 30, 2025 compared to $1.99 billion at December 31, 2024. The increase in total liabilities was almost entirely due to a $76.4 million or 4.0% increase in total deposits.

Shareholders’ equity increased $13.1 million or 5.3% to $259.7 million at September 30, 2025 compared to $246.6 million at December 31, 2024. The increase in shareholders’ equity was primarily attributable to net income earned during the current year coupled with a decrease in accumulated other comprehensive loss due to lower market interest rates during the nine months ended September 30, 2025. This increase was partially offset by cash dividends paid and increased share count from shareholder option exercises and restricted share award issuances. The decrease in accumulated other comprehensive loss was attributable to an increase in the market value of our available-for-sale investment portfolio. Book value per share was $18.27 as of September 30, 2025 compared to $17.28 as of December 31, 2024, an increase of 5.7%. During the nine months ended September 30, 2025, the Company repurchased 95,103 shares of its common stock at a weighted average price of $17.33. The aggregate year-to-date repurchase activity was accretive to the Company’s book value per share.

Investment Securities

The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $205.7 million at September 30, 2025 and $222.3 million at December 31, 2024. The investment portfolio provides liquidity, interest income, credit risk diversification, means to manage interest rate sensitivity and collateral for secured public funds and secured credit lines. Investment securities are classified as available-for-sale or held-to-maturity based on management’s investment strategy and management’s assessment of the intent and ability to hold the securities until maturity. Investment securities that we may sell prior to maturity in response to changes in management’s investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available-for-sale. The Company also had restricted stock and equity securities within its investment securities portfolio with total carrying values of $7.6 million and $2.8 million, respectively, at both September 30, 2025 and December 31, 2024.

The Company purchased $14.0 million of investment securities during the nine months ended September 30, 2025, which were comprised of $13.0 million of agency mortgage-backed securities and $1.0 million of agency collateralized mortgage obligation securities. The Company did not sell any fixed income investment securities during the nine months ended September 30, 2025. The Company had $34.4 million in maturities and principal repayments on securities during the nine months ended September 30, 2025, which were comprised of $14.1 million of U.S. agency mortgage-backed securities, $10.8 million of U.S. Treasuries, $5.0 million of U.S. government and federal agencies securities and $4.5 million of U.S. agency collateralized mortgage obligation securities.

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The following table summarizes the amortized cost and fair value of the Company’s fixed income investment portfolio as of September 30, 2025 and December 31, 2024, respectively.


	September 30, 2025				December 31, 2024
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Held-to-maturity
U.S. Treasuries	$	6,002	$	5,642	$	6,001	$	5,418
U.S. government and federal agencies		35,323		32,117		35,349		30,606
U.S. agency collateralized mortgage obligations		16,567		13,424		17,805		13,857
Taxable municipal		6,028		5,228		6,041		4,952
U.S. agency mortgage-backed		25,371		21,236		26,813		21,437
Total Held-to-maturity Securities	$	89,291	$	77,647	$	92,009	$	76,270
Available-for-sale
U.S. Treasuries	$	17,231	$	16,992	$	27,920	$	27,137
U.S. government and federal agencies		5,989		5,807		10,966		10,581
Corporate bonds		3,000		2,811		3,000		2,739
U.S. agency collateralized mortgage obligations		33,713		28,184		36,032		29,611
Tax-exempt municipal		1,378		1,214		1,379		1,171
Taxable municipal		270		270		270		263
U.S. agency mortgage-backed		64,692		61,100		64,274		58,755
Total Available-for-sale Securities	$	126,273	$	116,378	$	143,841	$	130,257

In the prevailing rate environments as of September 30, 2025 and December 31, 2024, the Company’s fixed income investment portfolio had an estimated weighted average remaining life of approximately 4.1 years and 4.2 years, respectively. The available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years at both September 30, 2025 and December 31, 2024, respectively. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.4 years and 6.0 years as of September 30, 2025 and December 31, 2024, respectively.

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The following table summarizes the maturity composition of our fixed income investment securities as of September 30, 2025, including the weighted average yield of each maturity band. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security.


	September 30, 2025
	Amortized		Fair		Weighted-Average
(Dollars in thousands)	Cost		Value		Yield
Held-to-maturity
Due in one year or less	$	—	$	—	—
Due after one year through five years		33,496		31,110	1.20	%
Due after five years through ten years		16,493		14,385	1.78	%
Due after ten years		39,302		32,152	1.44	%
Total Held-to-maturity Securities	$	89,291	$	77,647	1.41	%
Available-for-sale
Due in one year or less	$	22,701	$	22,433	1.30	%
Due after one year through five years		17,737		17,223	2.76	%
Due after five years through ten years		34,275		33,479	3.40	%
Due after ten years		51,560		43,243	1.58	%
Total Available-for-sale Securities	$	126,273	$	116,378	2.19	%

Loan Portfolio

Gross loans, net of unearned income, increased $65.9 million to $1.94 billion as of September 30, 2025 compared to $1.87 billion as of December 31, 2024. The increase in loans from December 31, 2024, was primarily attributable to growth in commercial real estate loans, construction and development loans, and residential mortgage loans. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns.

The following table presents the Company’s composition of loans held for investment, net of deferred fees and costs, in dollar amounts and as a percentage of total gross loans as of September 30, 2025 and December 31, 2024.


	September 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		Percent		Amount		Percent
Real Estate Loans:
Commercial	$	1,191,151	61.61	%	$	1,181,090	63.24	%
Construction and land development		193,444	10.01	%		164,988	8.83	%
Residential		501,104	25.92	%		472,932	25.32	%
Commercial - Non Real Estate:
Commercial loans		46,610	2.41	%		47,736	2.56	%
Consumer - Non-Real Estate:
Consumer loans		1,029	0.05	%		906	0.05	%
Total Gross Loans	$	1,933,338	100.00	%	$	1,867,652	100.00	%
Allowance for loan credit losses		(19,714)				(18,715)
Net deferred loan costs		4,770				4,521
Total net loans	$	1,918,394			$	1,853,458

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Asset Quality

The Company maintains policies and procedures to promote sound underwriting and to mitigate credit risk. The Chief Credit Officer is responsible for establishing credit risk policies and procedures, including underwriting and hold guidelines and credit approval authority, and monitoring credit exposure and performance of the Company’s lending-related transactions.

The Company’s asset quality remained strong through the first nine months of 2025. The Company did not have any nonperforming assets, which includes nonperforming loans, OREO, or loans classified as substandard as of September 30, 2025. The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025. As a result, the Company did not have any nonperforming loans, which consists of loans that are 90 days or more past due or loans placed on nonaccrual as of September 30, 2025.

The Company did not have any nonaccrual loans as of September 30, 2025 or December 31, 2024 nor were there any loans placed on nonaccrual during those periods. A loan is placed on nonaccrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection. As a result, the Company did not have any interest income that would have been recognized on nonaccrual loans for the three and nine months ended September 30, 2025 or the three and nine months ended September 30, 2024.

The following table summarizes the Company’s asset quality as of September 30, 2025 and December 31, 2024.


(Dollars in thousands)	September 30, 2025			December 31, 2024
Nonaccrual loans	$	—		$	—
Loans past due 90 days and accruing interest		—			9,978
Other real estate owned and repossessed assets		—			—
Total nonperforming assets	$	—		$	9,978

Allowance for loan credit losses to nonperforming assets		N/M			N/M
Nonaccrual loans to gross loans		0.00	%		0.00	%
Nonperforming assets to period end loans and OREO		0.00	%		0.53	%

N/M – Not meaningful

Allowance for Loan Credit Losses

Refer to the discussion in Note 1 of the audited financial statements and notes for the year ended December 31, 2024 contained in the Company’s 2024 Annual Report on Form 10-K for management’s approach to estimating the allowance for loan credit losses.

The Company recorded $1 thousand and $2 thousand of net recoveries during the three and nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, the allowance for loan credit losses was $19.7 million or 1.02% of outstanding loans, net of unearned income, compared to $18.7 million or 1.01% of outstanding loans, net of unearned income, at December 31, 2024. The increase in the allowance as a percentage of outstanding loans, net of unearned income, was primarily a result of changes in the composition of the loan portfolio coupled with the updates to the economic forecast and considerations of qualitative factors.

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The following tables summarize the Company’s loan loss experience by loan portfolio for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended
	September 30, 2025					September 30, 2024
	Net		Net			Net		Net
	(charge-offs)		(charge-off)			(charge-offs)		(charge-off)
(Dollars in thousands)	recoveries		recovery rate ⁽¹⁾			recoveries		recovery rate ⁽¹⁾
Real estate loans:
Commercial	$	—		—		$	—	—
Construction and land development		—		—			—	—
Residential		—		—			—	—
Commercial loans		1		0.01	%		1	—
Consumer loans		—		—			—	—
Total	$	1				$	1

Average loans outstanding during the period	$	1,912,275				$	1,818,472
Allowance coverage ratio ⁽²⁾				1.02	%			1.00	%
Total net (charge-off) recovery rate				0.00	%			0.00	%
Allowance to nonaccrual loans ratio⁽³⁾				N/M				N/M

N/M – Not meaningful

(1)	The net (charge-off) recovery rate is calculated by dividing annualized total net (charge-offs) recoveries during the period by average gross loans outstanding during the period.

(2)	The allowance coverage ratio is calculated by dividing the allowance for loan credit losses at the end of the period by gross loans, net of unearned income at the end of the period.

(3)	The allowance to nonaccrual loans ratio is calculated by dividing the allowance for loan credit losses at the end of the period by nonaccrual loans at the end of the period.


	Nine Months Ended
	September 30, 2025					September 30, 2024
	Net		Net			Net		Net
	(charge-offs)		(charge-off)			(charge-offs)		(charge-off)
(Dollars in thousands)	recoveries		recovery rate ⁽¹⁾			recoveries		recovery rate ⁽¹⁾
Real estate loans:
Commercial	$	—		—		$	—	—
Construction and land development		—		—			—	—
Residential		—		—			—	—
Commercial loans		2		0.01	%		2	0.01	%
Consumer loans		—		—			—	—
Total	$	2				$	2

Average loans outstanding during the period	$	1,883,117				$	1,821,708
Allowance coverage ratio ⁽²⁾				1.02	%			1.00	%
Total net (charge-off) recovery rate				0.00	%			0.00	%
Allowance to nonaccrual loans ratio⁽³⁾				N/M				N/M

N/M – Not meaningful

(1)	The net (charge-off) recovery rate is calculated by dividing annualized total net (charge-offs) recoveries during the period by average gross loans outstanding during the period.

(2)	The allowance coverage ratio is calculated by dividing the allowance for loan credit losses at the end of the period by gross loans, net of unearned income at the end of the period.

(3)	The allowance to nonaccrual loans ratio is calculated by dividing the allowance for loan credit losses at the end of the period by nonaccrual loans at the end of the period.

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The following tables summarize the allowance for loan credit losses by portfolio with a comparison of the percentage composition in relation to total allowance for loan credit losses and total loans as of September 30, 2025 and December 31, 2024.


	September 30, 2025
	Allowance		Percent of Allowance		Percent of Loans in
	for Loan Credit		in Each Category to		Each Category to Total
(Dollars in thousands)	Losses		Total Allocated Allowance		Loans
Real Estate Loans:
Commercial	$	11,833	60.02	%	61.61	%
Construction and land development		2,274	11.53	%	10.01	%
Residential		4,967	25.20	%	25.92	%
Commercial - Non-Real Estate:
Commercial loans		567	2.88	%	2.41	%
Consumer - Non-Real Estate:
Consumer loans		73	0.37	%	0.05	%
Total	$	19,714	100.00	%	100.00	%


	December 31, 2024
	Allowance		Percent of Allowance		Percent of Loans in
	for Loan Credit		in Each Category to		Each Category to Total
(Dollars in thousands)	Losses		Total Allocated Allowance		Loans
Real Estate Loans:
Commercial	$	11,732	62.69	%	63.24	%
Construction and land development		1,761	9.41	%	8.83	%
Residential		4,594	24.54	%	25.32	%
Commercial - Non-Real Estate:
Commercial loans		548	2.93	%	2.56	%
Consumer - Non-Real Estate:
Consumer loans		80	0.43	%	0.05	%
Total	$	18,715	100.00	%	100.00	%

Management believes that the allowance for loan credit losses is adequate to absorb lifetime expected credit losses inherent in the portfolio as of September 30, 2025. There can be no assurance, however, that adjustments to the provision for (recovery of) credit losses will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments; adverse developments in the economy, on a national basis or in the Company’s market area; or changes in the circumstances of particular borrowers are criteria that could change and make adjustments to the provision for (recovery of) credit losses necessary.

Deposits

Total deposits increased $76.4 million or 4.0% to $1.97 billion as of September 30, 2025 compared to $1.89 billion as of December 31, 2024.

Non-interest bearing demand deposits increased $13.6 million or 3.1% to $446.9 million as of September 30, 2025 compared to $433.3 million at December 31, 2024. Non-interest bearing demand deposits represented 22.7% and 22.9% of total deposits at September 30, 2025 and December 31, 2024, respectively.

Interest-bearing deposits, which include NOW accounts, regular savings accounts, money market accounts, and time deposits, increased $62.8 million or 4.3% to $1.52 billion as of September 30, 2025 compared to $1.46 billion December 31, 2024. Interest-bearing deposits represented 77.3% and 77.1% of total deposits at September 30, 2025 and December 31, 2024, respectively.

The Company focuses on funding asset growth with deposit accounts, with an emphasis on core deposit growth, as its primary source of deposits. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts, time deposits, reciprocal IntraFi Demand^® deposits, reciprocal IntraFi Money Market^® deposits and reciprocal IntraFi CD^® deposits. Core deposits totaled $1.67 billion or 84.7% of total deposits and $1.62 billion or 85.4% of total deposits at September 30, 2025 and December 31, 2024, respectively.

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The following table sets forth the average balances of deposits and the average interest rates paid for the three months ended September 30, 2025 and 2024.


	September 30, 2025				September 30, 2024
	Average				Average
(Dollars in thousands)	Amount		Rate		Amount		Rate
Non-interest bearing	$	443,909			$	461,337
Interest bearing:
NOW accounts		354,918	2.30	%		319,463	2.89	%
Money market accounts		350,431	2.74	%		374,141	3.26	%
Savings accounts		43,401	1.10	%		45,980	1.45	%
Time deposits		741,797	4.19	%		738,680	4.60	%
Total interest-bearing		1,490,547	3.31	%		1,478,264	3.80	%
Total	$	1,934,456	2.55	%	$	1,939,601	2.89	%

The following table sets forth the average balances of deposits and the average interest rates paid for the nine months ended September 30, 2025 and 2024.


	September 30, 2025				September 30, 2024
	Average				Average
(Dollars in thousands)	Amount		Rate		Amount		Rate
Non-interest bearing	$	434,238			$	436,147
Interest bearing:
NOW accounts		347,468	2.32	%		312,255	2.79	%
Money market accounts		346,041	2.71	%		340,362	3.21	%
Savings accounts		42,853	1.03	%		50,060	1.41	%
Time deposits		730,532	4.27	%		773,537	4.53	%
Total interest-bearing		1,466,894	3.35	%		1,476,214	3.75	%
Total	$	1,901,132	2.58	%	$	1,912,361	2.90	%

The following table sets forth the maturity ranges of certificates of deposit with balances of $250,000 or more as of September 30, 2025.


	September 30, 2025
(Dollars in thousands)	Total		Uninsured
Three months or less	$	61,634	$	45,134
Over three through 6 months		96,339		74,089
Over 6 through 12 months		118,176		93,426
Over 12 months		61,651		56,901
Total	$	337,800	$	269,550

The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $843.4 million at September 30, 2025 and $816.7 million at December 31, 2024. Included in these amounts were $160.6 million and $157.4 million of public fund deposits that are collateralized as of September 30, 2025 and December 31, 2024, respectively. Deposits that were not insured or not collateralized represented 35% of total deposits at both September 30, 2025 and December 31, 2024, respectively.

Capital Resources

The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Exchange Act. As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory capital requirements.

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Note 11 to the Consolidated Financial Statements, included in Item 1 of this Form 10-Q, contains additional discussion and analysis regarding the Company and Bank’s regulatory capital requirements.

Shareholders’ equity increased $13.1 million or 5.3% to $259.7 million at September 30, 2025 compared to $246.6 million at December 31, 2024. During the nine months ended September 30, 2025, the increase in shareholders’ equity was primarily attributable to a $11.0 million increase in retained earnings, a result of the year-to-date net income exceeding the amount of dividends paid, coupled with a $2.9 million decrease in accumulated other comprehensive loss, due to lower market interest rates. Book value per share was $18.27 as of September 30, 2025 compared to $17.28 as of December 31, 2024.

In August of 2025, the Company’s Board of Directors authorized the extension of the Company’s stock repurchase program that was originally adopted in August of 2021. Under the stock repurchase program, the Company may repurchase up to 700,000 shares of its common stock, par value of $0.01 per share, or approximately 5% of its outstanding shares of common stock. The stock repurchase program will expire on August 31, 2026, or earlier if all the authorized shares have been repurchased. The Company repurchased 15,660 and 95,103 shares of its outstanding common stock under the program during the three and nine months ended September 30, 2025, respectively.

Liquidity

Liquidity reflects a financial institution’s ability to fund assets and meet current and future financial obligations. Liquidity is essential in all banks to meet customer withdrawals, compensate for balance sheet fluctuations, and provide funds for growth. Monitoring and managing both liquidity measurements is critical in developing prudent and effective balance sheet management. Management conducts liquidity stress testing on a quarterly basis to prepare for unexpected adverse scenarios and contemporaneously develops mitigating strategies to reduce losses in the event of an economic downturn.

The Company’s principal source of liquidity and funding is its deposit base. The level of deposits necessary to support the Company’s lending and investment activities is determined through monitoring loan demand.

In addition to the liquidity provided by balance sheet cash flows, the Company supplements its liquidity with additional sources such as secured borrowing credit lines with the FHLB and the Federal Reserve Bank. Specifically, the Company has pledged a portion of its commercial real estate and residential real estate loan portfolios to the FHLB and commercial loans to the Federal Reserve Bank. Based on collateral pledged as of September 30, 2025, the total FHLB available borrowing capacity was $446.9 million. Additional borrowing capacity with the Federal Reserve Bank was approximately $115.5 million as of September 30, 2025.

On September 3, 2024, the Company took out three fixed interest rate FHLB advances with terms of 18, 24, and 36 months. The interest rates on the advances range from 3.91% to 4.14%. At September 30, 2025, the Company had three outstanding FHLB advances totaling $56.0 million.

Total liquidity, defined as cash and cash equivalents, unencumbered securities at fair value, and available secured borrowing capacity, was $826.7 million at September 30, 2025 compared to $727.3 million at December 31, 2024.

In addition to available secured borrowing capacity, the Company had available federal funds lines with correspondent banks of $110.0 million at September 30, 2025.

Off-Balance Sheet Arrangements

The Company enters into certain off-balance sheet arrangements in the normal course of business to meet the financing needs of its customers. These off-balance sheet arrangements include commitments to extend credit, standby letters of credit and financial guarantees which would impact the Company’s liquidity and capital resources to the extent customers accept and or use these commitments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. With the exception of these off-balance sheet arrangements, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, that is material to investors. For further information, see Note 7 to the Consolidated Financial Statements, included in Item 1 of this Form 10-Q, for further discussion of the nature, business purpose and elements of risk involved with these off-balance sheet arrangements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. Based on their evaluation of the Company’s disclosure controls and procedures, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations are designed and operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the third fiscal quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of our operations, the Company and its subsidiary are parties to various claims and lawsuits. Currently, we are not party to any material legal proceedings, and no such proceedings are, to management’s knowledge, threatened against us.

Item 1A. Risk Factors

There have been no material changes in the risk factors that were disclosed in Item 1A, under the caption “Risk Factors” in our 2024 Annual Report on Form 10-K, which we filed with the SEC on March 28, 2025.

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

(a) Not applicable.

(b) Not applicable.

On August 18, 2021, the Company’s Board of Directors approved a share repurchase plan (the “Plan”) of up to 5% of outstanding common stock. As announced in a Current Report of Form 8-K filed with the SEC on August 19, 2025, the Plan, which was set to expire on August 31, 2025, was extended to August 31, 2026. The first repurchase under the Plan occurred in May 2024. The following table reflects share repurchase activity during the three months ended September 30, 2025:


	Total Number of Shares Repurchased	Average Price Paid Per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares that May Yet Be Purchased Under the Plan
July 2025	—	$	—	—	617,554
August 2025	15,660		18.74	15,660	601,894
September 2025	—		—	—	601,894
	15,660	$	18.74	15,660

(1)	The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

(a)

None.

(b)

None.

(c)

During the fiscal quarter ended September 30, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits


Exhibit No.		Description
31.1†		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1†		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.0†		Interactive data files formatted in Inline eXtensible Business Reporting Language pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024, (ii) the Consolidated Statements of Income for the three and nine months ended September 30, 2025 and September 30, 2024 (unaudited), (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and September 30, 2024 (unaudited), (iv) the Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2025 and September 30, 2024 (unaudited), (v) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and September 30, 2024 (unaudited) and (vi) the Notes to the Consolidated Financial Statements.

104†		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.0)

†Filed herewith.

Table of Contents

SIGNATURES

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

Date: November 14, 2025


	JOHN MARSHALL BANCORP, INC.

	By:	/s/ Christopher W. Bergstrom
	Name:	Christopher W. Bergstrom
	Title:	President, Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Kent D. Carstater
	Name:	Kent D. Carstater
	Title:	Senior Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

Source: View Original Filing on SEC EDGAR

FAQ

How did JMSB perform in Q3 2025?

Q3 2025 net income was $5.4 million with diluted EPS of $0.38, compared to $4.2 million and $0.30 in Q3 2024.

What were JMSB’s key balance sheet totals at September 30, 2025?

Total assets were $2.325 billion, loans (net) were $1.918 billion, and deposits were $1.969 billion.

What was JMSB’s net interest income in Q3 2025?

Net interest income was $15.6 million for the quarter.

How are credit metrics trending for JMSB?

The allowance for loan credit losses was $19.7 million, and there were no past-due or nonaccrual loans at quarter end.

How did unrealized securities positions affect equity?

Accumulated other comprehensive loss improved to $7.8 million from $10.7 million at year-end, reflecting moderated unrealized losses.

What were JMSB’s nine-month 2025 results?

For the nine months, net income was $15.3 million with diluted EPS of $1.07.

How much brokered funding does JMSB use?

Brokered deposits totaled $302.0 million, primarily within time deposits.

[10-Q] John Marshall Bancorp, Inc. Quarterly Earnings Report

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FAQ

How did JMSB perform in Q3 2025?

What were JMSB’s key balance sheet totals at September 30, 2025?

What was JMSB’s net interest income in Q3 2025?

How are credit metrics trending for JMSB?

How did unrealized securities positions affect equity?

What were JMSB’s nine-month 2025 results?

How much brokered funding does JMSB use?

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[10-Q] John Marshall Bancorp, Inc. Quarterly Earnings Report

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Banking Equity Analyst positive

FAQ

How did JMSB perform in Q3 2025?

What were JMSB’s key balance sheet totals at September 30, 2025?

What was JMSB’s net interest income in Q3 2025?

How are credit metrics trending for JMSB?

How did unrealized securities positions affect equity?

What were JMSB’s nine-month 2025 results?

How much brokered funding does JMSB use?

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