# EAGLE FINANCIAL SERVICES INC (EFSI) Informational only - not investment advice. CIK: 0000880641 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: 2026-03-16 SEC page: https://www.sec.gov/edgar/browse/?CIK=880641 Filing source: https://www.sec.gov/Archives/edgar/data/880641/000088064126000004/efsi-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 99005000 | USD | 2025 | 2026-03-16 | | Net income | 8214000 | USD | 2025 | 2026-03-16 | | Assets | 1888626000 | USD | 2025 | 2026-03-16 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-16. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000880641.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | 25,785,000 | 28,351,000 | 31,923,000 | 35,454,000 | 38,908,000 | 42,676,000 | 54,686,000 | 83,093,000 | 91,321,000 | 99,005,000 | | Net income | 6,370,000 | 7,786,000 | 9,001,000 | 9,759,000 | 11,172,000 | 11,021,000 | 14,521,000 | 9,357,000 | 15,343,000 | 8,214,000 | | Diluted EPS | 1.81 | 2.24 | 2.60 | 2.84 | 3.27 | 3.20 | 4.17 | 2.66 | 4.32 | 1.59 | | Operating cash flow | 9,700,000 | 9,367,000 | -1,523,000 | 11,348,000 | 11,006,000 | 16,459,000 | 13,814,000 | 6,875,000 | 18,762,000 | 25,754,000 | | Capital expenditures | 257,000 | 368,000 | 432,000 | 1,314,000 | 456,000 | 520,000 | 838,000 | 1,071,000 | 1,019,000 | 1,406,000 | | Dividends paid | 2,354,000 | 2,652,000 | 2,776,000 | 2,996,000 | 3,198,000 | 3,261,000 | 3,808,000 | 4,229,000 | 4,299,000 | 6,111,000 | | Assets | 700,149,000 | 765,751,000 | 799,617,000 | 877,320,000 | 1,130,152,000 | 1,303,038,000 | 1,616,717,000 | 1,825,597,000 | 1,866,215,000 | 1,888,626,000 | | Liabilities | 620,733,000 | 681,934,000 | 712,018,000 | 780,994,000 | 1,025,078,000 | 1,192,758,000 | 1,514,988,000 | 1,717,218,000 | 1,747,228,000 | 1,699,787,000 | | Stockholders' equity | 79,416,000 | 83,817,000 | 87,599,000 | 96,326,000 | 105,074,000 | 110,280,000 | 101,729,000 | 108,379,000 | 118,987,000 | 188,839,000 | | Free cash flow | 9,443,000 | 8,999,000 | -1,955,000 | 10,034,000 | 10,550,000 | 15,939,000 | 12,976,000 | 5,804,000 | 17,743,000 | 24,348,000 | ### 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 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | 24.70% | 27.46% | 28.20% | 27.53% | 28.71% | 25.82% | 26.55% | 11.26% | 16.80% | 8.30% | | Return on equity | 8.02% | 9.29% | 10.28% | 10.13% | 10.63% | 9.99% | 14.27% | 8.63% | 12.89% | 4.35% | | Return on assets | 0.91% | 1.02% | 1.13% | 1.11% | 0.99% | 0.85% | 0.90% | 0.51% | 0.82% | 0.43% | | Liabilities / equity | 7.82 | 8.14 | 8.13 | 8.11 | 9.76 | 10.82 | 14.89 | 15.84 | 14.68 | 9.00 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000880641.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 | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q2 | 2022-06-30 | | | 1.14 | reported discrete quarter | | 2022-Q3 | 2022-09-30 | | | 1.17 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | 0.73 | reported discrete quarter | | 2023-Q2 | 2023-03-31 | | 2,585,000 | | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 20,364,000 | | 0.58 | reported discrete quarter | | 2023-Q3 | 2023-06-30 | | 2,058,000 | | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 22,191,000 | | 0.66 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 22,015,000 | 2,395,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 21,912,000 | 2,548,000 | 0.72 | reported discrete quarter | | 2024-Q2 | 2024-03-31 | | 2,548,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 21,748,000 | | 0.89 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 23,686,000 | 3,424,000 | 0.97 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 23,994,000 | 6,186,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 23,502,000 | -6,974,000 | -1.53 | reported discrete quarter | | 2025-Q2 | 2025-03-31 | | -6,974,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 24,815,000 | | 0.98 | reported discrete quarter | | 2025-Q3 | 2025-06-30 | | 5,270,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 25,933,000 | | 1.04 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 24,755,000 | 4,334,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 23,826,000 | 3,740,000 | 0.69 | 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/880641/000088064126000013/efsi-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-05-11 Report date: 2026-03-31 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion is to focus on certain information relevant to the Company’s financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with the Company’s Audited Consolidated Financial Statements and notes thereto included in the 2025 Form 10-K, and in conjunction with the Unaudited Consolidated Financial Statements and notes thereto presented in Part I, Item 1, Financial Statements, of this Form 10-Q. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the full-year ending December 31, 2026 or any future period. GENERAL Eagle Financial Services, Inc. is a bank holding company which owns 100% of the stock of Bank of Clarke (the “Bank” and, collectively with Eagle Financial Services, Inc., the “Company”, “we”, “us” or “our”). Accordingly, the results of operations for the Company are dependent upon the operations of the Bank. The Bank conducts a commercial banking business which consists of attracting deposits from the general public and investing those funds in commercial, consumer and real estate loans and mortgage-backed securities, municipal and U.S. government agency securities. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law. The Company strives to be an outstanding financial institution in its market by: building solid sustainable relationships with its customers, employees, communities, and shareholders; offering best-in-class products and services; and being the leader in the markets it serves. At March 31, 2026, the Company had total assets of $1.84 billion, net loans of $1.44 billion, total deposits of $1.60 billion, and shareholders’ equity of $190.3 million. The Company has continued to build on its strategic actions taken during 2025, which was marked by a successful capital raise and balance sheet repositioning of its investment securities portfolio. These actions strengthened its balance sheet and improved its forward earnings profile. Our vision for 2026 is about disciplined growth with smart investment and continued focus on people and technology, which we believe will lead to stronger core earnings and a balance sheet positioned for more consistent results. CRITICAL ACCOUNTING ESTIMATES The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions. These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported. Our most significant policies are described in in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to our audited financial statements for the year ended December 31, 2025, included in the Company's 2025 Annual Report on Form 10-K filed with the SEC. There have been no changes since that time. 39 TABLE OF CONTENTS NON-GAAP FINANCIAL MEASURES This report refers to certain financial measures that are computed under a basis other than GAAP ("non-GAAP"). The Company uses certain non-GAAP financial measures, including non-GAAP net income, non-GAAP noninterest income, non-GAAP earnings per share, non-GAAP return on average equity and average assets, tax-equivalent net interest income and efficiency ratio, to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. Non-GAAP measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. There were no significant non-recurring transactions executed during the first quarter of 2026 that substantially impacted the Company's operating results, unlike during the 2025 quarter. During the three months ended March 31, 2025, the Company executed balance sheet repositioning transactions and recorded a realized loss on the sale of the available for sale securities totaling $12.4 million. This loss significantly impacted the Company's operating results and certain performance metrics and ratios for three months ended March 31, 2025. The following table reconciles the GAAP reported measure to the adjusted non-GAAP measure to show the impact of significant non-recurring transactions for the periods presented: Three Months Ended March 31, (dollars in thousands except for per share data) 2026 2025 GAAP Net income (loss) $ 3,740 $ (6,974 ) Adjustments to net income (loss): Loss on sales of securities — 12,425 Tax effect of adjustments to net income (loss) — (2,609 ) Non-GAAP Net income $ 3,740 $ 2,842 GAAP Noninterest income (loss) $ 4,928 $ (8,554 ) Adjustments to noninterest income (loss): Loss on sales of securities — 12,425 Non-GAAP Noninterest income $ 4,928 $ 3,871 Earnings (loss) per share, basic and diluted (GAAP) $ 0.69 $ (1.53 ) Effect of adjustments to net income — 2.15 Non-GAAP Earnings per share, basic and diluted $ 0.69 $ 0.62 Annualized return on average equity 7.98 % (20.75 )% Effect of adjustments to net income — 29.21 Non-GAAP Annualized return on average equity 7.98 % 8.46 % Annualized return on average assets 0.81 % (1.48 )% Effect of adjustments to net income — 2.07 Non-GAAP Annualized return on average assets 0.81 % 0.59 % For additional information and calculations of tax-equivalent net interest income and efficiency ratio, see the sections entitled "Tax-Equivalent Net Interest Income" and "Efficiency Ratio" below. 40 TABLE OF CONTENTS FORWARD LOOKING STATEMENTS This report contains statements that are "forward looking statements." The Company may also make forward looking statements in other documents that are filed with the Securities and Exchange Commission, in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors, or employees. Forward looking statements include statements regarding our expectations, intentions, and objectives, or other expressions that predict or indicate future events and trends and which do not relate to historical matters. The words “believe,” “expect,” “may,” “will,” “should,” "could," “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward looking statements. You should not rely on forward looking statements, as they involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control. These risks, uncertainties, and other factors may cause our actual results, performance, or achievements to be materially different than the anticipated future results, performance, or achievements expressed or implied by the forward looking statements. Some of the factors that might cause these differences include the following: • difficult market conditions in our industry; • the ability to successfully manage growth or implement growth strategies if the Bank is unable to identify attractive markets, locations or opportunities to expand in the future or if the Bank is unable to successfully integrate new branches, business lines or other growth opportunities into its existing operations; • competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources; • the successful management of interest rate risk; • risks inherent in making loans such as repayment risks and fluctuating collateral values; • the Company's ability to successfully resolve non-performing assets; • changes in general economic and business conditions in the Bank’s market area; • reliance on the Bank’s management team, including the ability to attract and retain key personnel; • changes in interest rates and interest rate policies; • maintaining capital levels adequate to support growth; • maintaining cost controls and asset qualities as new branches are opened or acquired; • demand, development and acceptance of new products and services; • deposit flows; • the Bank's ability to manage liquidity; • the cost and availability of secondary funding sources; • effects of soundness of other financial institutions; • problems with technology utilized by the Bank; • changing trends in customer profiles and behavior; • geopolitical conditions, including acts or threats of terrorism, international hostilities, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the U.S. and abroad; • the economic impact of duties, tariffs or other barriers or restrictions on trade, any retaliatory counter measures, or the volatility and uncertainty arising there from; • political developments, including government shutdowns, and other significant disruptions and changes in the funding, size, scope, and efficiencies of the federal government, its agencies and services; • the Company's potential exposure to fraud, negligence, computer theft, and cyber-crime; • potential impact on us of existing and future legislation and regulations; • changes in accounting policies and banking and other law and regulations; and • other factors described in Item 1A., "Risk Factors," in the Company's 2025 Form 10-K. 41 TABLE OF CONTENTS You should carefully review all of these factors and you should be aware that there may be other factors that cause these differences. These forward looking statements were based on information, plans, and estimates at the date of this report, and we assume no obligation to update any forward looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. 42 TABLE OF CONTENTS RESULTS OF OPERATIONS Summary The following table presents a summarized consolidated statement of operations for the periods indicated: Three Months Ended March 31, Change (dollars in thousands) 2026 2025 $ Change % Change Net interest income $ 15,903 $ 13,336 $ 2,567 19 % Noninterest income (loss) 4,928 (8,554 ) 13,482 158 % Net revenues 20,831 4,782 16,049 336 % Provision for credit losses 1,961 1,233 728 59 % Noninterest expense 14,212 12,589 1,623 13 % Income (loss) before income taxes 4,658 (9,040 ) 13,698 152 % Income tax expense (benefit) 918 (2,066 ) 2,984 144 % Net income (loss) $ 3,740 $ (6,974 ) $ 10,714 154 % Adjusted net income (non-GAAP) (1) $ 3,740 $ 2,842 $ 898 32 % (1) Adjusted to exclude the loss on sale of securities in connection with the Company's balance sheet repositioning transactions during the three months ended March 31, 2025. See "Non-GAAP Financial Measures" for a reconciliation to comparable measures calculated in accordance with GAAP. The Company's net income increased during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 primarily due to the loss on the sale of available for sale securities totaling $12.4 million, o [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation The purpose of this discussion is to focus on certain information relevant to the Company’s financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with the Company’s Audited Consolidated Financial Statements and notes thereto presented in Item 8, Financial Statements and Supplementary Data, of this Form 10-K. Operating results for the year ended December 31, 2025 are not necessarily indicative of the results for any future period. GENERAL Eagle Financial Services, Inc. is a bank holding company which owns 100% of the stock of Bank of Clarke (the “Bank” and, collectively with Eagle Financial Services, Inc., the “Company”, “we”, “us” or “our”). Accordingly, the results of operations for the Company are dependent upon the operations of the Bank. The Bank conducts a commercial banking business which consists of attracting deposits from the general public and investing those funds in commercial, consumer and real estate loans and mortgage-backed securities, municipal and U.S. government agency securities. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law. The Company strives to be an outstanding financial institution in its market by building solid sustainable relationships with its customers, employees, communities, and shareholders. At December 31, 2025, the Company had total assets of $1.89 billion, net loans of $1.46 billion, total deposits of $1.61 billion, and shareholders’ equity of $188.8 million. During 2025, the Company strengthened its balance sheet and improved its forward earnings profile, as marked by a successful capital raise, a strategic balance sheet repositioning of its investment securities portfolio, and subsequent uplist of its stock to NASDAQ. The Company sold available for sale securities with an amortized cost balance of $99.2 million, resulting in a net realized pre-tax loss of $12.4 million, and reinvested $66.0 million into purchases of available for sale securities. Additionally, the Company completed an underwritten public offering of 1,796,875 shares of its common stock at a public offering price of $32.00 per share. Net proceeds from the offering were $53.5 million. Also during 2025, the Company opened a full-service branch in McLean, VA offering a full suite of retail and business banking, lending, and wealth management solutions offered at the Bank's other locations. 23 The following table presents selected financial data, which was derived from the Company’s audited financial statements for the periods indicated. As of or for the Years Ended December 31, 2025 2024 2023 2022 2021 (dollars in thousands, except per share amounts) Income Statement Data: Interest and dividend income $ 99,005 $ 91,321 $ 83,093 $ 54,686 $ 42,676 Interest expense 36,391 40,094 32,837 5,473 1,677 Net interest income $ 62,614 $ 51,227 $ 50,256 $ 49,213 $ 40,999 Provision for credit losses 3,701 2,551 1,649 1,830 1,483 Net interest income after provision for credit losses $ 58,913 $ 48,676 $ 48,607 $ 47,383 $ 39,516 Noninterest income 6,883 21,557 14,780 13,345 11,320 Net revenue $ 65,796 $ 70,233 $ 63,387 $ 60,728 $ 50,836 Noninterest expenses 55,871 51,332 52,754 43,057 38,049 Income before income taxes $ 9,925 $ 18,901 $ 10,633 $ 17,671 $ 12,787 Income tax expense 1,711 3,558 1,276 3,150 1,766 Net Income $ 8,214 $ 15,343 $ 9,357 $ 14,521 $ 11,021 Performance Ratios: Return on average assets 0.42 % 0.85 % 0.54 % 1.02 % 0.90 % Return on average equity 4.81 % 13.77 % 9.05 % 14.06 % 10.28 % Shareholders’ equity to assets 10.00 % 6.38 % 5.94 % 6.29 % 8.46 % Dividend payout ratio 77.99 % 28.01 % 45.11 % 27.58 % 34.38 % Non-performing loans to total loans 0.98 % 0.14 % 0.40 % 0.19 % 0.28 % Non-performing assets to total assets 0.77 % 0.14 % 0.34 % 0.16 % 0.21 % Share and Per Share Data: Net income, basic $ 1.59 $ 4.32 $ 2.66 $ 4.17 $ 3.20 Net income, diluted 1.59 4.32 2.66 4.17 3.20 Cash dividends declared 1.24 1.21 1.20 1.15 1.10 Book value 35.14 33.52 30.78 29.15 31.93 Market price 39.80 36.40 30.00 35.95 34.65 Average shares outstanding, basic 5,178,488 3,553,919 3,523,547 3,482,368 3,440,080 Average shares outstanding, diluted 5,178,488 3,553,919 3,523,547 3,482,368 3,440,080 Balance Sheet Data: Total securities $ 123,329 $ 128,887 $ 147,011 $ 158,389 $ 193,370 Total loans 1,473,077 1,467,049 1,462,686 1,323,783 985,720 Total assets 1,888,626 1,866,215 1,825,597 1,616,717 1,303,038 Total deposits 1,607,360 1,575,156 1,506,322 1,264,075 1,177,235 Shareholders’ equity 188,839 118,987 108,379 101,729 110,280 24 MANAGEMENT’S STRATEGY The Company strives to be an outstanding financial institution in its market by building solid sustainable relationships with: (1) its customers, by providing highly personalized customer service, a network of conveniently placed branches and ATMs, a competitive variety of products/services and courteous, professional employees, (2) its employees, by providing generous benefits, a positive work environment, advancement opportunities and incentives to exceed expectations, (3) its communities, by participating in local concerns, providing monetary support, supporting employee volunteerism and providing employment opportunities, and (4) its shareholders, by providing sound profits and returns, sustainable growth, regular dividends and committing to our local, independent status. OPERATING STRATEGY The Bank is a locally managed, commercial focused banking institution operating in several of the country's most attractive markets. The Company expanded its ownership to institutional investors through a public offering of its common stock in February 2025, increasing the number of shares outstanding by 50% and added approximately $53.5 million in capital. This operating strategy allows the Bank to be flexible and responsive in the products and services it offers and to further grow by lending funds to local residents and businesses at a competitive price that reflects the inherent risk of lending. The Bank strives to fund these loans through deposits gathered from local residents and businesses. The Bank prices its deposits by comparing alternative sources of funds and selecting the lowest cost available. When deposits are not adequate to fund asset growth, the Bank relies on borrowings, both short and long term. The Bank’s primary source of borrowed funds is the Federal Home Loan Bank of Atlanta which offers numerous terms and rate structures to the Bank. As interest rates change, the Bank attempts to maintain its net interest margin. This is accomplished by changing the price, terms, and mix of its financial assets and liabilities. The Bank also earns fees on services provided through the Bank of Clarke Wealth Management Division, which is the Bank’s investment management division that offers both trust services and investment sales, mortgage originations, loan sales to the secondary market, and deposit operations. The Bank also incurs noninterest expenses associated with compensating employees, maintaining and acquiring fixed assets, and purchasing goods and services necessary to support its daily operations. The Bank maintains a full-service marketing department dedicated to driving new business and increasing awareness of the Bank's banking, lending, and wealth management offerings across its footprint. Marketing employs an integrated, multi-channel strategy that includes television and radio advertising, digital media (such as display ads, SEO/SEM, podcasts, and streaming platforms), print and electronic publications, billboards, email campaigns, branch signage, and social media. The Marketing department is responsible for all content creation, campaign strategy and execution, marketing-related internal and external communications, marketing vendor management, and brand stewardship. LENDING POLICIES Administration and supervision over the lending process is provided by the Bank’s Credit Administration Department. The principal risk associated with the Bank’s loan portfolio is the creditworthiness of its borrowers. In an effort to manage this risk, the Bank’s policy gives loan amount approval limits to individual loan officers based on their position and level of experience. Credit risk is increased or decreased, depending on the type of loan and prevailing economic conditions. In consideration of the different types of loans in the portfolio, the risk associated with real estate mortgage loans, commercial loans and consumer loans varies based on employment levels, consumer confidence, fluctuations in the value of real estate and other conditions that affect the ability of borrowers to repay debt. The Company has written policies and procedures to help manage credit risk. The Company utilizes a loan review process that includes formulation of portfolio management strategy, guidelines for underwriting standards and risk assessment, procedures for ongoing identification and management of credit deterioration, and regular portfolio reviews to establish loss exposure and to ascertain compliance with the Company’s policies. The Bank uses a tiered approach to approve credit requests consisting of individual lending authorities, joint approval of Co-Approval officers (Executive, Regional Credit Officer, Small Business Credit Officer), and a director loan committee. Lending limits for individuals are set by the Board of Directors and are determined by loan purpose, collateral type, and internal risk rating of the borrower. The highest individual authority (Executive) is assigned to the Bank’s President/ Chief Executive Officer, Chief Banking Officer and Chief Credit Officer (approval authority only). Two Executive officers may combine their authority to approve loan requests to borrowers with credit exposure up to $10.0 million on a secured basis and $6.0 million unsecured. Three Executive officers may combine to approve loan requests to borrowers with credit exposure up to $15.0 million on a secured basis and $9.0 million unsecured. Consumer Central Lenders are individual lenders who have been assigned to an Approval Category (A through F) based on their level of experience and job function. Consumer Central Lenders can co-approve consumer, home equity lines of credit and home equity loan requests up to their stated authorities. 25 Officers in Categories A through F have lesser authorities and with approval of an Executive officer may extend loans to borrowers with exposure of $5.0 million on a secured basis and $3.0 million unsecured. Officers in Categories A through F can also utilize the co-approval of the Regional and Small Business Credit Officers to extend loans with exposures up to $2.5 million and $1.5 million, respectively on a secured basis, and up to $1 million and $750 thousand, respectively on an unsecured basis. Loans exceeding $15.0 million and up to the Bank’s legal lending limit can be approved by the Risk Committee consisting of four directors (three directors constituting a quorum). The Director’s Loan Committee also reviews and approves changes to the Bank’s Loan Policy as presented by management. The following sections discuss the major loan categories within the total loan portfolio: One-to-Four-Family Residential Real Estate Lending Residential lending activity may be generated by the Bank’s loan officer solicitations, referrals by real estate professionals, and existing or new bank customers. Loan applications are taken by a Bank loan officer. As part of the application process, information is gathered concerning income, employment and credit history of the applicant. The valuation of residential collateral is provided by independent fee appraisers who have been approved by the Bank’s Directors Loan Committee. In connection with residential real estate loans, the Bank requires title insurance, hazard insurance and, if applicable, flood insurance. In addition to traditional residential mortgage loans secured by a first or junior lien on the property, the Bank offers home equity lines of credit. Commercial Real Estate Lending Commercial real estate loans are secured by various types of commercial real estate in the Bank’s market area, including multi-family residential buildings, commercial buildings and offices, small shopping centers and churches. Commercial real estate loan originations are obtained through broker referrals, direct solicitation of developers and continued business from customers. In its underwriting of commercial real estate, the Bank’s loan to original appraised value ratio is generally 80% or less. Commercial real estate lending entails significant additional risk as compared with residential mortgage lending. Commercial real estate loans typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. Additionally, the repayment of loans secured by income producing properties is typically dependent on the successful operation of a business or a real estate project and thus may be subject, to a greater extent, to adverse conditions in the real estate market or the economy, in general. The Bank’s commercial real estate loan underwriting criteria require an examination of debt service coverage ratios, the borrower’s creditworthiness, prior credit history and reputation, and the Bank typically requires personal guarantees or endorsements of the borrowers’ principal owners. Construction and Land Development Lending The Bank makes local construction loans and land acquisition and development loans. The construction loans are secured by residential houses under construction and the underlying land for which the loan was obtained. The average life of most construction loans is less than one year and the Bank offers both fixed and variable rate interest structures. The interest rate structure offered to customers depends on the total amount of these loans outstanding and the impact of the interest rate structure on the Bank’s overall interest rate risk. There are two characteristics of construction lending which impact its overall risk as compared to residential mortgage lending. First, there is more concentration risk due to the extension of a large loan balance through several lines of credit to a single developer or contractor. Second, there is more collateral risk due to the fact that loan funds are provided to the borrower based upon the estimated value of the collateral after completion. This could cause an inaccurate estimate of the amount needed to complete construction or an excessive loan-to-value ratio. To mitigate the risks associated with construction lending, the Bank generally limits loan amounts to 80% of the estimated appraised value of the finished property. The Bank also obtains a first lien on the property as security for its construction loans and typically requires personal guarantees from the borrower’s principal owners. Finally, the Bank performs inspections of the construction projects to ensure that the percentage of construction completed correlates with the amount of draws on the construction line of credit. Commercial and Industrial Lending Commercial business loans generally have more risk than residential mortgage loans but have higher yields. To manage these risks, the Bank generally obtains appropriate collateral and personal guarantees from the borrower’s principal owners and monitors the financial condition of its business borrowers. Residential mortgage loans generally are made on the basis of the borrower’s ability to make repayment from employment and other income and are secured by real estate whose value tends to be readily ascertainable. In contrast, commercial business loans typically are made on the basis of the borrower’s ability to make repayment from cash flow from its business and are secured by business assets, such as, accounts receivable, equipment and inventory. As a result, the availability of funds for the repayment of commercial business loans is substantially dependent on the success of the business itself. Furthermore, the collateral for commercial business loans may depreciate over time and generally cannot be appraised with as much precision as residential real estate. 26 Consumer Lending The Bank offers various secured and unsecured consumer loans, which include personal installment loans, personal lines of credit, automobile loans, and credit card loans. The Bank generally originates its consumer loans within its geographic market area and these loans are largely made to customers with whom the Bank has an existing relationship. Consumer loans generally entail greater risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or secured by rapidly depreciable assets such as automobiles. In such cases, any repossessed collateral on a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. The underwriting standards employed by the Bank for consumer loans include a determination of the applicant’s payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan. The stability of the applicant’s monthly income may be determined by verification of gross monthly income from primary employment, and from any verifiable secondary income. Although creditworthiness of the applicant is the primary consideration, the underwriting process also includes an analysis of the value of the security in relation to the proposed loan amount. Marine Lending The Bank's marine loan portfolio is comprised of originated retail loans. The Company ceased accepting new marine business in August 2023, upon completion of a sale of specific assets from its marine lending segment. Subsequent to the sale the Company retained ownership of its portfolio of marine vessel retail loans, which continue to constitute a significant portion of the Company's assets, revenues, and earnings. At present, the Company expects to hold the retained outstanding loans until they are ultimately repaid. Retail loans were generally limited to premium manufacturers with established relationships with the Company which have a vested interest in the secondary market pricing of their respective brand due to the limited inventory available for resale. Consequently, while not contractually committed, manufacturers will often support secondary resale values which can have the effect of reducing losses from non-performing retail marine loans. Retail borrowers generally have very high credit scores, substantial down payments, substantial net worth, personal liquidity, and excess cash flow. CRITICAL ACCOUNTING POLICIES The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires us to make estimates and assumptions. Actual results could differ from those estimates. The financial information contained within these statements is, to a significant extent, based on measurements of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained when earning income, recognizing an expense, recovering an asset or relieving a liability. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of the transactions would be the same, the timing of events that would impact the transactions could change. The accounting estimate with the greatest uncertainty and susceptibility to significant near-term change for the Company is the allowance for credit losses on loans. Allowance for Credit Losses on Loans The Company establishes the allowance for credit losses through charges to earnings in the form of a provision for credit losses. Loan losses are charged against the allowance for credit losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance represents management’s current estimate of expected credit losses over the contractual term of loans held for investment, and is recorded at an amount that, in management’s judgment, reduces the recorded investment in loans to the net amount expected to be collected. Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans. Loans that share common risk characteristics are evaluated collectively using a loss-rate, or cohort methodology to estimate its current expected credit losses on loans. The measurement of the allowance for credit losses is based in part on forecasts of unemployment, inflation, as well as the consumer price index, and may also consider other factors, which we believe to be indicative of risk factors related to collectability. Management also assesses the risk of credit losses arising from changes in economic conditions; the nature 27 and volume of the loan portfolio; the volume and severity of delinquencies and adversely classified loan balances; lending policy and procedures; credit administration and lending staff; loan review; concentrations of credit and the value of underlying collateral in determining the recorded balance of the allowance for credit losses. This evaluation is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available. In evaluating the level of the allowance, we consider a range of possible assumptions and outcomes related to the various factors identified above. Note 1 to the Consolidated Financial Statements presented in Item 8, Financial Statements and Supplementary Data, of the 2025 Form 10-K, provides additional information concerning the determination of the allowance for credit losses on loans. NON-GAAP FINANCIAL MEASURES This report refers to certain financial measures that are computed under a basis other than GAAP ("non-GAAP"). The Company uses certain non-GAAP financial measures, including non-GAAP net income, non-GAAP noninterest income, non-GAAP earnings per share, non-GAAP return on average equity and average assets, tax-equivalent net interest income and efficiency ratio, to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. Non-GAAP measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. The realized loss on the sale of the available for sale securities, which resulted from the balance sheet repositioning transactions during the first quarter of 2025 and the December 2024 sale of the Company's operating center and branch building in a sales-leaseback transaction, significantly impacted the Company's operating results and certain performance metrics and ratios. The following table reconciles the GAAP reported measure to the adjusted non-GAAP measure to show the impact of these transactions during the twelve months ended December 31, 2025 and 2024. Twelve Months Ended December 31, (dollars in thousands except for per share data) 2025 2024 GAAP Net income $ 8,214 $ 15,343 Adjustments to net income: Loss on sales of securities 12,425 — (Gain) on sale of fixed assets — (3,875 ) Tax effect of adjustments to net income (2,609 ) 814 Non-GAAP Net income $ 18,030 $ 12,282 GAAP Noninterest income $ 6,883 $ 21,557 Adjustments to noninterest income: Loss on sales of securities 12,425 — (Gain) on sale of fixed assets — (3,875 ) Non-GAAP Noninterest income $ 19,308 $ 17,682 Earnings per share, basic and diluted (GAAP) $ 1.59 $ 4.32 Effect of adjustments to net income 1.90 (0.86 ) Non-GAAP Earnings per share, basic and diluted $ 3.49 $ 3.46 Return on average equity 4.81 % 13.77 % Effect of adjustments to net income (5.75 )% 2.75  % Non-GAAP Return on average equity 10.56 % 11.03 % Return on average assets 0.42 % 0.85 % Effect of adjustments to net income (0.51 )% 0.17  % Non-GAAP Return on average assets 0.93 % 0.68 % 28 For additional information and calculations of tax-equivalent net interest income and efficiency ratio, see the sections entitled "Tax-Equivalent Net Interest Income" and "Efficiency Ratio" below. FORWARD LOOKING STATEMENTS This report contains statements that are "forward looking statements." The Company may also make forward looking statements in other documents that are filed with the Securities and Exchange Commission, in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors, or employees. Forward looking statements include statements regarding our expectations, intentions, and objectives, or other expressions that predict or indicate future events and trends and which do not relate to historical matters. The words “believe,” “expect,” “may,” “will,” “should,” "could," “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward looking statements. You should not rely on forward looking statements, as they involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control. These risks, uncertainties, and other factors may cause our actual results, performance, or achievements to be materially different than the anticipated future results, performance, or achievements expressed or implied by the forward looking statements. Some of the factors that might cause these differences include the following: • difficult market conditions in our industry; • the ability to successfully manage growth or implement growth strategies if the Bank is unable to identify attractive markets, locations or opportunities to expand in the future or if the Bank is unable to successfully integrate new branches, business lines or other growth opportunities into its existing operations; • competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources; • the successful management of interest rate risk; • risks inherent in making loans such as repayment risks and fluctuating collateral values; • the Company's ability to successfully resolve non-performing assets; • changes in general economic and business conditions in the Bank’s market area; • reliance on the Bank’s management team, including the ability to attract and retain key personnel; • changes in interest rates and interest rate policies; • maintaining capital levels adequate to support growth; • maintaining cost controls and asset qualities as new branches are opened or acquired; • demand, development and acceptance of new products and services; • deposit flows; • the Bank's ability to manage liquidity; • the cost and availability of secondary funding sources; • effects of the soundness of other financial institutions; • problems with technology utilized by the Bank; • changing trends in customer profiles and behavior; • geopolitical conditions, including acts or threats of terrorism, international hostilities, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the U.S. and abroad; • the economic impact of duties, tariffs or other barriers or restrictions on trade, any retaliatory counter measures, or the volatility and uncertainty arising there from; • political developments, including government shutdowns, and other significant disruptions and changes in the funding, size, scope, and efficiencies of the federal government, its agencies and services; • the Company's potential exposure to fraud, negligence, computer theft, and cyber-crime; • potential impact on us of existing and future legislation and regulations; • changes in accounting policies and banking and other law and regulations; and • other factors described in Item 1A., “Risk Factors,” in this annual report on Form 10-K. You should carefully review all of these factors and you should be aware that there may be other factors that cause these differences. These forward looking statements were based on information, plans, and estimates at the date of this report, and we assume no obligation to update any forward looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. 29 RESULTS OF OPERATIONS Net Income The following table presents a summarized consolidated statement of income for the periods indicated: Twelve Months Ended December 31, Change (dollars in thousands) 2025 2024 $ Change % Change Net interest income $ 62,614 $ 51,227 $ 11,387 22.23  % Noninterest income 6,883 21,557 (14,674 ) (68.07 )% Net revenues 69,497 72,784 (3,287 ) (4.52 )% Provision for credit losses 3,701 2,551 1,150 45.08  % Noninterest expense 55,871 51,332 4,539 8.84  % Income before income taxes 9,925 18,901 (8,976 ) (47.49 )% Income tax expense 1,711 3,558 (1,847 ) (51.91 )% Net income $ 8,214 $ 15,343 $ (7,129 ) (46.46 )% Adjusted net income (non-GAAP) $ 18,030 $ 12,282 $ 5,748 46.80  % Net income for 2025 and 2024 was significantly impacted by two transactions. During the first quarter of 2025, the Company recognized a loss on the sale of available for sale securities totaling $9.8 million, net of tax, and during the fourth quarter of 2024, the Bank's operating center and branch building in Winchester, VA was sold in a sale-leaseback transaction and the Company recognized a net of tax gain of $3.1 million. The twelve months ended December 31, 2025 also experienced a strong increase in net interest income over the corresponding 2024 period, largely due to the restructuring of the investment securities portfolio further described in the section titled Securities under the heading Financial Condition. The following table presents a summary of performance metrics and ratios for the periods indicated: Twelve Months Ended December 31, 2025 2024 Earnings per share, basic and diluted $ 1.59 $ 4.32 Adjusted earnings per share, basic and diluted (non-GAAP)(1) $ 3.49 $ 3.46 Return on average assets 0.42 % 0.85 % Adjusted return on average assets (non-GAAP)(1) 0.93 % 0.68 % Return on average equity 4.81 % 13.77 % Adjusted return on average equity (non-GAAP)(1) 10.56 % 11.03 % (1) Adjusted to exclude the loss on sale of securities in 2025 and the gain recognized on the sale of the Company's operating center and branch building in 2024. Return on average assets (“ROA”) measures how efficiently the Company uses its assets to produce net income. Factors reflected within this efficiency include the Company’s asset mix, funding sources, pricing, fee generation, and cost control. Return on average equity (“ROE”) measures the utilization of shareholders’ equity in generating net income. This measurement is affected by the same factors as ROA with consideration to how much of the Company’s assets are funded by the shareholders. 30 Average Balances, Income and Expenses, Yields and Rates (Tax-Equivalent Basis) The following table shows average balance, interest, and yield/rate information, as well as net interest margin on a tax- equivalent basis for the years ended December 31, 2025 and 2024 (dollars in thousands): Years Ended December 31, 2025 December 31, 2024 Average Interest Income/ Average Average Interest Income/ Average Balance Expense Rate Balance Expense Rate Assets: Securities: Taxable $ 120,646 $ 4,792 3.97  % $ 138,205 $ 3,551 2.57  % Tax-Exempt (1) 87 4 4.60  % 495 20 4.09  % Total Securities $ 120,733 $ 4,796 3.97  % $ 138,700 $ 3,571 2.58  % Loans: (2) Taxable 1,432,473 81,978 5.72  % 1,446,705 81,366 5.62  % Non-accrual 11,944 — — % 3,774 — — % Tax-Exempt (1) 9,769 496 5.08  % 10,405 523 5.02  % Total Loans $ 1,454,186 $ 82,474 5.67  % $ 1,460,884 $ 81,889 5.61  % Federal funds sold and interest-bearing deposits in other banks 269,375 11,840 4.40  % 114,189 5,975 5.23  % Total earning assets $ 1,844,294 $ 99,110 5.37  % $ 1,713,773 $ 91,435 5.34  % Allowance for credit losses (15,351 ) (14,793 ) Total non-earning assets 109,176 105,840 Total assets $ 1,938,119 $ 1,804,820 Liabilities and Shareholders' Equity: Interest-bearing deposits: NOW accounts $ 300,711 $ 6,654 2.21  % $ 259,372 $ 6,097 2.35  % Money market accounts 273,390 6,033 2.21  % 263,960 5,989 2.27  % Savings accounts 128,007 142 0.11  % 134,893 155 0.12  % Time deposits: $250,000 and more 176,777 7,568 4.28  % 153,398 7,260 4.73  % Less than $250,000 292,311 11,782 4.03  % 276,580 12,353 4.47  % Total interest-bearing deposits $ 1,171,196 $ 32,179 2.75  % $ 1,088,203 $ 31,854 2.93  % Federal funds purchased 4 — NM 11 — NM Federal Home Loan Bank advances 57,603 2,795 4.85  % 145,383 6,823 4.69  % Subordinated debt 29,543 1,417 4.80  % 29,476 1,417 4.81  % Total interest-bearing liabilities $ 1,258,346 $ 36,391 2.89  % $ 1,263,073 $ 40,094 3.17  % Noninterest-bearing liabilities: Demand deposits 486,606 412,646 Other Liabilities 22,409 17,714 Total liabilities $ 1,767,361 $ 1,693,433 Shareholders' equity 170,758 111,387 Total liabilities and shareholders' equity $ 1,938,119 $ 1,804,820 Net interest income $ 62,719 $ 51,341 Net interest spread 2.48  % 2.17  % Interest expense as a percent of average earning assets 1.97  % 2.34  % Net interest margin (3) 3.40  % 3.00  % (1) Income and yields are reported on a tax-equivalent basis using the federal tax rate of 21%. (2) Interest and yields on loans include the amortization/accretion of origination costs/fees as well as any purchase premiums or discounts. (3) Refer to the section titled "Tax-Equivalent Net Interest Income" for the reconciliation of tax-equivalent net interest income. NM = Not Meaningful 31 Tax-Equivalent Net Interest Income The following table reconciles tax-equivalent net interest income, which is not a measurement under GAAP, to net interest income. Tax-equivalent net interest income (Non-GAAP) is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The tax rate used to calculate the tax benefit was 21% for 2025 and 2024. Twelve Months Ended December 31, 2025 2024 (in thousands) GAAP Financial Measurements: Interest Income - Loans $ 82,370 $ 81,779 Interest Income - Securities and Other Interest-Earnings Assets 16,635 9,542 Interest Expense - Deposits 32,179 31,854 Interest Expense - Other Borrowings 4,212 8,240 Total Net Interest Income $ 62,614 $ 51,227 Non-GAAP Financial Measurements: Add: Tax Benefit on Tax-Exempt Interest Income - Loans (1) $ 104 $ 110 Add: Tax Benefit on Tax-Exempt Interest Income - Securities (1) 1 4 Total Tax Benefit on Tax-Exempt Interest Income $ 105 $ 114 Tax-Equivalent Net Interest Income $ 62,719 $ 51,341 (1) Tax benefit was calculated using the federal statutory tax rate of 21%. Net Interest Income Net interest income is our primary source of revenue, representing the difference between interest and fees earned on interest-earning assets and the interest paid on deposits and other interest-bearing liabilities. The level of net interest income is primarily impacted by variations in the volume and mix of these assets and liabilities, as well as changes in interest rates. The year-over-year improvements in net interest income, tax-equivalent net interest income, net interest spread, and net interest margin primarily reflect the impact of the balance sheet repositioning strategy, pursuant to which the Company raised capital, increased cash on hand and replaced lower-yielding investment securities with higher yielding securities. Declining average rates paid on interest-bearing deposits and maturities of FHLB advances also contributed to the increase in net interest income, which was partially offset the amount of interest paid also increased due to higher average balance levels of time deposits during the 2025 period. Net interest income was $62.6 million for 2025 and $51.2 million for 2024, which represents an increase of $11.4 million or 22.23%. Tax-equivalent net interest income was $62.7 million and $51.3 million for the twelve months ended December 31, 2025 and 2024, respectively. The net interest margin was 3.40% for 2025 and 3.00% for 2024. The net interest margin is calculated by dividing tax-equivalent net interest income by total average earnings assets. Ongoing margin pressures include deposit pricing, the Bank's strategy of originating mortgage loans for sale, and an increase in nonaccrual assets. The net interest spread for the twelve months ended December 31, 2025 was 2.48%, an increase of 31 basis points compared to 2.17% for the twelve months ended December 31, 2024. The 31 basis point increase was due to improvements of three basis points and 28 basis points in the tax-equivalent yield on earning assets and the average rate paid on interest-bearing liabilities, respectively. Total average balance of securities decreased by $18.0 million during 2025 from the average balances in the prior year period primarily due to routine paydowns and maturities in the portfolio. The average yield on securities increased 139 basis points during 2025 reflecting the sale of lower-yielding securities and reinvestment into higher-yielding securities in the first quarter of 2025. The total average loan balances decreased by $6.7 million during the year ended December 31, 2025 largely reflecting the sale of a pool of mortgage loans totaling $18.8 million early in the first quarter of 2025 as well as continuing paydowns and payoffs in the marine loan portfolio as the Company is no longer originating new marine business. These 32 decreases were partially offset by new loan growth in the commercial real estate loan portfolios. The average yield on loans increased by six basis points during 2025. The average balance of federal funds sold and interest-bearing deposits in other banks increased $155.2 million, or 135.90%, during 2025 compared to 2024, resulting from higher cash levels, which were bolstered by proceeds received from the public stock offering and increased deposit balances during 2025. The average yield earned during 2025 decreased by 83 basis points reflecting the decline in market interest rates experienced during the current year. Total average interest-bearing deposit balances during 2025 increased by $83.0 million from the prior year, primarily in NOW accounts and time deposits. The average rate paid on interest-bearing deposits decreased 18 basis points during the 2025, reflecting the lower market interest rate environment balanced by pricing strategies. The average balance of FHLB advances decreased $87.8 million, or 60.38%, during the year ended December 31, 2025 due to maturing advances that were not replaced with new borrowings. The average rate paid on FHLB advances increased 16 basis points during the 2025. Volume and Rate Analysis (Tax-Equivalent Basis) Interest income and expense are affected by fluctuation in interest rates, by changes in the volume of earning assets and interest-bearing liabilities, and by the interaction of rate and volume factors. Changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of change in each. The following table provides information about changes in rate and volume (dollars in thousands): 2025 vs 2024 Increase (Decrease) Due to Changes in: Volume Rate Total Earning Assets: Securities: Taxable $ (377 ) $ 1,618 $ 1,241 Tax-exempt (19 ) 3 (16 ) Loans: Taxable (757 ) 1,369 612 Tax-exempt (32 ) 5 (27 ) Federal funds sold and interest-bearing deposits in other banks 6,640 (775 ) 5,865 Total earning assets $ 5,455 $ 2,220 $ 7,675 Interest-Bearing Liabilities: NOW accounts $ 889 $ (332 ) $ 557 Money market accounts 169 (125 ) 44 Savings accounts (13 ) — (13 ) Time deposits: $250,000 and more 820 (512 ) 308 Less than $250,000 781 (1,352 ) (571 ) Total interest-bearing deposits $ 2,646 $ (2,321 ) $ 325 Federal Home Loan Bank advances (4,269 ) 241 (4,028 ) Total interest-bearing liabilities $ (1,623 ) $ (2,080 ) $ (3,703 ) Change in net interest income $ 7,078 $ 4,300 $ 11,378 Provision for Credit Losses The provision for credit losses results from management's review of the adequacy of the allowance for credit losses. The allowance for credit losses is management’s estimate, at the reporting date, of expected lifetime credit losses and includes consideration of current forecasted economic conditions. Estimating the amount required to maintain an adequate allowance 33 for credit losses involves a high degree of judgment.as discussed within the Critical Accounting Policies section above and Note 1 to the Consolidated Financial Statements presented in Item 8, Financial Statements and Supplementary Data. The following table presents the provision for credit losses: Twelve Months Ended December 31, (dollars in thousands) 2025 2024 $ Change % Change Provision for credit losses on loans $ 3,880 $ 2,525 $ 1,355 54 % Provison for credit losses on unfunded commitments (179 ) 26 (205 ) (788 )% Provison for credit losses $ 3,701 $ 2,551 $ 1,150 45 % The provision for credit losses for the years ended December 31, 2025 and 2024 included the impact of net losses and specific reserve allocations on individually evaluated nonaccrual loans and reflected management's estimate of forecasted economic conditions and changes in loan balances. Net charge-offs were $3.6 million and $2.0 million during 2025 and 2024, respectively. Net charge-offs for 2025 were primarily within the commercial real estate and marine loan portfolios and consisted of six relationships totaling $3.3 million. The provision for credit losses in 2024 resulted largely from a $1.9 million provision against the marine portfolio due to charge-offs against six marine loans totaling $1.8 million. Specific reserve allocations were $467 thousand and $248 thousand at December 31, 2025 and 2024, respectively. The majority of the specific reserve at December 31, 2025 reflects three commercial loan relationships with loan balances totaling $880 thousand. The specific reserve allocation in 2024 represented two commercial loan relationships with loan balances totaling $908 thousand. The Company is committed to maintaining an allowance that it believes will adequately absorb the current expected losses in the loan portfolio. This commitment is more fully discussed in the “Asset Quality” section. Noninterest Income Total noninterest income was $6.9 million and $21.6 million during 2025 and 2024, respectively. This represents a decrease of $14.7 million or 68.07% for 2025. Management reviews the activities which generate noninterest income on an ongoing basis. The following table provides the components of noninterest income for the twelve months ended December 31, 2025 and 2024, which are included within the respective Consolidated Statements of Income headings. Variances that the Company believes require explanation are discussed below the table. December 31, (dollars in thousands) 2025 2024 $ Change % Change Wealth management fees $ 7,457 $ 5,624 $ 1,833 32.59  % Service charges on deposit accounts 2,141 1,936 205 10.59  % Other service charges and fees 4,192 4,179 13 0.31  % (Loss) gain on the sale and disposal of bank premises and equipment (19 ) 3,863 (3,882 ) NM (Loss) on sale of securities (12,425 ) — (12,425 ) NM Gain on sale of loans 3,375 2,141 1,234 57.64  % Small business investment company income 251 1,357 (1,106 ) (81.50 )% Bank owned life insurance income 1,099 1,981 (882 ) (44.52 )% Other operating income 812 476 336 70.59  % Total noninterest income $ 6,883 $ 21,557 $ (14,674 ) (68.07 )% NM - Not Meaningful Wealth management fees increased in 2025 compared to 2024. Wealth management fee income is primarily comprised of income from fiduciary activities and commissions from the sale of non-deposit investment products. The amount of income from fiduciary activities is determined by the number of active accounts and total assets under management. Income from investment sales increased due to the continued attractiveness of brokerage and advisory investments products. Wealth 34 management revenue also includes transaction-based revenues that are not primarily derived from the value of assets. Transaction-based revenues related to estates and other services have also contributed to the year over year increase in revenue. These include estate settlement fees which increased primarily due to two large trusts that were settled. Services charges on deposit accounts increased when comparing the year ended December 31, 2025 to 2024. This increase is mainly due to growth in the number of accounts as well as higher levels of overdraft charges. Gain on the sale and disposal of bank premises and equipment decreased during the year ended December 31, 2025 due to sale of the Company's operating center and branch building in a sales-leaseback transaction during the fourth quarter of 2024, which resulted in a realized gain of $3.9 million. There was no similar transaction during the year ended December 31, 2025. The Company executed balance sheet repositioning transactions within its investment securities portfolio during March 2025. The sale of $99.2 million of available for sale debt securities, with a fair value of $86.8 million, resulted in a pre-tax loss of $12.4 million during the twelve months ended December 31, 2025. Management utilized the proceeds from the public offering capital raise completed in February 2025 to enable the balance sheet repositioning. During 2025, the Company sold $89.7 million in mortgage loans on the secondary market and $21.8 million in Small Business Association ("SBA") loans. During 2024, the Company sold $59.0 million in mortgage loans on the secondary market and $14.3 million in SBA loans. These loan sales resulted in gains of $3.4 million and $2.1 million during the years ended December 31, 2025 and 2024, respectively. Income from holdings in small business investment companies decreased during 2025 compared to 2024. The decrease during the current year period is mainly attributed to lower cash distributions received, based on the results of their performance and timing of distributions. Bank owned life insurance ("BOLI") fee income totaled $1.1 million for the year ended December 31, 2025 compared to $2.0 million for the year ended December 31, 2024. The decrease was primarily due to death benefit settlement gains of $907 thousand received during the year ended December 31, 2024. Other operating income increased primarily as a result of an increase in loan swap fee income recognized on agreements with initial notional balances totaling $21.6 million and $4.1 million during the years ended December 31, 2025 and 2024 respectively. The agreements resulted in a gain of $271 thousand during 2025 compared to $27 thousand in 2024. Noninterest Expenses Total noninterest expenses were $55.9 million and $51.3 million during 2025 and 2024, respectively. This represents an increase of $4.5 million or 8.84% during 2025. 35 The following table provides the components of noninterest expense for the twelve months ended December 31, 2025 and 2024, which are included within the respective Consolidated Statements of Income headings. The following paragraphs provide information about activities which are included within the respective Consolidated Statements of Income headings. Variances that the Company believes require explanation are discussed below the table. December 31, (dollars in thousands) 2025 2024 $ Change % Change Salaries and employee benefits $ 33,203 $ 30,059 $ 3,144 10.46  % Occupancy expenses 2,614 2,077 537 25.85  % Equipment expenses 1,703 1,657 46 2.78  % Advertising and marketing expenses 861 1,038 (177 ) (17.05 )% Stationery and supplies 134 145 (11 ) (7.59 )% ATM network fees 1,345 1,530 (185 ) (12.09 )% Other real estate owned expense 20 — 20 NM Loss on other real estate owned 51 — 51 NM Loss on sale of repossessed assets 302 204 98 48.04  % FDIC assessment 948 1,433 (485 ) (33.85 )% Computer software expense 1,369 1,068 301 28.18  % Bank franchise tax 1,524 1,353 171 12.64  % Professional fees 2,420 2,065 355 17.19  % Data processing fees 2,210 2,418 (208 ) (8.60 )% Loan servicing expense 1,116 1,062 54 5.08  % Other operating expenses 6,051 5,223 828 15.85  % Total noninterest expenses $ 55,871 $ 51,332 $ 4,539 8.84  % NM - Not Meaningful Salaries and employee benefits expense increased during 2025 reflecting increases in salaries, commission, stock-based compensation expenses, and annual incentive plan expenses. The Company's number of full-time equivalent employees (FTEs) increased from 231 at December 31, 2024 to 254 at December 31, 2025. Stock based compensation expense increased due to a higher grant price in the twelve months ended December 31, 2025, compared to the twelve months ended December 31, 2024. Partially offsetting these increases was a net reduction in employee medical costs due to lower claims deficit expenses during the twelve months ended December 31, 2025. Occupancy expenses increased during 2025 largely due to the impact of the sales-leaseback transaction of the Company's operating center and branch building in December 2024. Rental expense, net of building depreciation increased $498 thousand during 2025 compared to 2024. The increase in rental expense also reflects a new long-term lease executed during the first quarter of 2025 as the Company moved its standalone loan production office and established a full-service branch in McLean, Virginia. Advertising and marketing expenses decreased during 2025. This reflects fewer advertising campaigns and a marketing bonus credit related to the Bank's credit card provider relationship. ATM network fees decreased during 2025 due, in part, to a contract renegotiation which lowered per unit transaction fees as well as lower costs associated with fewer plastic cards purchased. FDIC assessment expense, which is based in part on asset size and capital levels, decreased in 2025 compared to 2024. The decrease reflects an improvement in the financial ratios primarily due to the capital raise completed in early 2025. An improved loan mix index, partially offset by an increase in nonperforming loans also contributed to the decreased assessment rate during 2025. Computer software expense increased during 2025 compared to 2024 due to the Company's continued investment in technology to enhance systems security and drive operational efficiencies. Additionally, approximately $200 thousand of the increase was due to existing loan software expenses, which were recorded to other operating expenses in the prior year. Bank franchise tax which is based on asset and capital levels, increased during 2025 compared to 2024 reflecting growth of the Company's capital. 36 Professional fees increased during 2025 primarily due to higher legal fees as a result of increased problem loan workouts and activity as well as increased internal audit services, testing, and annual loan review costs. Data processing fees decreased reflecting core provider pricing discounts and credits recognized during 2025. Other operating expenses increased during 2025. The largest drivers of the increase were loan collection costs, higher contributions towards charitable activities, debit card usage incentive rewards, and greater travel costs related to investor relations activities. These increases were partially offset by the reclassification of loan software expenses as described above in computer software expenses. Efficiency Ratio The efficiency ratio of the Company was 67.67% and 75.08% for 2025 and 2024, respectively. The improvement in the efficiency ratio during 2025 reflects an increase in net interest and noninterest income. The efficiency ratio is not a measurement under GAAP. It is calculated by dividing total noninterest expenses by the sum of tax-equivalent net interest income and total noninterest income. The Company adjusts for non-recurring items such as gains and losses on investment portfolio sales and other gains/losses from OREO, repossessed assets, sale or disposals of bank assets, etc. The tax rate utilized is 21%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency. The calculation of the efficiency ratio for the twelve months ended December 31, 2025 and 2024 was as follows: December 31, 2025 2024 (in thousands) Summary of Operating Results: Noninterest expenses (GAAP) $ 55,871 $ 51,332 Less: Loss on other real estate owned and repossessed assets 353 204 Adjusted noninterest expenses (non-GAAP) $ 55,518 $ 51,128 Net interest income $ 62,614 $ 51,227 Noninterest income (GAAP) $ 6,883 $ 21,557 Less: (Loss) on sales of securities (12,425 ) — Less: (Loss) Gain on the sale and disposal of premises and equipment (19 ) 3,863 Less: Life insurance proceeds — 935 Adjusted noninterest income (non-GAAP) $ 19,327 $ 16,759 Tax equivalent adjustment (1) 105 114 Total net interest income and noninterest income, adjusted (non-GAAP) $ 82,046 $ 68,100 Efficiency ratio 67.67  % 75.08  % (1) Includes tax-equivalent adjustments on loans and securities using the federal statutory tax rate of 21%. Income Taxes The following table presents the Company's income tax provision and applicable tax rates for the periods indicated: Twelve Months Ended December 31, (dollars in thousands) 2025 2024 Income tax expense $ 1,711 $ 3,558 Effective income tax rate 17.24 % 18.82 % Income tax expense was $1.7 million and $3.6 million for the years ended December 31, 2025 and 2024, respectively. These amounts correspond to an effective tax rate of 17.24% and 18.82% for 2025 and 2024, respectively. Total income tax expense is comprised of federal and state income taxes of $1.6 million and $100 thousand, respectively, for the year ended December 31, 2025 and $3.4 million and $134 thousand, respectively, for the year ended December 31, 2024. The effective tax rate is below the statutory rate of 21%, due primarily to the recognition of tax-exempt life insurance income, which also included death benefit proceeds during 2024. The effective tax rate is also impacted by 37 tax-exempt income on investment securities and loans, qualified rehabilitation credits and tax credits on qualified affordable housing project investments. Note 9 to the Consolidated Financial Statements provides a reconciliation between income tax expense computed using the federal statutory income tax rate and the Company’s actual income tax expense during 2025 and 2024 and Note 25 further discusses qualified affordable housing project investments. As previously discussed in the "Non-GAAP Financial Measures" section above, both 2025 and 2024 had large out of the ordinary transactions due to balance sheet repositioning events that affected taxable income. Due to lower taxable income in 2025, resulting from realized losses on the sale of securities, the strategies employed by the Company to reduce its effective tax rate had a greater impact. Conversely, higher taxable income in 2024 due to the realized gain on the sale of the Company's operating center and branch building, lessened the impact of the Company's effective tax rate strategies. Business Segments The Company has three reportable operating segments: community banking, marine lending and wealth management. See Note 27 to the Consolidated Financial Statements. The following table presents a summarized statement of income for the community banking business segment for the twelve months ended December 31, 2025 and 2024. December 31, (dollars in thousands) 2025 2024 $ Change % Change Net Interest Income $ 57,814 $ 45,756 $ 12,058 26.35  % Gain on sales of loans 3,375 2,141 1,234 57.64  % (Loss) on the sale of securities (12,425 ) — (12,425 ) NM Other noninterest income 8,305 13,792 (5,487 ) (39.78 )% Net Revenue 57,069 61,689 (4,620 ) (7.49 )% Provision for credit losses 3,690 2,403 1,287 53.56  % Noninterest expense 51,674 47,448 4,226 8.91  % Income before taxes 1,705 11,838 (10,133 ) (85.60 )% Income tax expense 7 2,048 (2,041 ) (99.66 )% Net Income $ 1,698 $ 9,790 $ (8,092 ) (82.66 )% Net interest income increased during the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to income earned on: i) non-marine loans; ii) the investment securities portfolio, which was restructured in the first quarter of 2025 to sell and replace lower yielding investments with higher yielding securities; iii) higher levels of earning deposit balances in other other banks; and iv) reduction in borrowings expense as FHLB advances have matured and were not replaced. These increases were partially offset by an increase in interest-bearing deposit expense due to growth in average balances. Higher levels of interest-earning deposits balances in other banks reflects proceeds received from the capital raise and sales of available for sale securities completed during the first quarter of 2025, as well as increases in customer deposit balances. Gain on sales of loans increased during 2025 compared to 2024 largely reflecting increases in sales of mortgage loans originated for sale and SBA loans. See further discussion of gain on sales of loans under the caption "Noninterest Income" above. Loss on the sale of securities resulted from the Company's execution of balance sheet repositioning transactions within its investment securities portfolio in March 2025. Available for sale debt securities totaling $99.2 million, with a fair value of $86.8 million, were sold resulting in a pre-tax loss of $12.4 million. Other noninterest income for the twelve months ended December 31, 2025 decreased compared to the same period in 2024 primarily reflecting the sale of the Company's operating center and branch building in a sales-leaseback transaction, resulting in a realized gain of $3.9 million during 2024. Provision for credit losses increased during 2025 largely reflecting the increase in net charge-offs within the commercial real estate loan portfolio. See further discussion under the caption "Provision" above. Noninterest expense increased during 2025 primarily due to salaries and employee benefits. See further discussion under the caption "Noninterest Expenses" above. 38 Income tax expense decreased by $2.0 million from 2024 primarily due to the impact of securities sale loss recognized in 2025. The following table presents a summarized statement of income for the marine lending segment for the twelve months ended December 31, 2025 and 2024. December 31, (dollars in thousands) 2025 2024 $ Change % Change Net Interest Income $ 6,217 $ 6,888 $ (671 ) (9.74 )% Net Revenue 6,217 6,888 (671 ) (9.74 )% Provision for credit losses 11 148 (137 ) (92.57 )% Noninterest expense 433 629 (196 ) (31.16 )% Income before taxes 5,773 6,111 (338 ) (5.53 )% Income tax expense 1,212 1,283 (71 ) (5.53 )% Net Income $ 4,561 $ 4,828 $ (267 ) (5.53 )% NM - Not Meaningful Marine lending net revenues declined for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024 due to pay downs in the portfolio, which are not being replaced with new loan originations. The marine loan portfolio balance totaled $175.6 million at December 31, 2025 compared to $210.1 million at December 31, 2024. Provision for credit losses for marine lending decreased due to the declining loan balances, which mostly offset the impact of net charge-offs recorded during 2025. Net charge-offs declined by $1.2 million, or 67.38%, from 2024 levels. Noninterest expenses were down from 2024 due to decreases in loan servicing and collection expenses, which comprise the majority of total noninterest expenses for marine lending. The following table presents a summarized statement of income for the wealth management business segment for the twelve months ended December 31, 2025 and 2024. December 31, (dollars in thousands) 2025 2024 $ Change % Change Net Interest Income $ — $ — $ — — % Other noninterest income 7,628 5,624 2,004 35.63  % Net Revenue 7,628 5,624 2,004 35.63  % Noninterest expense 3,267 2,823 444 15.73  % Income before taxes 4,361 2,801 1,560 55.69  % Income tax expense 916 588 328 55.78  % Net Income $ 3,445 $ 2,213 $ 1,232 55.67  % Wealth Management's net revenues increased $2.0 million, or 35.63%, for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024, reflecting increases in both trust services and investment sales income. See further discussion of wealth management revenues under the caption "Noninterest Income" above. Noninterest expense increased during 2025 primarily reflecting increases in salaries, commissions and annual incentive plan expenses. 39 FINANCIAL CONDITION Select financial condition data is presented in the following table: December 31, (dollars in thousands) 2025 2024 $ Change % Change Securities available for sale $ 119,543 $ 121,330 $ (1,787 ) (1.47 )% Loans 1,473,077 1,467,049 6,028 0.41 % Allowance for credit losses (15,320 ) (15,027 ) (293 ) 1.95 % Total assets 1,888,626 1,866,215 22,411 1.20 % Total deposits 1,607,360 1,575,156 32,204 2.04 % FHLB advances 40,000 120,000 (80,000 ) (66.67 )% Total shareholders' equity 188,839 118,987 69,852 58.71 % Two significant events impacting the Company's financial condition occurred during the first quarter of 2025. On February 13, 2025, the Company completed an underwritten public offering of 1,796,875 shares of its common stock at a public offering price of $32.00 per share. The net proceeds from the offering were $53.5 million. During March 2025, the Company executed balance sheet repositioning transactions within its investment securities portfolio. The execution of these events was to support continued organic growth and capital generation. These are further described in their corresponding paragraphs below. Securities The carrying amounts of the Company's available for sale securities are as follows: December 31, (dollars in thousands) 2025 2024 Amount Percent Amount Percent Securities available for sale: Obligations of U.S. government corporations and agencies $ 7,444 6 % $ 7,668 6 % U.S. Treasury securities 10,001 8 % — 0 % Mortgage-backed securities 75,129 63 % 104,967 87 % Collateralized mortgage obligations 22,495 19 % — 0 % Obligations of states and political subdivisions — 0 % 4,645 4 % Subordinated debt 4,474 4 % 4,050 3 % $ 119,543 100 % $ 121,330 100 % Total securities available for sale decreased by $1.8 million, or 1.47%, during 2025. The Company purchased $102.7 million of securities during the twelve months ended December 31, 2025 , which includes $66.0 million as part of the balance sheet repositioning transactions in the first quarter of 2025. The Company had total maturities, calls, and principal repayments of $22.7 million and sales of $99.2 million during the twelve months ended December 31, 2025. Net unrealized loss on available for sale securities was $6.7 million at December 31, 2025 as compared to a net unrealized loss of $23.6 million at December 31, 2024. Unrealized gains or losses on available for sale securities are reported within shareholders’ equity, net of the related deferred tax effect, as accumulated other comprehensive income (loss). During March 2025, balance sheet repositioning transactions were comprised of sales of available for sale debt securities with an amortized cost balance of $99.2 million (fair value of $86.8 million) and a weighted average yield of 1.72%, with proceeds reinvested into purchases of $66.0 million of available for sale debt securities with a weighted average yield of 4.72%. The total sales of $99.2 million represented 68.48% of December 31, 2024 securities balance. The majority of these repositioning sales and purchases consisted of mortgage-backed securities. The sale of debt securities resulted in a net pre-tax realized loss of $12.4 million (after-tax of $9.8 million) that was recognized in the first quarter of 2025. In addition to the repositioning transactions, the Company purchased U.S. Treasury notes totaling $9.9 million prior to the repositioning to maintain pledging levels throughout the repositioning period and has also made subsequent purchases. 40 The primary cause of the unrealized losses at December 31, 2025 and December 31, 2024 was changes in market interest rates, rather than other market conditions or credit concerns of the issuers over the time between purchase and measurement periods. Since the losses can be primarily attributed to changes in market interest rates and conditions and not expected cash flows or an issuer’s financial condition and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, the Company concluded a credit loss did not exist. The table titled “Maturity Distribution and Yields of Securities” shows the maturity period and average yield for the different types of securities in the portfolio at December 31, 2025. The weighted average is calculated based on the relative amortized costs of the securities. Although mortgage-backed securities have definitive maturities, they provide monthly principal curtailments which can be reinvested at a prevailing rate and for a different term. Maturity Distribution and Yields of Securities December 31, 2025 Due in one year or less Due after 1 through 5 years Due after 5 through 10 years Due after 10 years Total Securities available for sale: Obligations of U.S. government corporations and agencies — % — % — % 4.83  % 4.83  % U.S. treasury securities 4.27  % — % — % — % 4.27  % Mortgage-backed securities — % 4.82  % 4.32  % 3.30  % 3.59  % Collateralized mortgage obligations — % 5.20  % — % 5.09  % 5.12  % Subordinated debt — % 7.95  % 5.53  % — % 5.91  % Total taxable 4.27  % 5.19  % 4.59  % 3.75  % 4.08  % Total 4.27  % 5.19  % 4.59  % 3.75  % 4.08  % (1) Yields on tax-exempt securities have been computed on a tax-equivalent basis using a federal tax rate of 21%. 41 Loan Portfolio The Company’s primary use of funds is supporting lending activities from which it derives the greatest amount of interest income. Details of the Company's loan portfolio are presented below: December 31, 2025 December 31, 2024 (dollars in thousands) Amount Percent to Total Loans Amount Percent to Total Loans Mortgage real estate loans: HELOCs $ 58,640 4 % $ 50,646 4 % Residential First Lien - Investor 107,307 7 % 105,910 7 % Residential First Lien - Owner Occupied 178,807 12 % 194,065 13 % Residential Junior Liens 10,724 1 % 11,184 1 % Total residential real estate loans 355,478 24 % 361,805 25 % Commercial - Owner Occupied 298,853 20 % 272,236 19 % Commercial - Non-Owner Occupied & Multifamily 398,926 27 % 367,680 25 % Total commercial real estate loans 697,779 47 % 639,916 44 % Construction & Secured by Farmland 82,336 6 % 95,200 6 % Total mortgage real estate loans 1,135,593 77 % 1,096,921 75 % Commercial and industrial loans 113,224 8 % 110,343 8 % Marine loans 175,639 12 % 210,095 14 % Consumer loans 28,742 2 % 31,017 2 % Other loans 14,264 1 % 12,220 1 % Total loans 1,467,462 100 % 1,460,596 100 % Net deferred loan costs and premiums 5,615 6,453 Gross loans $ 1,473,077 $ 1,467,049 Gross loans increased $6.0 million, or 0.41%, and totaled $1.47 billion at December 31, 2025 and 2024. The ratio of gross loans to deposits decreased during the year from 93.14% to 91.65% at December 31, 2024 and December 31, 2025, respectively. The loan portfolio consists primarily of loans for owner-occupied single-family dwellings and loans secured by commercial real estate. The modest increase in gross loans reflects new loan originations outpacing reductions due to loan sales, paydowns, and significant payoffs of commercial and industrial loans related to the sales of two customers' businesses. Total residential real estate loans decreased by $6.3 million, or 1.75%, during the year ended December 31, 2025 primarily due to the sale of $18.8 million of portfolio mortgage loans in early 2025, ahead of the Company's public stock offering, in order to bolster on-balance sheet liquidity. Total commercial real estate loans increased by $57.9 million, or 9.04%, since December 31, 2024, reflecting strong origination growth in both owner and non-owner occupied portfolios. This growth included a large construction loan that converted to permanent financing. Marine loans are declining due to normal paydowns and payoffs only as the Company is no longer accepting new marine business. At present, the Company expects to hold the retained outstanding loans until they are ultimately repaid. The table titled “Maturity Schedule of Selected Loans” shows the various loan categories and the period during which they mature. For loans maturing in more than one year, the table also shows a breakdown between fixed rate loans and floating rate loans. The table indicates that $764.6 million or 52.11% of the loan portfolio matures within five years. The floating rate loans maturing after five years are primarily comprised of loans secured by 1-4 family residential properties. 42 Maturity Schedule of Selected Loans (dollars in thousands) December 31, 2025 Within 1 Year After 1 Year Within 5 Years After 5 Years Within 15 years After 15 Years Total Loans secured by real estate: Construction & Farmland $ 34,475 $ 31,739 $ 8,513 $ 7,609 $ 82,336 Secured by 1-4 family residential properties 34,443 67,838 57,823 195,374 355,478 Commercial & Multifamily 91,596 421,201 173,176 11,806 697,779 Commercial and industrial loans 36,241 36,348 37,842 2,793 113,224 Marine — 761 50,578 124,300 175,639 Consumer installment loans 1,608 5,288 3,711 18,135 28,742 All other loans 368 2,718 9,262 1,916 14,264 $ 198,731 $ 565,893 $ 340,905 $ 361,933 $ 1,467,462 For maturities over one year: Floating rate loans $ 106,151 $ 126,940 $ 146,226 $ 379,317 Fixed rate loans 459,742 213,965 215,707 889,414 $ 565,893 $ 340,905 $ 361,933 $ 1,268,731 Asset Quality The Company has policies and procedures designed to control credit risk and to maintain the quality of its loan portfolio. These include underwriting standards for new originations and ongoing monitoring and reporting of asset quality and adequacy of the allowance for credit losses. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk on a quarterly basis. The following table presents credit risk ratings as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 (dollars in thousands) Amount Percent to Total Loans Amount Percent to Total Loans Risk categories Pass $ 1,396,752 95 % $ 1,405,997 96 % Special Mention 54,752 4 % 50,081 3 % Classified 15,958 1 % 4,518 1 % Total loans $ 1,467,462 100 % $ 1,460,596 100 % Loans risk rated as special mention, which exhibit negative trends and potential weaknesses include loans with stale financial information. Of the total special mention loans, $35.7 million had stale financial information at December 31, 2025 compared to $45.0 million at December 31, 2024. Upon receipt of current financial information, the loans will be evaluated and returned to a pass classification if appropriate. Loans risk rated as classified, include substandard, doubtful, and loss loans. Classified loans increased primarily due to three large relationships being placed on nonaccrual status during 2025 that totaled $9.6 million at December 31, 2025. The first relationship had an outstanding balance of $2.2 million as of December 31, 2025 and was a partially owner-occupied property whose owner passed away unexpectedly causing the business to halt. The second relationship is comprised of three residential multifamily income of producing properties in Washington D.C. (the District) with a combined exposure of $5.3 million at December 31, 2025. The Bank has been granted receivership of these properties and is actively working with the receiver to update the properties and ready them for sale while continuing to collect the housing payments directly from the District. The third relationship had an outstanding balance of $2.1 million at December 31, 2025. The Bank's portion is part of a larger syndicated loan, with the Bank’s portion being 0.31% of the total loan commitment. The borrower is currently under a forbearance agreement, for financial covenant violations and past due payments. The borrower's new management team along with the lead bank continue to work on a restructuring of the business. 43 Classified loans also include other potential problem loans, defined as performing loans that possess certain risks that management has identified that could result in the loans not being repaid in accordance with their terms. Accordingly, these loans are risk rated at a level of substandard or lower. At December 31, 2025, other potential problem loans totaled $1.6 million. All other loans were classified as pass, exhibiting acceptable history of profits, cash flow ability and liquidity. Total past due loans were $16.9 million at December 31, 2025, an increase of $12.4 million, compared to $4.5 million at December 31, 2024. The $12.4 million increase in past due loans primarily reflects a $12.7 million increase in loans 90 or more days past due, partially offset by a $292 thousand decrease in loans 30-89 days past due. Loans 90 or more days past due were concentrated in the commercial real estate loan portfolios and reflected the increase in nonaccrual loans. Nonperforming and Other Assets Nonperforming assets consist of nonaccrual loans, loans past due 90 days and accruing interest, other real estate owned (foreclosed properties), and repossessed assets. Loans are placed on non-accrual status when collection of principal and interest is doubtful, generally when a loan becomes 90 days past due. There are three negative implications for earnings when a loan is placed on non-accrual status. First, all interest accrued but unpaid at the date that the loan is placed on non-accrual status is either deducted from interest income or written off as a loss. Second, accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid. Finally, there may be actual losses that require additional provisions for credit losses to be charged against earnings. For real estate loans, upon foreclosure, the properties are recorded at the fair value of the property based on current appraisals and other current market trends, less selling costs. If a write down of the OREO property is necessary at the time of foreclosure, the amount is charged-off against the allowance for credit losses on loans. A review of the recorded property value is performed in conjunction with normal loan reviews, and if market conditions indicate that the recorded value exceeds the fair value, additional write downs of the property value are charged directly to operations. Gains on properties acquired through foreclosure where the fair value less costs to sell exceeds the related loan balance and there have been no prior charge-offs are recorded to current earnings. Loans secured by other assets, such as marine vessels, are recorded in a similar manner when a repossession occurs. In addition, the Company may, under certain circumstances, modify loans. Modifications made to a loan are considered when a borrower is experiencing financial difficulty and the modification constitutes a concession to the borrower that is not in line with market rates and/or terms. Modified terms are dependent upon the financial position and needs of the individual borrower. Generally, the modifications granted are extensions of terms, deferrals of payments for an extended period or interest rate reductions. There were three commercial real estate loan modifications to one borrower experiencing financial difficulty totaling $5.3 million during the year ended December 31, 2025. These residential multifamily income producing properties are under a receivership agreement and are expected to be ready for sale during 2026. No loans were modified during 2024. 44 Nonperforming assets and related ratios are detailed in the table below: December 31, 2025 2024 Nonaccrual loans $ 14,398 $ 2,072 Loans past due 90 days and accruing interest 60 — Other real estate owned and repossessed assets 135 514 Total nonperforming assets $ 14,593 $ 2,586 Allowance for credit losses on loans $ 15,320 $ 15,027 Gross loans $ 1,473,077 $ 1,467,049 Allowance for credit losses on loans to nonperforming assets 105  % 581  % Allowance for credit losses on loans to total loans 1.04  % 1.02  % Allowance for credit losses on loans to nonaccrual loans 106  % 725  % Nonaccrual loans to total loans 0.98  % 0.14  % Non-performing assets to period end loans, other real estate owned and repossessed assets 0.99  % 0.18  % There were $14.6 million in total non-performing assets at December 31, 2025. This increase of $12.0 million when compared to the December 31, 2024 balance of $2.6 million resulted mostly from the increase in nonaccrual loans. Nonaccrual loans were $14.4 million at December 31, 2025 and $2.1 million at the end of 2024. The gross amount of interest income that would have been recognized on nonaccrual loans was $672 thousand for 2025 and $81 thousand for 2024. None of this interest income was included in net income for 2025 or 2024. Included in the nonaccrual balance at December 31, 2025 were 20 loans totaling $14.1 million which were placed on nonaccrual during 2025, including three large relationships which made up $9.6 million of the nonaccrual balance at December 31, 2025 and were discussed above. Four additional commercial relationships totaling $2.7 million were added to nonaccrual status during 2025 reflecting their delinquent payment status and required an allowance for credit losses of $467 thousand based on management's evaluation of the underlying collateral values. In addition, of the $2.1 million nonaccrual balance at December 31, 2024, payoffs totaling $1.6 million were received, $89 thousand was charged off, and three loans totaling $316 thousand remained on nonaccrual status at December 31, 2025. Management evaluates the financial condition of borrowers in nonaccrual status and the value of any collateral on these loans. The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these nonaccrual loans. Nonaccrual loans that were individually evaluated for impairment at December 31, 2025 totaled $14.4 million, of which $2.7 million required a specific allocation of $467 thousand to be assigned. Other real estate owned and repossessed assets decreased from $514 thousand at December 31, 2024 to $135 thousand at December 31, 2025, consisting of repossessed assets. Four marine vessels were repossessed during 2025 and placed into repossessed assets. Sales of repossessed assets during 2025 included three marine vessel repossessed in 2024 and three of the four marine vessels repossessed during 2025. A net loss of $302 thousand and $204 thousand was recognized on the sale of repossessed assets for the twelve months ended December 31, 2025 and 2024, respectively. There was one real estate property that foreclosed and sold during 2025, compared to no transactions during 2024. The difference between the amount of other real estate owned and the settlement proceeds is recognized as a gain or loss on the sale of other real estate owned. A net loss of $51 thousand was recognized on the sale of other real estate owned during the twelve months ended December 31, 2025. 45 Allowance for Credit Losses on Loans The purpose of and the methods for measuring the allowance for credit losses on loans is discussed in the Critical Accounting Policies section above as well as in Note 1 to the Consolidated Financial Statements presented in Item 8, Financial Statements and Supplementary Data, of the this Form 10-K. The following table presents the activity in the allowance for credit losses on loans and related ratios for the periods indicated: Twelve Months Ended December 31, (dollars in thousands) 2025 2024 Balance at beginning of period $ 15,027 $ 14,493 Charge-Offs Construction & secured by farmland — (94 ) Residential real estate (31 ) (277 ) Commercial real estate (2,771 ) (7 ) Commercial (485 ) (238 ) Marine (580 ) (1,778 ) Consumer (140 ) (309 ) Other (139 ) (141 ) Total charge-off's (4,146 ) (2,844 ) Recoveries Construction & secured by farmland 5 102 Residential real estate 308 347 Commercial real estate — 162 Commercial 153 67 Marine — — Consumer 46 150 Other 47 25 Total recoveries 559 853 Net charge-off's (3,587 ) (1,991 ) Provision for credit losses on loans 3,880 2,525 Balance at end of period $ 15,320 $ 15,027 Net charge-off's to average loans 0.25 % 0.14 % Allowance for credit losses on loans as a percentage of gross loans 1.04 % 1.02 % Charged-off loans were $4.1 million and $2.8 million for 2025 and 2024, respectively. Recoveries were $559 thousand and $853 thousand for 2025 and 2024, respectively. Net charge-offs were $3.6 million for 2025 and $2.0 million for 2024. The year over year increase in net charge-offs was primarily due to one relationship in the commercial real estate loan portfolio. A non-owner occupied commercial real estate loan relationship consisting of four residential multifamily income producing properties had a current combined exposure of approximately $5.4 million at December 31, 2025. The largest of the four properties had a corresponding loan balance of $5.9 million at June 30, 2025. This property was offered for sale on July 8, 2025, for $5.7 million with the Bank agreeing to a short sale of $4.8 million, thereby creating a deficiency balance of $1.1 million after consideration of past due taxes and other costs. Due to the unlikelihood of repayment and limited remaining collateral value, the deficiency balance was charge-off in the third quarter of 2025. Combined with write-downs on the other remaining properties, a total of $2.3 million was charged off during 2025 related to this relationship. Four marine loan relationships had charge-off totaling $580 thousand during 2025 compared to $1.8 million during 2024, which represented six marine relationships. Marine net charge-offs as a percentage to average marine loans outstanding was 0.29% and 0.74%, respectively. The allowance for credit losses as a percentage of loans was 1.04% and 1.02% at the end of 2025 and 2024, respectively. The increase in the allowance percentage year over year was mostly attributable to the increase in net 46 charge-offs and growth in the portfolio, partially offset by a reduction in the specific reserve. Additionally, the impact of the change in mix of the loan pool balances and associated reserve factors has tempered the level of allowance for credit losses related to loan growth. The ratio of net charge-offs to average loans was 0.25% for 2025 and 0.14% for 2024. The provision for credit losses for the years ended December 31, 2025 and 2024 was $3.7 million and $2.6 million, respectively. The provision for credit losses in 2025 and 2024 reflected the level of net charge-offs and the specific reserve allocation in addition to loan growth in the portfolio. The table titled “Allocation of Allowance for Credit Losses on Loans” shows the amount of the allowance for credit losses which is allocated to the indicated loan categories, along with that category’s percentage of total loans, at December 31, 2025 and 2024. The amount of allowance for credit losses allocated to each loan category is based on the amount of delinquent loans in that loan category, the status of nonperforming assets in that loan category, the historical losses for that loan category, the evaluation of qualitative factors impacting the portfolio and the financial condition of certain borrowers whose financial conditional is monitored on a periodic basis. Management believes that the allowance for credit losses is adequate to absorb the current expected losses in the loan portfolio. Analysis of Allowance for Credit Losses (dollars in thousands) Years Ended December 31, 2025 2024 Net charge-offs (recoveries) Average loans outstanding Net charge-offs (recoveries) to average loans outstanding Net charge-offs (recoveries) Average loans outstanding Net charge-offs (recoveries) to average loans outstanding Construction and Farmland $ (5 ) $ 84,528 (0.01 )% $ (8 ) $ 89,383 (0.01 )% Residential Real Estate (277 ) 354,568 (0.08 )% (70 ) 367,706 (0.02 )% Commercial Real Estate 2,771 669,204 0.41 % (155 ) 618,843 (0.03 )% Commercial 332 106,146 0.31 % 171 102,818 0.17 % Marine 580 199,327 0.29 % 1,778 239,853 0.74 % Consumer 94 26,028 0.36 % 159 29,742 0.53 % All Other Loans 92 14,385 0.64 % 116 12,539 0.93 % Total $ 3,587 $ 1,454,186 0.25 % $ 1,991 $ 1,460,884 0.14 % Allocation of Allowance for Credit Losses on Loans (dollars in thousands) December 31, 2025 December 31, 2024 Allowance for Credit Losses Percent of Loans in Category to Total Loans Allowance for Credit Losses Percent of Loans in Category to Total Loans Construction and Farmland $ 1,275 5.6  % $ 2,387 6.5  % Residential Real Estate 3,160 24.2  % 2,318 24.8  % Commercial Real Estate 8,163 47.5  % 7,251 43.8  % Commercial 1,312 7.7  % 1,433 7.6  % Marine 710 12.0  % 1,279 14.4  % Consumer 230 2.0  % 238 2.1  % All Other Loans 470 1.0  % 121 0.8  %    Total $ 15,320 100 % $ 15,027 100 % 47 Deposits Total deposits were $1.61 billion and $1.58 billion at December 31, 2025 and 2024, respectively. This represents an increase of $32.2 million or 2.04% during 2025. 2025 benefited from a higher level of deposits from non interest bearing accounts received during the second quarter primarily related to sales proceeds of two customers' businesses. These balances had mostly been withdrawn at December 31, 2025. The following table provides the composition of total deposits at December 31, 2025 and December 31, 2024. December 31, (dollars in thousands) 2025 2024 $ Change % Change Noninterest bearing demand deposits $ 432,171 $ 406,180 $ 25,991 6 % NOW accounts 322,687 278,835 43,852 16 % Money market accounts 282,828 269,115 13,713 5 % Regular savings accounts 123,030 131,380 (8,350 ) (6 )% Time deposits less than $250,000 262,390 293,864 (31,474 ) (11 )% Time deposits $250,000 and more 184,254 195,782 (11,528 ) (6 )% Total deposits $ 1,607,360 $ 1,575,156 $ 32,204 2 % Core deposits $ 1,304,733 $ 1,299,323 5,410 0 % Core deposits as a percent of total deposits 81 % 82 % Non-core deposits $ 302,627 $ 275,833 26,794 10 % Non-core deposits as a percent of total deposits 19 % 18 % The total increase in deposits was primarily in non-core accounts, which increased $26.8 million while core accounts increased $5.4 million. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts and time deposits less than $250,000, excluding wholesale or brokered deposits. In general, deposit pricing is done in response to monetary policy actions and yield curve changes. Local competition for funds also affects the cost of time deposits. Marketing efforts, including rate specials, are utilized to maintain maturing accounts and to acquire new time deposit accounts. At December 31, 2025, over 87% of deposits were fully FDIC insured. The table titled “Average Deposits and Rates Paid” shows the average deposit balances and average rates paid for 2025 and 2024. Average Deposits and Rates Paid (dollars in thousands) Years Ended December 31, 2025 2024 Amount Rate Amount Rate Noninterest-bearing $ 486,606 $ 412,646 Interest-bearing: NOW accounts 300,711 2.21  % 259,372 2.35  % Money market accounts 273,390 2.21  % 263,960 2.27  % Regular savings accounts 128,007 0.11  % 134,893 0.12  % Time deposits: $250,000 and more 176,777 4.28  % 153,398 4.73  % Less than $250,000 292,311 4.03  % 276,580 4.47  % Total interest-bearing $ 1,171,196 2.75  % $ 1,088,203 2.93  % Total deposits $ 1,657,802 $ 1,500,849 48 The table titled “Maturities of Certificates of Deposit and Other Time Deposits of $250,000 and Greater” shows the amount of certificates of deposit of $250,000 and more maturing within the time periods indicated at December 31, 2025. The total amount maturing within one year is $181.2 million, or 98.35%, of the total amount outstanding. Maturities of Certificates of Deposit and Other Time Deposits of $250,000 and Greater (dollars in thousands) Within Three Months Three to Six Months Six to Twelve Months Over One Year Total Percent of Total Deposits December 31, 2025 $ 59,007 $ 59,308 $ 62,892 $ 3,047 $ 184,254 11.46  % The table titled “Certificates of Deposit and Other Time Deposits Otherwise Uninsured" shows the balances of certificates of deposit that were in excess of the FDIC insurance limit at December 31, 2025. The total amount maturing within one year is $121.7 million, or 98.54%, of the total amount outstanding. Certificates of Deposit and Other Time Deposits Otherwise Uninsured (dollars in thousands) Within Three Months Three to Six Months Six to Twelve Months Over One Year Total Percent of Total Deposits December 31, 2025 $ 42,257 $ 35,559 $ 43,892 $ 1,797 $ 123,505 7.68  % CAPITAL RESOURCES Total shareholders’ equity on December 31, 2025 was $188.9 million, reflecting a percentage of total assets of 10.00% as compared to $119.0 million and 6.38% at December 31, 2024. The $69.9 million increase in shareholders’ equity was primarily due to net proceeds of $53.5 million received from the completion of an underwritten public offering of 1,796,875 shares of its common stock at a public offering price of $32.00 per share. An additional increase of $13.4 million is due to a decrease in unrealized losses on the securities available for sale portfolio largely reflecting the impact of the balance sheet repositioning. This increase in shareholders' equity was further enhanced by a net operating income of $8.2 million and partially offset by $6.1 million in dividends declared for the twelve months ended December 31, 2025. During the twelve months ended December 31, 2025 and 2024, the Company paid dividends of $1.24 and $1.21 per share, respectively. The Company has a Dividend Investment Plan that allows shareholders to reinvest dividends in Company stock. At December 31, 2025, and 2024, the Bank met all capital adequacy requirements and had regulatory capital ratios in excess of the levels established for well capitalized institutions. The bank monitors these ratios on a quarterly basis and has several strategies, including without limitation the issuance of common stock, to ensure that these ratios remain above regulatory minimum. The bank's capital amounts and ratios are presented using the Federal Reserve's risk-based capital framework. Federal regulatory risk-based capital guidelines require percentages to be applied to various assets, including off-balance sheet assets, based on their perceived risk in order to calculate risk-weighted assets. Tier 1 capital consists of total shareholders’ equity plus qualifying trust preferred securities outstanding less net unrealized gains and losses on available for sale securities, goodwill and other intangible assets. Total capital is comprised of Tier 1 capital plus the allowable portion of the allowance for credit losses and any excess trust preferred securities that do not qualify as Tier 1 capital. The risk-based capital rules require the Bank to comply with the following minimum capital ratios: (i) a common equity Tier 1 capital ratio of 4.5% of risk-weighted assets; (ii) a Tier 1 capital ratio of 6.0% of risk-weighted assets; (iii) a total capital ratio of 8.0% of risk-weighted assets; and (iv) a leverage ratio of 4.0% of total assets. In addition, a capital conservation buffer requirement of 2.5% was effective January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with any ratio (excluding the leverage ratio) above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The capital conservation buffer rule requires the Bank to maintain (i) a minimum ratio of common equity Tier 1 to 49 risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% common equity Tier 1 ratio, effectively resulting in a minimum ratio of common equity Tier 1 to risk-weighted assets of at least 7.0%), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio, effectively resulting in a minimum Tier 1 capital ratio of 8.5%), (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (which is added to the 8.0% total capital ratio, effectively resulting in a minimum total capital ratio of 10.5%), and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average assets. Pursuant to the Federal Reserve’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement, qualifying bank holding companies with total consolidated assets of less than $3 billion, such as the Company, are not subject to consolidated regulatory capital requirements. The following table summarizes the Bank's regulatory capital and related ratios at December 31, 2025 and December 31, 2024: Analysis of Bank Capital (dollars in thousands) December 31, 2025 2024 Tier 1 Capital: Common stock $ 1,682 $ 1,682 Capital surplus 9,773 9,773 Retained earnings 211,730 155,016 Nonmortgage servicing assets (637 ) (326 ) Total Tier 1 capital $ 222,548 $ 166,145 Common equity tier 1 capital $ 222,548 $ 166,145 Tier 2 Capital: Allowable portion of allowance for credit losses and reserve for off-balance sheet commitments $ 15,128 $ 14,493 Total Tier 2 capital $ 15,128 $ 14,493 Total risk-based capital $ 237,676 $ 180,638 Risk weighted assets $ 1,530,835 $ 1,504,960 Capital Ratios: Common equity Tier 1 capital ratio 14.54  % 11.04  % Tier 1 risk-based capital ratio 14.54  % 11.04  % Total risk-based capital ratio 15.53  % 12.00  % Tier 1 leverage ratio 11.68  % 8.79  % Note 15 to the Consolidated Financial Statements provides additional discussion and analysis of regulatory capital requirements. LIQUIDITY Liquidity management involves meeting the present and future financial obligations of the Company with the sale or maturity of assets or with the occurrence of additional liabilities. Liquidity needs are met with cash on hand, deposits in banks, federal funds sold, unpledged securities classified as available for sale, and loans maturing within one year. At December 31, 2025 liquid assets totaled $423.4 million as compared to $335.9 million at December 31, 2024. These amounts represent 24.91% and 19.22% of total liabilities at December 31, 2025 and 2024, respectively. The increase during the year reflects increased cash on hand from Federal Funds Sold as well as an increase in the balance of loans maturing within one year, partially offset by lower levels of deposits with other institutions. The Company generally attempts to minimize liquidity demand by primarily utilizing core deposits to fund asset growth. Securities provide a constant source of liquidity through paydowns and maturities. Also, the Company maintains 50 short-term borrowing arrangements, namely federal funds lines of credit, with larger financial institutions as an additional source of liquidity. The Bank’s membership with the Federal Home Loan Bank of Atlanta also provides a source of borrowings with numerous rate and term structures. At December 31, 2025 and 2024, the Company had remaining credit availability in the amounts of $454.1 million and $254.3 million, respectively, with the Federal Home Loan Bank of Atlanta. The Company also had unused lines of credit with financial institutions of $78.0 million at December 31, 2025 and 2024. The Company pledges available for sale mortgage-backed securities with the Federal Reserve Bank discount window, which while reducing its liquid assets it reinforces its ability to obtain liquidity from the Federal Reserve Bank discount window. At December 31, 2025 the Company had $63.2 million in funds available through the discount window. The Company’s senior management monitors the liquidity position regularly and attempts to maintain a position which utilizes available funds most efficiently. OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS Note 18 to the Consolidated Financial Statements provides information about the off-balance sheet arrangements which arise through the lending activities of the Company. These arrangements increase the degree of both credit and interest rate risk beyond that which is recognized through the financial assets and liabilities on the consolidated balance sheets. 51