EAGLE FINANCIAL SERVICES INC
For the period ended Mar 31, 2026. Filed May 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 11, 2026
EFSI$45.71+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001193125-25-279991
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0000880641-26-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 170 previous paragraphs and 166 current paragraphs.
85 unchanged; 51 reworded; 26 added; 30 removed; 4 previous and 4 current paragraphs rearranged.
Tables are not compared: 20 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
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.
Current report
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.
Current report
(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.
Current report
(1) Adjusted to exclude the loss on sale of securities in connection with the Company's balance sheet repositioning transactionsduring the three months ended March 31, 2025. See "Non-GAAP Financial Measures" for a reconciliation to comparable measures calculated in accordance with GAAP.
Current report
Net interest income, on a tax-equivalent basis, was $15.9 million and $13.4 million for the three months ended March 31, 2026 and 2025, respectively, an increase of $2.6 million, or 19.2%.
Current report
The Company's net interest spread and net interest margin increased 67 basis points and 65 basis points, respectively, for the three months ended March 31, 2026 compared to three months ended March 31, 2025. These increases are primarily attributable to the repositioning of the securities portfolio and reductions in the average rate paid on and average balances of time deposits. Ongoing margin pressures include loan demand unpredictability, deposit competition, and elevated funding costs.
Current report
During the three months ended March 31, 2026, net recoveries totaled $34 thousand compared to net charge-offs totaling $891 thousand during the three months ended March 31, 2025.
Current report
Specific reserve allocations totaled $2.1 million at March 31, 2026 primarily reflecting four commercial loan relationships, three of which are commercial and industrial relationships and one includes both commercial and industrial and commercial real estate loans. The specific reserves on these four relationships comprised $1.7 million, or 81%, of the total allocation at March 31, 2026. At March 31, 2025, specific reserve allocations totaled $152 thousand consisting of two commercial loan relationships.
Current report
The increase in the specific reserve allocation at March 31, 2026 was primarily attributable to two commercial and industrial relationships for which new or increased specific allocations were recorded during the first quarter of 2026, driven by updated collateral information. Additional appraisals on certain nonaccrual and individually evaluated loans have been ordered and are expected to be received in the middle to late portion of the second quarter of 2026. The results of these appraisals may indicate that further specific reserves are warranted on certain existing nonaccrual or impaired loans, which could result in additional provisioning in future periods.
Current report
Bank Franchise tax increased during the three months ended March 31, 2026 compared to the same period in 2025 due to a higher estimate for 2026, reflective of the Company's capital level.
Current report
Income tax expense for the three months ended March 31, 2026 was comprised of federal and state income taxes of $874 thousand and $44 thousand, respectively. For the three months ended March 31, 2025, the Company recognized a net income tax benefit of $2.1 million, which represented a federal income tax benefit partially offset by state income taxes of $1 thousand. The increase in income tax expense reflects the level of net income recognized during the first quarter of 2026 compared to a net loss recognized in the first quarter of 2025.
Current report
The effective tax rate for the three months ended March 31, 2026 was below the statutory rate of 21% due primarily to the recognition of tax-exempt life insurance income. The effective tax rate was also impacted by tax-exempt income on investment securities and loans, qualified rehabilitation credits and tax credits on qualified affordable housing project investments. The effective tax rate for the three months ended March 31, 2025 was also impacted by the balance sheet repositioning transaction previously discussed in the "Non-GAAP Financial Measures" section above.
Current report
Provision for credit losses reflects net recoveries totaling $34 thousand and net charge-offs totaling $891 thousand for the three months ended March 31, 2026 and 2025, respectively, as well as specific reserves of $2.1 million and $152 thousand, respectively. The increase in the specific reserve was primarily attributable to two commercial and industrial relationships for which new or increased specific allocations were recorded during the first quarter of 2026.
Current report
(1) Allocation of interest expense is a function of the Bank's internal cost of funds rate and the average loan balance of the marine lending portfolio.
Current report
Select financial condition data is presented in the following table:
Current report
During the three months ended March 31, 2026, through the normal course of business, $24.1 million in loans were sold, consisting of $16.6 million in mortgage loans originated for sale and $7.5 million of SBA commercial loans.
Current report
Commercial real estate loans increased during the three months ended March 31, 2026 with growth in the owner occupied portfolio. The Company experienced steady activity across commercial business lines reflecting its focus on relationship-based lending in its core markets.
Current report
During the three months ended March 31, 2026, the Company recorded net recoveries of $34 thousand primarily due to a recovery on a residential mortgage loan. Charge-offs during three months ended March 31, 2026 primarily consisted of one commercial loan secured by equipment and writeoffs of overdraft and credit card accounts.
Current report
During the three months ended March 31, 2025, charge-offs were primarily related to one non-owner occupied commercial loan relationship consisting of four residential multifamily income producing properties. Recoveries were $185 thousand resulting in net charge-offs of $891 thousand for the three months ended March 31, 2025.
Current report
The increase of 14 basis points in the allowance for credit losses on loans to gross loans ratio largely reflects the increase in specific reserve allocations required at March 31, 2026. The increase was also attributable to changes in historical loss ratios, primarily within the consumer and non‑owner occupied commercial real estate portfolios.
Current report
Loans risk rated as classified, include substandard, doubtful, and loss loans increased primarily due to one commercial real estate relationship being downgraded from special mention to classified during the first quarter of 2026 due to cash flow concerns. This relationship consists of a non-owner occupied office building that is active, accruing and current at March 31, 2026.
Current report
Nonperforming assets increased slightly during the three months ended March 31, 2026, reflecting the addition of two small loans to nonaccrual status, partially offset by the sale of one repossessed assets.
Current report
Total past due loans, as disclosed in Note 5 to the Consolidated Financial Statements, increased by $2.5 million and totaled $19.4 million at March 31, 2026 compared to $16.9 million at December 31, 2025. The increase in past due loans primarily reflects loans secured by commercial real estate in the past due 30-59 days category. One owner occupied commercial real estate loan totaling $4.4 million became past due and a non-owner occupied commercial real estate loan totaling $1.9 million moved into current status during the three months ended March 31, 2026. Both of these loans are rated special mention.
Current report
Total deposits were $1.60 billion and $1.61 billion at March 31, 2026 and December 31, 2025, respectively. This represents a decrease of $9.1 million or 0.57% during the three months ended March 31, 2026.
Current report
(2) Non-core deposits consist of brokered deposits, CDARs and time deposits of $250,000 or more.
Current report
The decline in deposits was due to a decrease in non-core deposits of $38.9 million, reflecting runoff of higher cost deposits, partially offset by core deposits which increased $29.7 million during the three months ended March 31, 2026. The increase in core deposits was in line with management's effort to grow these deposits to support loan expansion.
Removed paragraphs (30)
Previous report
During the first quarter of 2025 the Company executed a balance sheet repositioning of its investment securities portfolio, selling 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 reinvesting $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.
Previous report
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.
Previous report
Annualized.
Previous report
Net interest income, on a tax-equivalent basis, was $17.2 million and $13.2 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $4.0 million, or 30.6%. For the nine months ended September 30, 2025 and 2024, net interest income, on a tax-equivalent basis, was $46.3 million and $37.8 million, respectively, which represents an increase of $8.5 million, or 22.5%.
Previous report
The Company's net interest spread and net interest margin increased 25 basis points and 35 basis points, respectively, for the nine months ended September 30, 2025 compared to nine months ended September 30, 2024. For the three months ended September 30, 2025, the Company's net interest spread and net interest margin increased 39 basis points and 55 basis points, respectively, compared to the three months ended September 30, 2024. Ongoing margin pressures include deposit pricing, the Bank's continued strategy of originating mortgage loans for sale, and an increase in nonaccrual loans during the nine months ended September 30, 2025.
Previous report
During the three months ended September 30, 2025 and 2024, net charge-offs totaled $2.3 million and $1.2 million, respectively, and $3.4 million and $1.5 million during the nine months ended September 30, 2025 and 2024.
Previous report
Specific reserve allocations totaled $333 thousand at September 30, 2025 reflecting three commercial loan relationships and totaled $268 thousand at September 30, 2024, allocated to one commercial loan relationship.
Previous report
The increase in service charges on deposit accounts during 2025 reflects growth in the number of accounts as well as higher levels of overdraft charges.
Previous report
Gain on loan sales during the three months ended September 30, 2025 and 2024 reflected sales of $21.6 million and $14.9 million of mortgage loans, respectively, and $6.4 million and $4.2 million of SBA commercial loans, respectively.
Previous report
Bank owned life insurance income ("BOLI") decreased during three and nine months ended September 30, 2025 due to BOLI settlements received during the prior year periods.
Previous report
Other operating income increased for the three and nine months ended September 30, 2025 due to loan swap fee income recognized on agreements with initial notional balances totaling $15.7 million, which resulted in a gain of $179 thousand. There was no loan swap fee income generated during the three and nine months ended September 30, 2024.
Previous report
Occupancy expenses increased during the three and nine months ended September 30, 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 $133 thousand and $382 thousand, during the three and nine months ended September 30, 2025, respectively, compared to the 2024 periods. The increase in rental expense also reflects a new long-term lease executed during the first quarter of 2025 as the Company has moved its standalone loan production office and established a full-service branch in McLean, Viriginia.
Previous report
Computer software expenses increased during the three and nine months ended September 30, 2025 as the Company continues to invest in technology to enhance systems security and drive operational efficiencies.
Previous report
Professional fees increased during the three and nine months ended September 30, 2025 compared to the same periods in 2024 primarily due to legal fees related to loan matters, outside recruitment services, and internal audit services.
Previous report
Data processing fees decreased reflecting core provider pricing discounts recognized during 2025.
Previous report
The year over year comparisons include tax-exempt income on investment securities and loans, BOLI income, income tax credits on qualified affordable housing project investments, and qualified rehabilitation credits. Additionally, during the nine months ended September 30, 2025, the effective tax rate was impacted by the balance sheet repositioning transactions, which resulted in a pre-tax loss of $12.4 million with an associated tax benefit of $2.6 million, calculated by using the federal statutory tax rate of 21%. Qualified affordable housing project investments are discussed in Note 11 to the Consolidated Financial Statements.
Previous report
Provision for credit losses reflects charge-offs totaling $2.0 million and $3.2 million for the three and nine months ended September 30, 2025, specific reserves of $333 thousand related to three commercial loans totaling $2.3 million, partially offset by recoveries and decreases in loan balances.
Previous report
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.
Previous report
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.
Previous report
During the nine months ended September 30, 2025, through the normal course of business, $88.6 million in loans were sold, consisting primarily of mortgage loans. Included in total loans sold was a pool of residential mortgage loans totaling $18.8 million, which was sold at par. This pool was sold in January 2025, ahead of the Company's public offering, to bolster on-balance sheet liquidity.
Previous report
Residential real estate loans decreased primarily due to the portfolio loan sale in early 2025.
Previous report
Commercial real estate loans increased during the nine months ended September 30, 2025 with growth in both owner occupied and non-owner occupied portfolios. The increase was due to strong originations, including a large construction loan that converted to permanent financing.
Previous report
The majority of the decrease in construction and secured by farmland loans was due to a large construction loan which converted to permanent financing in the owner-occupied commercial real estate portfolio.
Previous report
Charge-offs during the three months ended September 30, 2025 primarily consisted of losses on three marine vessels that were repossessed, a nonaccrual owner-occupied commercial real estate loan, and a $1.2 million deficiency balance related to non-owner occupied commercial loan relationship consisting of four residential multifamily income producing properties. Total charge-offs for this relationship during the nine months ended September 30, 2025 were $2.2 million, representing over 50% of the total year-to-date charge-offs. The Company does not anticipate having to make any further significant write-downs on the three remaining properties after the sale of the fourth and largest property during the third quarter of 2025.
Previous report
Recoveries were $478 thousand and $754 thousand for the nine months ended September 30, 2025 and 2024, respectively, resulting in net charge-offs of $3.4 million and $1.5 million for the nine months ended September 30, 2025 and 2024, respectively.
Previous report
The reduction of two basis points in the allowance for credit losses on loans to gross loans ratio largely reflects the combined impact of the change in mix of loan pool balances and associated reserve factors applied. Declining loan balances and a net decrease in the total loss factor for the construction and secured by farmland, residential first lien, and marine portfolios more than offset the balance growth and loss factor increase in the commercial real estate portfolio during the nine months ended September 30, 2025 compared to the prior year.
Previous report
Loans risk rated as classified, include substandard, doubtful, and loss loans increased primarily due to two large commercial real estate relationships being placed on nonaccrual status during the first quarter of 2025, including a $2.2 million owner-occupied relationship and an $5.5 million non-owner occupied relationship. Two additional commercial real estate relationships, each totaling $1.8 million, were added to nonaccrual loans during the third quarter of 2025.
Previous report
Total past due loans, as disclosed in Note 5 to the Consolidated Financial Statements, increased to $16.1 million at September 30, 2025 compared to $4.5 million at December 31, 2024. The $11.6 million increase in past due loans primarily reflects loans secured by real estate. One non-owner occupied commercial real estate relationship accounts for $5.5 million of the total increase, comprised of three residential multifamily income producing properties as of September 30, 2025 after the sale of a fourth property, which was the largest loan in the relationship at $5.9 million, during the third quarter of 2025. The Company has been granted receivership on the remaining three properties and is actively with the receiver to update the properties and ready them for sale while continuing to collect the housing payments.
Previous report
Total deposits were $1.66 billion and $1.58 billion at September 30, 2025 and December 31, 2024, respectively. This represents an increase of $79.9 million or 5.07% during the nine months ended September 30, 2025. The majority of this increase was due to large deposits in non-interest bearing accounts received during the second quarter 2025 primarily related to sales proceeds of two customers' businesses with a remaining balance of $79.4 million at September 30, 2025.
Previous report
On March 31, 2022, the Company entered into Subordinated Note Purchase Agreements with certain purchasers pursuant to which the Company issued and sold $30.0 million in aggregate principal amount of its 4.50% Fixed-to-Floating Rate Subordinated Notes due April 1, 2032. See Note 14 to the Consolidated Financial Statements included in this Form 10-Q, for discussion of subordinated debt.
Reworded paragraphs (51)
Previous wording
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 Annual Report on Form 10-K for the year ended December 31, 2024, 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 and nine months ended September 30, 2025 are not necessarily indicative of the results for the full-year ending December 31, 2025 or any future period.
Current wording
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.
Previous wording
The Company strives to be an outstanding financial institution in its market by building solid sustainable relationships with its customers, employees, communities, and shareholders.
Current wording
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.
Previous wording
At September 30, 2025, the Company had total assets of $1.93 billion, net loans of $1.45 billion, total deposits of $1.66 billion, and shareholders’ equity of $185.6 million.
Current wording
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.
Previous wording
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 accounting estimate with the greatest uncertainty and susceptibility to significant near-term change for the Company is the allowance for credit losses on loans.
Current wording
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.
Previous wording
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, 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 the loss on sales of securities during the three and nine months ended September 30, 2025.
Current wording
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.
Previous wording
The Company's net income increased $2.2 million, or 63.1%, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 and decreased $5.3 million, or 57.6%, during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. During the nine months ended September 30, 2025, net income was significantly impacted by a recognized loss on the sale of available for sale securities totaling $9.8 million, net of tax, while both the three and nine month periods in 2025 experienced a strong increase in net interest income over the corresponding 2024 periods.
Current wording
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, or $9.8 million, net of tax, recognized during the prior year period. The first quarter of 2026 also experienced an increase in net interest income, which was partially offset by higher noninterest expenses and provision for credit losses over the corresponding 2025 period.
Previous wording
The following table presents a summarized consolidated statement of income and performance metrics and ratios for the periods indicated:
Current wording
The following table presents a summary of performance metrics and ratios for the periods indicated:
Previous wording
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 by higher average balances of time deposits during the 2025 periods.
Current wording
The year-over-year improvements in net interest income, tax-equivalent net interest income, net interest spread, and net interest margin primarily reflect a decrease in the average balances of interest-bearing liabilities and reductions in the average rates paid. Additionally, the impact of the balance sheet repositioning strategy completed in March 2025, pursuant to which the Company raised capital, increased cash on hand and replaced lower-yielding investment securities with higher yielding securities, and an increase in the average yield earned on loans contributed to the increase in net interest income during the three months ended March 31, 2026.
Previous wording
Total average balance of securities decreased by $12.8 million and $20.2 million for the three and nine months ended September 30, 2025, respectively, from the average balances in the prior year periods primarily due to routine paydowns and maturities in the portfolio. The average yield on securities increased 177 basis points and 129 basis points during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 reflecting the sale of lower-yielding securities and reinvestment into higher-yielding securities in the first quarter of 2025.
Current wording
Total average balance of securities increased by $4.4 million for the three months ended March 31, 2026 from the average balance in the prior year period due to purchases exceeding routine paydowns and maturities in the portfolio. The average yield on securities increased 141 basis points during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 reflecting the sale of lower-yielding securities and reinvestment into higher-yielding securities in the first quarter of 2025.
Previous wording
The total average loan balances for the three and nine months ended September 30, 2025 decreased $26.3 million and $4.9 million, respectively, from the same periods in 2024 largely reflecting the sale of a pool of mortgage loans totaling $18.8 million early in the first quarter of 2025 ahead of the Company's public offering and continuing paydowns and payoffs in the marine loan portfolio as the Company is no longer accepting new marine business. These decreases were partially offset by new loan growth in the commercial real estate loan portfolios.
Current wording
The total average loan balances for the three months ended March 31, 2026 remained level with the same period in 2025 reflecting growth in commercial real estate and home equity lines of credit loan portfolios, offset by the sale of a pool of mortgage loans totaling $18.8 million early in the first quarter of 2025 ahead of the Company's public offering, continued amortization of the marine loan portfolio as the Company is no longer accepting new marine business, and a net decrease in the commercial and industrial loan portfolio largely due to sales of SBA loans to the secondary market.
Previous wording
Total average balance of federal funds sold and interest-bearing deposits in other banks have increased $216.3 million and $189.2 million during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024, which were bolstered by the impact of the proceeds received from the public offering and increased deposit balances.
Current wording
Total average balance of federal funds sold and interest-bearing deposits in other banks decreased $46.7 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to the payoff of maturing borrowings.
Previous wording
Total average interest-bearing deposit balances for three and nine months ended September 30, 2025 increased $55.8 million $107.1 million, respectively, from the same periods in 2024. These increases were primarily in NOW accounts and time deposits. The average rate paid on interest-bearing deposits has decreased 33 basis points and 12 basis points during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 reflecting lower short-term market interest rates.
Current wording
Total average interest-bearing deposit balances for three months ended March 31, 2026 decreased $21.2 million from the same period in 2025. Time deposits and savings accounts decreased $60.6 million and $10.3 million, respectively, partially offset by NOW and money market accounts which increased $36.9 million and $12.8 million, respectively. The average rate paid on interest-bearing deposits decreased 39 basis points during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 reflecting lower average rates paid on time deposits.
Previous wording
The average balance of FHLB advances decreased $108.8 million and $83.1 million during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 due to maturing advances that were not replaced with new borrowings.
Current wording
The average balance of FHLB advances decreased $82.1 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to maturing advances that were not replaced with new borrowings. During the three months ended March 31, 2026 the Company's remaining FHLB borrowings were fully paid down, which materially reduced our reliance on wholesale funding.
Previous wording
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):
Current wording
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.
Previous wording
The provision for credit losses for the three and nine months ended September 30, 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.
Current wording
The provision for credit losses for the three months ended March 31, 2026 and 2025 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.
Previous wording
Total noninterest income was $5.2 million and $5.3 million for the three months ended September 30, 2025 and 2024, respectively, and $1.5 million and $13.0 million, respectively for the nine months ended September 30, 2025 and 2024. Management reviews the activities which generate noninterest income on an ongoing basis. The following table provides the components of noninterest income for the three and nine months ended September 30, 2025 and 2024, which are included within the respective Consolidated Statements of Income headings.
Current wording
Total noninterest income (loss) was $4.9 million and $(8.6) million for the three months ended March 31, 2026 and 2025, respectively. Management reviews the activities which generate noninterest income on an ongoing basis. The following table provides the components of noninterest income for the three months ended March 31, 2026 and 2025, which are included within the respective Consolidated Statements of Operations headings.
Previous wording
Wealth management fee income increased from 2024 to 2025. Wealth management fee income is comprised of income from fiduciary activities as well as 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 which has increased over the 2024 year period. Additionally, per transaction fees for estates and other services have also contributed to the year over year increase in revenue.
Current wording
Wealth management fee income increased from 2025 to 2026. Wealth management fee income is comprised of income from fiduciary activities as well as 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, which has increased $48.5 million, or 9.22%, to $574.4 million since March 31, 2025. Additionally, per transaction fees for estates and other services have also contributed to the year over year increase in revenue. Partially offsetting these increases was a decrease in investment sales commissions.
Previous wording
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 net pre-tax loss of $12.4 million during the nine months ended September 30, 2025. Management utilized the proceeds from the public offering capital raise completed in February 2025 to enable the balance sheet repositioning.
Current wording
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 net pre-tax loss of $12.4 million during three months ended March 31, 2025. There was no sale of available for sale debt securities in the three months ended March 31, 2026 .
Previous wording
Gain on sale of loans increased during the three and nine months ended September 30, 2025 when compared to the same periods in 2024. The Company sold $72.3 million in mortgage loans on the secondary market, consisting of $53.5 million of loans originated for sale and a $18.8 million pool of residential mortgage loans held for investment, and $16.3 million of SBA commercial loans during the nine months ended September 30, 2025. This compares to loan sales consisting of $40.4 million in mortgage loans and $6.9 million SBA commercial loans during the nine months ended September 30, 2024. The Company intends to continue originating mortgage loans for sale, whereas the mortgage portfolio sale was completed in the first quarter of 2025, at par, and ahead of the Company's public offering in order to bolster on-balance sheet liquidity.
Current wording
Gain on sale of loans increased during the three months ended March 31, 2026 when compared to the same period in 2025. The Company sold $24.1 million in mortgage loans on the secondary market, consisting of $16.6 million of loans originated for sale and $7.5 million of SBA commercial loans during the three months ended March 31, 2026. This compares to loan sales of $16.9 million, consisting of $14.9 million of loans originated for sale and $2.0 million SBA commercial loans, during the three months ended March 31, 2025. Additionally, during three months ended March 31, 2025 a pool of $18.8 million residential mortgage loans held for investment was sold at par.
Previous wording
Income from holdings in small business investment companies decreased during three and nine months ended September 30, 2025, respectively, compared to the same period in 2024. The decreases during the current year period are mainly attributed to lower cash distributions received, based on the results of their performance and timing of distributions.
Current wording
Income from holdings in small business investment companies increased during three months ended March 31, 2026, compared to the same period in 2025. The increase during the current year period is mainly attributed to higher cash distributions received, based on the results of their performance and difference in timing of distributions.
Previous wording
Total noninterest expenses increased $1.5 million, or 11.28%, for the three months ended September 30, 2025 and $2.6 million, or 6.76%, for the nine months ended September 30, 2025 compared to the same periods in 2024. The following table presents the components of noninterest expense for the three and nine months ended September 30, 2025 and 2024, which are included within the respective Consolidated Statements of Income headings.
Current wording
Total noninterest expenses increased $1.6 million, or 13%, for the three months ended March 31, 2026 compared to the same period in 2025. The following table presents the components of noninterest expense for the three months ended March 31, 2026 and 2025, which are included within the respective Consolidated Statements of Operations headings.
Previous wording
Salaries and employee benefits increased during the three and nine months ended September 30, 2025 over 2024, reflecting increases in salaries, commission and employee insurance expense, and annual incentive plan expense. The Company's number of full-time equivalent employees ("FTE's") has increased from 233 at September 30, 2024 to 249 at September 30, 2025.
Current wording
Salaries and employee benefits increased during the three months ended March 31, 2026 over 2025, primarily reflecting increases in salaries, employee insurance expense, employer 401(k) expense, and stock-based compensation expense. The Company's number of full-time equivalent employees ("FTE's") has increased from 233 at March 31, 2025 to 253 at March 31, 2026.
Previous wording
Three repossessed marine vessels were sold during the first quarter of 2025, resulting in the recognition of a $133 thousand loss during the nine months ended September 30, 2025. There were no sales of repossessed assets during the three months ended September 30, 2025 compared to the sale of one repossessed marine vessel during the three and nine months ended September 30, 2024, which resulted in a loss of $204 thousand.
Current wording
One repossessed marine vessel was sold during the first quarter of 2026, resulting in the recognition of a $39 thousand loss compared to the sale of three repossessed marine vessels during the first quarter 2025 which resulted in a loss of $133 thousand.
Previous wording
FDIC assessment expense, which is based in part on asset size and capital levels, decreased during the three and nine months ended September 30, 2025 compared to the same periods in 2024. The decrease in FDIC assessment reflects an improvement in the capital and financial ratio portion of the assessment rate, largely due to the capital raise completed in early 2025.
Current wording
FDIC assessment expense, which is based in part on asset size and capital levels, decreased during the three months ended March 31, 2026 compared to the same periods in 2025. The decrease in FDIC assessment reflects an improvement in the capital adequacy and financial ratio portions of the assessment rate for the year ended December 31, 2025 compared to December 31, 2024 largely due to the capital raise completed in early 2025.
Previous wording
Other operating expenses increased by $412 thousand, or 27.56%, and $513 thousand, or 10.88%, during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, largely reflecting a higher level of fraudulent activity related to customer accounts, higher expenses related to volume based costs and loan collection costs, an increase in director expenses, and greater travel costs related to investor relations activities.
Current wording
Other operating expenses increased by $552 thousand, or 43% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, largely reflecting higher expenses related to volume based costs and loan collection costs, an increase in director expenses, and higher charitable contributions.
Previous wording
The efficiency ratio of the Company was 64.06% and 71.34% for the three months ended September 30, 2025 and 2024, respectively, and 66.68% and 75.22% for the nine months ended September 30, 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 noninterest expense by the sum of tax equivalent net interest income and noninterest income. The Company adjusts for non-recurring items such as gains and losses on the investment portfolio and other gains/losses from OREO, repossessed assets, disposals of bank premises and equipment, etc. The tax rate utilized is 21%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency.
Current wording
The efficiency ratio of the Company was 67.97% and 72.20% for the three months ended March 31, 2026 and 2025, respectively. The improvement in the efficiency ratio during 2026 reflects an increase in net interest and noninterest income, which was partially offset by an increase in noninterest expenses. The efficiency ratio is not a measurement under GAAP. It is calculated by dividing noninterest expense by the sum of tax equivalent net interest income and noninterest income. The Company adjusts for non-recurring items such as gains and losses on the investment portfolio and other gains/losses from OREO, repossessed assets, disposals of bank premises and equipment, etc. The tax rate utilized is 21%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency.
Previous wording
The calculation of the efficiency ratio for the three and nine months ended September 30, 2025 and 2024 was as follows:
Current wording
The calculation of the efficiency ratio for the three months ended March 31, 2026 and 2025 was as follows:
Previous wording
The following table presents the Company's income tax provision and applicable tax rates for the periods indicated:
Current wording
The following table presents the Company's income tax provision (benefit) and effective tax rate for the periods indicated:
Previous wording
The following table presents a summarized statement of income for the community banking business segment for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a summarized statement of operations for the community banking business segment for the three months ended March 31, 2026 and 2025:
Previous wording
Net interest income increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 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. 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.
Current wording
Net interest income increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 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) reduction in time deposit interest expense due primarily to lower average rates paid; and iv) reduction in borrowings interest expense as FHLB advances have matured. These increases were partially offset by a decrease in the level of interest-earning deposits balances in other banks as cash was deployed to payoff the Company's remaining FHLB advances, as well as an increase in customer NOW and money market deposit balances.
Previous wording
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 net pre-tax loss of $12.4 million.
Current wording
Loss on the sale of securities during the three months ended March 31, 2025 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 and a pre-tax loss of $12.4 million was recognized.
Previous wording
The decrease in income tax expense during the nine months ended September 30, 2025 was directly related to the recognized loss on the sale of securities.
Current wording
The increase in income tax expense during the three months ended March 31, 2026 was due to the Company's net income compared to its net loss recorded during three months ended March 31, 2025, which was directly related to the recognized loss on the sale of securities during the 2025 period.
Previous wording
The following table presents a summarized statement of income for the marine lending segment for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a summarized statement of operations for the marine lending segment for the three months ended March 31, 2026 and 2025:
Previous wording
Net revenues declined due to pay downs in the portfolio, which are not being replaced with new loan originations. The marine loan portfolio totaled $185.9 million and $225.9 million at September 30, 2025 and September 30, 2024, respectively.
Current wording
Net revenues declined due to pay downs in the portfolio, which are not being replaced with new loan originations. The marine loan portfolio totaled $170.2 million and $203.5 million at March 31, 2026 and March 31, 2025, respectively.
Previous wording
Provision for credit losses increased reflecting charge-off activity partially offset by declining loan balances during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Current wording
Provision for credit losses increased reflecting an increase in the historical loss factor, which was partially offset by declining loan balances during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Previous wording
The following table presents a summarized statement of income for the wealth management segment for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table presents a summarized statement of operations for the wealth management segment for the three months ended March 31, 2026 and 2025:
Previous wording
Net revenue increased during the three and nine months ended September 30, 2025 over the 2024 periods due to increases in trust services income reflecting fees earned on a higher level of assets under management and estate settlements and increases in investment sales revenue. The increase in noninterest expense reflects increases in salaries and employee benefits expenses.
Current wording
Net revenue increased during the three months ended March 31, 2026 over the 2025 periods due to increases in trust services income reflecting fees earned on a higher level of assets under management and estate settlements, partially offset by a decrease in investment sales revenue. Assets under management were $574.4 million and $525.9 million at March 31, 2026 and 2025, respectively.
Previous wording
Total securities available for sale increased $49 thousand, or 0.04% during 2025. The Company purchased $102.2 million of securities during the nine months ended September 30, 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 $19.8 million and sales of $99.2 million during the nine months ended September 30, 2025.
Current wording
Total securities available for sale decreased $4.2 million, or 3.49% during the three months ended March 31, 2026. The Company purchased $9.8 million of securities during the three months ended March 31, 2026 and had total maturities, calls, and principal repayments of $13.3 million. There were no sales during the three months ended March 31, 2026.
Previous wording
Net unrealized loss on available for sale securities was $7.1 million at September 30, 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).
Current wording
Net unrealized loss on available for sale securities was $7.5 million at March 31, 2026 as compared to a net unrealized loss of $6.7 million at December 31, 2025. 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).
Previous wording
Gross loans were $1.46 billion and $1.47 billion at September 30, 2025 and December 31, 2024, respectively. This represents a decrease of $7.1 million, or 0.49%, during the nine months ended September 30, 2025. The ratio of gross loans to deposits decreased during the nine months ended September 30, 2025 from 93.14% at December 31, 2024 to 88.21% at September 30, 2025 reflecting the decrease in gross loans, compounded by a 5.07% increase in deposits during the same time period.
Current wording
Gross loans were $1.46 billion and $1.47 billion at March 31, 2026 and December 31, 2025, respectively. This represents a decrease of $14.2 million, or 0.97%, during the three months ended March 31, 2026. The ratio of gross loans to deposits decreased during the three months ended March 31, 2026 from 91.65% at December 31, 2025 to 91.28% at March 31, 2026 reflecting the decrease in gross loans, mostly offset by a .57% decrease in deposits during the same time period.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
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:
Current report — wording carried from elsewhere
The following table presents a summarized consolidated statement of operations for the periods indicated:
Current report — wording carried from elsewhere
The following table provides information about changes in rate and volume (dollars in thousands):
Current report — wording carried from elsewhere
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 short-term borrowing arrangements, including the Federal Reserve discount window and federal funds lines of credit with larger financial institutions as additional sources of liquidity. The Bank’s membership with the Federal Home Loan Bank of Atlanta provides a source of borrowings with numerous rate and term structures. The Company’s senior management monitors the liquidity position regularly and attempts to maintain a position which utilizes available funds most efficiently.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following table shows average balance, interest, and yield/rate information, as well as net interest margin on a tax- equivalent basis for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
Previous report — wording carried elsewhere
Income and yields are reported on a tax-equivalent basis using a federal tax rate of 21% (Non-GAAP).
Previous report — wording carried elsewhere
Refer to section entitled "Tax-Equivalent Net Interest Income" for the reconciliation of tax-equivalent net interest income.
Previous report — wording carried elsewhere
Allowance for Credit Losses on Loans