Q1 profit rises at Texas Community Bancshares (NASDAQ: TCBS) bank

Rhea-AI Filing Summary

Texas Community Bancshares, Inc. reported higher first-quarter earnings while maintaining solid capital and credit quality. For the three months ended March 31, 2026, net income rose to $836,000, and basic earnings per share increased to $0.32 from $0.22 a year earlier, helped by lower credit loss provisioning and stronger noninterest income.

Total assets were $430.4 million, with loans, net of allowance, at $297.5 million and deposits at $332.0 million. The allowance for credit losses on loans was $3.4 million, and nonaccrual balances remained modest. The Bank’s Community Bank Leverage Ratio was 11.97%, above the 9% threshold to be considered well-capitalized.

Insights

Bank equity analyst

Q1 shows healthier profitability, stable credit, and strong capital.

Texas Community Bancshares generated net income of $836,000 for the quarter ended March 31, 2026, up from $643,000 a year earlier, as basic EPS improved from $0.22 to $0.32. Net interest income edged up to $3.43 million while the provision for credit losses dropped to only $6,000.

Noninterest income increased to $698,000, with higher other income, while noninterest expenses rose to $3.17 million, reflecting growth in data processing and technology costs. Asset quality metrics appeared stable, with loans receivable, net, at $297.46 million and an allowance for credit losses of $3.44 million. Nonaccrual loans and charge-offs were limited.

Total assets were $430.45 million and deposits $331.96 million at quarter-end. The Bank reported a Community Bank Leverage Ratio of 11.97%, above the 9% level required under the CBLR framework to be considered well-capitalized, suggesting ample regulatory capital based on the disclosed measures.

Key Figures

Total assets: $430.45M Loans receivable, net: $297.46M Total deposits: $331.96M +5 more

8 metrics

Total assets $430.45M As of March 31, 2026

Loans receivable, net $297.46M Net of $3.44M allowance at March 31, 2026

Total deposits $331.96M As of March 31, 2026

Net income $836,000 Three months ended March 31, 2026 vs $643,000 in 2025

Basic EPS $0.32/share Three months ended March 31, 2026; prior-year $0.22

Net interest income $3.43M Q1 2026, after $5.57M interest income and $2.14M expense

Allowance for credit losses $3.44M Allowance on loans at March 31, 2026

Community Bank Leverage Ratio 11.97% Bank capital ratio at March 31, 2026 under CBLR framework

Key Terms

Allowance for credit losses, Community Bank Leverage Ratio, collateral-dependent loans, other real estate owned, +2 more

6 terms

Allowance for credit losses financial

"The allowance for credit losses applies to any financial asset carried at amortized cost, including off-balance sheet commitments"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

Community Bank Leverage Ratio regulatory

"At March 31, 2026 and December 31, 2025, the Bank’s CBLR ratio was 11.97% and 11.74%, respectively"

Community bank leverage ratio is a regulatory measure that compares a bank’s core capital (its safety cushion) to the size of its balance sheet, showing what share of assets is backed by tangible equity rather than borrowed money. Investors use it like a health check: a higher ratio means the bank has more buffer to absorb losses, support lending and dividends, and face fewer regulatory limits, while a lower ratio signals greater risk.

collateral-dependent loans financial

"The following table presents the amortized cost basis of collateral-dependent loans by class of loans"

other real estate owned financial

"At March 31, 2026, the Company had other real estate owned consisting of one multi-family property acquired through foreclosure"

Assets a lender or financial firm holds after taking back real property through foreclosure or repossession because a borrower defaulted. Think of it like a store keeping returned items it didn’t sell — these properties are not earning interest, can be costly to maintain, and may be sold at a loss or profit, so they directly affect a lender’s balance sheet, cash flow and perceived credit risk for investors.

available for sale securities financial

"Securities available for sale | | | 60,070 | | | 59,893"

Available-for-sale securities are bonds or stocks a company owns that it does not plan to trade frequently or hold until they mature, but might sell before maturity; their market value is tracked over time and changes are recorded separately from regular profits until they are sold. Investors watch these holdings because swings in their market value affect a company’s reported assets and equity and can signal future cash from sales, much like items in a household that are kept for occasional sale and can change in resale value.

fair value hierarchy technical

"The following table summarizes financial assets measured at fair value on a recurring basis as of March 31, 2026, segregated by the level of the valuation inputs within the fair value hierarchy"

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Table of Contents

​

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

OR

◻ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 001-40610

Texas Community Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

​	​	​
Maryland	​ ​ ​	86-2760335
(State or Other Jurisdiction of Incorporation or Organization)	​	(I.R.S. Employer Identification No.)
​	​	​
215 West Broad Street, Mineola, Texas	​	75773
(Address of Principal Executive Offices)	​	(Zip Code)

​

(903) 569-2602

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

		​ ​
Common stock, $0.01 par value per share		TCBS		The Nasdaq Stock Market LLC
(Title of Each Class)		(Trading Symbol(s))		(Name of Each Exchange on Which Registered)

​

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 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 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  ⌧

There were 2,885,392 shares, par value $0.01 per share, of the Registrant’s common stock outstanding as of May 7, 2026.

​

​

​

Table of Contents

Texas Community Bancshares, Inc.

Form 10-Q

Table of Contents

​	​	​	​	​
​	​ ​	​	​ ​ ​	Page
PART I. FINANCIAL INFORMATION
​	​	​	​	​
Item 1.	​	Financial Statements	​	1
​	​	​	​	​
​	​	Consolidated Statements of Financial Condition at March 31, 2026 (unaudited) and December 31, 2025	​	1
​	​	​	​	​
​	​	Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited)	​	2
​	​	​	​	​
​	​	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026 and 2025 (unaudited)	​	3
​	​	​	​	​
​	​	Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited)	​	4
​	​	​	​	​
​	​	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited)	​	5
​	​	​	​	​
​	​	Notes to Consolidated Financial Statements (unaudited)	​	6
​	​	​	​	​
Item 2.	​	Management’s Discussion and Analysis of Financial Condition and Results of Operations	​	28
​	​	​	​	​
Item 3.	​	Quantitative and Qualitative Disclosures About Market Risk	​	40
​	​	​	​	​
Item 4.	​	Controls and Procedures	​	41
​	​	​	​	​
PART II. OTHER INFORMATION
​	​	​	​	​
Item 1.	​	Legal Proceedings	​	42
​	​	​	​	​
Item 1A.	​	Risk Factors	​	42
​	​	​	​	​
Item 2.	​	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	​	42
​	​	​	​	​
Item 3.	​	Defaults Upon Senior Securities	​	42
​	​	​	​	​
Item 4.	​	Mine Safety Disclosures	​	42
​	​	​	​	​
Item 5.	​	Other Information	​	42
​	​	​	​	​
Item 6.	​	Exhibits	​	43
​	​	​	​	​
​	​	Signatures	​	44

​

​

​

​

​

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.        Financial Statements

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

March 31, 2026 and December 31, 2025

(Amounts in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​ ​ ​	March 31,		​ ​ ​	December 31,
​	​	2026		​	2025
​	​	(unaudited)		​	​	​
Assets	​	​	​	​	​	​
Cash and due from banks		$	3,222		$	3,876
Federal funds sold	​	​	3,232	​	​	2,574
Cash and cash equivalents	​	​	6,454	​	​	6,450
Interest bearing deposits in banks	​	​	10,083	​	​	5,509
Securities available for sale	​	​	60,070	​	​	59,893
Securities held to maturity, net of allowance for credit losses of $0 (fair values of $15,859 at March 31, 2026 and $16,744 at December 31, 2025)	​	​	17,521	​	​	18,283
Loans receivable, net of allowance for credit losses of $3,437 at March 31, 2026 and $3,440 at December 31, 2025	​	​	297,463	​	​	301,986
Net investment in direct financing leases	​	​	1,038	​	​	1,219
Accrued interest receivable	​	​	1,683	​	​	1,888
Premises and equipment, net	​	​	13,121	​	​	11,459
Bank-owned life insurance	​	​	6,587	​	​	6,544
Other real estate owned	​	​	9,104	​	​	9,271
Restricted investments carried at cost	​	​	2,805	​	​	2,773
Deferred income taxes	​	​	1,772	​	​	1,814
Other assets	​	​	2,745	​	​	2,753
​	​	$	430,446	​	$	429,842
Liabilities and Shareholders' Equity	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​
Noninterest bearing	​	$	48,658	​	$	45,871
Interest bearing	​	​	283,299	​	​	282,033
Total deposits	​	​	331,957	​	​	327,904
Advances from Federal Home Loan Bank (FHLB)	​	​	41,567	​	​	45,669
Accrued expenses and other liabilities	​	​	2,688	​	​	2,512
Total liabilities	​	​	376,212	​	​	376,085
Shareholders' Equity	​	​	​	​	​	​
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding	​	​	—	​	​	—
Common stock, $0.01 par value, 19,000,000 shares authorized, 3,364,633 issued and 2,885,392 outstanding at March 31, 2026 and 3,366,516 issued and 2,887,275 outstanding at December 31, 2025	​	​	34	​	​	34
Additional paid in capital	​	​	33,257	​	​	33,198
Retained earnings	​	​	33,105	​	​	32,412
Accumulated other comprehensive loss	​	​	(3,372)	​	​	(3,063)
Unearned Employee Stock Ownership Program (ESOP) shares, at cost	​	​	(1,850)	​	​	(1,884)
Treasury stock, at cost (479,241 shares at March 31, 2026 and December 31, 2025)	​	​	(6,940)	​	​	(6,940)
Total shareholders' equity	​	​	54,234	​	​	53,757
​	​	$	430,446	​	$	429,842

See Notes to Consolidated Financial Statements

​

1

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Interest Income		​
Loans, including fees	​	$	4,654	​	$	4,400
Debt securities	​		​	​		​
Taxable	​		726	​		984
Non taxable	​		36	​		44
Dividends on restricted investments	​		34	​		50
Federal funds sold	​		61	​		62
Deposits with banks	​		59	​		104
Financial derivative	​		—	​		(10)
Total interest income	​		5,570	​		5,634
Interest Expense	​	​	​	​		​
Deposits	​		1,648	​		1,799
Advances from FHLB	​		489	​		503
Other	​		2	​		4
Total interest expense	​		2,139	​		2,306
Net Interest Income	​		3,431	​		3,328
Provision for Credit Losses - loans	​	​	6	​	​	63
Provision for Credit Losses - off-balance sheet credit exposures	​	​	—	​	​	50
Provision for Credit Losses	​		6	​		113
Net Interest Income After Provision for Credit Losses	​		3,425	​		3,215
Noninterest Income	​	​	​	​		​
Service charges on deposit accounts	​		180	​		165
Other service charges and fees	​		275	​		302
Net loss on sale of other real estate owned	​		(25)	​		—
Fair value adjustments to other real estate owned	​		—	​		(52)
Net appreciation on bank-owned life insurance	​		43	​		41
Other income	​		225	​		6
Total noninterest income	​		698	​		462
Noninterest Expenses	​	​	​	​		​
Salaries and employee benefits	​		1,643	​		1,654
Occupancy and equipment expense	​		288	​		247
Data processing	​		277	​		234
Technology expense	​		134	​		57
Contract services	​		69	​		67
Director fees	​		53	​		71
Other expense	​		704	​		598
Total noninterest expense	​		3,168	​		2,928
Income Before Income Taxes	​		955	​		749
Income Tax Expense	​		119	​		106
Net Income	​	$	836	​	$	643
Earnings per share - basic	​	​	0.32	​	​	0.22
Earnings per share - diluted	​	​	0.31	​	​	0.22
Weighted-average shares outstanding - basic	​	​	2,645,472	​	​	2,863,916
Weighted-average shares outstanding - diluted	​	​	2,736,745	​	​	2,965,742

See Notes to Consolidated Financial Statements

​

2

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Net Income	​	$	836	​	$	643
​	​	​	​	​	​	​
Other items of comprehensive income (loss)	​	​	​	​	​	​
Debt Securities	​	​	​	​	​	​
Net changes in fair value of available for sale securities, before tax	​		(391)	​		918
Net changes in fair value of available for sale securities hedged, before tax	​		—	​		(417)
Total other items of comprehensive (loss) income, before tax	​		(391)	​		501
​	​	​	​	​	​	​
Income tax (expense) benefit related to other items of comprehensive (loss) income	​		82	​		(106)
Total other items of comprehensive (loss) income, after tax	​		(309)	​		395
​	​	​	​	​	​	​
Comprehensive Income	​	$	527	​	$	1,038

See Notes to Consolidated Financial Statements

​

​

3

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

Accumulated

​ ​ ​

​

​ ​ ​

​

​ ​ ​

​

​

​

​

​

​

​

Additional

​

​

​

​

Other

​

Unearned

​

​

​

Total

​

​

Preferred

​

Common

​

Paid In

​

Retained

​

Comprehensive

​

ESOP

​

Treasury

​

Shareholders'

​

​

Stock

​

Stock

​

Capital

​

Earnings

​

Loss

​

Shares

​

Stock

​

Equity

Balance at January 1, 2026

​

$

—

​

$

34

​

$

33,198

​

$

32,412

​

$

(3,063)

​

$

(1,884)

​

$

(6,940)

​

$

53,757

Net income

​

—

​

—

​

—

​

836

​

—

​

—

​

—

​

836

Stock based compensation expense

​

​

—

​

​

—

​

​

37

​

​

—

​

​

—

​

​

—

​

​

—

​

​

37

Other comprehensive loss, net of tax

​

—

​

—

​

—

​

—

​

(309)

​

—

​

—

​

(309)

Cash dividend declared ($0.05 per share)

​

—

​

—

​

—

​

(143)

​

—

​

—

​

—

​

(143)

ESOP shares committed to be released, 3,349 shares

​

—

​

—

​

22

​

—

​

—

​

34

​

—

​

56

Balance at March 31, 2026

​

$

—

​

$

34

​

$

33,257

​

$

33,105

​

$

(3,372)

​

$

(1,850)

​

$

(6,940)

​

$

54,234

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at January 1, 2025

​

$

—

​

$

34

​

$

32,493

​

$

30,163

​

$

(4,766)

​

$

(2,039)

​

$

(3,777)

​

$

52,108

Net income

​

—

​

—

​

—

​

643

​

—

​

—

​

—

​

643

Stock based compensation expense

​

​

—

​

​

—

​

​

175

​

​

—

​

​

—

​

​

—

​

​

—

​

​

175

Other comprehensive income, net of tax

​

—

​

—

​

—

​

—

​

395

​

—

​

—

​

395

Cash dividend declared ($0.04 per share)

​

​

—

​

​

—

​

​

—

​

​

(123)

​

​

—

​

​

—

​

​

—

​

​

(123)

ESOP shares committed to be released, 3,277 shares

​

—

​

—

​

19

​

—

​

—

​

33

​

—

​

52

Treasury stock purchased, 31,500 shares

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(495)

​

​

(495)

Balance at March 31, 2025

​

$

—

​

$

34

​

$

32,687

​

$

30,683

​

$

(4,371)

​

$

(2,006)

​

$

(4,272)

​

$

52,755

​

​

See Notes to Consolidated Financial Statements

​

4

Table of Contents

​

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Operating Activities		​	​		​	​
Net income	​	$	836	​	$	643
Adjustments to reconcile net income to net cash from operating activities	​		​	​		​
Provision for credit losses - loans	​	​	6	​	​	63
Provision for credit losses - off-balance sheet credit exposures	​		—	​		50
Net amortization (accretion) of securities	​		38	​		(15)
Depreciation and amortization	​		124	​		146
Net unrealized gain on discontinued financial derivative	​	​	—	​	​	463
Stock dividends on restricted investments	​	​	(32)	​	​	(47)
Appreciation on bank-owned life insurance	​		(43)	​		(41)
ESOP compensation expense for allocated shares	​	​	56	​	​	52
Loss on sale other real estate owned	​	​	25	​	​	—
Fair value adjustment on other real estate owned	​	​	—	​	​	52
Stock-based compensation	​		37	​		175
Deferred income tax expense	​		124	​		80
Loss on fair value adjustment of fair value hedges	​		—	​		10
Net change in	​		​	​		​
Accrued interest receivable	​		205	​		68
Other assets	​		56	​		47
Accrued expenses and other liabilities	​		176	​		(3,279)
Net Cash from (used for) Operating Activities	​		1,608	​		(1,533)
Investing Activities	​		​	​		​
Net change in interest bearing deposits in banks	​		(4,574)	​		436
Activity in available for sale securities	​	​	​	​	​	​
Purchases	​		(1,515)	​		(2,702)
Maturities, prepayments and calls	​	​	927	​	​	3,591
Activity in held to maturity securities	​		​	​		​
Maturities, prepayments and calls	​		729	​		891
Redemptions of restricted investments	​		—	​		1,096
Purchases of other investment	​		(33)	​		(36)
Loan originations and principal collections, net	​		4,637	​	​	(4,098)
Net decrease in net investment in direct financing leases	​		181	​		149
Proceeds from sales of other real estate owned	​		22	​		—
Additions of premises and equipment	​		(1,786)	​		(28)
Net Cash (used for) Investing Activities	​		(1,412)	​		(701)
Financing Activities	​		​	​		​
Net increase in deposits	​		4,053	​		1,704
Payments on FHLB and other borrowings	​		(4,102)	​		(320)
Cash dividends declared and paid	​		(143)	​		(123)
Purchases of treasury stock	​		—	​		(495)
Net Cash (used for) from Financing Activities	​		(192)	​		766
Net Change in Cash and Cash Equivalents	​		4	​		(1,468)
Cash and Cash Equivalents at Beginning of Period	​		6,450	​		13,290
Cash and Cash Equivalents at End of Period	​	$	6,454	​	$	11,822

​

See Notes to Consolidated Financial Statements

​

​

5

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Note 1 -    Summary of Significant Accounting Policies

General

Texas Community Bancshares, Inc. (the “Company”), a Maryland corporation and registered bank holding company, was incorporated on March 5, 2021. The Company became the bank holding company for Broadstreet Bank, SSB (the “Bank”), formerly known as Mineola Community Bank, SSB prior to December 4, 2023, as part of the Bank’s mutual to stock conversion completed on July 14, 2021. The Company’s shares trade on the NASDAQ under the symbol TCBS. Voting rights in the Company are held and exercised exclusively by the shareholders of the Company.

The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in Mineola, Texas, and the surrounding area and the Dallas-Fort Worth Metroplex. The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America (GAAP) and to general practices of the banking industry.

Policies and practices which materially affect the determination of financial position, results of operations and cash flows are summarized as follows:

Interim Financial Statements

The interim unaudited consolidated financial statements as of March 31, 2026, and for the three months ended March 31, 2026 and 2025, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Such adjustments are the only adjustments contained in these unaudited consolidated financial statements. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission, and therefore certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be achieved for the year ending December 31, 2026, or any other period. Certain prior period data presented in the consolidated financial statements has been revised to conform with the current period presentation. The accompanying consolidated financial statements have been derived from and should be read in conjunction with the audited consolidated financial statements, and notes, contained in the Company’s Form 10-K for the year ended December 31, 2025. Reference is made to the accounting policies of the Company described in the Notes to Consolidated Financial Statements contained in Form 10-K for the year ended December 31, 2025.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include the Bank and its wholly-owned subsidiary, Mineola Financial Service Corporation, which is inactive. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

In preparing consolidated 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 statements of financial condition 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 credit losses.

6

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

​

Note 2 – Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period, including allocated and committed to be released ESOP shares and restricted stock awards granted during the applicable period. Diluted earnings per 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 presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share:

​

​	​	​	​	​	​	​
​	​ ​ ​	Three Months Ended
​	​ ​ ​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Net Income	​	$	836	​	$	643
​	​	​	​	​	​	​
Weighted average shares outstanding for basic earnings per share:	​		​	​		​
Average shares outstanding	​		2,833,779	​		3,067,696
Less: average unearned ESOP shares	​		(188,307)	​		(203,780)
Weighted average shares outstanding for basic earnings per share	​		2,645,472	​		2,863,916
​	​	​	​	​	​	​
Additional dilutive shares	​		91,273	​		101,826
​	​	​	​	​	​	​
Weighted average shares outstanding for dilutive earnings per share	​		2,736,745	​		2,965,742
​	​	​	​	​	​	​
Basic earnings per share	​	$	0.32	​	$	0.22
​	​	​	​	​	​	​
Dilutive earnings per share	​	$	0.31	​	$	0.22

​

There were no antidilutive restricted awards for the three months ended March 31, 2026. Nonvested restricted stock awards for 21,493 shares of common stock were not considered in computing diluted earnings per share for the three months ended March 31, 2025, because they were antidilutive. There were no antidilutive stock options for the three months ended March 31, 2026. Stock options for 35,838 shares of common stock have vested, however, were not considered in computing diluted earnings per share for the three months ended March 31, 2025, because they were antidilutive.

7

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Note 3 -    Debt Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

​

​

​

​

Gross

​

Gross

​

Estimated

​

​

Amortized

​

Unrealized

​

Unrealized

​

Fair

Available for Sale

​ ​ ​

Cost

​ ​ ​

Gains

​ ​ ​

Losses

​ ​ ​

Value

Debt Securities:

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

6,741

​

$

—

​

$

(740)

​

$

6,001

Collateralized mortgage obligations

​

37,337

​

—

​

(1,530)

​

35,807

State and municipal

​

9,736

​

—

​

(1,119)

​

8,617

Corporate bonds

​

10,524

​

47

​

(926)

​

9,645

Total securities available for sale

​

$

64,338

​

$

47

​

$

(4,315)

​

$

60,070

​

​

​

​

​

​

​

​

​

​

​

​

​

Held to Maturity

​

​

​

​

​

​

​

​

Debt Securities:

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

15,453

​

$

—

​

$

(1,631)

​

$

13,822

State and municipal

​

​

1,200

​

​

—

​

​

(33)

​

​

1,167

U.S. Government and agency

​

868

​

2

​

—

​

870

Total securities held to maturity

​

$

17,521

​

$

2

​

$

(1,664)

​

$

15,859

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

​

​

​

Gross

​

Gross

​

Estimated

​

​

Amortized

​

Unrealized

​

Unrealized

​

Fair

Available for Sale

​ ​ ​

Cost

​ ​ ​

Gains

​ ​ ​

Losses

​ ​ ​

Value

Debt Securities:

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

6,475

​

$

—

​

$

(679)

​

$

5,796

Collateralized mortgage obligations

​

37,023

​

12

​

(1,293)

​

35,742

State and municipal

​

9,753

​

—

​

(1,010)

​

8,743

Corporate bonds

​

10,519

​

49

​

(956)

​

9,612

Total securities available for sale

​

$

63,770

​

$

61

​

$

(3,938)

​

$

59,893

​

​

​

​

​

​

​

​

​

​

​

​

​

Held to Maturity

​

​

​

​

​

​

​

​

Debt Securities:

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

16,112

​

$

—

​

$

(1,534)

​

$

14,578

State and municipal

​

1,200

​

—

​

(6)

​

1,194

U.S. Government and agency

​

​

971

​

​

1

​

​

—

​

​

972

Total securities held to maturity

​

$

18,283

​

$

1

​

$

(1,540)

​

$

16,744

​

During the three months ended March 31, 2026 and 2025, the Company had no sales of available for sale securities or held to maturity securities.

At March 31, 2026 and December 31, 2025, securities with a fair value of $14,872 and $14,815, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

8

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

The amortized cost and fair value of debt securities by contractual maturity at March 31, 2026, follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Available for Sale

​

Held to Maturity

​

​

​

​

​

Estimated

​

​

​

​

Estimated

​

​

Amortized

​

Fair

​

Amortized

​

Fair

​

​ ​ ​

Cost

​ ​ ​

Value

​ ​ ​

Cost

​ ​ ​

Value

Due in one year

​

$

—

​

$

—

​

$

—

​

$

—

Due from one to five years

​

1,145

​

1,046

​

135

​

128

Due in five to ten years

​

12,885

​

12,031

​

868

​

870

After ten years

​

6,230

​

5,185

​

1,065

​

1,039

Residential mortgage-backed

​

6,741

​

6,001

​

15,453

​

13,822

Collateralized mortgage obligations

​

37,337

​

35,807

​

—

​

—

Total

​

$

64,338

​

$

60,070

​

$

17,521

​

$

15,859

​

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

​

Less than 12 months

​

12 months or longer

​

​

​

​

​

Gross

​

​

​

​

Gross

​

​

Fair

​

Unrealized

​

Fair

​

Unrealized

Category (number of securities)

​ ​ ​

Value

​ ​ ​

Losses

​ ​ ​

Value

​ ​ ​

Losses

Residential mortgage-backed (1, 73)

​

$

483

​

$

(18)

​

$

19,340

​

$

(2,353)

Collateralized mortgage obligations (8, 15)

​

11,595

​

(109)

​

24,212

​

(1,421)

State and municipal (1, 9)

​

1,039

​

(26)

​

8,745

​

(1,126)

Corporate bonds (1, 14)

​

499

​

(1)

​

6,575

​

(925)

Total

​

$

13,616

​

$

(154)

​

$

58,872

​

$

(5,825)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

Less than 12 months

​

12 months or longer

​

​

​

​

​

Gross

​

​

​

​

Gross

​

​

Fair

​

Unrealized

​

Fair

​

Unrealized

Category (number of securities)

​ ​ ​

Value

​ ​ ​

Losses

​ ​ ​

Value

​ ​ ​

Losses

Residential mortgage-backed (0, 77)

​

$

—

​

$

—

​

$

20,374

​

$

(2,213)

Collateralized mortgage obligations (2, 15)

​

2,538

​

(18)

​

24,891

​

(1,275)

State and municipal (1, 9)

​

1,065

​

—

​

8,872

​

(1,016)

Corporate bonds (4, 13)

​

2,871

​

(29)

​

5,572

​

(927)

Total

​

$

6,474

​

$

(47)

​

$

59,709

​

$

(5,431)

​

At March 31, 2026 and December 31, 2025, the Company had investment securities with approximately $5,825 and $5,431, respectively, in unrealized losses, which have been in continuous loss positions for more than twelve months. The Company’s assessments indicated that the cause of the unrealized losses was primarily the change in market interest rates and not the issuers’ financial condition or downgrades by rating agencies. The Company has the ability and intent to hold such securities until maturity.

The Company monitors credit quality of debt securities held-to-maturity through the use of nationally recognized

9

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

credit ratings. The Company monitors credit ratings on a continual basis. The following table summarizes bond ratings for the Company’s held-to-maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of March 31, 2026 and December 31, 2025:

​

​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2026
​	​ ​ ​ ​ ​	Residential mortgage-backed		​ ​ ​ ​	State and municipal		​ ​ ​ ​	U.S Government and agency
AAA	​	$	15,453	​	$	1,065	​	$	868
Baa1	​	​	—	​	​	135	​	​	—
​	​	$	15,453	​	$	1,200	​	$	868
​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2025
​	​	Residential mortgage-backed		​	State and municipal		​	U.S Government and agency
AAA	​	$	16,112	​	$	1,066	​	$	971
Baa1	​	​	—	​	​	134	​	​	—
​	​	$	16,112	​	$	1,200	​	$	971

​

As of March 31, 2026 and December 31, 2025, there were no securities held to maturity on nonaccrual status or past due status.

​

Mortgage-backed Securities and Collateralized Mortgage Obligations

The unrealized losses on the Company’s investments in mortgage-backed securities and collateralized mortgage obligations were caused by market interest rate increases and changes in prepayment speeds and not credit quality. It is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments because the Company does not intend to sell the investments before recovery of their amortized cost basis, which may be maturity. The unrealized losses on the Company’s investment in mortgage-backed securities have not been recognized into income and no allowance for credit losses was established at March 31, 2026 or December 31, 2025.

U.S. Government and Agency Securities

The unrealized losses on the Company’s investments in U.S. government and agency securities have not been recognized into income and no allowance for credit losses was established because the bonds are of high credit quality, management does not intend to sell, and it is likely that management will not be required to sell the securities prior to their anticipated recovery, which may be at maturity. The decline in fair value is primarily due to increases in market interest rates and not credit quality deterioration and the fair value is expected to recover as the bonds approach maturity. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments. Therefore, an allowance for credit losses is deemed unnecessary at March 31, 2026 and December 31, 2025.

10

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Municipal Securities and Corporate Bonds

The unrealized losses on the Company’s investments in state and municipal securities and corporate bonds have not been recognized into income and no allowance for credit losses was established because the bonds are of high credit quality, management does not intend to sell, and it is likely that management will not be required to sell the securities prior to their anticipated recovery, which may be at maturity. The decline in fair value is primarily due to increases in market interest rates and not credit quality deterioration and the fair value is expected to recover as the bonds approach maturity. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments. Therefore, an allowance for credit losses is deemed unnecessary at March 31, 2026 and December 31, 2025.

​

Note 4 -   Loans and Allowance for Credit Losses

A summary of the balances of loans and leases follows:

​

​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​	​ ​ ​	2026		​ ​ ​	2025
Real estate	​	​	​	​	​	​
Construction and land	​	$	42,693	​	$	48,372
Farmland	​	​	17,490	​	​	17,085
1-4 Residential and multi-family	​	​	149,145	​	​	151,326
Commercial Real Estate	​	​	63,985	​	​	61,526
Total real estate	​	​	273,313	​	​	278,309
Agriculture	​		44	​		33
Commercial	​		9,259	​		8,813
Municipalities	​	​	15,229	​	​	14,890
Consumer and other	​		4,093	​		4,600
Subtotal	​		301,938	​		306,645
Less: allowance for credit losses	​		(3,437)	​		(3,440)
Loans and leases, net	​	$	298,501	​	$	303,205

​

Direct financing leases of $1,038 and $1,219 are included in consumer and other loans at March 31, 2026 and December 31, 2025, respectively.

​

The following tables set forth information regarding the activity in the allowance for credit losses for the three months ended March 31, 2026 and March 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​ ​ ​

​

March 31, 2026

​

​ ​ ​

Real Estate

​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

Allowance for credit losses:

​ ​ ​

Construction and Land

​ ​ ​

Farmland

​ ​ ​

1-4 Residential & multi-family

​ ​ ​

Commercial real estate

​ ​ ​

Agriculture

​ ​ ​

Commercial

​ ​ ​

Municipalities

​ ​ ​

Consumer and other

​ ​ ​

Total

Balance, January 1, 2026

​

$

591

​

$

152

​

$

1,399

​

$

718

​

$

1

​

$

407

​

$

102

​

$

70

​

$

3,440

Provision (credit) for credit losses

​

—

​

(2)

​

(49)

​

33

​

—

​

17

​

(3)

​

10

​

6

Loans charged-off

​

—

​

—

​

—

​

—

​

—

​

—

​

—

​

(10)

​

(10)

Recoveries

​

—

​

—

​

—

​

—

​

—

​

—

​

—

​

1

​

1

Balance, March 31, 2026

​

$

591

​

$

150

​

$

1,350

​

$

751

​

$

1

​

$

424

​

$

99

​

$

71

​

$

3,437

​

11

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​ ​ ​

​

March 31, 2025

​

​ ​ ​

Real Estate

​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

​ ​ ​

​

​

Allowance for credit losses:

​ ​ ​

Construction and Land

​ ​ ​

Farmland

​ ​ ​

1-4 Residential & multi-family

​ ​ ​

Commercial real estate

​ ​ ​

Agriculture

​ ​ ​

Commercial

​ ​ ​

Municipalities

​ ​ ​

Consumer and other

​ ​ ​

Total

Balance, January 1, 2025

​

$

632

​

$

74

​

$

1,355

​

$

605

​

$

1

​

$

375

​

$

83

​

$

97

​

$

3,222

Provision for credit losses

​

29

​

3

​

24

​

14

​

—

​

(16)

​

10

​

(1)

​

63

Loans charged-off

​

—

​

—

​

(3)

​

—

​

—

​

—

​

—

​

(10)

​

(13)

Recoveries

​

—

​

—

​

—

​

—

​

—

​

—

​

—

​

1

​

1

Balance, March 31, 2025

​

$

661

​

$

77

​

$

1,376

​

$

619

​

$

1

​

$

359

​

$

93

​

$

87

​

$

3,273

​

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days and still accruing as of March 31, 2026 and December 31, 2025:

​

​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2026
​	​ ​ ​	Nonaccrual without Allowance		​ ​ ​	Nonaccrual with Allowance		​ ​ ​	Loans Past Due Over 90 Days Still Accruing
Real estate	​	​	​		​	​		​	​
Construction and land	​	$	—	​	$	—	​	$	—
Farmland	​		—	​		—	​		—
1‑4 Residential & multi-family	​		955	​		—	​		—
Commercial real estate	​		40	​		—	​		—
Agriculture	​		—	​		—	​		—
Commercial	​		65	​		885	​		—
Municipalities	​	​	—	​	​	—	​	​	—
Consumer and other	​		4	​		—	​		—
Total	​	$	1,064	​	$	885	​	$	—

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2025
​	​ ​ ​	Nonaccrual without Allowance		​ ​ ​	Nonaccrual with Allowance		​ ​ ​	Loans Past Due Over 90 Days Still Accruing
Real estate	​	​	​		​	​		​	​
Construction and land	​	$	—	​	$	—	​	$	—
Farmland	​		—	​		—	​		—
1‑4 Residential & multi-family	​		968	​		—	​		—
Commercial real estate	​		42	​		—	​		—
Agriculture	​		—	​		—	​		—
Commercial	​		67	​		933	​		1
Municipalities	​	​	—	​	​	—	​	​	—
Consumer and other	​		4	​		—	​		—
Total	​	$	1,081	​	$	933	​	$	1

​

The Company did not recognize any interest income on nonaccrual loans during the three months ended March 31, 2026 or March 31, 2025.

12

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2026 and December 31, 2025:

​

​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2026
​	​ ​ ​	Real Estate		​ ​ ​	Accounts Receivable and Inventory		​ ​ ​	Other
Real estate	​	​	​		​	​		​	​
1-4 Residential & multi-family	​	$	1,074	​	$	—	​	$	—
Commercial real estate	​		40	​		—	​		—
Commercial	​		—	​		235	​		715
Consumer and other	​		—	​		—	​		4
Total	​	$	1,114	​	$	235	​	$	719

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2025
​	​ ​ ​	Real Estate		​ ​ ​	Accounts Receivable and Inventory		​ ​ ​	Other
Real estate	​	​	​		​	​		​	​
1-4 Residential & multi-family	​	$	1,090	​	$	—	​	$	—
Commercial real estate	​		42	​		—	​		—
Commercial	​		—	​		247	​		753
Consumer and other	​	​	—	​	​	—	​	​	3
Total	​	$	1,132	​	$	247	​	$	756

​

The Company had $2,068 and $2,135 in collateral-dependent loans at March 31, 2026 and December 31, 2025, respectively.

Internal Risk Categories

A loan is considered collateral-dependent when based on current information and events; it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Collateral dependent loans include nonperforming loans (nonaccrual loans), loans performing but with deterioration that leads to doubt regarding collectability.

Loans that do not share risk characteristics are evaluated on an individual basis. For collateral-dependent loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying

13

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

collateral, less estimated costs to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.

The Company monitors credit quality within its portfolio segments based on primary credit quality indicators. All of the Company’s loans and leases are evaluated using pass rated or reservable criticized as the primary credit quality indicator. The term reservable criticized refers to those loans and leases that are internally classified or listed by the Company as special mention, substandard, doubtful or loss. These assets pose an elevated risk and may have a high probability of default or total loss.

The classifications of loans and leases reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits quarterly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each quarterly reporting period.

The methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness; however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits with this classification have often become collateral dependent and any shortage in collateral or other likely loss amount is recorded as a specific valuation allowance. Credits rated doubtful are generally also placed on nonaccrual status.

Credits rated loss are those that are considered uncollectable 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 that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

Pass rated refers to loans that are not considered criticized. In addition to this primary credit quality indicator, the Company uses other credit quality indicators for certain types of loans.

The Company evaluates the loan risk grading system definitions and allowance for credit loss methodology on an ongoing basis. No significant changes in methodology were made during the three months ended March 31, 2026.

14

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Based on the most recent analysis performed, the risk category of loans by class of loans and gross chargeoffs as of March 31, 2026 and December 31, 2025 are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

Term Loans Amortized Cost Basis by Origination Year

​

​ ​ ​

2026

​ ​ ​

2025

​ ​ ​

2024

​ ​ ​

2023

​ ​ ​

2022

​ ​ ​

Prior

​ ​ ​

Total

Construction and land

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

2,616

​

$

18,671

​

$

16,061

​

$

1,710

​

$

1,506

​

$

1,689

​

$

42,253

Special mention

​

​

—

​

​

440

​

​

—

​

​

—

​

​

—

​

​

—

​

​

440

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

2,616

​

$

19,111

​

$

16,061

​

$

1,710

​

$

1,506

​

$

1,689

​

$

42,693

Farmland

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

373

​

$

8,653

​

$

2,873

​

$

2,383

​

$

1,367

​

$

1,629

​

$

17,278

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

212

​

​

—

​

​

212

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

373

​

$

8,653

​

$

2,873

​

$

2,383

​

$

1,579

​

$

1,629

​

$

17,490

1-4 Residential & multi-family

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

9,061

​

$

12,757

​

$

10,651

​

$

20,404

​

$

16,206

​

$

77,155

​

$

146,234

Special mention

​

​

—

​

​

—

​

​

—

​

​

275

​

​

—

​

​

646

​

​

921

Substandard

​

​

—

​

​

—

​

​

—

​

​

1,314

​

​

—

​

​

676

​

​

1,990

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

9,061

​

$

12,757

​

$

10,651

​

$

21,993

​

$

16,206

​

$

78,477

​

$

149,145

Commercial real estate

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

3,082

​

$

14,154

​

$

13,271

​

$

12,943

​

$

4,866

​

$

14,968

​

$

63,284

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

661

​

​

661

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

40

​

​

40

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

3,082

​

$

14,154

​

$

13,271

​

$

12,943

​

$

4,866

​

$

15,669

​

$

63,985

Agriculture

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

17

​

$

—

​

$

—

​

$

23

​

$

—

​

$

4

​

$

44

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

17

​

$

—

​

$

—

​

$

23

​

$

—

​

$

4

​

$

44

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

742

​

$

1,042

​

$

2,272

​

$

252

​

$

186

​

$

3,807

​

$

8,301

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

8

​

​

65

​

​

—

​

​

—

​

​

885

​

​

958

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

742

​

$

1,050

​

$

2,337

​

$

252

​

$

186

​

$

4,692

​

$

9,259

Municipalities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

633

​

$

5,829

​

$

8,021

​

$

746

​

$

—

​

$

—

​

$

15,229

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

633

​

$

5,829

​

$

8,021

​

$

746

​

$

—

​

$

—

​

$

15,229

Consumer and other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

608

​

$

1,339

​

$

1,376

​

$

230

​

$

110

​

$

401

​

$

4,064

Special mention

​

​

—

​

​

19

​

​

2

​

​

2

​

​

—

​

​

—

​

​

23

Substandard

​

​

—

​

​

6

​

​

—

​

​

—

​

​

—

​

​

—

​

​

6

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

608

​

$

1,364

​

$

1,378

​

$

232

​

$

110

​

$

401

​

$

4,093

Current period gross charge-offs

​

$

8

​

$

2

​

$

—

​

$

—

​

$

—

​

$

—

​

$

10

​

15

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

Term Loans Amortized Cost Basis by Origination Year

​

​ ​ ​

2025

​ ​ ​

2024

​ ​ ​

2023

​ ​ ​

2022

​ ​ ​

2021

​ ​ ​

Prior

​ ​ ​

Total

Construction and land

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

17,279

​

$

19,483

​

$

8,354

​

$

1,522

​

$

585

​

$

1,149

​

$

48,372

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

17,279

​

$

19,483

​

$

8,354

​

$

1,522

​

$

585

​

$

1,149

​

$

48,372

Current period gross charge-offs

​

$

—

​

$

—

​

$

453

​

$

—

​

$

—

​

$

—

​

$

453

Farmland

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

9,257

​

$

2,893

​

$

1,606

​

$

1,383

​

$

146

​

$

1,587

​

$

16,872

Special mention

​

​

—

​

​

—

​

​

—

​

​

213

​

​

—

​

​

—

​

​

213

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

9,257

​

$

2,893

​

$

1,606

​

$

1,596

​

$

146

​

$

1,587

​

$

17,085

1-4 Residential & multi-family

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

13,244

​

$

11,610

​

$

28,449

​

$

16,657

​

$

26,422

​

$

52,053

​

$

148,435

Special mention

​

​

—

​

​

—

​

​

275

​

​

—

​

​

243

​

​

352

​

​

870

Substandard

​

​

—

​

​

—

​

​

1,332

​

​

—

​

​

—

​

​

689

​

​

2,021

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

13,244

​

$

11,610

​

$

30,056

​

$

16,657

​

$

26,665

​

$

53,094

​

$

151,326

Current period gross charge-offs

​

$

—

​

$

—

​

$

3

​

$

—

​

$

—

​

$

—

​

$

3

Commercial real estate

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

13,786

​

$

13,486

​

$

13,042

​

$

4,925

​

$

6,605

​

$

8,974

​

$

60,818

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

666

​

​

666

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

42

​

​

42

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

13,786

​

$

13,486

​

$

13,042

​

$

4,925

​

$

6,605

​

$

9,682

​

$

61,526

Agriculture

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

—

​

$

—

​

$

26

​

$

—

​

$

7

​

$

—

​

$

33

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

—

​

$

26

​

$

—

​

$

7

​

$

—

​

$

33

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

1,722

​

$

1,671

​

$

444

​

$

207

​

$

12

​

$

3,757

​

$

7,813

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

67

​

​

—

​

​

—

​

​

686

​

​

247

​

​

1,000

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

1,722

​

$

1,738

​

$

444

​

$

207

​

$

698

​

$

4,004

​

$

8,813

Current period gross charge-offs

​

$

—

​

$

8

​

$

—

​

$

—

​

$

—

​

$

—

​

$

8

Municipalities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

5,964

​

$

8,131

​

$

795

​

$

—

​

$

—

​

$

—

​

$

14,890

Special mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

5,964

​

$

8,131

​

$

795

​

$

—

​

$

—

​

$

—

​

$

14,890

Consumer and other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Risk rating

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

1,930

​

$

1,713

​

$

314

​

$

143

​

$

469

​

$

—

​

$

4,569

Special mention

​

​

21

​

​

3

​

​

3

​

​

—

​

​

—

​

​

—

​

​

27

Substandard

​

​

4

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

4

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

1,955

​

$

1,716

​

$

317

​

$

143

​

$

469

​

$

—

​

$

4,600

Current period gross charge-offs

​

$

45

​

$

7

​

$

8

​

$

—

​

$

—

​

$

—

​

$

60

​

16

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. The Company also evaluates credit quality based on the aging status of the loan. The following is an aging analysis for loans as of March 31, 2026 and December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

​ ​ ​

30-59 Days Past Due

​ ​ ​

60-89 Days Past Due

​ ​ ​

90 Days and Greater

​ ​ ​

Total Past Due

​ ​ ​

Current

​ ​ ​

Total Loans

Real estate

​

​

​

​

​

​

​

​

​

​

​

​

Construction and land

​

$

—

​

$

1,240

​

$

—

​

$

1,240

​

$

41,453

​

$

42,693

Farmland

​

—

​

—

​

—

​

—

​

17,490

​

17,490

1‑4 Residential & multi-family

​

816

​

671

​

—

​

1,487

​

147,658

​

149,145

Commercial real estate

​

—

​

—

​

—

​

—

​

63,985

​

63,985

Agriculture

​

—

​

—

​

—

​

—

​

44

​

44

Commercial

​

—

​

8

​

—

​

8

​

9,251

​

9,259

Municipalities

​

​

—

​

​

—

​

​

—

​

​

—

​

​

15,229

​

​

15,229

Consumer and other

​

24

​

—

​

—

​

24

​

4,069

​

4,093

Total

​

$

840

​

$

1,919

​

$

—

​

$

2,759

​

$

299,179

​

$

301,938

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​ ​ ​

30-59 Days Past Due

​ ​ ​

60-89 Days Past Due

​ ​ ​

90 Days and Greater

​ ​ ​

Total Past Due

​ ​ ​

Current

​ ​ ​

Total Loans

Real estate

​

​

​

​

​

​

​

​

​

​

​

​

Construction and land

​

$

—

​

$

—

​

$

—

​

$

—

​

$

48,372

​

$

48,372

Farmland

​

—

​

—

​

—

​

—

​

17,085

​

17,085

1‑4 Residential & multi-family

​

113

​

49

​

—

​

162

​

151,164

​

151,326

Commercial real estate

​

—

​

—

​

—

​

—

​

61,526

​

61,526

Agriculture

​

—

​

—

​

—

​

—

​

33

​

33

Commercial

​

181

​

—

​

1

​

182

​

8,631

​

8,813

Municipalities

​

​

—

​

​

—

​

​

—

​

​

—

​

​

14,890

​

​

14,890

Consumer and other

​

22

​

3

​

—

​

25

​

4,575

​

4,600

Total

​

$

316

​

$

52

​

$

1

​

$

369

​

$

306,276

​

$

306,645

​

All interest accrued but not collected for loans that are placed on nonaccrual status or are charged‐off is reversed against interest income. The interest on these loans is accounted for on the cash‐basis or cost‐recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. No interest income was recognized for loans on nonaccrual status for the three months ended March 31, 2026 and 2025.

​

During the three months ended March 31, 2026 and 2025, there was no interest income recognized on collateral-dependent loans.

​

During the three months ended March 31, 2026 and 2025, there were no modifications of loans to borrowers in financial difficulty.

There have been no modifications to borrowers with financial difficulty in the three months ended March 31, 2026 and 2025, that subsequently defaulted. The Company has no commitments to loan additional funds to borrowers whose loans have been modified but may on occasion extend financing to these borrowers.

17

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Note 5 -   Off-Balance-Sheet Activities

The Company is a party to credit related 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 and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At March 31, 2026 and December 31, 2025, the following financial instruments were outstanding whose contract amounts represent credit risk:

​

​	​	​	​	​	​	​
​	​ ​ ​	Contract Amount
​	​ ​ ​	March 31, 2026		​ ​ ​	December 31, 2025
Commitments to extend credit	​	$	28,698	​	$	35,666

​

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. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

The Bank is party to an agreement with the Federal Reserve Bank of Boston that provides the Bank with a federal funds line of credit in an amount tied to securities on deposit with that bank. The Bank pays no fees for this line of credit and has not drawn upon it. The Bank is party to agreements with its correspondent banks that provide the Bank with unsecured lines for up to $8,000 federal funds lines of credit to support overnight funding needs. The Bank pays no fees for these lines of credit and has not drawn upon them. One line renews annually and the other line is in effect until either party changes the terms of the agreement.

At March 31, 2026, the Company had no commitments to purchase securities.

The Company has no other off-balance sheet arrangements or transactions with unconsolidated, special purpose entities that would expose the Company to liability that is not reflected on the face of the consolidated financial statements.

18

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Note 6 -   Supplemental Cash Flow Information

​

Supplemental disclosure of cash flow information is as follows:

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Supplemental cash flow information:		​	​		​	​
Cash paid for		​	​		​	​
Interest on deposits	​	$	1,679	​	$	1,875
Interest on FHLB advances	​		503	​		504
Other interest	​		2	​		2
Non-cash activities	​	​	​	​	​	​
Loan originations to facilitate the sale of other real estate owned	​	​	120	​	​	—
Loans transferred to other real estate owned	​	​	—	​	​	22

​

​

​

​

​

Note 7 -   Minimum Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, 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 judgements by the regulators about components, risk weightings, and other factors.

The Bank has opted into the Community Bank Leverage Ratio (CBLR) framework, beginning with the Call Report filed for the first quarter of 2020. At March 31, 2026 and December 31, 2025, the Bank’s CBLR ratio was 11.97% and 11.74%, respectively, which exceeded all regulatory capital requirements under the CBLR framework, and the Bank was considered to be “well-capitalized.”

Under the CBLR framework, banks and their bank holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9%, are eligible to opt into the CBLR framework. Qualifying community banking organizations that elect to use the CBLR framework and that maintain a leverage ratio of greater than 9% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules (generally applicable capital rules) and, if applicable, will be considered to have met the well-capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act. Accordingly, qualifying community banking organizations that exceed the 9% CBLR are considered to have met: (i) the generally applicable risk-based and leverage capital requirements of the generally applicable capital rules; (ii) the capital ratio requirements in order to be considered well-capitalized under the prompt corrective action framework; (iii) any other applicable capital or leverage requirements. Qualifying community banking organizations that elect to be under the CBLR framework generally would be exempt from the current capital framework, including risk-based capital requirements and capital conservation buffer requirements.

19

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Note 8 -   Fair Value Measurements

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

Authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

● Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

● Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. There were no changes in valuation techniques during either the three months ended March 31, 2026 or the year ended December 31, 2025.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed or third-party models that primarily use, as inputs,

20

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

observable market- based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Available for Sale Securities – Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things.

Collateral-dependent Loans – Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria.

Other real estate owned – Fair values are valued at the time the loan is foreclosed upon and the asset is transferred from loans or when the asset is transferred into other real estate owned from premises and equipment. The value is based upon primarily third-party appraised values, less estimated costs to sell. The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and the client’s business. Such discounts are typically significant and result in Level 3 classification of inputs for determining fair value. Other real estate owned is reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same or similar factors above.

21

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

​

The following table summarizes financial assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

​ ​ ​

Level 1

​ ​ ​

Level 2

​ ​ ​

Level 3

​ ​ ​

Total

​

​

Inputs

​

Inputs

​

Inputs

​

Fair Value

Financial assets

​

​

​

​

​

​

​

​

Available for sale securities

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

—

​

$

6,001

​

$

—

​

$

6,001

Collateralized mortgage obligations

​

​

—

​

​

35,807

​

​

—

​

​

35,807

State and municipal

​

—

​

8,617

​

—

​

8,617

Corporate bonds

​

​

—

​

​

9,645

​

​

—

​

​

9,645

Total financial assets

​

$

—

​

$

60,070

​

$

—

​

$

60,070

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​ ​ ​

Level 1

​ ​ ​

Level 2

​ ​ ​

Level 3

​ ​ ​

Total

​

​

Inputs

​

Inputs

​

Inputs

​

Fair Value

Financial assets

​

​

​

​

​

​

​

​

Available for sale securities

​

​

​

​

​

​

​

​

Residential mortgage-backed

​

$

—

​

$

5,796

​

$

—

​

$

5,796

Collateralized mortgage obligations

​

​

—

​

​

35,742

​

​

—

​

​

35,742

State and municipal

​

—

​

8,743

​

—

​

8,743

Corporate bonds

​

​

—

​

​

9,612

​

​

—

​

​

9,612

Total financial assets

​

$

—

​

$

59,893

​

$

—

​

$

59,893

​

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

22

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

The following table summarizes financial and non-financial assets measured at fair value on a nonrecurring basis as of March 31, 2026 and December 31, 2025, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​ ​ ​

March 31, 2026

​

​

Level 1

​

Level 2

​

Level 3

​

Total Fair

​

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Value

Financial assets

​

​

​

​

​

​

​

​

Collateral-dependent loans

​

$

—

​

$

—

​

$

606

​

$

606

​

​

$

—

​

$

—

​

$

606

​

$

606

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​ ​ ​

December 31, 2025

​

​

Level 1

​

Level 2

​

Level 3

​

Total Fair

​

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Value

Financial assets

​

​

​

​

​

​

​

​

​

​

​

​

Collateral-dependent loans

​

$

—

​

$

—

​

$

654

​

$

654

Nonfinancial assets

​

​

​

​

​

​

​

​

​

​

​

​

Other real estate owned

​

​

—

​

​

—

​

​

9,271

​

​

9,271

​

​

$

—

​

$

—

​

$

9,925

​

$

9,925

​

During the three months ended March 31, 2026 and 2025, certain collateral-dependent loans were remeasured and reported at fair value through a specific allocation of the allowance for credit losses based upon the fair value of the underlying collateral. The fair value of collateral dependent loans is determined based on collateral valuations utilizing Level 3 valuation inputs. At March 31, 2026, collateral-dependent loans with a carrying value of $885 were reduced by specific valuation allowance allocations totaling $279 to a reported fair value of $606. At December 31, 2025, collateral dependent loans with a carrying value of $933 were reduced by specific valuation allowance allocations totaling $279 to a reported fair value of $654.

​

At March 31, 2026, the Company had other real estate owned consisting of one multi-family property acquired through foreclosure and two land development projects belonging to one customer that were transferred through deeds in lieu of foreclosure. The reported fair value includes a deduction for estimated costs to sell and all properties are currently listed for sale. At December 31, 2025, the Company had other real estate owned consisting of Bank-owned property that was purchased for future expansion, one multi-family property acquired through foreclosure and two land development projects belonging to one customer that were transferred through deeds in lieu of foreclosure.

​

The estimated fair value amounts of other real estate owned have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

​

23

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

​

Quantitative Information About Significant Unobservable Inputs Used in Level 3 Fair Value Measurements – The following table represents the Company’s Level 3 financial assets, the valuation techniques used to measure the fair value of those financial assets, the significant unobservable inputs and the ranges of values for those inputs:

​

​	​	​	​	​	​	​	​	​	​	​
​	​ ​ ​	​	​	​ ​ ​	​	​ ​ ​	Significant	​ ​ ​	Range of
​	​	Fair Value at		​	Principal Valuation	​	Unobservable	​	Significant Input
Instrument	​	March 31, 2026		​	Technique	​	Inputs	​	Values
Collateral-dependent loans	​	$	606		Appraisal of collateral (1)		Appraisal adjustment		5-25	%
​	​	​	​		​		​	​	​	​
Other real estate owned	​	$	9,104		Appraisal of collateral (1)		Appraisal adjustment		5-25	%

​

​	​	​	​	​	​	​	​	​	​	​
​	​ ​ ​	​	​	​ ​ ​	​	​ ​ ​	Significant	​ ​ ​	Range of
​	​	Fair Value at		​	Principal Valuation	​	Unobservable	​	Significant Input
Instrument	​	December 31, 2025		​	Technique	​	Inputs	​	Values
Collateral-dependent loans	​	$	654	​	Appraisal of collateral (1)	​	Appraisal adjustment	​	5-25	%
​	​	​	​	​	​	​	​	​	​	​
Other real estate owned	​	$	9,271		Appraisal of collateral (1)		Appraisal adjustment		5-25	%
​	​	​	​	​	​	​	​	​	​	​

​

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

24

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

March 31, 2026

​

​

Level 1

​

Level 2

​

Level 3

​

Total

​

Total

​

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Fair Value

​ ​ ​

Carrying Value

Financial assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and cash equivalents

​

$

6,454

​

$

—

​

$

—

​

$

6,454

​

$

6,454

Interest bearing deposits in banks

​

10,083

​

—

​

—

​

10,083

​

10,083

Securities held to maturity

​

—

​

15,859

​

—

​

15,859

​

17,521

Loans, net

​

—

​

—

​

288,125

​

288,125

​

297,463

Net investment in direct financing leases

​

—

​

—

​

​

1,006

​

1,006

​

1,038

Accrued interest receivable

​

1,683

​

—

​

—

​

1,683

​

1,683

Restricted investments carried at cost

​

—

​

​

2,805

​

—

​

2,805

​

2,805

Mortgage servicing rights

​

​

—

​

​

—

​

​

205

​

​

205

​

​

205

Financial liabilities

​

​

​

​

​

​

​

​

​

​

Deposits

​

—

​

—

​

301,030

​

301,030

​

331,957

FHLB advances

​

—

​

—

​

42,049

​

42,049

​

41,567

Accrued interest payable

​

639

​

—

​

—

​

639

​

639

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

Level 1

​

Level 2

​

Level 3

​

Total

​

Total

​

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Inputs

​ ​ ​

Fair Value

​ ​ ​

Carrying Value

Financial assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and cash equivalents

​

$

6,450

​

$

—

​

$

—

​

$

6,450

​

$

6,450

Interest bearing deposits in banks

​

5,509

​

—

​

—

​

5,509

​

5,509

Securities held to maturity

​

—

​

16,744

​

—

​

16,744

​

18,283

Loans, net

​

—

​

—

​

293,446

​

293,446

​

301,986

Net investment in direct financing leases

​

—

​

—

​

1,185

​

1,185

​

1,219

Accrued interest receivable

​

1,888

​

—

​

—

​

1,888

​

1,888

Restricted investments carried at cost

​

—

​

2,773

​

—

​

2,773

​

2,773

Mortgage servicing rights

​

—

​

—

​

210

​

210

​

210

Financial liabilities

​

​

​

​

​

​

​

​

​

​

Deposits

​

—

​

—

​

297,856

​

297,856

​

327,904

FHLB advances

​

—

​

—

​

46,478

​

46,478

​

45,669

Accrued interest payable

​

683

​

—

​

—

​

683

​

683

​

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

Cash and cash equivalents and interest-bearing deposits in banks – The carrying value approximates their fair values.

Securities held to maturity – Fair values for investment securities are based on quoted market prices or whose value is determined using discounted cash flow methodologies.

Loans and net investment in direct financing leases – The fair values for loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms and credit quality.

Accrued interest receivable – The carrying value approximates its fair value.

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Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

Restricted investments carried at cost – The carrying value of these investments approximates fair value based on the redemption provisions contained in each.

Mortgage servicing rights – Fair values are estimated using discounted cash flows based on current market rates of interest.

Deposits – The fair values disclosed for demand deposits (for example, interest and noninterest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

FHLB advances – Current market rates for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Accrued interest payable – The carrying value approximates the fair value.

Note 9 -   Employee Stock Ownership Plan

In connection with the mutual to stock conversion completed on July 14, 2021, the Company established an Employee Stock Ownership Plan for the exclusive benefit of eligible employees. The ESOP borrowed funds from the Company in an amount sufficient to purchase 260,621 shares (approximately 8.0% of the common stock issued in connection with the conversion). The loan is secured by the unallocated ESOP shares and will be repaid by the ESOP with funds from contributions made by the Company and dividends received by the ESOP. Contributions will be applied to repay interest on the loan first, and then the remainder will be applied to principal. The loan is expected to be repaid over a period of up to 20 years.

Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation. Participants will vest in their accrued benefits determined by the years of service for vesting purposes. Vesting is accelerated upon retirement, death or disability of the participant, or a change in control of the Company or the Bank. Forfeitures will be reallocated to remaining participants. Benefits may be payable upon retirement, death, disability, separation of service, or termination of the ESOP.

The debt of the ESOP is eliminated in consolidation. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports the compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends on unallocated ESOP shares, if any, are recorded as a reduction of debt and accrued interest. ESOP compensation was $56 and $52 for the three months ended March 31, 2026 and 2025, respectively.

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Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2026 and 2025

(Amounts in thousands, except share, per share data, and percentages)

A summary of the ESOP shares as of March 31, 2026 and December 31, 2025 are as follows:

​

​	​	​	​	​	​	​	​
​	​	March 31, 2026		​	​	December 31, 2025
Shares allocated to participants		​	72,240	​		​	72,240
Shares committed to be released to participants	​	​	3,349	​	​	​	—
Shares distributed to terminated participants		​	(12,475)	​		​	(12,475)
Unreleased shares		​	185,032	​		​	188,381
Total		​	248,146	​		​	248,146
Fair value of unreleased shares	​	$	3,240	​	​	$	3,385

​

​

​

​

​

27

Table of Contents

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

General

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding Texas Community Bancshares, Inc.’s (the “Company”) consolidated financial condition at March 31, 2026 and consolidated results of operations for the three months ended March 31, 2026 and 2025. It should be read in conjunction with the unaudited consolidated financial statements and the related notes appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q and with the audited consolidated financial statements, and notes, contained in the Annual Report on Form 10-K for the year ended December 31, 2025.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “would,” “should,” “could” or “may,” and words of similar meaning. These forward-looking statements include, but are not limited to:

● statements of our goals, intentions and expectations;

● statements regarding our business plans, prospects, growth and operating strategies;

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

● estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

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

● our ability to control costs and manage liquidity;

● our ability to maintain our deposit base cost-effectively and access cost-effective funding;

● general economic conditions, either nationally or in our market areas, which are worse than expected;

● changes in yields on our assets resulting from changes in market interest rates;

● fluctuation in the demand for construction loans in our market area;

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

● risks related to a high concentration of loans secured by 1-4 family real estate located in our market area;

● risks related to higher levels of commercial real estate and development loans;

● our ability to control costs when hiring employees in a competitive labor market and rural area;

● our ability to control cost and expenses, particularly those associated with operating a publicly traded company;

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

● demand for loans and deposits in our market area;

● our ability to implement and change our business strategies;

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Table of Contents

● competition among depository and other financial institutions and brokers;

● inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of our investment securities and other financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

● adverse changes in the securities or secondary mortgage markets;

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

● changes in tax laws;

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

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

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

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

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

● our ability to enter new markets successfully and capitalize on growth opportunities;

● changes in consumer spending, borrowing and savings habits;

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

● changes in our compensation and benefit plans, and our ability to retain key members of our senior management team and to address staffing needs in response to product demand or strategic plan implementation;

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

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Summary of Critical Accounting Policies; Critical Accounting Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups Act of 2012 (JOBS Act) contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we had the option to delay adoption of new or revised accounting pronouncements applicable to public companies until such

29

Table of Contents

pronouncements are made applicable to private companies. However, we have determined not to take advantage of the benefits of this extended transition period.

The following represent our critical accounting policies:

Allowance for Credit Losses. The allowance for credit losses applies to any financial asset carried at amortized cost, including off-balance sheet commitments (unfunded commitments). The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. The Company uses the weighted average remaining maturity (WARM) method to estimate future expected losses for all of the Company’s loan pools. The allowance for credit losses on loans is a reserve for estimated current expected credit losses on individually evaluated loans determined to be impaired as well as estimated current expected credit losses inherent in the loan portfolio. Actual credit losses, net of recoveries, are deducted from the allowance for credit losses. Loans are charged off when management believes that the collectability of the principal is confirmed. Subsequent recoveries, if any, are credited to the allowance for credit losses. A provision for credit losses, which is a charge against earnings, is recorded to bring the allowance for credit losses to a level that, in management’s judgment, is adequate to absorb current expected losses in the loan portfolio. Management’s evaluation process used to determine the appropriateness of the allowance for credit losses is subject to the use of estimates, assumptions, and judgment. The evaluation process involves gathering and interpreting many qualitative and quantitative factors which could affect current expected credit losses. Because interpretation and analysis involves judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated credit losses and therefore the appropriateness of the allowance for credit losses could change significantly.

For additional information regarding the allowance for credit losses, see notes 1 and 4 of the notes to the accompanying consolidated financial statements.

Income Taxes. The assessment of income tax assets and liabilities involves the use of estimates, assumptions, interpretation, and judgment concerning certain accounting pronouncements and federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be significant to the results of operations and reported earnings.

The Company files consolidated federal income tax returns with its subsidiaries. Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax law rates applicable to the periods in which the differences are expected to affect taxable income. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income tax expense. Valuation allowances are established when it is more likely than not that a portion of the full amount of the deferred tax asset will not be realized. In assessing the ability to realize deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. We may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the consolidated financial statements. Penalties related to unrecognized tax benefits are classified as income tax expense.

Comparison of Financial Condition at March 31, 2026 and December 31, 2025

Total Assets. Total assets were $430.4 million at March 31, 2026, an increase of $604,000, or 0.1%, from $429.8 million at December 31, 2025. The increase was due primarily to an increase of $4.6 million in interest bearing deposits in banks, offset by a $4.7 million decrease in net loans and leases.

Cash and Cash Equivalents. Cash and cash equivalents were unchanged at $6.5 million at March 31, 2026 and December 31, 2025. This included fed funds sold balances of $3.2 million at March 31, 2026 and $2.6 million at December 31, 2025.

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Table of Contents

Interest Bearing Deposits in Banks. Interest bearing deposits in banks increased $4.6 million, or 83.6%, to $10.1 million at March 31, 2026, compared to $5.5 million at December 31, 2025. This increase was primarily the result of a decrease in net loans and leases receivable of $4.7 million, an increase in deposits of $4.1 million, and partially offset by a $4.1 million decrease in advances from the Federal Home Loan Bank.

Securities Available for Sale. Securities available for sale increased by $177,000, or 0.3%, to $60.1 million at March 31, 2026 from $59.9 million at December 31, 2025. During the three months ended March 31, 2026, there were purchases of securities of $1.5 million offset by net paydowns of $927,000. Accumulated other comprehensive loss increased by $309,000, or 9.7%, to $3.4 million, net of tax, from $3.1 million, net of tax, due primarily to changes in market interest rates. Gross unrealized losses on the AFS portfolio consisting of 67 securities increased from $3.9 million, or 6.1% of the portfolio’s amortized cost of $63.8 million at December 31, 2025, to $4.3 million, or 6.7%, of the amortized cost of $64.3 million at March 31, 2026. These unrealized losses are primarily due to increases in market interest rates. At March 31, 2026, the AFS portfolio was comprised of 59.6% collateralized mortgage obligations, 16.1% corporate bonds, 14.3% State and municipal securities, and 10.0% residential mortgage backed securities.

Securities Held to Maturity. Securities held to maturity decreased by $762,000, or 4.4%, to $17.5 million at March 31, 2026 from $18.3 million at December 31, 2025. This decrease is due to paydowns of $729,000. The HTM portfolio had 60 securities with gross unrealized losses of $1.7 million, or 9.7%, of the amortized cost of $17.5 million at March 31, 2026 compared to $1.5 million, or 8.2%, of the amortized cost of $18.3 million at December 31, 2025. These unrealized losses are due to increases in market interest rates. At March 31, 2026, the HTM portfolio was comprised of 88.2% residential mortgage backed securities, 6.8% state and municipal securities and 5.0% U.S government and agency bonds.

Loans and Leases Receivable, Net. Net loans and leases receivable decreased $4.7 million, or 1.6%, to $298.5 million at March 31, 2026 from $303.2 million at December 31, 2025. The decrease in loans was primarily due to the payoff of a $7.7 million multifamily loan in the first quarter of 2026. There were new loan originations of $23.5 million partially offset by payoffs, other principal reductions, and contractual repayments.

The loan and lease portfolio totaled $301.9 million and was comprised of $273.3 million, or 90.5%, real estate loans, $9.3 million, or 3.1%, commercial and industrial loans, $15.2 million, or 5.0%, municipal loans and $4.1 million, or 1.4%, consumer loans and other loans. Real estate loans include $145.9 million, or 48.3%, 1-4 family residential loans, $3.2 million, or 1.1%, multi-family loans, $64.0 million, or 21.2%, commercial real estate (CRE) loans, $17.5 million, or 5.8%, farmland loans, $11.8 million, or 3.9%, 1-4 family construction loans, and $30.9 million, or 10.2%, other construction and development loans. Total loans include interim construction loans of $18.5 million, or 58.3%, of the completed project balance of $31.8 million which includes $20.2 million in single-family residence loans, including $10.5 million in speculative construction loans to builders, $1.7 million in subdivision construction, $1.1 million in multi-family construction loans and $8.8 million in CRE loans. The total construction loan portfolio consisted of 56 loans with completed project balances of $31.8 million at March 31, 2026 compared to 54 loans totaling $36.0 million at December 31, 2025.

At March 31, 2026, commercial real estate loans consisted of $28.2 million owner occupied and $35.8 million non-owner occupied real estate. At March 31, 2026, commercial real estate loans primarily included loans collateralized by gas stations with convenience stores ($17.0 million), self-storage facilities ($15.5 million), and commercial rental properties ($12.8 million). The maximum loan-to-value ratio of our commercial real estate loans is generally 80%. Generally, we require the debt service coverage ratio to be at least 1.2x. The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. Personal guarantees are generally obtained from the principals of commercial real estate borrowers. We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications and financial conditions of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property, debt service capabilities, global cash flows of the borrower and other guarantors, and the borrower’s payment history with us and other financial institutions.

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Table of Contents

Other Real Estate Owned. Other real estate owned decreased $167,000, or 1.8%, to $9.1 million at March 31, 2026 from $9.3 million at December 31, 2025 due to the sale of a bank owned property in the first quarter of 2026. At March 31, 2026, there are three remaining properties including a residential development property in Dallas, Texas with a carrying value of $1.3 million, a commercial development property in North Richland Hills, Texas with a carrying value of $2.1 million, and a multi-family property in our primary service area with a carrying value of $5.7 million. We are actively marketing all three other real estate owned properties.

Deposits. Deposits increased $4.1 million, or 1.3%, to $332.0 million at March 31, 2026 from $327.9 million at December 31, 2025. Core deposits (defined as all deposits other than certificates of deposit) increased $4.9 million, or 2.5%, to $199.0 million at March 31, 2026 from $194.1 million at December 31, 2025. Certificates of deposit decreased $1.5 million, or 1.4%, to $111.5 million at March 31, 2026 from $113.1 million at December 31, 2025. At March 31, 2026, there were $18.0 million in brokered deposits and $3.5 million in listed deposits. Average cost of interest-bearing deposits decreased 12 basis points, or 5.0%, to 2.33% for the three months ended March 31, 2026 compared to 2.45% for the three months ended March 31, 2025. At March 31, 2026, there were 201 accounts with balances in excess of the $250,000 FDIC insurance limit with an aggregate balance of $98.7 million, or 29.7% of deposits. The amount that was over the FDIC insurance limit was $48.5 million, or 14.6%, that was potentially uninsured, including certificates of deposit of $13.0 million, money market and savings accounts of $16.5 million and $19.0 million in checking accounts.

Advances from Federal Home Loan Bank. Advances from Federal Home Loan Bank decreased $4.1 million, or 9.0%, to $41.6 million at March 31, 2026 from $45.7 million at December 31, 2025, as two advances totaling $4.0 million were repaid prior to maturity. There are three short-term advances remaining totaling $13.0 million that will mature in 2026.

Total Shareholders’ Equity. Total shareholders’ equity increased $477,000, or 0.9%, to $54.2 million at March 31, 2026 from $53.8 million at December 31, 2025. This increase was primarily due to net income of $836,000 for the three months ended March 31, 2026, an increase of $37,000 from stock-based compensation expense, and an increase of $56,000 from the accrual of ESOP commitments. This was partially offset by a $309,000 increase in accumulated other comprehensive loss, net of tax, and quarterly dividends paid totaling $143,000.

At March 31, 2026, Broadstreet Bank opted to use the community bank leverage ratio framework (Tier 1 capital to average assets) for regulatory capital purposes. A community bank leverage ratio of at least 9.0% is required to be considered “well capitalized” under regulatory requirements. At March 31, 2026, Broadstreet Bank was well capitalized and had a leverage ratio of 11.97%.

32

Table of Contents

Average Balance Sheets

The following table sets forth average balances, average yields and costs, and certain other information at and for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Nonaccrual loans are only included in the computation of average balances. Average yields for loans include loan fees of $166,000 and $121,000 for the three months ended March 31, 2026 and 2025, respectively. We have not recorded deferred loan fees, as we have determined them to be immaterial.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended March 31,

​

​ ​ ​

2026

​ ​ ​

2025

​

​ ​ ​

Average

​ ​ ​

​

​

​ ​ ​

​

​ ​ ​

Average

​ ​ ​

​

​

​ ​ ​

​

​

​

Outstanding

​

​

​

​

Average

​

Outstanding

​

​

​

​

Average

​

​

Balance

​

Interest

​

Yield/Rate

​

Balance

​

Interest

​

Yield/Rate

​

​

(Dollars in thousands)

Interest-earning assets:

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

$

303,040

​

$

4,654

6.14

%

$

299,454

​

$

4,400

5.88

%

Allowance for credit losses

​

(3,439)

​

​

​

​

(3,244)

​

​

​

​

Securities

​

78,030

​

762

3.91

%

96,100

​

1,028

4.28

%

Restricted investments

​

2,776

​

34

4.90

%

3,630

​

50

5.51

%

Interest bearing deposits in banks

​

6,542

​

59

3.61

%

9,423

​

104

4.41

%

Federal funds sold

​

6,813

​

61

3.58

%

5,643

​

62

4.39

%

Financial derivative

​

—

​

—

​

​

—

​

(10)

​

​

Total interest earning assets

​

393,762

​

5,570

5.66

%

411,006

​

5,634

5.48

%

Noninterest earning assets

​

38,501

​

​

​

​

29,135

​

​

​

​

Total assets

​

$

432,263

​

​

​

​

$

440,141

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-bearing liabilities:

​

​

​

​

​

​

​

​

​

​

​

Interest bearing demand deposits

​

$

60,932

​

83

0.54

%

$

71,719

​

113

0.63

%

Regular savings and other deposits

​

41,503

​

35

0.34

%

43,233

​

35

0.32

%

Money market deposits

​

46,759

​

278

2.38

%

47,666

​

327

2.74

%

Certificates of deposit

​

134,003

​

1,252

3.74

%

130,974

​

1,324

4.04

%

Total interest bearing deposits

​

283,197

​

1,648

2.33

%

293,592

​

1,799

2.45

%

Advances from FHLB

​

45,382

​

489

4.31

%

49,674

​

503

4.05

%

Other liabilities

​

155

​

2

5.16

%

524

​

4

3.05

%

Total interest bearing liabilities

​

328,734

​

2,139

2.60

%

343,790

​

2,306

2.68

%

Noninterest bearing demand deposits

​

50,454

​

​

​

​

48,905

​

​

​

​

Other noninterest bearing liabilities

​

4,078

​

​

​

​

3,915

​

​

​

​

Total liabilities

​

383,266

​

​

​

​

396,610

​

​

​

​

Total shareholders’ equity

​

48,997

​

​

​

​

43,531

​

​

​

​

Total liabilities and shareholders' equity

​

$

432,263

​

​

​

​

$

440,141

​

​

​

​

Net interest income

​

​

​

$

3,431

​

​

​

​

$

3,328

​

​

Net interest rate spread (1)

​

​

​

​

3.06

%

​

​

​

2.80

%

Net interest earning assets (2)

​

$

65,028

​

​

​

​

$

67,216

​

​

​

​

Net interest margin (3)

​

​

​

​

3.49

%

​

​

​

3.24

%

Average interest earning assets to interest bearing liabilities

​

​

​

​

119.78

%

​

​

​

119.55

%

​

(1) Net interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average rate of interest bearing liabilities.

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

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

​

​

33

Table of Contents

Comparison of the Operating Results for the Three Months Ended March 31, 2026 and March 31, 2025

Net Income. The Company had net income of $836,000 for the three months ended March 31, 2026, compared to net income of $643,000 for the three months ended March 31, 2025, an increase of $193,000, or 30.0%. The increase was primarily due to a $103,000, or 3.1%, increase in net interest income, and a $107,000, or 94.7% decrease in the provision for loan loss to $6,000 for the three months ended March 31, 2026 from $113,000 for the same period in 2025. Noninterest income increased $236,000, or 51.1%, from $462,000 for the three months ended March 31, 2025 to $698,000 for the three months ended March 31, 2026. This was offset by an increase of $240,000, or 8.2%, in noninterest expense from $2.9 million for the three months ended March 31, 2025 to $3.2 million for the three months ended March 31, 2026.

Interest Income. Interest income decreased $64,000 or 1.1%, to $5.6 million for the three months ended March 31. This was primarily the result of decreased interest income on securities due to a decrease in the average balance and decreased yields and a decrease in interest income on interest bearing deposits in banks due to a decrease in the average balance and decreased yields. This was partially offset by an increase in interest income on loans due to an increase in the average balance and increased yields. Average interest earning assets decreased by $17.2 million, or 4.2%, from $411.0 million for the three months ended March 31, 2025 to $393.8 million for the three months ended March 31, 2026 primarily from a decrease in average securities of $18.1 million, a decrease in average interest bearing deposits in banks of $2.9 million, and partially offset by an increase in average loans of $3.6 million. The yield on average interest earning assets increased 18 basis points, or 3.2%, from 5.48% for the three months ended March 31, 2025 to 5.66% for the three months ended March 31, 2026.

Interest income on loans increased $254,000, or 5.8%, to $4.7 million for the three months ended March 31, 2026 from $4.4 million for the three months ended March 31, 2025. This increase resulted primarily from an increase in average loan balances of $3.6 million, or 1.2%, from $299.4 million for the three months ended March 31, 2025 to $303.0 million for the three months ended March 31, 2026, with an increase in loan yield of 26 basis points, or 4.4%, to 6.14% for the three months ended March 31, 2026 from 5.88% for the three months ended March 31, 2025. The increase in loan volume and yield was due to continued efforts to increase the commercial loan portfolio.

Interest income on securities decreased $266,000, or 25.9%. This decrease was due primarily to a decrease of $18.1 million, or 18.8%, in average balances from $96.1 million for the three months ended March 31, 2025 to $78.0 million for the three months ended March 31, 2026 following the sale of securities in the 4^th quarter of 2025. The yield on securities decreased 37 basis points, or 8.7%, to 3.91% for the three months ended March 31, 2026 from 4.28% for the same period in 2025, due to shorter average lives and faster principal paydown of the higher yielding securities.

Interest income on restricted investments, which includes stock dividends from the Federal Home Loan Bank (FHLB) and our primary correspondent bank, decreased $16,000, or 32.0%, from $50,000 for the three months ended March 31, 2025 to $34,000 for the three months ended March 31, 2026. This decrease resulted primarily from a decrease in the average balance of these investments of $854,000, or 22.2%, from $3.6 million for the three months ended March 31, 2025 to $2.8 million for the three months ended March 31, 2026 primarily due to the FHLB repurchasing $1.1 million in excess stock following a reduction in outstanding advances and a decrease of 61 basis points, or 11.1%, in the average yield from 5.51% for the three months ended March 31, 2025 to 4.90% for the three months ended March 31, 2026 due primarily to a reduction in the dividend rate paid by FHLB.

Interest income on interest bearing deposits in banks decreased $45,000, or 43.3%, from $104,000 for the three months ended March 31, 2025 to $59,000 for the three months ended March 31, 2026. This decrease is due primarily to a decrease in average interest-bearing deposits of $2.9 million, or 30.9%, from $9.4 million for the three months ended March 31, 2025 to $6.5 million for the three months ended March 31, 2026 and a decrease in average yield of 80 basis points, or 18.1%, from 4.41% for the three months ended March 31, 2025 to 3.61% for the three months ended March 31, 2026. Fed funds interest remained relatively flat, decreasing $1,000, or 1.6%, from $62,000 for the three months ended March 31, 2025 to $61,000 for the three months ended March 31, 2026. An increase in average fed funds balances of $1.2 million, or 21.4%, from $5.6 million for the three months ended March 31, 2025 to $6.8 million for the three months ended March 31, 2026 was offset by a decrease in average yield of 81 basis points, or 18.5%, from 4.39% for the three months ended March 31, 2025 to 3.58% for the three months ended March 31, 2026. These changes in volume are

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due primarily to fluctuations in overall bank liquidity, while decreases in yield were due to decreases in fed funds rates and other market interest rates.

Interest Expense. Total interest expense decreased $167,000, or 7.2%, to $2.1 million for the three months ended March 31, 2026 from $2.3 million for the three months ended March 31, 2025 primarily due to a decrease in average interest-bearing liabilities of $15.1 million, or 4.4%, to $328.7 million for the three months ended March 31, 2026 from $343.8 million for the three months ended March 31, 2025 and a decrease in the average cost of interest-bearing liabilities of eight basis points, or 3.0%, from 2.68% for the three months ended March 31, 2025 to 2.60% for the three months ended March 31, 2026, primarily due to the reduction in rates on interest bearing deposits.

Interest expense on deposit accounts decreased $151,000, or 8.4%, from $1.8 million for the three months ended March 31, 2025 to $1.6 million for the three months ended March 31, 2026. This was due to a decrease in average interest-bearing deposits of $10.4 million, or 3.5%, from $293.6 million for the three months ended March 31, 2025, to $283.2 million for the three months ended March 31, 2026. The average deposit cost decreased 12 basis points, or 5.0%, from 2.45% for the three months ended March 31, 2025 to 2.33% for the three months ended March 31, 2026.

Interest expense on Federal Home Loan Bank advances decreased $14,000, or 2.8%, to $489,000 for the three months ended March 31, 2026 from $503,000 for the three months ended March 31, 2025. This decrease was due primarily to a decrease in the average balance of FHLB advances of $4.3 million, or 8.7%, to $45.4 million for the three months ended March 31, 2026 from $49.7 million for the three months ended March 31, 2025. This was partially offset by an increase in average cost of 26 basis points, or 6.4%, primarily due to maturities and paydowns of advances with lower rates than the weighted average cost of all FHLB borrowings.

Net Interest Income. Net interest income increased $103,000, or 3.1%, to $3.4 million for the three months ended March 31, 2026 from $3.3 million for the three months ended March 31, 2025 due primarily to an increase in net interest margin of 25 basis points, or 7.6%, to 3.49% for the three months ended March 31, 2026 from 3.24% for the three months ended March 31, 2025. The increase in net interest margin is due primarily to higher loan volume and yield, a decrease in rates paid on interest bearing deposit accounts, and a decrease in FHLB advances. The increase in net interest margin was partially offset by a decrease in net interest earning assets of $2.2 million, or 3.3%, to $65.0 million for the three months ended March 31, 2026 from $67.2 million for the three months ended March 31, 2025.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses decreased $107,000, or 94.7%, to $6,000 for the three months ended March 31, 2026 from $113,000 for the three months ended March 31, 2025, as a result of significant loan payoffs and corresponding decrease in loan balances in the 1^st quarter of 2026. The allowance for credit losses was 1.14% of total loans at March 31, 2026.

Noninterest Income. Noninterest income increased $236,000, or 51.1%, to $698,000 for the three months ended March 31, 2026 from $462,000 for the three months ended March 31, 2025. This was due primarily to $168,000 in rental income on a multifamily property foreclosed on in the 3^rd quarter of 2025, as well as a $57,000 referral fee earned in connection with the payoff and transfer of an existing multifamily loan to capital markets. The foreclosed property is currently held in other real estate owned. It is over 90% occupied and is currently being marketed for sale.

Noninterest Expense. Noninterest expense increased $240,000, or 8.2%, to $3.2 million for the three months ended March 31, 2026 from $2.9 million for the same period in 2025. This was due to an increase in other expenses of $106,000, or 17.7%, to $704,000 for the three months ended March 31, 2026 from $598,000 for the same period in 2025, which was the result of $98,000 in expense related to the foreclosed multifamily property noted previously, including utilities, maintenance, insurance, legal fees and real estate taxes. Technology expense increased $77,000, or 135.1%, from $57,000 for the three months ended March 31, 2025, to $134,000 for the three months ended March 31, 2026, due primarily to expense related to the implementation of an online loan origination and account opening platform. Occupancy and equipment expenses increased $41,000, or 16.6%, from $247,000 for the three months ended March 31, 2025 to $288,000 for the three months ended March 31, 2026 due primarily to higher property taxes due to normal increases and higher values, and expenses related to the lease of new administrative offices.

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Table of Contents

Income Tax Expense. Income tax expense increased by $13,000, or 12.3%, to $119,000 for the three months ended March 31, 2026 from $106,000 for the three months ended March 31, 2025. Net income before taxes increased $206,000, or 27.5%, from $749,000 for the three months ended March 31, 2025 to $955,000 for the three months ended March 31, 2026 and the effective tax rate was 12.46% and 14.15% for the three months ended March 31, 2026 and 2025, respectively. The decrease in effective tax rate was primarily due to tax-exempt income increasing at a faster rate than taxable income.

​

​

​

​

​

​

​

​

​

​

​

​

36

Table of Contents

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. The Federal Reserve Bank of Boston provides the Bank with a federal funds line of credit and we are able to borrow from the Federal Home Loan Bank of Dallas. At March 31, 2026, we had outstanding advances of $41.6 million from the Federal Home Loan Bank of Dallas. At March 31, 2026, we had unused borrowing capacity of $108.5 million with the Federal Home Loan Bank of Dallas. In addition, at March 31, 2026, we had two unused unsecured lines of credit totaling $8.0 million with correspondent banks.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. For additional information, see the consolidated statements of cash flow for the three months ended March 31, 2026 and 2025 included as part of the consolidated financial statements included in this report.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

Texas Community Bancshares, Inc. is a separate legal entity from Broadstreet Bank, and must provide for its own liquidity to pay its operating expenses and other financial obligations. Its primary source of income is dividends received from Broadstreet Bank. The amount of dividends that Broadstreet Bank may declare and pay to Texas Community Bancshares, Inc. is governed by applicable banking laws and regulations. Broadstreet Bank paid $1.0 million in dividends to Texas Community Bancshares, Inc. in the first quarter of 2026. At March 31, 2026, Texas Community Bancshares, Inc. (on a stand-alone, unconsolidated basis) had liquid assets of $4.4 million.

Liquidity management and asset quality continue to be high priorities. With continued volatility in the market and market interest rate fluctuations, liquidity management and analysis is a key factor in daily asset and liability management and strategic planning. We are monitoring deposit balances daily. We run stress tests quarterly in multiple scenarios, which include deposit runoff combined with the inability to access our available lines of credit and a reduction in the availability of FHLB advances. The scenarios indicate that we are able to maintain our operational liquidity with a designated buffer with our liquidity resources available. We are closely monitoring our assets, liabilities, capital and investment portfolio unrealized losses for possible issues and opportunities related to the current economic and market conditions.

We monitor our large depositors and have discussions with them on how to maximize FDIC coverage to the fullest legal extent, which is limited to coverage of $250,000 per insured depositor. At March 31, 2026, there were 201 accounts with balances in excess of the $250,000 FDIC insurance limit totaling $98.7 million, or 29.7% of deposits. The amount that was over $250,000 was $48.5 million, or 14.6%, that was potentially uninsured, including certificates of deposit of $13.0 million and $35.5 million in checking, MMDA and savings accounts.

At March 31, 2026, the weighted average life (WAL) of our securities portfolio is 5.0 years. The gross unrealized losses on the AFS securities was $4.3 million, or 6.6% of the $64.3 million AFS portfolio and 7.9% of capital. Unrealized losses on the HTM securities were $1.7 million, or 9.5% of the $17.5 million HTM portfolio and 3.1% of capital. The total gross unrealized losses are $5.9 million, or 7.2% of the $81.8 million securities portfolio and 10.2% of capital, which includes $31.2 million, or 38.1%, that are agency issued and guaranteed by the U.S. government. These losses are the result of market interest rate increases and we continue to monitor the portfolio for

37

Table of Contents

credit and other risks. The net unrealized loss on AFS securities, and the corresponding other comprehensive loss, was $3.4 million, or 5.9% of capital. Over the next 24 months from March 31, 2026, we expect to receive $38.4 million in cash flow from the securities portfolio with $17.9 million in 2026, $18.7 million in 2027 and $1.8 million in 2028. We should receive $22.2 million of that over the next 12 months. See the Securities section of the management discussion and analysis for more information.

At March 31, 2026, our allowance for credit losses to loans and leases held for investment was 1.14%. Following the sale of one property in the 1^st quarter of 2026. At March 31, 2026, we had $9.1 million remaining in other real estate owned, which includes a residential development property in Dallas, Texas, with a carrying value of $1.3 million, a commercial development property in North Richland Hills, Texas, with a carrying value of $2.1 million, and a multi-family property in our primary service area with a carrying value of $5.7 million. We are actively marketing all three properties. We monitor credit quality in the loan portfolio on an ongoing basis and maintain strong underwriting standards and asset management procedures. Our overall asset quality remains strong. The Company continues to monitor rates and loan demand weekly and aligns pricing accordingly. Housing supply and demand are monitored for indicators of a significant change in the local housing markets. We are increasing our lending in CRE, other commercial lending and loans to municipalities to more strategically balance our loan portfolio.

The following are the various liquidity sources we had available at March 31, 2026 that we could use as needed:

● FHLB borrowing capacity of $108.5 million

● $8 million in unused credit lines with 2 correspondent banks

● Federal Reserve discount window

● Qwickrate CD Program

● Brokered deposits

● The ability to sell securities

● The ability to sell a group of loans in the secondary market on an as needed basis

● The ability to sell a portion of BOLI assets

At March 31, 2026, Broadstreet Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category.

Management of Market Risk

Our most significant form of market risk is interest rate risk. As a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Risk Management and Interest Rate Risk Management Officer is responsible for evaluating the interest rate risk inherent in our assets and liabilities, determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

● maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;

● maintaining a high level of liquidity;

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Table of Contents

● growing our volume of core deposit accounts;

● managing our investment securities portfolio so as to reduce the average maturity and effective life of the portfolio;

● managing our borrowings from the Federal Home Loan Bank of Dallas;

● continuing to diversify our loan portfolio by adding more commercial loans, which typically have shorter maturities, adjustable rates, and fee income;

● expanding our wholesale lending program to be able to meet customer loan needs while managing the weighted average life and interest rate risk in the loan portfolio; and

● utilizing callable brokered deposits and derivatives.

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

The tables below set forth the calculation of the estimated changes in our monthly net interest income that would result from the designated immediate changes in the United States Treasury yield curve. The estimated changes presented are within policy guidelines established by the Company’s Board of Directors.

​

​	​	​	​	​	​	​
At March 31, 2026
Change in Interest Rates	​ ​ ​	Net Interest Income Year		​ ​ ​	Year 1 Change from
(basis points) (1)	​	1 Forecast		​	Level
(Dollars in thousands)
400	​	$	15,587		11.49	%
300	​		15,261		9.16	%
200	​		14,890		6.52	%
100	​		14,428		3.21	%
Level	​		13,980		—	​
(100)	​		13,633		(2.48)	%
(200)	​		13,561		(3.00)	%
(300)	​		13,346		(4.54)	%
(400)	​		13,390		(4.22)	%

​

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at March 31, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 6.52% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 3.00% decrease in net interest income.

Net Economic Value. We also compute amounts by which the net present value of our assets and liabilities (net economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate

39

Table of Contents

sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability, and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The table below sets forth the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. The estimated changes presented are within policy guidelines established by the Company’s Board of Directors.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
At March 31, 2026
​	​	​	​	​	​	​	​	​	​	EVE as a Percentage of
​	​	​	​	​	​	​	​	​	​	Present Value of Assets (3)
​	​	​	​	​	Estimated Increase				​	​	​	Increase
Change in Interest	​	Estimated		​	(Decrease) in EVE				​	​	​	(Decrease)
Rates (basis points) (1)	​ ​ ​	EVE (2)		​ ​ ​	Amount		​ ​ ​	Percent	​ ​ ​	EVE Ratio (4)	​ ​ ​	(basis points)
(Dollars in thousands)
400	​	$	64,716	​	$	(851)		(1.30)	%	16.49	%	135
300	​	​	65,703	​		136		0.21	%	16.35	%	121
200	​		66,313	​		746		1.14	%	16.11	%	97
100	​		66,354	​		787		1.20	%	15.72	%	58
Level	​		65,567	​		—		—	%	15.14	%	—
(100)	​		63,509	​		(2,058)		(3.14)	%	14.29	%	(85)
(200)	​		59,426	​		(6,141)		(9.37)	%	13.02	%	(212)
(300)	​		52,721	​		(12,846)		(19.59)	%	11.25	%	(389)
(400)	​		42,671	​		(22,896)		(34.92)	%	8.90	%	(624)

​

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) EVE is the discounted present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at March 31, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 1.14% increase in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 9.37% decrease in EVE.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

​

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

See “Management of Market Risk” in Item 2 above.

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Item 4.  Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended, as of March 31, 2026. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026.

During the quarter ended March 31, 2026, there were no changes in the Company’s internal controls over financial reporting that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

​

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41

Table of Contents

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

The Company has been named as a defendant in a legal action arising from the conduct of its normal business and employment activities. Management believes that the legal action against the Company is without merit and intends to defend against it. Any liability that could arise with respect to this action is not reasonably estimable as of March 31, 2026, and, in the opinion of the Company, any such liability will not have a material adverse effect on the Company’s consolidated financial statements.

Item 1A.  Risk Factors

Not applicable, as the Company is a “smaller reporting company.”

Item 2.  Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

On May 16, 2023, the Company announced a program to repurchase up to 164,842 shares of the Company’s outstanding common stock, or approximately 5% of the shares then outstanding. On November 9, 2023, after completing the purchase of 164,842 shares, the Company announced a second repurchase program of 161,316 shares, or approximately 5% of the shares then outstanding, which was completed on April 14, 2025. On February 27, 2025, the Company announced a third repurchase program of 153,083 shares of the Company’s outstanding common stock, or approximately 5% of the shares then outstanding. On December 16, 2025, after completing the purchase of 153,083 shares, the Company announced a fourth repurchase program of 144,364 shares, or approximately 5% of the shares then outstanding. The program has no stated expiration date. As of March 31, 2026, the Company had repurchased 479,241 shares under the plans.

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Total Number of Shares Purchased	​ ​ ​ ​	​	Average Price Paid Per Share	​ ​ ​ ​	​	Total Number of Shares Purchased as Part of Publicly Announced Plans	​ ​ ​ ​	​	Maximum Number of Shares That May Yet be Purchased Under the Plans
January 1, 2026 - January 31, 2026	​	-	​	​	-	​	​	-	​	​	144,364
February 1, 2026 - February 28, 2026	​	-	​	​	-	​	​	-	​	​	144,364
March 1, 2026 - March 31, 2026	​	-	​	​	-	​	​	-	​	​	144,364
Total	​	-	​	$	-	​	​	-	​	​	​

​

​

​

​

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

During the three months ended March 31, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement “ (as such term is defined in Item 408 of SEC Regulation S-K).

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Item 6.  Exhibits

Exhibit	​ ​ ​
Number		Description
3.1		Articles of Incorporation of Texas Community Bancshares, Inc. (1)
3.2	​	Amended and Restated Bylaws of Texas Community Bancshares, Inc. (2)
​	​	​
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 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	​	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
​	​	​
101		The following materials for the quarter ended March 31, 2026, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements
104	​	Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1) Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-254053), as filed on March 9, 2021.

(2) Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-40610), as filed on January 26, 2022.

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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.

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​	​ ​ ​	TEXAS COMMUNITY BANCSHARES, INC.
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Date: May 7, 2026	​	/s/ Jason Sobel
​	​	Jason Sobel
​	​	President and Chief Executive Officer
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Date: May 7, 2026	​	/s/ Jason McCrary
​	​	Jason McCrary, CPA
​	​	Chief Financial Officer

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44

FAQ

How did Texas Community Bancshares (TCBS) perform in Q1 2026?

Texas Community Bancshares reported net income of $836,000 for Q1 2026, up from $643,000 a year earlier. Basic earnings per share rose to $0.32, reflecting modest net interest income growth, lower credit loss provisions, and stronger noninterest income.

What were Texas Community Bancshares’ key balance sheet totals at March 31, 2026?

At March 31, 2026, Texas Community Bancshares reported $430.4 million in total assets. Loans receivable, net of allowance, were $297.5 million, and total deposits reached $332.0 million, showing a deposit increase from $327.9 million at year-end 2025.

How strong is Texas Community Bancshares’ capital position in this 10-Q?

The Bank reported a Community Bank Leverage Ratio of 11.97% at March 31, 2026. Under the CBLR framework, this exceeds the 9% threshold, so the Bank is considered well-capitalized based on the disclosed leverage ratio criteria and related regulatory guidelines.

What did Texas Community Bancshares report about credit quality and nonaccrual loans?

The allowance for credit losses on loans was $3.44 million at March 31, 2026. Nonaccrual loans included $955,000 of 1‑4 family and multifamily real estate and $925,000 of commercial-related exposure, and the Company reported no interest income recognized on nonaccrual loans during the quarter.

How did net interest income and expenses trend for Texas Community Bancshares?

Total interest income was $5.57 million and interest expense was $2.14 million in Q1 2026, resulting in net interest income of $3.43 million. Interest expense on deposits declined slightly year over year, while advances from the FHLB and other funding costs remained manageable.

What noninterest income and expense levels did TCBS report for Q1 2026?

Noninterest income totaled $698,000, up from $462,000 a year earlier, driven by higher other income and stable service charges. Noninterest expense increased to $3.17 million, reflecting higher data processing, technology, and other operating costs alongside largely flat salary and benefit expenses.