# Commercial Bancgroup, Inc. (CBK) Informational only - not investment advice. CIK: 0001981546 SIC: 6022 State Commercial Banks SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6022 State Commercial Banks](/industry/6022/) Latest 10-K filed: 2026-03-24 SEC page: https://www.sec.gov/edgar/browse/?CIK=1981546 Filing source: https://www.sec.gov/Archives/edgar/data/1981546/000121390026033659/ea0282863-10k_commercial.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 121604088 | USD | 2025 | 2026-03-24 | | Net income | 37196198 | USD | 2025 | 2026-03-24 | | Assets | 2291454981 | USD | 2025 | 2026-03-24 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001981546.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2024 | 2025 | | --- | ---: | ---: | | Revenue | 123,212,968 | 121,604,088 | | Net income | 31,409,926 | 37,196,198 | | Diluted EPS | 2.54 | 2.95 | | Operating cash flow | 38,675,935 | 37,094,507 | | Capital expenditures | 3,041,086 | 1,865,126 | | Dividends paid | 2,002,669 | 2,002,079 | | Share buybacks | 1,829,803 | 980,800 | | Assets | 2,301,211,138 | 2,291,454,981 | | Liabilities | 2,080,955,355 | 2,006,111,149 | | Stockholders' equity | 220,255,783 | 285,343,832 | | Cash and cash equivalents | 178,197,916 | 144,318,929 | | Free cash flow | 35,634,849 | 35,229,381 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2024 | 2025 | | --- | ---: | ---: | | Net margin | 25.49% | 30.59% | | Return on equity | 14.26% | 13.04% | | Return on assets | 1.36% | 1.62% | | Liabilities / equity | 9.45 | 7.03 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001981546.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2025-Q3 | 2025-09-30 | 30,020,936 | 9,466,149 | 0.77 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 29,958,564 | 10,138,851 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 29,463,199 | 9,534,438 | 0.70 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1981546/000121390026055885/ea0290365-10q_commercial.htm Extracted from a later financial-section MD&A body after Item 2 boundaries were low-confidence. Confidence: high Filing date: 2026-05-13 Report date: 2026-03-31 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2025 included in the 2025 Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Report, particularly in the section titled “Cautionary Note Regarding Forward-Looking Statements” as well as the section titled “Risk Factors” in the 2025 Annual Report. We assume no obligation to update any of these forward-looking statements except to the extent required by law. Overview The Company is a bank holding company headquartered in Harrogate, Tennessee that has elected under the BHC Act to become a financial holding company. We were incorporated in Tennessee in 1975, and we operate primarily through our wholly owned subsidiary, the Bank, a Tennessee-chartered banking corporation organized in 1976. We provide banking services from 34 offices in select markets in Kentucky, North Carolina, and Tennessee, and we also operate one loan production office in Lincolnton, North Carolina. The Bank is a full-service community banking institution that offers traditional consumer and commercial products and services to serve businesses and individuals in our markets. Our management’s discussion and analysis of financial condition and results of operations is intended to provide the reader with information that will assist in the understanding of our business, results of operations, financial condition and financial statements; changes in certain key items in our financial statements from period to period; and the primary factors that we use to evaluate our business. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP and follow general practices within the banking industry. The application of these principles requires management to make estimates, assumptions and complex judgements that affect amounts presented in our consolidated financial statements. These estimates, assumptions and judgements are based on information available as of the date of the financial statements; accordingly, as this information changes, the consolidated financial statements could reflect different estimates, assumptions, and judgements. Management has identified the ACL as a critical accounting policy as included in Note 1 of our consolidated financial statements as of and for the fiscal year ended December 31, 2025, and included in the 2025 Annual Report to be an accounting area that requires the most complex and subjective judgements and, as such, could be most subject to revision as new and additional information becomes available or circumstances change, including changes in the economic climate and interest rate changes. These policies, along with the disclosures presented in the other notes to the consolidated financial statements and in this analysis and discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. There have been no significant changes to the accounting policies, estimates, and assumptions, or the judgments affecting the application of these policies, estimates, and assumptions, from those disclosed in the 2025 Annual Report. 42 Emerging Growth Company Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected to take advantage of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we may adopt the standard on the application date for private companies. We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company. Three Months ended March 31, 2026 Highlights Results of Operations ● We had net income of $9.5 million for the three months ended March 31, 2026, an increase of $0.8 million, or 9.7%, as compared to the three months ended March 31, 2025. The increase was primarily the result of an increase in net interest income after provision for credit losses offset by a loss on retirement of debt. ● We had net income before income taxes of $11.9 million for the three months ended March 31, 2026, an increase of $.7 million, or 5.9%, as compared to the three months ended March 31, 2025. The increase was primarily the result of an increase in net interest income after provision for credit losses. ● Net interest income was $20.5 million for the three months ended March 31, 2026, an increase of $1.1 million, or 5.9%, as compared to the three months ended March 31, 2025. The increase was primarily attributable to increased loan volume and a reduction in long-term debt interest expense. ● Noninterest income was $2.6 million for the three months ended March 31, 2026, an increase of $0.14 million, or 6.1%, as compared to the three months ended March 31, 2025. The increase was primarily the result of increases in customer service charges due to normal fluctuations in our letters of credit fees. ● Noninterest expense was $11.1 million for the three months ended March 31, 2026, an increase of $0.5 million, or 4.8%, as compared to the three months ended March 31, 2025. The increase was primarily the result of a loss on retirement of debt. Financial Condition ● Total assets were $2.3 billion as of March 31, 2026, an increase of $37.3 million, or 1.6%, from December 31, 2025. ● Net loans were $1.9 billion as of March 31, 2026, an increase of $18.4 million, or 1.0%, from December 31, 2025. ● Total deposits were $1.9 billion as of March 31, 2026, an increase of $76.5 million, or 4.2%, from December 31, 2025. This increase was primarily driven by a $16.4 million increase in time deposits to $503.4 million at March 31, 2026, from $487.0 million at December 31, 2025. Noninterest bearing demand deposits increased $3.8 million or 1.0% to $401.6 million as of March 31, 2026, from $397.8 million as of December 31, 2025. Brokered deposits decreased $6.4 million or 13.3%, to $41.5 million as of March 31, 2026 from $48.0 million as of December 31, 2025. ● Non-brokered deposits were $1.8 billion as of March 31, 2026, an increase of $82.9 million, or 4.7%, from December 31, 2025. This increase was primarily driven by normal customer business cycles and the Bank’s focus on deposit growth. ● Asset quality stayed the same with nonperforming assets to total assets of 0.28% as of March 31, 2026, and December 31, 2025. The ACL to total loans remained flat at .97% as of these same dates. ● Book value per share increased $0.60, or 2.9%, to $21.43 at March 31, 2026, from $20.83 at December 31, 2025. 43 Primary Factors Used to Evaluate Our Business and Results of Operations The most significant factors we use to evaluate our business and results of operations are net income, return on average assets (“ROAA”) and return on average equity (“ROAE”). We also use net interest income, noninterest income, noninterest expense and efficiency ratio. Net Income Our net income depends substantially on net interest income, which is the difference between interest earned on interest-earning assets (usually interest-bearing cash, investment securities and loans) and the interest expense incurred in connection with interest-bearing liabilities (usually interest-bearing deposits and borrowings). Our net income also depends on noninterest income, which is income generated other than by our interest-earning assets. Other factors that influence our net income include our provisions for credit losses, income taxes, and noninterest expenses, which include our fixed and variable overhead costs and other miscellaneous operating expenses. Return on Average Assets We monitor ROAA to measure our operating performance and to determine how efficiently our assets are being used to generate net income. In determining ROAA for a given period, net income is divided by the average total assets for that period. Return on Average Equity We use ROAE to assess our effectiveness in utilizing shareholders’ equity to generate net income. In determining ROAE for a given period, net income is divided by the average shareholders’ equity for that period. Net Interest Income Net interest income is our principal source of net income and represents the difference between interest income and interest expense. We generate interest income from interest-earning assets that we own, including loans and investment securities. We incur interest expense from interest-bearing liabilities, including interest-bearing deposits and other borrowings, notably FHLB advances, outstanding holding company loan agreement with Community Trust Bank, Inc. (the “CTB Loan”) and the Subordinated Debentures. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the cost of our deposits and other funding sources; (iii) our net interest spread; and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is a ratio of net interest income to average interest earning assets for the same period. Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing liabilities and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Noninterest Income Noninterest income primarily consists of: (i) service charges on deposit accounts; (ii) net realized gains on the sale of premises and equipment; (iii) net realized gains on the sale of foreclosed assets; (iv) automated teller machine (“ATM”) and debit card fees; (v) benefits from changes in the cash surrender value of bank owned life insurance (“BOLI”); and (vi) other miscellaneous fees and income. Our income from service charges on deposit accounts, which includes nonsufficient funds fees, is impacted by several factors, including number of accounts, products utilized and account holder cash management behaviors. These are further impacted by deposit products utilized by customers, marketing of new products and other factors. Net realized gains on the sale of premises and equipment reflects non-recurring gains from sales of property and equipment no longer needed for operations. Net realized gains on the sale of foreclosed assets reflects net gains from the sale of real estate classified as other real estate owned (“OREO”). ATM and debit card fees includes ATM transaction fees charged to non-bank customers for the use of our ATMs and interchange income. Income on BOLI, which is non-taxable, reflects changes in the cash surrender value of our BOLI policies, which is the amount that the Bank may realize under the [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes appearing elsewhere in this Report. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may not be realized. Certain risks, uncertainties and other factors, including those set forth under “Risk Factors,” under “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Report, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements. Certain monetary amounts, percentages and other figures included in this discussion and analysis may have been subject to rounding adjustments. Accordingly, figures shown in totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. Overview The Company is a bank holding company with principal executive offices located in Harrogate, Tennessee that has elected under the BHC Act to become a financial holding company. We were incorporated in Tennessee in 1975, and we operate primarily through our wholly owned subsidiary, the Bank, a Tennessee banking corporation organized in 1976. We provide banking services from 34 offices in select markets in Kentucky, North Carolina, and Tennessee, and we also operate one LPO in Lincolnton, North Carolina. The Bank is a full-service community banking institution that offers traditional consumer and commercial products and services to serve businesses and individuals in our markets. 51 We have pursued a strategy of disciplined organic and acquisition-fueled growth. Since 2008, we have successfully completed five whole-bank acquisitions. Most recently, in June 2023, we acquired a majority (76.83%) ownership interest in AB&T Financial Corporation (“AB&T”), the parent company of Alliance, for total consideration of $23.8 million, which included cash, debt forgiveness, and shares of Class C Common Stock. An approximately 57.17% ownership interest in AB&T was acquired in exchange for a combination of cash and debt forgiveness, with the AB&T shares being valued for this purpose at two times the tangible book value per share of AB&T’s common stock as of May 31, 2023. We acquired the remaining portion of the majority ownership interest in AB&T, or an approximately 19.66% ownership interest, in exchange for shares of Class C Common Stock, with the shares of Class C Common Stock being issued pursuant to exemptions from registration under the federal securities laws. This exchange of shares was completed using the tangible book value per share of the Company’s common stock and Class B Common Stock ($3,551.38 per share), on the one hand, and AB&T’s common stock ($0.56 per share), on the other hand, as of April 30, 2023, with shares of AB&T common stock converting to shares of Class C Common Stock on a book-for-book basis at a ratio of 0.000158 shares of Class C Common Stock for each share of AB&T common stock. We acquired the remaining minority (23.17%) ownership interest in AB&T on June 30, 2024, for aggregate cash consideration of $5,678,150, or $0.74 per share of AB&T common stock. This per share price was supported by a valuation of the AB&T common stock as of June 30, 2023, commissioned by a committee of the board of directors of AB&T comprised solely of independent directors. On July 1, 2024, Alliance merged with and into the Bank. Our acquisition of Alliance added four branches and one LPO to our network and expanded our reach into North Carolina, including the Charlotte MSA. Our management’s discussion and analysis of financial condition and results of operations is intended to provide the reader with information that will assist in the understanding of our business, results of operations, financial condition and financial statements; changes in certain key items in our financial statements from period to period; and the primary factors that we use to evaluate our business. Fiscal Year ended December 31, 2025 Highlights Highlights of our financial condition and results of operations as of and for the fiscal year ended December 31, 2025, and other key events that occurred during the fiscal year 2025 are provided below. Financial Condition ● Total assets were $2.3 billion as of December 31, 2025, a slight decrease of $9.6 million, or 0.4%, from December 31, 2024. ● Net loans were $1.9 billion as of December 31, 2025, an increase of $66.6 million, or 3.7%, from December 31, 2024. ● As of December 31, 2025, the Bank exceeded the minimum requirements to be well-capitalized for bank regulatory purposes, with a total risk-based capital ratio of 13.5%, a Tier 1 risk-based capital ratio of 12.5%, a common equity Tier 1 capital ratio of 12.5%, and a Tier 1 leverage ratio of 10.8%. ● Total deposits were $1.8 billion as of December 31, 2025, a decrease of $122.9 million, or 6.3%, from December 31, 2024. This decrease was primarily driven by a $126.9 million reduction in brokered deposits to $48.0 million at December 31, 2025, from $174.9 million at December 31, 2024. Noninterest bearing demand deposits increased $1.2 million, or 0.3%, to $397.8 million as of December 31, 2025, from $396.6 million as of December 31, 2024. ● Asset quality decreased slightly with nonperforming assets to total assets of 0.28% as of December 31, 2025, compared to 0.26% as of December 31, 2024. The allowance for credit losses to total loans decreased slightly to 0.97% as of December 31, 2025 from 1.01% as of December 31, 2024. ● Book value per share increased $2.65, or 14.6%, to $20.83 at December 31, 2025, from $18.18 at December 31, 2024. Tangible book value per share increased $2.87, or 16.8%, to $19.98 at December 31, 2025, from $17.11 at December 31, 2024. Tangible book value per share is a non-GAAP financial measure. Please see “Non-GAAP Financial Measures” for a definition of tangible book value per share and a reconciliation of tangible book value per share to its most directly comparable GAAP financial measure. 52 Results of Operations ● We had net income less non-controlling interest of $37.2 million for the fiscal year ended December 31, 2025, an increase of $5.8 million, or 18.4%, from the fiscal year ended December 31, 2024. The increase was primarily the result of an increase in net interest income after provision for credit losses and reduction in noninterest expenses. ● Net interest income was $80.4 million for the fiscal year ended December 31, 2025, an increase of $2.8 million, or 3.7%, from the fiscal year ended December 31, 2024. The increase was primarily attributable to a reduction in deposit and long-term debt interest expense. ● Noninterest income was $9.9 million for the fiscal year ended December 31, 2025, a decrease of $0.9 million, or 8.7%, from the fiscal year ended December 31, 2024. The decrease was primarily the result of a decrease in gains on sales of premises and equipment and decreases in customer service charges due to normal fluctuations in our letters of credit fees. ● Noninterest expense was $42.5 million for the fiscal year ended December 31, 2025, a decrease of $3.6 million, or 7.8%, from the fiscal year ended December 31, 2024. The decrease was primarily the result of efficiencies realized from the acquisition of AB&T. Primary Factors Used to Evaluate Our Business Results of Operations The most significant factors we use to evaluate our business and results of operations are net income, return on average assets (“ROAA”) and return on average equity (“ROAE”). We also use net interest income, noninterest income, noninterest expense and efficiency ratio. Net Income Our net income depends substantially on net interest income, which is the difference between interest earned on interest-earning assets (usually interest-bearing cash, investment securities and loans) and the interest expense incurred in connection with interest-bearing liabilities (usually interest-bearing deposits and borrowings). Our net income also depends on noninterest income, which is income generated other than by our interest-earning assets. Other factors that influence our net income include our provisions for credit losses, income taxes, and noninterest expenses, which include our fixed and variable overhead costs and other miscellaneous operating expenses. Return on Average Assets We monitor ROAA to measure our operating performance and to determine how efficiently our assets are being used to generate net income. In determining ROAA for a given period, net income is divided by the average total assets for that period. 53 Return on Average Equity We use ROAE to assess our effectiveness in utilizing shareholders’ equity to generate net income. In determining ROAE for a given period, net income is divided by the average shareholders’ equity for that period. Net Interest Income Net interest income is our principal source of net income and represents the difference between interest income and interest expense. We generate interest income from interest-earning assets that we own, including loans and investment securities. We incur interest expense from interest-bearing liabilities, including interest-bearing deposits and other borrowings, notably FHLB advances, the CTB Loan and the Subordinated Debentures (as defined below). To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the cost of our deposits and other funding sources; (iii) our net interest spread; and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is a ratio of net interest income to average interest earning assets for the same period. Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing liabilities and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Noninterest Income Noninterest income primarily consists of: (i) service charges on deposit accounts; (ii) net realized gains on the sale of premises and equipment; (iii) net realized gains on the sale of foreclosed assets; (iv) automated teller machine (“ATM”) and debit card fees; (v) benefits from changes in the cash surrender value of BOLI; and (vi) other miscellaneous fees and income. Our income from service charges on deposit accounts, which includes nonsufficient funds fees, is impacted by several factors, including number of accounts, products utilized and account holder cash management behaviors. These are further impacted by deposit products utilized by customers, marketing of new products and other factors. Net realized gains on the sale of premises and equipment reflects non-recurring gains from sales of property and equipment no longer needed for the Bank. Net realized gains on the sale of foreclosed assets reflects net gains from the sale of real estate classified as other real estate owned (“OREO”). ATM and debit card fees includes ATM transaction fees charged to non-bank customers for the use of our ATMs and interchange income. Income on BOLI, which is non-taxable, reflects changes in the cash surrender value of our BOLI policies, which is the amount that the Bank may realize under these insurance policies. Our other miscellaneous fees and income can include items such as other service fees and other nonrecurring items. All of these can vary based on customer activity and other factors. Noninterest Expense Noninterest expense primarily consists of: (i) salaries and employee benefits; (ii) occupancy expenses; (iii) professional fees; (iv) data processing expenses; (v) FDIC deposit insurance premiums; (vi) depreciation and amortization; and (vii) other operating expenses. Salaries and employee benefits include compensation, employee benefits and employer tax expenses for our personnel. Occupancy expenses include utility expenses, property taxes, lease expenses, and property maintenance related items. Professional fees include expenses for legal, accounting, consulting, and third-party internal audit and review services. Data processing expenses include expenses paid to our primary third-party data processor and other ancillary providers as well as telecommunication and data services expenses. Other operating expenses include marketing, telephone, supply, travel and entertainment expenses, armored carrier services fees, and director fees. 54 Efficiency Ratio The efficiency ratio is defined as operating expenses divided by fee income plus tax equivalent net interest income. As a general rule, the lower a financial institution’s efficiency ratio, the better the performance. Primary Factors Used to Evaluate Our Financial Condition The most significant factors we use to evaluate and manage our financial condition include asset quality, capital, liquidity, net income growth and profitability versus peer group banks. Asset Quality We monitor the quality of our assets based upon various factors, including the level and severity of deterioration in borrower cash flows and asset quality. Problem assets are assessed and reported as delinquent, classified, nonperforming, nonaccrual or troubled debt restructurings. We also monitor credit concentrations. We manage the allowance for credit losses to reflect loan volumes, identified credit and collateral conditions, economic conditions and other qualitative factors. Capital We monitor capital using regulatory capital ratios. Factors other than regulatory capital rules used include overall financial condition, including the trend and volume of problem assets, reserves, risks, level and quality of earnings, and anticipated growth, including acquisitions. Liquidity Deposits primarily consist of commercial and personal accounts maintained by businesses and individuals in our primary market areas. We also utilize brokered deposits (Multi-Bank Securities, Inc. and LPL) and non-brokered deposits (National CD Rateline), certificates of deposits and reciprocal deposits through a third-party network that effectively allows depositors to receive insurance on amounts greater than the FDIC insurance limit, which is currently $250,000 per depositor, per insured bank for each account ownership category. We manage liquidity based on factors that include liquid assets to loans, cash flow projections, short-term funding needs and sources, and the availability of unused funding sources. As of December 31, 2025, approximately $276.0 million was available for borrowing on committed lines with the FHLB and $112.5 million was available for purchases of federal funds from correspondents on an overnight uncommitted basis. Net Income Growth We monitor net income growth monthly, quarterly and annually. Net income growth is compared to prior month, prior year to date, and budget. Profitability Versus Peer Group Banks We monitor the Bank’s profitability metrics compared to those of peer banks with comparable size and markets. Profitability metrics include ROAA, ROAE, net interest spread, and overhead efficiency ratio. Specific peer bank comparisons are provided to the board of directors of the Bank quarterly. 55 Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024 The following table shows the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and average costs of our liabilities, for the periods indicated. Yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period. Year Ended December 31, 2025 Year Ended December 31, 2024 Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate (Dollars in thousands) Assets: Interest-earning assets: Total loans(1) $ 1,791,550 $ 112,301 6.27 % $ 1,738,433 $ 113,391 6.52 % Investment securities 173,927 4,777 2.75 % 204,554 3,747 1.83 % Other interest-earning assets 112,578 4,526 4.02 % 123,380 6,075 4.92 % Total interest-earning assets $ 2,078,055 $ 121,604 5.85 % $ 2,066,367 $ 123,213 5.96 % Allowance for credit losses (18,102 ) (17,568 ) Noninterest-earning assets 179,515 168,624 Total Assets: $ 2,239,468 $ 2,217,423 Liabilities and Shareholders’ Equity: Interest-bearing liabilities: Interest-bearing demand deposits $ 533,325 $ 11,730 2.20 % $ 497,662 $ 11,757 2.36 % NOW, savings and money market deposits 396,126 5,902 1.49 % 403,563 6,665 1.65 % Time deposits 519,390 19,475 3.75 % 546,599 21,931 4.01 % FHLB advances 62,419 1,778 2.85 % 72,540 1,983 2.73 % Other borrowings 40,109 2,288 5.71 % 47,746 3,294 6.90 % Total interest-bearing liabilities $ 1,551,369 $ 41,173 2.65 % $ 1,568,110 $ 45,630 2.91 % Noninterest-bearing liabilities: Noninterest-bearing deposits $ 412,956 $ 409,405 Other liabilities 38,373 33,286 Total noninterest-bearing liabilities $ 451,329 $ 442,691 Shareholders’ equity $ 236,770 $ 206,622 Total liabilities and shareholders’ equity $ 2,239,468 $ 2,217,423 Net Interest Income $ 80,431 $ 77,583 Net Interest Spread(2) 3.20 % 3.05 % Net Interest Margin(3) 3.87 % 3.75 % (1) Includes nonaccrual loans. (2) Net interest spread is the difference between interest rates earned on interest-earning assets and interest rates paid on interest-bearing liabilities. (3) Net interest margin is a ratio of net interest income to average interest-earning assets for the same period. 56 Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to: (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate), and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate. Fiscal Year Ended December 31, 2025 over 2024 Changes due to: Total Volume Rate Variance (Dollars in thousands) Interest-Earning Assets: Loans $ 3,465 $ (4,555 ) $ (1,090 ) Investment securities (561 ) 1,591 1,030 Other interest earning assets (532 ) (1,017 ) (1,549 ) Total increase in interest income 2,372 (3,981 ) (1,609 ) Interest-Bearing Liabilities: NOW, savings, MMDA deposits 720 (1,510 ) (790 ) Time deposits (1,092 ) (1,364 ) (2,456 ) FHLB advances (277 ) 72 (205 ) Other borrowings (527 ) (478 ) (1,005 ) Total increase (decrease) in interest expense (1,176 ) (3,280 ) (4,456 ) Increase (decrease) in net interest income $ 3,547 $ (700 ) $ 2,847 Net interest income for the fiscal year ended December 31, 2025 was $80.4 million compared to $77.6 million for the fiscal year ended December 31, 2024, an increase of $2.8 million, or 3.7%. The increase in net interest income was comprised of an approximately $1.6 million, or 1.3%, decrease in interest income and dividend income, and an approximately $4.5 million, or 9.8%, decrease in interest expense. The decrease in interest income was primarily attributable to a $1.5 million, or 25.5%, decrease in earnings on other interest-bearing assets for year ended December 31, 2025, compared to the year ended December 31, 2024, and a 0.34% decrease in the yield on gross total loans. The increase in average gross loans outstanding was primarily due to organic loan growth in the Nashville MSA, Knoxville MSA and Charlotte MSA. The $4.5 million decrease in interest expense for the fiscal year ended December 31, 2025, was primarily related to a 0.26% decrease in the rates paid on interest-bearing liabilities and a decrease of $17 million, or 1.1%, in average interest-bearing liabilities as of December 31, 2025, compared to December 31, 2024. The decrease in average interest-bearing liabilities from December 31, 2024 to December 31, 2025 was due to decreases in time deposit accounts. For the fiscal year ended December 31, 2025, net interest margin and net interest spread were 3.87% and 3.20%, respectively, compared to 3.75% and 3.05%, respectively, for the same periods in 2024, which reflects the increases in net interest income discussed above relative to the slight decrease in interest income. Provision for Credit Losses Credit risk is inherent in the business of making loans. We establish an allowance for credit losses through charges to earnings, which are shown in the statements of income as the provision for credit losses. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance. The provision for credit losses is determined by conducting a quarterly evaluation of the adequacy of our allowance for credit losses and charging the shortfall or excess, if any, to the current quarter’s expense. This has the effect of creating variability in the amount and frequency of charges to our earnings. The provision for credit losses and level of allowance for each period are dependent upon many factors, including loan growth, net charge offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. 57 The provision for credit losses for the fiscal year ended December 31, 2025, was $0.46 million compared to $1.83 million for the fiscal year ended December 31, 2024. The provision recorded for the fiscal year ended December 31, 2024, was based on an increase in the number of loans outstanding. There were no significant net charge-offs in the fiscal year ended December 31, 2025. The allowance for credit losses as a percentage of total loans was 0.97% as of December 31, 2025, compared to 1.01%7 as of December 31, 2024. Noninterest Income While interest income remains the largest single component of total revenues, noninterest income is an important contributing component. Our most significant sources of noninterest income include customer service fees, which include overdraft program fees, and bank card services and interchange fees. Noninterest income for the fiscal year ended December 31, 2025, was $9.9 million compared to $10.8 million for the fiscal year ended December 31, 2024, a decrease of $0.9 million. The following table sets forth the major components of our noninterest income for the fiscal years ended December 31, 2025 and 2024: Fiscal Year Ended December 31, 2025 2024 Increase (Decrease) (Dollars in thousands) Noninterest income: Customer service fees $ 2,844 $ 3,041 $ (197 ) Net realized gains (losses) on sales of available-for-sale securities — 0 — Net gains (losses) on sales of premises and equipment 38 759 (721 ) Net gains (losses) on sales of foreclosed assets 161 153 8 Net gains on sales of loans — 0 — ATM and debit card fees 3,413 3,281 132 Increase in BOLI 1,292 1,199 93 Other income and fees(1) 2,182 2,445 (263 ) Total noninterest income $ 9,930 $ 10,878 $ (948 ) (1) Other income and fees includes income and fees associated with miscellaneous services. Customer service fees includes fees for overdraft privilege charges, insufficient funds charges, account analysis service fees on commercial accounts, and monthly account service fees. These fees decreased $0.2 million, or 6.5%, to $2.8 million for the fiscal year ended December 31, 2025, from $3.0 million for the fiscal year ended December 31, 2024. The decrease was primarily the result of normal fluctuations in our operations. ATM and debit card fees increased $0.1 million, or 4.0%, to $3.4 million for the fiscal year ended December 31, 2025, from $3.3 million for the fiscal year ended December 31, 2024. The increase was primarily the result of changes in transactional volume that generates interchange fees. 58 The income on BOLI increased $0.1 million, or 7.8%, to $1.3 million for the fiscal year ended December 31, 2025, from $1.2 million for the fiscal year ended December 31, 2024. The increase was primarily the result of a gain on policies due to a death benefit and an increase in earnings rates. Other income and fees decreased $0.2 million, or 10.8%, to $2.2 million for the fiscal year ended December 31, 2025 from $2.4 million for the fiscal year ended December 31, 2024. This decrease was primarily due to normal fluctuations in our operations. Noninterest Expense Noninterest expense for the fiscal year ended December 31, 2025 was $42.5 million compared to $46.1 million for the fiscal year ended December 31, 2024, a decrease of $3.6 million, or 7.8%, which was primarily a result of efficiencies realized from the acquisition of AB&T and a decrease in compensation expense due to a stock award of $2.1 million during 2024. The following table sets forth the major components of our noninterest expense for the fiscal years ended December 31, 2025 and 2024: Fiscal Year Ended December 31, 2025 2024 Increase (Decrease) (Dollars in thousands) Noninterest expense: Salaries and employee benefits $ 22,764 $ 24,873 $ (2,109 ) Occupancy expenses 3,264 3,786 (522 ) Data processing 4,531 4,235 295 Deposit insurance premiums 972 1,129 (157 ) Professional Fees 846 1,017 (171 ) Depreciation and amortization 3,706 4,109 (403 ) Other expenses(1) 6,397 6,912 (515 ) Total noninterest expense $ 42,480 $ 46,061 $ (3,582 ) (1) Other expenses include items such as telephone expenses, marketing and advertising expenses, debit card expenses, courier fees, directors’ fees, and insurance. Salaries and employee benefits primarily include: (i) amounts paid to employees for base pay, incentive compensation, and bonuses; (ii) health and other related insurance paid by the Bank on behalf of our employees; and (iii) the annual cost for any increases in the liability for non-qualified plans maintained for certain key employees. Salaries and employee benefits for the fiscal year ended December 31, 2025 were $22.8 million, a decrease of $2.1 million, or 8.5%, compared to $24.9 million for the fiscal year ended December 31, 2024. This decrease was primarily due to efficiencies realized from the acquisition of AB&T and a decrease in compensation expense due to a stock award of $2.1 million during 2024. Occupancy expenses consist of depreciation on property, premises, equipment and software, rent expense for leased facilities, maintenance agreements on equipment, property taxes, and other expenses related to maintaining owned or leased assets. Occupancy expenses for the fiscal year ended December 31, 2025 were $3.3 million compared to $3.8 million for the fiscal year ended December 31, 2024, a decrease of $0.5 million, or 13.8%. The decrease was primarily attributable to normal fluctuations. Data processing expenses, which primarily consist of expenses for data processing services for core processing, increased $0.3 million, or 7.0%, to $4.5 million for the fiscal year ended December 31, 2025 from $4.2 million for the fiscal year ended December 31, 2024. The majority of this increase was for one-time fees for new software for credit card servicing, on-boarding deposits and loans, and additional fraud detection; all of which provide increased customer service. 59 Professional fees expenses, which include legal fees, audit and accounting fees, and consulting fees, decreased $0.2 million, or 16.8%, to $0.8 million for the fiscal year ended December 31, 2025 compared to $1.0 million for the fiscal year ended December 31, 2024. This decrease was primarily the result of the additional costs associated with the acquisition of AB&T in 2024. Depreciation and amortization for the fiscal year ended December 31, 2025 was $3.7 million compared to $4.1 million for the fiscal year ended December 31, 2024, a decrease of approximately $0.4 million, or 9.8%. The decrease was primarily attributable to the sale of a closed Bank office and the decrease in core deposit intangibles from previous acquisitions. Other expenses decreased $0.5 million, or 7.5%, to $6.4 million for the fiscal year ended December 31, 2025, compared to $6.9 million for the fiscal year ended December 31, 2024. This decrease was primarily due to efficiencies realized from the acquisition of AB&T. Financial Condition Total assets were $2.3 billion as of both December 31, 2025 and 2024. Net loans increased $66.6 million, or 3.7%, to $1.9 billion at December 31, 2025, compared to $1.8 billion at December 31, 2024. The increase in net loans was due to organic loan growth in the Nashville MSA, Knoxville MSA8, and Charlotte MSA. Our securities portfolio decreased $35.3 million, or 20.0%, to $140.9 million at December 31, 2025, compared to $176.2 million at December 31, 2024. The decrease in our securities portfolio is the result of decreased need for pledging. Total deposits decreased $122.9 million, or 6.3%, to $1.8 billion at December 31, 2025, compared to $1.9 billion at December 31, 2024. This decrease was primarily driven by a $126.9 million reduction in brokered deposits to $48.0 million at December 31, 2025, from $174.9 million at December 31, 2024. Loan Portfolio Loans represent the largest portion of our earning assets, greater than the securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. We have four loan portfolio segments: (i) real estate (which is divided into four classes), (ii) commercial, (iii) consumer and (iv) other. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and method for monitoring and assessing credit risk. Classes within the real estate portfolio segment include (i) CRE, (ii) C&D, (iii) residential, and (iv) other. Our loan clients primarily consist of small to medium-sized business, the owners and operators of these businesses, as well as other professionals, entrepreneurs and high net worth individuals. We believe owner-occupied and investment CRE loans, residential construction loans and commercial business loans provide us with higher risk-adjusted returns, shorter maturities and more sensitivity to interest rate fluctuations, and are complemented by our relatively lower risk residential real estate loans to individuals. The following describes risk characteristics relevant to each of the loan portfolio segments: Real estate — We offer various types of real estate loan products, which are divided into the classes described below. All loans within this portfolio segment are particularly sensitive to the valuation of real estate. ● CRE loans include both owner-occupied CRE loans and other CRE loans, such as commercial loans secured by income producing properties. Owner-occupied CRE loans made to operating businesses are long-term financings of land and buildings and are repaid by cash flows generated from business operations. Real estate loans for income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers are repaid from rent income derived from the properties. ● C&D loans include extensions of credit to real estate developers or investors where repayment is dependent on the sale of the real estate or income generated from the real estate collateral. 60 ● Residential loans include one-to-four-family first mortgage loans, which are repaid by various means such as a borrower’s income, the sale of the property, or rental income derived from the property. These also include second lien or open-end residential real estate loans, such as home equity lines, which are typically repaid by the same means as one-to-four-family first mortgages. ● Other real estate loans include loans collateralized by farmland. Commercial — This loan portfolio segment includes loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, leases, or expansion projects. Loans are repaid by business cash flows. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrower, particularly cash flows from the borrower’s business operations. Consumer — This loan portfolio segment includes non-real estate secured direct loans to consumers for household, family, and other personal expenditures. In addition to consumer installment loans, this portfolio segment also includes secured and unsecured personal lines of credit as well as overdraft protection lines. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures. Other — This loan portfolio segment primarily consists of tax-exempt commercial loans, undisbursed loans of all types, and unpaid overdrafts on deposit accounts. The following table presents our balances and associated percentages of the composition of loans by loan portfolio segment, excluding loans held for sale, on the dates indicated: Loan Portfolio Segments As of December 31, 2025 2024 Amount %  of Total Amount %  of Total (Dollars in thousands) Real Estate Loans: Commercial $ 1,113,440 59 % $ 1,006,207 55 % Construction and land development 176,688 9 % 199,800 11 % Residential 377,943 20 % 369,308 20 % Other 14,824 1 % 16,816 1 % Commercial 174,248 9 % 201,593 11 % Consumer 15,417 1 % 15,214 1 % Other 7,450 0 % 6,744 0 % Total loans $ 1,880,010 100 % $ 1,815,682 100 % Deferred loan fees and discounts 6,477 8,685 Allowance for credit losses 18,096 18,205 Loans, net $ 1,855,437 $ 1,788,792 Total loans increased $64.3 million, or 3.5%, to $1.9 billion as of December 31, 2025 as compared to $1.8 billion as of December 31, 2024. This increase was substantially the result of organic loan growth in the Nashville MSA, Knoxville MSA and Charlotte MSA. 61 The following tables show the contractual maturities of our total loan principal balances, excluding loan discounts, overdrafts and other items in the distribution between fixed and adjustable interest rate loans, as of December 31, 2025 and December 31, 2024: As of December 31, 2025 Due in One Year or Less Due after One Year Through Five Years Due after Five Years Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Total (Dollars in thousands) Real Estate: Construction & land development $ 16,036 $ 35,403 $ 29,331 $ 67,293 $ 10,202 $ 18,423 $ 176,688 Residential 9,081 8,382 22,664 36,553 51,800 249,463 377,943 Commercial real estate 156,594 22,646 345,028 303,721 23,782 261,669 1,113,440 Other 90 369 3,213 9,902 244 1,006 14,824 Commercial 23,696 29,453 29,031 60,418 1,154 30,496 174,248 Consumer & other 10,783 3,260 6,601 316 1,534 373 22,867 Total Loans $ 216,280 $ 99,513 $ 435,868 $ 478,203 $ 88,716 $ 561,430 $ 1,880,010 As of December 31, 2024 Due in One Year or Less Due after One Year Through Five Years Due after Five Years Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Total (Dollars in thousands) Real Estate: Construction & land development $ 41,606 $ 57,676 $ 22,821 $ 70,396 $ 1,530 $ 5,770 $ 199,800 Residential 5,453 8,897 30,075 26,906 57,764 240,213 369,308 Commercial real estate 44,743 36,720 450,711 174,953 22,664 276,415 1,006,207 Other 1,280 1 3,060 10,706 749 1,020 16,816 Commercial 10,613 68,649 52,911 34,237 1,341 33,843 201,593 Consumer & other 6,613 316 12,465 556 1724 286 21,958 Total Loans $ 110,308 $ 172,259 $ 572,043 $ 317,754 $ 85,772 $ 557,546 $ 1,815,682 The majority of our loans are priced with a fixed rate and a one-to-five-year maturity. This type of loan has historically been about 40.9% of total loans over the past two years because the majority of our commercial loans are priced with five-year balloons. We are primarily involved in real estate, commercial, and consumer lending activities with customers throughout our markets in Kentucky, North Carolina, and Tennessee. About 89.5% and 87.7% of our total loans were secured by real property as of December 31, 2025, and December 31, 2024, respectively. We believe that these loans are not concentrated in any one single property type and that they are geographically dispersed throughout our markets. Our debtors’ ability to repay their loans is substantially dependent upon the economic conditions of the markets in which we operate, which consist primarily of Nashville MSA, Knoxville MSA, Chattanooga9, and Tri-Cities MSA in Tennessee and the Charlotte MSA in North Carolina. 62 CRE loans were 59.2% of total loans as of December 31, 2025, and represented 55.4% of total loans as of December 31, 2024. C&D loans were 9.4% of total loans as of December 31, 2025, and represented 11.0% of total loans as of December 31, 2024. The ratio of our CRE loans to total risk-based Bank capital was 435.4% as of December 31, 2025 and 396.2% as of December 31, 2024. C&D loans represented 69.1% of total risk-based Bank capital as of December 31, 2025 as compared to 78.7% as of December 31, 2024. We have established concentration limits in our loan portfolio for CRE loans by loan type, including collateral and industry, among others. All loan types are within established limits other than our hotels/motels category, which has occasionally exceeded our limit of 50% of total risk-based capital. For further information on the risks associated with the concentration of our loan portfolio in certain industries, please see the risk factor titled “We have a concentration of credit exposure to borrowers in certain industries, and we also target small to medium-sized businesses and make other loans that may carry increased levels of credit risk.” Despite this category being outside of our established limits, we believe lending risk in this category is mitigated by a significant portion of the financed properties being owner-occupied hotels/motels, meaning that the properties are run by their owners. All but one of the hotel/motel projects currently in our loan portfolio are “flag” hotels. Further, our exposure to the hotels/motels category is geographically dispersed throughout the states of Florida, Kentucky, North Carolina, South Carolina and Tennessee. We have restricted lending on lodging projects to existing clients only for the foreseeable future. Our lending concentration in the hotels/motels sector is actively managed by our senior management team, including our President and Chief Executive Officer and Chief Credit Officer. We require all business purpose loans to be underwritten by a centralized underwriting department located in Harrogate, Tennessee. Industry-tested underwriting guidelines are used to assess a borrower’s historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used in commercial lending to allow us to react to a borrower’s deteriorating financial condition, should that occur. Construction and Land Development. Loans for residential construction are for single-family properties and to developers or investors. These loans are underwritten based on estimates of costs and the completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control the costs of the projects. This category also includes commercial construction projects. C&D loans decreased $23.1 million, or 11.6%, to $176.7 million as of December 31, 2025 from $199.8 million as of December 31, 2024. The majority of this decrease was due to the completion of financial projects and payoff of C&D loans. Residential C&D loans increased $8.6 million, or 2.3%, to $377.9 million as of December 31, 2025 from $369.3 million as December 31, 2024. Residential. We offer one-to-four family mortgage loans on both owner-occupied primary residences and investor-owned residences, which made up approximately 18.1% of our residential loan portfolio as of December 31, 2025. Our residential loans also include home equity lines of credit, which totaled $38.9 million, or approximately 2.07% of our residential portfolio, as of December 31, 2025. By offering a full line of residential loan products, the owners of the small to medium-sized businesses that we lend to are able to use us, instead of a competitor, for financing a personal residence. Commercial Real Estate. Our CRE loan portfolio includes loans for commercial property that is owned by real estate investors, construction loans to build owner-occupied properties, and loans to developers of CRE investment properties and residential developments. CRE loans are subject to underwriting standards and processes similar to our commercial loans. These loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the properties securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing our real estate portfolio are diversified by type and geographic location. We believe this diversity helps reduce our exposure to adverse economic events that may affect any single market or industry. 63 CRE loans were $1.1 billion as of December 31, 2025, an increase of $107.2 million, or 10.7%, compared to December 31, 2024. The increase was primarily driven by organic new loan growth and completion of C&D loan projects. As of December 31, 2025, our CRE portfolio was comprised of $388.7 million in non-owner occupied CRE loans and $146.3 million in commercial construction loans. Commercial. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, to evaluate current and projected cash flows to determine the ability of the borrower to repay its obligations, and to ensure appropriate collateral is obtained to secure the loan. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans decreased $27.3 million, or 13.6%, to $174.2 million as of December 31, 2025 from $201.6 million as of December 31, 2024. Consumer and Other. We utilize the central underwriting department for all consumer loans over $200,000 in total credit exposure regardless of collateral type. Loans below this threshold are underwritten by the responsible loan officer in accordance with our consumer loan policy. The loan policy addresses types of consumer loans that may be originated and the requisite collateral, if any, which must be perfected. We believe relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers helps minimize risk. Consumer and other loans (non-real estate loans) increased $0.9 million, or 4.1%, to $22.9 million as of December 31, 2025, from $22.0 million as of December 31, 2024. Loan Participations In the normal course of business, we periodically sell participating interests in loans to other banks and investors. All participations are sold on a proportionate basis with all cash flows divided proportionately among the participants and no party has the right to pledge or exchange the entire financial asset without the consent of all the participants. Other than standard 90-day prepayment provisions and standard representations and warranties, participating interests are sold without recourse. We also purchase loan participations from time to time. On December 31, 2025 and December 31, 2024, loan participations sold to third parties (which are not included in the accompanying consolidated balance sheets) totaled $37.9 million and $46.3 million, respectively. We sell participations to manage our credit exposures to borrowers. On December 31, 2025 and December 31, 2024, loan participations purchased totaled $8.0 million and $7.7 million, respectively. The variances come from purchases and sales of participations in the ordinary course of business. 64 Allowance for Credit Losses The allowance for credit losses is funded as losses are estimated through a provision for credit losses charged to expense. Credit losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Confirmed losses are charged off immediately. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio. The allowance for credit losses is evaluated on a regular basis by management and is based upon management’s periodic review of the uncollectibility of loans in light of historical experience, the nature and volume of the loan portfolio, the overall portfolio quality, specific problem loans, current economic conditions that may affect borrowers’ ability to pay, the estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. The Bank estimates the allowance for credit losses on loans based on the underlying loans’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Bank has policies in place to reverse accrued interest in a timely manner. Therefore, the Bank has made a policy election to exclude accrued interest from the measurement of the allowance for credit losses. Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. The Company measures expected credit losses on loans on a collective (pool) basis when the loans share similar risk characteristics. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Bank. The Company’s methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions over a period that has been determined to be reasonable and supportable, to the identified pools of loans with similar risk characteristics for which the historical loss experience was observed. The Company’s primary methodology for estimating expected credit losses for all loan types is the weighted average remaining maturity (“WARM”) method. The WARM current expected credit losses methodology uses average annual loss rate along with a simple but reasonable forecast based on a “regression” analysis of loan history dating back 18 years. The dependent variable is an entity’s loss rate, based on changes in the NY Prime Lending Rate over the same period. The Company utilizes the NY Prime Lending Rate as the independent variable due to it being the tool most commonly utilized by the Federal Reserve to either accelerate and/or slow down the economy. Additionally, the allowance for credit losses calculation includes qualitative adjustments to account for risk factors that may not be incorporated in the quantitatively derived allowance estimate. Qualitative adjustments may increase or decrease the allowance estimate. 65 Qualitative factors considered include: changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices; national, regional and local economic and business conditions and developments that affect the collectability of the loan portfolio, including the condition of various market segments; nature and volume of the loan portfolio and terms of loans; experience, depth and ability of lending management; volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans; quality of the loan review system; underlying collateral values; concentrations of credit and changes in the level of such concentrations; and the effect of other external factors such as competition and legal and regulatory requirements. Our allowance for credit losses was $18.1 million on December 31, 2025 compared to $18.2 million on December 31, 2024, a decrease of $0.1 million, or 0.6%. A provision of $416 thousand was recorded for the fiscal year ended December 31, 2025 compared to $1.8 million provision for the fiscal year ended December 31, 2024. Additional provisions were recorded based on national, regional and economic conditions and changes in the volume and nature of our loan portfolio. In addition, some of the allowance for credit loss decrease was due to adjustments for consideration of the concentration of loans in certain risk categories. The following table provides an analysis of the allowance for credit losses at the dates indicated. As of December 31, 2025 2024 2023 2022 2021 (Dollars in thousands) Average loans outstanding $ 1,791,550 $ 1,738,433 $ 1,522,033 $ 1,264,516 $ 1,186,332 Total loans outstanding at end of period $ 1,880,010 $ 1,815,682 $ 1,696,295 $ 1,335,462 $ 1,209,606 Allowance for credit losses at beginning of period $ 18,205 $ 16,635 $ 13,448 $ 11,190 $ 10,907 Charge-offs: Commercial real estate (301 ) (49 ) — — (117 ) Construction and land development — — (30 ) (58 ) — Residential real estate (121 ) (52 ) — (113 ) (128 ) Commercial (362 ) (177 ) (9 ) (126 ) (126 ) Consumer & other (251 ) (151 ) (147 ) (212 ) (238 ) Total charge-offs (1,035 ) (429 ) (186 ) (509 ) (609 ) Recoveries: Commercial real estate 151 75 — — 2 Construction & land development 201 — 36 1,241 106 Residential real estate 64 9 — 303 251 Commercial 11 54 8 7 61 Consumer & other 83 32 55 50 76 Total recoveries 510 170 99 1,601 496 Net (charge-offs) recoveries $ (525 ) $ (259 ) $ (87 ) $ 1,092 $ (113 ) Provision for credit losses $ 416 $ 1,829 $ 3,274 $ 778 $ 396 Balance at end of period $ 18,096 $ 18,205 $ 16,635 $ 13,060 $ 11,190 Ratio of allowance to end of period loans 0.97 % 1.00 % 0.98 % 0.98 % 0.93 % Ratio of net (charge-offs) recoveries to average loans (0.029 )% (0.015 )% (0.006 )% (0.086 )% (0.015 )% 66 Net charge-offs for the year ended December 31, 2025 totaled $0.5 million, an increase of $0.2 million, or 102.5%, compared to $0.3 million for the year ended December 31, 2024. Nonperforming Loans Loans are considered delinquent when principal or interest payments are past due 30 days or more. Delinquent loans may remain on accrual status between 30 days and 90 days past due. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Typically, the accrual of interest on loans is discontinued when principal or interest payments are past due 90 days or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on a nonaccrual loan is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when the loans become well-secured and management believes full collectability of principal and interest is probable. 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 loan 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. The Company may, in the alternative, measure the expected credit loss as the amount by which the amortized cost basis of the loan exceeds the estimated fair value 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 costs basis of the loan exceeds the fair value of the underlying collateral less estimated cost 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. Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs. Any write-down to fair value at the time of transfer to other real estate owned is charged to the allowance for credit losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Costs of improvements are capitalized, whereas costs related to holding other real estate owned and subsequent write-downs to the value thereof are expensed. Any gains and losses realized at the time of disposal are reflected in income. Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as OREO until sold and is initially recorded at fair value less costs to sell when acquired, establishing a new carrying value. OREO totaled approximately $0.3 million at December 31, 2025 and $0.8 million at December 31, 2024. Nonperforming loans include nonaccrual loans and loans past due 90 days or more. Nonperforming assets consist of nonperforming loans plus OREO and collateral taken in foreclosure or similar proceedings. Nonaccrual loans were $6.2 million at December 31, 2025. We had no loans 90 days past due and still accruing at December 31, 2025. Total nonperforming loans increased approximately $1.2 million from December 31, 2024 to December 31, 2025. The increase was primarily the result of normal fluctuations. 67 The following tables present the contractual aging of the recorded investment and loan discount in current and past due loans by class of loans as of December 31, 2025 and December 31, 2024: Contractual Aging of Recorded Investments As of December 31, 2025 Current 30 – 89 Days Past Due 90+ Days Past Due Nonaccrual Total (Dollars in thousands) Real estate mortgages: Commercial real estate $ 1,113,181 $ 259 $ — $ — $ 1,113,440 Construction & land development 176,057 35 — 596 176,688 Residential real estate 366,957 5,547 — 5,439 377,943 Other 14,824 — — — 14,824 Commercial 173,794 323 — 131 174,248 Consumer & other 22,675 113 — 79 22,867 Total loans $ 1,867,488 $ 6,277 $ — $ 6,245 $ 1,880,010 Contractual Aging of Recorded Investments As of December 31, 2024 Current 30 – 89 Days Past Due 90+ Days Past Due Nonaccrual Total (Dollars in thousands) Real estate mortgages: Commercial real estate $ 1,005,336 $ 427 $ — $ 444 $ 1,006,207 Construction & land development 199,555 238 — 6 199,800 Residential real estate 358,812 6,005 — 4,491 369,308 Other 16,816 — — — 16,816 Commercial 201,101 418 — 74 201,593 Consumer & other 21,794 118 2 44 21,958 Total loans $ 1,803,415 $ 7,206 $ 2 $ 5,059 $ 1,815,682 68 Nonperforming Assets The following table sets forth the allocation of our nonperforming assets among different asset categories as of the dates indicated. Nonperforming assets consist of nonperforming loans plus OREO and repossessed property. Nonperforming loans include nonaccrual loans and loans past due 90 days or more. As of December 31, 2025 2024 2023 2022 2021 (Dollars in Thousands) Nonaccrual loans $ 6,245 $ 5,059 $ 4,888 $ 4,005 $ 4,804 Loans past due 90 days or more and still accruing — 2 342 8 5 Total nonperforming loans 6,245 5,061 5,230 4,013 4,809 OREO 253 832 1,046 1,709 2,285 Repossessed property — — — — — Total nonperforming assets $ 6,498 $ 5,893 $ 6,276 $ 5,722 $ 7,095 Modified loans – nonaccrual(1) $ — $ — $ — $ — $ — Modified loans – accruing $ — $ — $ — $ 3,063 $ 2,121 Allowance for credit losses $ 18,096 $ 18,205 $ 16,636 $ 13,060 $ 11,189 Total loans outstanding at end of period $ 1,880,010 $ 1,815,682 $ 1,696,295 $ 1,335,462 $ 1,209,606 Nonperforming loans to total loans 0.33 % 0.28 % 0.31 % 0.30 % 0.40 % Nonperforming assets to total loans and OREO 0.35 % 0.32 % 0.37 % 0.43 % 0.59 % Allowance for credit losses to nonperforming loans 290 % 360 % 318 % 325 % 233 % Allowance for credit losses to total loans 0.97 % 1.00 % 0.98 % 0.98 % 0.93 % Nonaccrual loans by category: Real estate: Commercial real estate $ — $ 444 $ 643 $ 142 $ 223 Construction and land development 596 6 — 127 330 Residential & other 5,439 4,491 4,007 3,663 4,081 Commercial 131 74 155 16 107 Consumer & other 79 44 83 56 63 Total $ 6,245 $ 5,059 $ 4,888 $ 4,005 $ 4,804 (1) Troubled debt restructured loans are excluded from nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are more than 90 days past due. Modifications to Borrowers Experiencing Financial Difficulty On occasion, the Bank modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, interest rate reductions, or payment delays. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. In some cases, the Bank provides multiple types of concessions on one loan. On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2023-02 — Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (ASU 2023-02). ASU 2023-02 eliminates the troubled debt restructuring (TDR) measurement and recognition guidance and requires that entities evaluate whether a modification represents a new loan or a continuation of an existing loan consistent with the accounting for other loan modifications. Additional disclosures relating to modifications to borrowers experiencing financial difficulty are required under ASU 2023-02. The Company adopted this ASU on a prospective basis. These loans are excluded from our nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are past due 90 days or more after the restructuring. The balance of these loans as of December 31, 2025 and December 31, 2024 was $0. 69 Credit Quality Credit quality and trends in the loan portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, and other applicable criteria, are reviewed by our Chief Credit Officer. In addition to the past due and nonaccrual criteria, we also evaluate loans according to an internal risk grading system. Loans are segregated between pass, special mention, substandard, doubtful, and loss categories, which conform to regulatory definitions. A description of the general characteristics of the risk categories and definitions of those segregations follows: Pass — Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors. Special Mention — Loans in this category are currently protected but are potentially weak, including, for example, as a result of adverse trends in the borrower’s operations, credit quality or financial strength. These loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances. Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Bank’s credit position at some future date. Substandard — A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and they are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss — Loans classified as loss are considered 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 the asset even though partial recovery may be effected in the future. The following tables summarize the risk categories of our loan portfolio based upon the most recent analysis performed as of December 31, 2025 and December 31, 2024, respectively: Outstanding Loan Balance by Internal Risk Grades As of December 31, 2025 Pass Special Mention Substandard Doubtful Total (Dollars in thousands) Real estate: Commercial real estate $ 1,104,532 $ 8,814 $ 94 $ — $ 1,113,440 Construction & land development 176,014 78 596 — 176,688 Residential and other 386,407 833 5,527 — 392,767 Other Commercial 173,324 793 131 — 174,248 Consumer and other 22,768 21 79 — 22,868 Total loans $ 1,863,045 $ 10,539 $ 6,427 $ — $ 1,880,011 Outstanding Loan Balance by Internal Risk Grades As of December 31, 2024 Pass Special Mention Substandard Doubtful Total (Dollars in thousands) Real estate: Commercial real estate $ 1,002,112 $ 3,605 $ 489 $ — $ 1,006,207 Construction & land development 199,098 701 — — 199,800 Residential and other 380,768 865 4,491 — 386,124 Commercial 200,976 543 74 — 201,593 Consumer and other 21,902 8 48 — 21,958 Total loans $ 1,804,857 $ 5,722 $ 5,102 $ — $ 1,815,682 70 Securities Portfolio Our securities portfolio serves the following purposes: (i) it provides liquidity to supplement cash flows from the loan and deposit activities of customers; (ii) it can be used as an interest rate risk management tool because it provides a large base of assets and we can change the maturity and interest rate characteristics more easily than those of the loan portfolio to better match changes in the deposit base and other Company funding sources; (iii) it is an alternative interest-earning asset when loan demand is weak or when deposits grow more rapidly than loans; and (iv) it provides a source of pledged assets for securing certain deposits and borrowed funds, as may be required by law or by specific agreement with a depositor or lender. Our securities portfolio consists of securities classified as available-for-sale or held-to-maturity. In determining such classification, securities that the Company has the positive intent and ability to hold to maturity are classified as “held-to-maturity” and are carried at amortized cost. Securities not classified as held-to-maturity are classified as “available-for-sale” and recorded at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss) net of tax. Our securities portfolio consists of U.S. government and federal agency securities, U.S. government sponsored enterprise securities, mortgage-backed securities, and state and political subdivisions. We determine the appropriate classification at the time of purchase. The following tables summarize the fair value of our securities portfolio as of the dates presented. December 31, 2025 December 31, 2024 Amortized Cost Fair Value Unrealized Gain/(Loss) Amortized Cost Fair Value Unrealized Gain/(Loss) Available-for-Sale U.S. government and federal agency $ 14,830 $ 14,830 $ — $ 15,277 $ 15,269 $ (8 ) U.S. government-sponsored enterprises (GSEs) 5 5 — 56 56 — Mortgage-backed securities 13,295 12,787 (508 ) 17,085 16,143 (942 ) State and political subdivisions 15,780 15,514 (266 ) 17,253 16,470 (783 ) Total Available-for-Sale $ 43,910 $ 43,136 $ (774 ) $ 49,671 $ 47,938 $ (1,733 ) December 31, 2025 December 31, 2024 Amortized Cost Fair Value Unrealized Gain/(Loss) Amortized Cost Fair Value Unrealized Gain/(Loss) Held-to-Maturity U.S. government and federal agency $ 42,681 $ 41,879 (803 ) $ 87,467 $ 84,440 $ (3,027 ) U.S. government-sponsored enterprises (GSEs) 13,599 13,309 (291 ) 19,271 18,560 (711 ) Mortgage-backed securities 37,534 35,524 (2,010 ) 19,031 15,864 (3,167 ) State and political subdivisions 3,913 3,744 (168 ) 2,448 2,179 (269 ) Total Held-to-Maturity $ 97,728 $ 94,456 $ (3,272 ) $ 128,217 $ 121,043 $ (7,174 ) Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At December 31, 2025, we evaluated the securities that had an unrealized loss for other-than-temporary impairment and determined all declines in value to be temporary. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities, and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity. 71 The following tables set forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of December 31, 2025, and December 31, 2024. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2025 Due in One Year or Less Due after One Year through Five Years Due after Five Years through Ten Years Due after Ten Years Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield (Dollars in thousands) Available-for-Sale U.S. treasury securities 14,830 3.54 - - - - - - U.S. government and federal agencies 5 8.11 - - - - - - State and political subdivisions 3,351 .68 % 6,142 2.88 % 4,338 3,97 % 1,949 4.86 % Mortgage-backed securities 31 3.33 % 2,452 3.23 % 3,481 2.34 % 7,331 3.54 % Total Available-for-Sale $ 18,217 3.38 % $ 8,594 2.98 % $ 7,819 3.24 % $ 9,280 3.82 % As of December 31, 2024 Due in One Year or Less Due after One Year through Five Years Due after Five Years through Ten Years Due after Ten Years Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield (Dollars in thousands) Available-for-Sale U.S. government and federal agencies $ 15,277 4.7 % — — — — — — U.S. government sponsored enterprises (GSEs) 18 3.1 % 38 8.7 % — — — — State and political subdivisions 2,753 2.4 % 8,704 2.7 % 4,913 3.6 % 884 4.5 % Mortgage-backed securities 9 3.3 % 2,337 4.0 % 6,140 2.8 % 8,598 3.5 % Total Available-for-Sale $ 18,057 4.3 % $ 11,078 3.0 % $ 11,053 3.1 % $ 9,482 3.8 % As of December 31, 2025 Due in One Year or less Due after One Year through Five Years Due after Five Years through Ten Years Due after Ten Years Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield (Dollars in thousands) Held-to-Maturity U.S. government and federal agencies $ 30,234 2.19 % $ 12,448 0.93 % $ - - % $ - - % U.S. government-sponsored enterprises (GSEs) 7,883 3.24 % 5,716 1.59 % - - % - - % State and political subdivisions - - % 2,434 1.47 % 98 4.37 % 1,381 5.04 % Mortgage-backed securities - - % - - % - - % 37,534 3.65 % Total Held-to-Maturity $ 38,117 2.35 % $ 20,598 1.18 % $ 98 4.37 % $ 38,915 3.70 % 72 As of December 31, 2024 Due in One Year or less Due after One Year through Five Years Due after Five Years through Ten Years Due after Ten Years Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield (Dollars in thousands) Held-to-Maturity U.S. treasury securities $ 59,722 4.7 % $ 27,745 0.9 % $ — — % $ — — % U.S. government and federal agencies 5,926 3.1 % 13,345 2.5 % — — % — — % State and political subdivisions — — % 2,448 1.5 % — — % — — % Mortgage-backed securities — — % — — % — — % 19,031 1.8 % Total Held-to-Maturity $ 65,648 4.6 % $ 43,538 1.4 % $ — — % $ 19,031 1.8 % Allowance for Credit Losses — Available-For-Sale Securities: The Company evaluates available-for-sale securities in an unrealized loss position to determine if credit losses exist. The Company first evaluates whether it intends to sell, or it is more likely than not that it will be required to sell, a security before recovering its amortized cost basis. If either condition exists, the security’s amortized cost basis is written down to fair value through income. If either aforesaid condition does not exist, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If credit loss exists, the Company recognizes an allowance for credit losses, limited to the amount by which the amortized cost basis exceeds the fair value. Any impairment not recognized through an allowance for credit losses is recognized in other comprehensive income (loss), net of tax. Changes in the allowance for credit losses are recorded as provision for credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Allowance for Credit Losses — Held-to-Maturity Securities: Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type and any other risk characteristics used to segment the portfolio. Accrued interest receivable on held-to-maturity debt securities totaled $291,460 and $230,223 as of December 31, 2025 and December 31, 2024 respectively. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. 73 Securities borrowed or purchased under agreements to resell and securities loaned or sold under agreements to repurchase are treated as collateralized financial transactions. These agreements are recorded at the amount at which the securities were acquired or sold plus accrued interest. It is the Company’s policy to take possession of securities purchased under resale agreements. The market value of these securities is monitored, and additional securities are obtained when deemed appropriate to ensure such transactions are adequately collateralized. The Company also monitors its exposure with respect to securities sold under repurchase agreements, and a request for the return of excess securities held by the counterparty is made when deemed appropriate. The Company sold no held-to-maturity securities prior to maturity during the fiscal years ended December 31, 2025 and December 31, 2024. Bank-Owned Life Insurance We maintain investments in BOLI policies to help control employee benefit costs, as a protection against loss of certain employees and as a tax planning strategy. We are the sole owner and beneficiary of these BOLI policies. At December 31, 2025, BOLI policies totaled $46.6 million compared to $45.8 million at December 31, 2024. The increase represents increases in the cash surrender values of the policies net of a slight reduction in the policies’ total value due to an insured’s death. Deposits Deposits represent our primary and most vital source of funds. We offer a variety of deposit products including demand deposit accounts, interest-bearing products, savings accounts and certificates of deposit. The Bank also acquires brokered deposits, QwickRate internet certificates of deposit, and reciprocal deposits through the Promontory network. The reciprocal deposits include both the Certificate of Deposit Account Registry Service (CDARS) and Insured Cash Sweep programs. We are a member of the Promontory network, which effectively allows depositors to receive FDIC insurance on amounts greater than the FDIC insurance limit, which is currently $250,000 per depositor, per issued bank for each account ownership category. The Promontory network allows institutions to break large deposits into smaller amounts and place them in a network of other Promontory institutions to ensure full FDIC insurance is gained on the entire deposit. Generally, internet and reciprocal deposits are not brokered deposits for regulatory purposes. Our strong asset growth requires us to place a greater emphasis on both interest and noninterest-bearing deposits. Deposit accounts are added by loan production cross-selling, customer referrals, marketing advertisements, mobile and online banking and our involvement within our communities. Total deposits were $1.8 billion at December 31, 2025 and $1.9 billion at December 31, 2024. As of December 31, 2025, 21.9% of total deposits was comprised of noninterest-bearing demand deposits, 51.3% of total deposits was comprised of interest-bearing non-maturity accounts and 26.8% of total deposits was comprised of time deposits. As of December 31, 2024, 20.5% of total deposits was comprised of noninterest-bearing demand deposits, 49.8% of total deposits was comprised of interest-bearing non-maturity accounts and 29.7% of total deposits was comprised of time deposits. The following table summarizes our deposit balances as of December 31, 2025 and December 31, 2024: As of December 31, 2025 2024 Balance % of Total Balance % of Total (Dollars in thousands) Noninterest-bearing demand deposits $ 397,835 21.9 % $ 397,240 20.5 % Interest-bearing deposits: Interest-bearing demand deposits 516,151 28.5 % 579,240 29.9 % NOW, savings and money market 414,716 22.8 % 385,615 20.0 % Time deposits 487,032 26.8 % 576,501 29.7 % Total interest-bearing deposits 1,417,899 78.1 % 1,541,356 79.5 % Total deposits $ 1,815,734 100 % $ 1,938,596 100 % 74 The following tables set forth the maturity of time deposits as of December 31, 2025 and December 31, 2024: As of December 31, 2025 Maturity Within: Three  Months Three Months Through 12 Months Over 12 Months Through 3 Years Over 3 Years Total (Dollars in thousands) Time deposits (less than $250,000) $ 161,783 $ 176,711 $ 33,093 $ 5,363 $ 376,950 Time deposits (greater than or equal to $250,000) 40,542 57,046 12,494 - 110,082 Total time deposits $ 202,325 $ 233,757 $ 45,587 $ 5,363 $ 487,032 As of December 31, 2024 Maturity Within: Three  Months Three Months Through 12 Months Over 12 Months Through 3 Years Over 3 Years Total (Dollars in thousands) Time deposits (less than $250,000) $ 84,785 $ 315,751 $ 73,074 $ 8,150 $ 481,760 Time deposits (greater than or equal to $250,000) 17,909 68,975 7,566 291 94,741 Total time deposits $ 102,694 $ 384,726 $ 80,640 $ 8,441 $ 576,501 Time deposits issued in amounts of greater than or equal to $250,000 represent the type of deposit most likely to affect our future earnings because of interest rate sensitivity. The effective cost of these funds is generally higher than other time deposits because the funds are usually obtained at premium rates of interest. Borrowed Funds In addition to deposits, we utilize advances from the FHLB and other borrowings as a supplementary funding source to finance our operations. FHLB Advances. The FHLB allows us to borrow, on both a short and long-term basis, collateralized by a blanket floating lien on first mortgage loans and CRE loans as well as FHLB stock. At December 31, 2025 and December 31, 2024, we had borrowing capacity from the FHLB of $276.0 million and $175.1 million, respectively. The increase in capacity is due to adding new collateral. We had $75.0 million and $0 in short-term cash management advances from the FHLB as of December 31, 2025 and December 31, 2024, respectively. The December 31, 2025 cash management advance matures March 30, 2026 and bears interest at 3.89%. We had long-term FHLB borrowings of $60.6 and $65.6 million as of December 31, 2025 and December 31, 2024, respectively. All of our outstanding FHLB advances have fixed rates of interest. 75 The following table sets forth our long-term FHLB borrowings as of December 31, 2025 and December 31, 2024: As of December 31, 2025 2024 (Dollars in thousands) Long-term FHLB borrowings outstanding at end of period $ 60,553 $ 65,581 Weighted average interest rate at end of period 2.88 % 2.72 % Maximum month-end balance $ 66,202 $ 97,799 Average balance outstanding during the period $ 62,419 $ 72,572 Weighted average interest rate during the period 2.92 % 2.73 % Lines of Credit. The Bank has uncollateralized, uncommitted federal funds lines of credit with multiple banks as a source of funding for liquidity management. The total amount of the lines of credit was $102.5 million as of December 31, 2025, of which $92.5 million was available. The total amount of the lines of credit was $102.5 million as of December 31, 2024, all of which was available at that date. Federal Reserve Discount Window. The Bank has a line of credit with the Federal Reserve Discount Window collateralized with CRE loans. There were no amounts outstanding under this line of credit as of December 31, 2025 or December 31, 2024. The Bank has moved the collateral from the Federal Reserve Discount Window to the FHLB line in order to take advantage of longer maturities and different rate structures. As a result, the total line of credit with the Federal Reserve Discount Window as of December 31, 2025 and December 31, 2024 is $0. Community Trust Bank Loan Agreement. In April 2015, we executed a loan agreement with Community Trust Bank, Inc., which was later amended and restated pursuant to the Community Trust Loan Agreement, providing for a term loan that matured in 2035. The CTB Loan is collateralized by all of the issued and outstanding shares of the Bank. The Community Trust Loan Agreement included various financial and nonfinancial covenants. The CTB Loan was repayable in quarterly principal and interest payments based on a variable rate per annum equal to the prime rate as reported in The Wall Street Journal, adjustable daily. The Company repaid the CTB Loan in full on October 7, 2025. Trust Preferred Securities. With the acquisition of Citizens Bancorp, Inc. (“Citizens Bancorp”) and its bank subsidiary, Citizens Bank, in 2018, we also acquired the Trust. In September 2004, the Trust issued trust preferred securities (the “Trust Preferred Securities”) with an aggregate liquidation amount of $6,000,000 ($1,000 per Trust Preferred Security) to a third-party investor. Citizens Bancorp then issued variable rate junior subordinated debentures aggregating $6,186,000 to the Trust (the “Subordinated Debentures”). The Subordinated Debentures were the sole assets of the Trust. The Subordinated Debentures and the Trust Preferred Securities paid interest and dividends, respectively, on a quarterly basis, at a variable interest rate equal to the three-month SOFR plus 2.40% adjusted quarterly, which was 6.41% and 6.89% on December 31, 2025 and December 31, 2024, respectively. These Subordinated Debentures matured in 2034, at which time the Trust Preferred Securities were to be redeemed. The Subordinated Debentures and the Trust Preferred Securities were redeemed prior to maturity, in whole or in part, at a redemption price of $1,000 per Trust Preferred Security. The Company caused the Subordinated Debentures and Trust Preferred Securities to be redeemed, in full, on January 7, 2026. Liquidity and Capital Requirements Liquidity Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of our short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders. 76 Interest rate sensitivity involves the relationships between rate-sensitive assets and liabilities and is an indication of the probable effects of interest rate fluctuations on our net interest income. Interest rate-sensitive assets and liabilities are those with yields or rates that are subject to change within a future time period due to maturity or changes in market rates. A model is used to project future net interest income under a set of possible interest rate movements. The Bank’s Asset/Liability Committee (“ALCO”) reviews this information to determine if the projected future net interest income levels would be acceptable. We attempt to stay within acceptable net interest income levels. Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and the fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits and additional borrowings from correspondent banks, FHLB advances, and the Federal Reserve Discount Window. Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment securities portfolios and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis. The Company and the Bank are separate corporate entities. The Company’s liquidity depends primarily upon dividends received from the Bank and capital and debt instruments issued by the Company. Statutory and regulatory limitations apply to the Bank’s payment of dividends to the Company. The Company relies on its liquidity to pay interest and principal on Company indebtedness, company operating expenses, and dividends to Company shareholders. Capital Requirements We are subject to various regulatory capital requirements administered by the federal and state banking regulators. Failure to meet applicable regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under regulatory capital adequacy guidelines and the regulatory framework for “prompt corrective action” (described below), we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies. The capital amounts and classifications are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Because the Company has total consolidated assets of less than $3 billion and otherwise qualifies for the application of the Small Bank Holding Company Policy Statement, the Company currently is not subject to federal capital adequacy guidelines on a consolidated basis. Rather, the regulatory capital requirements are applied to and assessed at the Bank. See “Supervision and Regulation.” The tables below summarize the capital requirements applicable to the Bank in order for the Bank to satisfy the minimum capital requirements of the capital adequacy guidelines and to be considered “well-capitalized” from a regulatory perspective under the prompt corrective action framework, as well as the Company’s and the Bank’s capital ratios as of December 31, 2025 and December 31, 2024. The FDIA requires, among other things, that the federal banking regulators take prompt corrective action with respect to FDIC-insured depository institutions that do not meet certain minimum capital requirements. Under the FDIA, insured depository institutions are divided into five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Under applicable regulations, an institution is considered to be well capitalized if it has a common equity Tier 1 capital ratio (“CET1 capital”) of at least 6.5%, a leverage ratio of at least 5%, a Tier 1 risk-based capital ratio of at least 8%, and a total risk-based capital ratio of at least 10%, and it is not subject to a directive, order or written agreement to meet and maintain specific capital levels. 77 The Bank exceeded all the minimum regulatory capital requirements under the federal capital adequacy guidelines (Basel III), and the Bank met all the minimum capital requirements to be considered “well-capitalized” under the prompt corrective action framework, as of the dates reflected in the tables below. Actual Required Minimum Under Capital Adequacy Guidelines Minimum to be Considered “Well Capitalized” Under PCA Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2025: Tier 1 capital (to average assets) (leverage) Company $ 229,716 10.7 % N/A N/A N/A N/A Bank $ 237,827 10.8 % $ 88,218 4.0 % $ 110,272 5.0 % CET1 capital (to risk-weighted assets) Company $ 224,174 12.1 % N/A N/A N/A N/A Bank $ 237,827 12.5 % $ 85,349 4.5 % $ 123,282 6.5 % Tier 1 capital (to risk-weighted assets) Company $ 229,716 12.5 % N/A N/A N/A N/A Bank $ 237,827 12.5 % $ 113,799 6.0 % $ 151,732 8.0 % Total capital (to risk-weighted assets) Company $ 247,705 13.4 % N/A N/A N/A N/A Bank $ 255,727 13.5 % $ 151,732 8.0 % $ 189,665 10.0 % Actual Required Minimum Under Capital Adequacy Guidelines Minimum to be Considered “Well Capitalized” Under PCA Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2024: Tier 1 capital (to average assets) (leverage) Company $ 214,414 9.6 % N/A N/A N/A N/A Bank $ 235,674 10.6 % $ 89,209 4.0 % $ 111,511 5.0 % CET1 capital (to risk-weighted assets) Company $ 208,976 11.0 % N/A N/A N/A N/A Bank $ 235,674 12.5 % $ 84,892 4.5 % $ 122,622 6.5 % Tier 1 capital (to risk-weighted assets) Company $ 214,414 11.3 % N/A N/A N/A N/A Bank $ 235,674 12.5 % $ 113,190 6.0 % $ 150,920 8.0 % Total capital (to risk-weighted assets) Company $ 232,619 12.2 % N/A N/A N/A N/A Bank $ 253,949 13.5 % $ 150,920 8.0 % $ 188,650 10.0 % We have a relatively simple regulatory capital structure with the vast majority of our regulatory capital in the form of common equity Tier 1 capital, which is viewed by our regulators as the highest quality regulatory capital. 78 Contractual Obligations The following tables contain supplemental information regarding our total contractual obligations at December 31, 2025 and December 31, 2024: Payments Due at December 31, 2025 Within One Year One to Five Years After Five Years Total (Dollars in thousands) Time deposits $ 436,082 $ 50,950 $ - $ 487,032 Short-term borrowings 88,251 - - 88,251 Long-term borrowings 12,607 707 59,696 73,010 Subordinated debt securities - - 5,577 5,577 Total contractual obligations $ 536,940 $ 51,657 $ 65,273 $ 653,870 Payments Due at December 31, 2024 Within One Year One to Five Years After Five Years Total (Dollars in thousands) Time deposits $ 480,868 $ 92,188 $ 3,446 $ 576,501 Short-term borrowings 3,392 — — 3,392 Long-term borrowings 16,385 51,815 32,066 100,266 Subordinated debt securities — — 5,507 5,507 Total contractual obligations $ 500,644 $ 144,003 $ 41,019 $ 685,666 We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate cash levels. We expect to maintain adequate cash levels through profitability, loan and securities repayment and maturity activity and continued deposit gathering activities. We have in place various borrowing mechanisms for both short-term and long-term liquidity needs. Off-Balance Sheet Arrangements We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in our consolidated balance sheets. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit to our customers is represented by the contractual or notional amount of those instruments. Commitments to extend credit and standby letters of credit are not recorded as an asset or liability by us until the instrument is exercised. The contractual or notional amounts of these instruments reflect the extent of involvement we have in particular classes of financial instruments. 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 the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. The amount and nature of collateral obtained, if deemed necessary by us upon extension of credit, is based on management’s credit evaluation of the potential borrower. 79 Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private short-term borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. We hold collateral supporting such commitments for which collateral is deemed necessary. The following table summarizes commitments we had made as of the dates presented. As of December 31, 2025 2024 (Dollars in thousands) Commitments to grant loans and unfunded commitments under lines of credit $ 274,407 $ 354,509 Standby letters of credit 24,503 45,505 Total $ 298,910 $ 400,014 Impact of Inflation The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with GAAP and practices within the banking industry which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP and follow general practices within the banking industry. The application of these principles requires management to make estimates, assumptions and complex judgements that affect amounts presented in our consolidated financial statements. These estimates, assumptions and judgements are based on information available as of the date of the financial statements; accordingly, as this information changes, the consolidated financial statements could reflect different estimates, assumptions, and judgements. Management has identified our most significant accounting policies in Note 1 of our consolidated financial statements to be the accounting areas that require the most complex and subjective judgements and, as such, could be most subject to revision as new and additional information becomes available or circumstances change, including changes in the economic climate and interest rate changes. Pursuant to the JOBS Act, as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected to take advantage of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, we may adopt the standard on the application date for private companies. We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company. 80 The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information about these policies and estimates can be found in Note 1 of our consolidated financial statements as of and for the fiscal year ended December 31, 2025. Basis of Presentation and Consolidation. Our consolidated financial statements include the accounts of the Company and its wholly owned consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investment Securities. Investment securities are classified as either held-to-maturity or available-for-sale securities. In determining such classification, securities that we have the positive intent and ability to hold to maturity are classified as “held-to-maturity” and are carried at amortized cost. Securities not classified as held-to-maturity are classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss) net of tax. Securities purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Premiums on callable debt securities are amortized to their earliest call date. Gains and losses on the sale of available-for-sale securities are recorded on the trade date and are determined using the specific identification method. We have made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest in interest receivable in the consolidated balance sheets. Interest receivable on available-for-sale debt securities totaled $110,526 and $124,431 as of December 31, 2025 and December 31, 2024, respectively. A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on nonaccrual is reversed against interest income. There was no accrued interest related to debt securities reversed against interest income for the years ended December 31, 2025 and 2024. Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost (net of the allowance for credit losses). Amortized cost is the principal balance outstanding adjusted for unearned income, charge-offs, the allowance for credit losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest receivable totaled to $6.9 million and $6.7 million as of December 31, 2025 and 2024, respectively, and is excluded from the estimate of credit losses. Interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan. The accrual of interest on mortgage and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Mortgage loans are charged off at 180 days past due, and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Consumer and credit card loans continue to accrue interest until they are charged off no later than 120 days past due unless the loan is in the process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or 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. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 81 We have purchased loans, some of which have experienced more than insignificant credit deterioration since origination. Purchased credit deteriorated loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of a loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through credit loss expense. Allowance for Credit Losses. Under the current expected credit loss model, the allowance for credit losses on loans is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. We estimate the allowance for credit losses on loans based on the underlying loans’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, we have policies in place to reverse accrued interest in a timely manner. Therefore, we have made a policy election to exclude accrued interest from the measurement of the allowance for credit losses. Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. We measure expected credit losses on loans on a collective (pool) basis when the loans share similar risk characteristics. Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by us. Our methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions over a period that has been determined to be reasonable and supportable, to the identified pools of loans with similar risk characteristics for which the historical loss experience was observed. Our primary methodology for estimating expected credit losses for all loan types is the WARM method. The WARM current expected credit losses methodology uses average annual loss rate along with a simple but reasonable forecast based on a “regression” analysis of loan history dating back 18 years. The dependent variable is an entity’s loss rate, based on changes in the NY Prime Lending Rate over the same period. We utilize the NY Prime Lending Rate as the independent variable due to it being the tool most commonly utilized by the Federal Reserve to either accelerate and/or slow down the economy. Additionally, the allowance for credit losses calculation includes qualitative adjustments to account for risk factors that may not be incorporated in the quantitatively derived allowance estimate. Qualitative adjustments may increase or decrease the allowance estimate. Qualitative factors considered include: changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices; national, regional and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments; nature and volume of the portfolio and terms of loans; experience, depth and ability of lending management; volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans; quality of loan review system; underlying collateral values; concentrations of credit and changes in the levels of such concentrations; and the effect of other external factors such as competition and legal and regulatory requirements. 82 We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. Loans that do not share risk characteristics are evaluated on an individual basis. For collateral-dependent loans where we have determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and we expect repayment of the loan 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. We may, in the alternative, measure the expected credit loss as the amount by which the amortized cost basis of the loan exceeds the estimated fair value 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 collateral less estimated cost 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. Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. If the loan is collateral-dependent, the loss is more easily identified and is charged-off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, and the guarantor demonstrates willingness and capacity to support the debt, we may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged-off and any further collections are treated as recoveries. Public Company Costs We incur additional costs associated with operating as a public company. These costs include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules and regulations adopted by the SEC, the federal bank regulatory agencies, and national securities exchanges, require public companies to implement specified corporate governance practices were inapplicable to us as a private company. These additional laws, rules and regulations have increased and are likely to continue to increase our legal, regulatory and financial compliance costs and will make some activities more time-consuming and costly.