John Marshall Bancorp, Inc.
For the period ended Dec 31, 2025. Filed Mar 13, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 13, 2026
JMSB$23.20+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0001558370-25-003982
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-13.
0001104659-26-027378
Item 7. 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 113 previous paragraphs and 119 current paragraphs.
59 unchanged; 33 reworded; 24 added; 19 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 34 previous and 35 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 (24)
Current report
Net income for the year ended December 31, 2025 was $21.2 million ($1.49 per diluted common share) compared to $17.1 million ($1.20 per diluted common share) for the year ended December 31, 2024, representing a 24.0% and 24.2% increase in net income and earnings per diluted common share, respectively. The increase during 2025 was driven by a $9.5 million increase in net interest income, which was partially offset by a $2.1 million increase in provision for credit losses and a $1.8 million increase in non-interest expense. The increase in net interest income was driven primarily by the decrease in
Current report
rates of interest-bearing deposits coupled with increases in average balances and yields of the loan portfolio. The net interest margin for the twelve months ended December 31, 2025 was 2.68% as compared to 2.28% for the same period in the prior year. An improvement in net interest margin during the current year was attributable to management’s proactive approach in repricing deposits concurrently with each of the three federal funds rate cuts totaling 75 basis points since September 2025 through December 2025. Higher provision for credit losses during the twelve months ended December 31, 2025 was primarily a result of the growth in the loan portfolio and the related changes in the portfolio mix, coupled with the impact of the charge-off of the unguaranteed portion of one commercial business SBA 7(a) loan during the fourth quarter of 2025 and management’s assessment of the qualitative adjustments reflecting changing local economic conditions monitored throughout the year. An increase in non-interest expense during the current year as compared to the prior year was primarily attributable to an increase in salaries and employee benefits, which was mainly associated with the higher headcount within the Company and an increase in incentive compensation tied to the Company’s operating performance. The investments made to expand the headcount during the current year are expected to contribute to the future growth of the Company and subsequent increases in revenues. The increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan.
Current report
The results for 2025 reflect the following:
Current report
of the Company and subsequent increases in revenues. The increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan.
Current report
At December 31, 2025, the allowance for credit losses was $19.8 million or 1.00% of outstanding loans compared to $18.7 million or 1.00% of outstanding loans at the end of 2024. The increase in the allowance during the year compared to the previous year was primarily driven by the growth of the loan portfolio along with management’s adjustments of qualitative factors related to economy and loan portfolio concentrations. As of December 31, 2025, the Company had no non-accrual loans and no other real estate owned assets.
Current report
Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The ratio of common equity to assets increased to 12.2% at December 31, 2025, compared to 11.9% at December 31, 2024. At December 31, 2025, the Company had a total risk-based capital ratio of 16.3%, a common equity tier 1 risk-based capital ratio of 15.2%, a tier 1 risk-based capital ratio of 15.2%, and a tier 1 leverage ratio of 12.5%, all above the “well-capitalized” regulatory requirement levels.
Current report
Accounting Pronouncements Adopted During the Current Year
Current report
For further information regarding accounting pronouncements adopted during the current year, refer to Note 1— Nature of Business and Summary of Significant Accounting Policy in the Notes to the Consolidated Financial Statements.
Current report
Pending Accounting Pronouncements
Current report
Refer to Note 1— Nature of Business and Summary of Significant Accounting Policy in the Notes to the Consolidated Financial Statements for more details regarding pending accounting pronouncements.
Current report
(1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.
Current report
Net interest income increased $9.5 million or 18.6% on a fully tax-equivalent basis for the year ended December 31, 2025. The net interest margin for the year ended December 31, 2025 was 2.68% as compared to 2.28% for the same period in the prior year. These increases in net interest income and net interest margin were driven primarily by the decrease in rates of interest-bearing deposits coupled with increases in average balances and yields of the loan portfolio.
Current report
The yield on interest-earning assets was 5.01% for the twelve months ended December 31, 2025 compared to 4.91% for the same period in 2024. The increase in yield on interest-earning assets was primarily due to a 13 basis point increase in loan yield and an eight basis point increase in securities yield, as a result of higher prevailing interest rates as assets repriced subsequent to the fourth quarter of 2024. Average loans increased $73.1 million between the twelve months ended December 31, 2025 and 2024, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to December 31, 2024. These positive contributing factors to the year-over-year increase in the net interest margin were partially offset by lower yields and average balances of interest-bearing deposits in other banks.
Current report
Interest income on interest-bearing deposits with other banks decreased by approximately $2.8 million or 32.2% primarily as a result of lower rates and volume. Average balances declined approximately $26.5 million, mainly due to fundings of
Current report
the new loan originations, while yields decreased 101 basis points as a result of three fed funds rate cuts totaling 75 basis points since December 31, 2024.
Current report
Interest expense decreased by $6.4 million to $52.7 million for the year ended December 31, 2025 compared to $59.1 million for the year ended December 31, 2024, primarily due to a decrease in rates on interest-bearing deposits coupled with lower average balance of borrowings. The decrease in rates on interest-bearing deposits was mainly due to repricing of the Company’s time deposits as a result of three fed funds rate cuts since December 31, 2024. The decline in average balance of borrowings was driven by the full pay-off of Federal Reserve’s Bank Term Funding Program advance during the third quarter of 2024, which was replaced by lower cost FHLB advances.
Current report
Non-interest income decreased $197 thousand or 8.7% during the year ended December 31, 2025 compared to the same period of 2024. The decrease was primarily driven by a $198 thousand decrease in the recorded gain on sale of the government guaranteed portion of the SBA 7(a) loans due to lower sale activity along with the $88 thousand decrease in insurance commissions. These decreases were partially offset by a $166 thousand increase to the mark-to-market adjustments on the Company’s NQDC plan and a $37 thousand increase in swap fee income.
Current report
Non-interest expense increased $1.8 million or 5.5% during the year ended December 31, 2025 compared to the same period in 2024 primarily resulting from increases in salaries and employee benefits, data processing service fees, professional fees, and other operating expenses. The $1.5 million or 7.7% increase in salaries and employee benefits was mainly associated with the higher headcount within the Company and an increase in incentive compensation tied to the Company’s operating performance. The investments made to expand the headcount during the current year are expected to contribute to the future growth of the Company and subsequent increases in revenues. Increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan. The $168 thousand or 7.7% increase in data processing service fees was primarily due to contractual increases and volume-based activity. Professional fees increased $145 thousand or 14.5% for the period, driven primarily by higher consulting fees. These increases were partially offset by a decrease in the Company’s occupancy expense, which declined by $216 thousand or 12.3%, due to a decrease in office rent as a result of the renegotiation of more favorable terms on certain leases.
Current report
Income tax expense increased $1.4 million or 29.3% to $6.2 million for the year ended December 31, 2025 compared to $4.8 million for the year ended December 31, 2024. Our effective tax rate for the year ended December 31, 2025 was 22.5% compared to 21.7% for the year ended December 31, 2024. The increase in the effective tax rate between the comparative periods was primarily driven by higher permanent differences, the most significant component of which was the increased disallowance of compensation under Internal Revenue Code Section 162(m).
Current report
The Company’s total assets increased $97.6 million or 4.4% to $2.33 billion at December 31, 2025 compared to $2.23 billion at December 31, 2024. The increase in total assets is primarily attributable to the growth of the loan portfolio, which increased $103.2 million or 5.5% since December 31, 2024.
Current report
The Company’s total liabilities increased $78.6 million or 4.0% to $2.07 billion at December 31, 2025 compared to $1.99 billion at December 31, 2024, which was driven by the $49.9 million and $40.2 million increases in time deposits and interest-bearing demand deposits, respectively.
Current report
Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The year-over-year change in book value per share was primarily due to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss, resulting from an increase in the market value of our available-for-sale investment portfolio. This increase was partially offset by the cash dividend paid and the increased share count from shareholder option exercises and restricted share award issuances. The share issuances were partially offset by the Company’s share repurchases during the period.
Current report
Gross loans net of unearned income increased $103.2 million or 5.5% to $1.98 billion as of December 31, 2025 compared to $1.87 billion as of December 31, 2024. The increase in loans from December 31, 2025, was primarily attributable to
Current report
FHLB advances remained unchanged at $56.0 million as of December 31, 2025 compared to December 31, 2024. The three FHLB advances have a weighted average fixed interest rate of 3.99%. In addition to outstanding FHLB advances, total borrowings as of December 31, 2025 included subordinated debt totaling $24.9 million.
Removed paragraphs (19)
Previous report
As of December 31, 2024, the Company had total consolidated assets of $2.23 billion, total loans net of unearned income of $1.87 billion, total deposits of $1.89 billion and total shareholders’ equity of $246.6 million.
Previous report
The adoption of CECL did not result in a significant change to any other credit risk management and monitoring processes, including identification of past due or delinquent borrowers, nonaccrual practices or charge-off policy.
Previous report
Overview
Previous report
The Company reported net income of $17.1 million for the year ended December 31, 2024, an increase of $12.0 million when compared to the same period in 2023. As disclosed in our 2023 10-K filed March 20, 2024, during July 2023, the Company sold certain lower-yielding available-for-sale investment securities with a total par value of $161.2 million and agreed to surrender $21.4 million of bank owned life insurance (“BOLI”) contracts, resulting in a non-recurring, after-tax loss of $14.6 million that was recorded during the third quarter of 2023 (the “Restructuring”). Core net income (Non-GAAP) defined as reported net income excluding the non-recurring after-tax loss resulting from the Restructuring, was $19.8 million for the year ended December 31, 2023. The following table reconciles net income to core net income, which is a non-GAAP measure, and outlines reported (GAAP) and core (Non-GAAP) diluted earnings per share, ROAA and ROAE as follows:
Previous report
Net interest income increased $0.5 million or 0.9% on a fully tax-equivalent basis for the year ended December 31, 2024. The increase in net interest income was driven by the increase in the yield of interest-earning assets and the reduction in the average balance of interest-bearing liabilities outpacing the increase in the cost on interest-bearing liabilities.
Previous report
On a fully tax-equivalent basis, the net interest margin was 2.28% for the year ended December 31, 2024, compared to 2.21% for the same period in 2023. The increase in net interest margin was primarily due to increases in the yield of interest-bearing assets, which was partially offset by an increase in the cost of interest-bearing deposits.
Previous report
The loan portfolio’s yield for the year ended December 31, 2024 was 5.28% compared to 4.84% for the year ended December 31, 2023. The increase in yield on the Company’s loan portfolio was primarily a result of repricing of assets subsequent to the fourth quarter of 2023 and certain prepayment penalties.
Previous report
The investment securities portfolio’s yield for the year ended December 31, 2024 was 2.01% compared to 2.04% for the year ended December 31, 2023. The decrease was primarily due higher yielding investments maturing during the year ended December 31, 2024.
Previous report
The yield on interest-bearing deposits due from banks for the year ended December 31, 2024 was 5.35% compared to 5.35% for the year ended December 31, 2023.
Previous report
was primarily attributable to the Company’s loan portfolio. The decrease in volume of average interest-earning assets was primarily attributable to the Company’s securities portfolio.
Previous report
Interest expense increased by $8.8 million to $59.1 million for the year ended December 31, 2024 compared to $50.3 million for the year ended December 31, 2023, primarily due to an increase in rates. The increase in rates was primarily a result of the repricing of the Company’s time deposits. The increase in rates was partially offset by 69.7 million or 4.3% decrease in average interest-bearing liabilities, as the Company utilized a portion of the cash from the Restructuring and other cash flow from the investment portfolio to pay down higher cost funding.
Previous report
Non-interest income increased $17.2 million during the year ended December 31, 2024 compared to the same period in 2023. Excluding the impact of the Restructuring, non-interest income decreased $0.1 million or 4.4%. The decrease reflects the surrender of BOLI as part of the Restructuring.
Previous report
Non-interest expense increased $1.0 million or 3.2% during the year ended December 31, 2024 compared to the same period in 2023. In 2023, the Company realized a non-recurring $0.3 million reversal of a litigation reserve. During the first quarter 2024, the Company incurred non-recurring expenses totaling $0.1 million in connection with a strategic opportunity that was explored and ultimately did not materialize. Excluding these two non-recurring items, non-interest expense increased $0.6 million or 1.9%. The increase was also due to increases in professional fees and data processing, partially offset by lower salaries and employee benefit expense and lower occupancy expense as the Company continues to renegotiate its office leases. The increase in professional fees was due to increased contract costs and services. The increase in data processing fees was primarily due to contractual increases and volume-based activity. The decrease in salaries and employee benefits was due to lower incentive accruals and higher direct loan origination costs when compared to the same period of the prior year, partially offset by higher deferred compensation expense as a result of a mark-to-market fluctuations on the Company’s NQDC.
Previous report
Income tax expense increased $1.9 million or 68.5% to $4.8 million for the year ended December 31, 2024 compared to $2.8 million for the year ended December 31, 2023. Our effective tax rate for the year ended December 31, 2024 was 21.7% compared to 35.4% for the year ended December 31, 2023 or 21.2% for the year ended December 31, 2023, when excluding the impact of the Restructuring (Non-GAAP). The increase in effective tax rate between the adjusted comparative periods was due to changes in temporary differences. Income tax for the twelve months ended December 31, 2024 represents a $0.6 million or 10.5% decrease when compared to the Company’s core income tax expense (Non-GAAP) for the twelve months ended December 31, 2023 of $5.3 million.
Previous report
The Company’s total assets decreased $7.6 million or 0.3% to $2.23 billion at December 31, 2024 compared to $2.24 billion at December 31, 2023. The decrease in total assets is primarily attributable to a decrease in available-for-sale securities of $39.7 million, partially offset by increases in interest-bearing deposits in banks and loans, net of unearned income of $24.9 million and $12.2 million, respectively.
Previous report
The Company’s total liabilities decreased $24.3 million or 1.2% to $1.99 billion at December 31, 2024 compared to $2.01 billion at December 31, 2023. The decrease in total liabilities was primarily attributable to a decrease in time deposits of $125.5 million and a decrease of Federal Reserve Bank borrowings of $54.0 million. The decreases were partially offset by an increase in non-interest bearing demand deposits and interest-bearing demand deposits of $21.9 million and $97.1 million, respectively.
Previous report
NM – Not meaningful
Previous report
Shareholders’ equity increased $16.7 million or 7.3% to $246.6 million at December 31, 2024 compared to $229.9 million at December 31, 2023. The increase in shareholders’ equity was primarily attributable the Company’s earnings during the year and a decrease in accumulated other comprehensive loss, which was attributable to a decrease in unrealized losses on our available-for-sale portfolio due to market value increases. These increases were partially offset by cash dividends paid.
Previous report
On September 3, 2024, the Company paid off its $77.0 million advance from the Reserve Bank under the Bank Term Funding Program (“BTFP”) and concurrently secured three FHLB advances totaling $56.0 million. The FHLB advances have a weighted average fixed interest rate of 4.01% compared to 4.76% for the retired BTFP advance. Total borrowings as of December 31, 2024 consisted of subordinated debt totaling $24.8 million and the FHLB advances.
Reworded paragraphs (33)
Previous wording
This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this report consist of tax-equivalent net interest income, core net income, core earnings per share (diluted), core return on average assets, core return on average equity and core income tax expense.
Current wording
This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this report consist of tax-equivalent net interest income and net interest margin.
Previous wording
These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable
Current wording
These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.
Previous wording
We are a bank holding company headquartered in Reston, Virginia primarily serving the Washington, D.C. metropolitan area. The material business operations of our organization are performed through the Bank. As a result, the discussion and analysis within this section primarily relate to activities conducted at the Bank.
Current wording
John Marshall Bancorp, Inc. is a bank holding company headquartered in Reston, Virginia primarily serving the Washington, D.C. metropolitan area. The material business operations of the Company are performed through its only subsidiary, John Marshall Bank. As a result, the discussion and analysis within this section primarily relate to activities conducted at the Bank.
Previous wording
As with most community banks, the Bank derives a significant portion of its income from interest received on loans and investments. The Bank’s primary source of funding is deposits, both interest-bearing and non-interest-bearing. To account for credit risk inherent in all loans, the Bank maintains an allowance for loan credit losses to absorb lifetime losses on existing loans. The Bank establishes and maintains this allowance by recording a provision for loan credit losses against earnings. In addition to net interest income, the Bank also generates income through service charges on deposits, insurance commission income, merchant services fee income, swap fee income and gain on sale of the guaranteed portion of U.S. Small Business Administration (“SBA”) 7(a) loans. In order to maintain its operations, the Bank incurs various operating expenses which are further described within the “Results of Operations” later in this section.
Current wording
As with most community banks, the Bank derives a significant portion of its income from interest received on loans and investments. The Bank’s primary source of funding is deposits, both interest-bearing and non-interest-bearing. To account for credit risk inherent in all loans, the Bank maintains an allowance for loan credit losses to absorb lifetime losses on existing loans. The Bank establishes and maintains this allowance by recording a provision for loan credit losses against earnings. In addition to net interest income, the Bank also generates income through service charges on deposits, insurance commission income, merchant services fee income, swap fee income and gain on sale of the guaranteed portion of U.S. Small Business Administration (“SBA”) 7(a) loans.
Previous wording
In addition to available secured borrowing capacity, the Company had available federal funds lines with correspondent banks of $110.0 million at December 31, 2024.
Current wording
FHLB advances remained unchanged at $56.0 million as of December 31, 2025 compared to December 31, 2024. The three FHLB advances have a weighted average fixed interest rate of 3.99%. In addition to outstanding FHLB advances, total borrowings as of December 31, 2025 included subordinated debt totaling $24.9 million. The Company’s balance sheet remains highly liquid. The Company’s liquidity position, defined as the sum of cash, unencumbered securities and available secured borrowing capacity, totaled $827.0 million as of December 31, 2025 compared to $727.3 million as of December 31, 2024, respectively. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at December 31, 2025. At December 31, 2025, total cash and cash equivalents were $130.0 million, an increase of$7.5 million or 6.1% compared to December 31, 2024.
Previous wording
The following is a discussion of the critical accounting policy and significant estimate that require us to make complex and subjective judgments. Additional information about this policy can be found in Note 1 of our consolidated financial statements included in Item 8 of this Form 10-K.
Current wording
The following is a discussion of a critical accounting policy and significant estimate that require us to make complex and subjective judgments. Additional information about this policy can be found in Note 1 of our consolidated financial statements included in Item 8 of this Form 10-K.
Previous wording
The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income.
Current wording
The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous charge-offs, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income.
Previous wording
The Company utilizes a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of loss drivers, which may include unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast, changes in volume and severity of adversely classified loans, changes in concentrations of credit, changes in the nature and volume of the loan segments, factors related to credit administration, and other idiosyncratic risks not embedded in the data used in the model.
Current wording
The Company utilizes a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of economic variables, such as unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast, changes in volume and severity of adversely classified loans, changes in concentrations of loan portfolio, changes in the nature and volume of the loan segments, factors related to credit administration, and other idiosyncratic risks not embedded in the data used in the model.
Previous wording
Loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.
Current wording
Loans that do not share similar risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under the current expected credit loss model (“CECL,”) for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.
Previous wording
received and interest paid as a percentage of average total interest-earning assets. Management seeks to maximize net interest income without exposing the Company to an excessive level of interest rate risk through management’s asset and liability management policies. Interest rate risk is managed by monitoring the pricing, maturity, and repricing options of all classes of interest-bearing assets and liabilities. Management expects net interest income and net interest margin to fluctuate based on changes in interest rates and changes in the amount and composition of the Company’s interest-earning assets and interest-bearing liabilities.
Current wording
Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings, and is the Company’s primary revenue source. Net interest income is affected by overall balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings. The Company’s interest-earning assets include loans, investment securities and interest-bearing deposits in other banks, while our interest-bearing liabilities include interest-bearing deposits and borrowings. Net interest margin represents the difference between interest received and interest paid as a percentage of average total interest-earning assets. Management seeks to maximize net interest income without exposing the Company to an excessive level of interest rate risk through management’s asset and liability management policies. Interest rate risk is managed by monitoring the pricing, maturity, and repricing options of all classes of interest-earning assets and interest-bearing liabilities. Management expects net interest income and net interest margin to fluctuate based on changes in interest rates and changes in the amount and composition of the Company’s interest-earning assets and interest-bearing liabilities.
Previous wording
The cost of interest-bearing liabilities increased 0.70% from 3.08% for the year ended December 31, 2023 to 3.78% for the year ended December 31, 2024. The increase in the cost of interest-bearing liabilities was primarily due to higher interest expense on deposits and other borrowings. The increase in the cost of interest-bearing liabilities was primarily due to a 71 basis point increase in the cost of interest-bearing deposits as a result of the repricing of the Company’s time deposits coupled with an increase in rates offered on money market, NOW and savings deposit accounts since the fourth quarter of 2023.
Current wording
The cost of interest-bearing liabilities was 3.37% for the year ended December 31, 2025 compared to 3.78% for the year ended December 31, 2024. The decrease in the cost of interest-bearing liabilities was primarily due to a 40 basis points decrease in the cost of interest-bearing deposits as a result of the repricing of the Company’s time deposits coupled with a decrease in rates offered on money market, interest-bearing demand deposits and savings deposit accounts since the fourth quarter of 2024.
Previous wording
The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume.
Current wording
The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column
Previous wording
Interest income increased by $9.3 million or 9.2% to $110.3 million on a fully tax-equivalent basis for the year ended December 31, 2024 compared to $101.0 million for the year ended December 31, 2023, driven by an increase in rates which was partially offset by decrease in volume on interest-earning assets. The increase in rate on interest-earning assets
Current wording
Interest income increased by $3.1 million or 2.8% to $113.4 million on a fully tax-equivalent basis for the year ended December 31, 2025 compared to $110.3 million for the year ended December 31, 2024, driven by an increase in volume and rates on interest-earning assets. The increase in rates and volume on interest-earning assets was primarily attributable to the Company’s loan portfolio, which was partially offset by the decrease in rate and volume of interest-bearing deposits in other banks.
Previous wording
Fully tax-equivalent interest income on loans increased by approximately $9.9 million or 11.5% primarily as a result of rate. Average loans increased approximately $33.4 million between the years ended December 31, 2024 and December 31, 2023, which was primarily attributable to growth in the investor real estate and residential loan portfolios.
Current wording
Fully tax-equivalent interest income on loans increased by approximately $6.3 million or 6.6% primarily as a result of higher volume and rates. Average loans increased approximately $73.1 million, primarily attributable to growth in the construction & development and residential loan portfolios, while loan yields increased 13 basis points between the years ended December 31, 2025 and December 31, 2024.
Previous wording
Fully tax-equivalent interest income on investment securities decreased by approximately $2.4 million. The decrease was primarily the result of volume decreasing from the Restructuring and to a lesser extent, the amortization and maturities of securities. Average investment securities decreased approximately $116.5 million between the years ended December 31, 2024 and December 31, 2023.
Current wording
Fully tax-equivalent interest income on investment securities decreased by approximately $0.4 million. This decrease was primarily the result of volume decreasing from the amortization and maturities of securities. Average investment securities decreased approximately $29.1 million between the years ended December 31, 2025 and December 31, 2024.
Previous wording
The Company recorded a $0.4 million recovery of provision for credit losses for the year ended December 31, 2024 compared to a $3.3 million recovery of provision for the year ended December 31, 2023. The decreased recovery of provision for credit losses during 2024 was primarily a result of changes in the composition and volume of the loan portfolio, considerations of qualitative factors and the continued strong credit performance of our loan portfolio segments.
Current wording
The Company recorded a $1.7 million provision for credit losses for the year ended December 31, 2025 compared to a $0.4 million recovery of provision for the year ended December 31, 2024. The provision for credit losses during the year ended December 31, 2025 was primarily a result of growth of the loan portfolio and the related changes in the portfolio mix, coupled with the impact of the charge-off of the unguaranteed portion of one commercial business SBA 7(a) loan during the fourth quarter of 2025 and management’s assessment of the qualitative adjustments reflecting changing local economic conditions monitored throughout the year.
Previous wording
The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $222.3 million at December 31, 2024 and $265.5 million at December 31, 2023. The investment portfolio is used as a source of liquidity, interest income, and credit risk diversification, as well as to manage rate sensitivity and provide collateral for secured public funds and secured credit lines. Investment securities are classified as available-for-sale or held-to-maturity based on management’s investment strategy and management’s assessment of the intent and ability to hold the securities until maturity. Investment securities that we may sell prior to maturity in response to changes in management’s investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available-for-sale. The Company also had restricted stock and equity securities within its investment securities portfolio with total carrying values of $7.6 million and $2.8 million, respectively, as of December 31, 2024 and $5.0 million and $2.8 million, respectively, as of December 31, 2023.
Current wording
The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $212.3 million at December 31, 2025 and $222.3 million at December 31, 2024. The investment portfolio is used as a source of liquidity, interest income, and credit risk diversification, as well as to manage rate sensitivity and provide collateral for secured public funds and secured credit lines. Investment securities are classified as available-for-sale or held-to-maturity based on management’s investment strategy and management’s assessment of the intent and ability to hold the securities until maturity. Investment securities that we may sell prior to maturity in response to changes in management’s investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available-for-sale. The Company also had restricted stock and equity securities within its investment securities portfolio with total carrying values of $7.6 million and $2.8 million, respectively, at both December 31, 2025 and December 31, 2024.
Previous wording
The Company did not purchase or sell any investment securities during the year ended December 31, 2024. The Company had $45.6 million in maturities and principal repayments on securities during the year ended December 31, 2024. Maturities consisted of $17.0 million in U.S. treasuries, $3.0 million in U.S. agency, and $0.3 million in municipal -taxable. Principal repayments consisted of $18.8 million of mortgage-backed securities and $6.4 million of collateralized mortgage obligation securities.
Current wording
The Company purchased $32.3 million of investment securities during the year ended December 31, 2025, which were comprised of $30.3 million of mortgage-backed securities, $1.0 million of collateralized mortgage obligation securities and $1.0 million of U.S. agency securities. The Company did not sell any investment securities during the year ended December 31, 2025. The Company had $47.0 million in maturities and principal repayments on securities during the year ended December 31, 2025. Maturities consisted of $14.8 million in U.S. treasuries, $5.0 million in U.S. agency securities, and $0.3 million in municipal-taxable securities. Principal repayments consisted of $19.3 million of mortgage-backed securities and $7.6 million of collateralized mortgage obligation securities.
Previous wording
In the prevailing rate environments as of both December 31, 2024 and December 31, 2023, the Company’s investment portfolio had an estimated weighted average remaining life of approximately 4.2 years. The Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years and 3.0 years in the prevailing rate environments as of December 31, 2024 and December 31, 2023, respectively. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 6.0 years and 6.7 years as of December 31, 2024 and December 31, 2023, respectively.
Current wording
In the prevailing rate environments as of both December 31, 2025 and December 31, 2024, the Company’s investment portfolio had an estimated weighted average remaining life of approximately 3.9 years and 4.2 years, respectively. The Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years in the prevailing rate environments at both December 31, 2025 and December 31, 2024. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.2 years and 6.0 years as of December 31, 2025 and December 31, 2024, respectively.
Previous wording
The following table summarizes the maturity composition of our investment securities as of December 31, 2024, including the weighted average yield of each maturity band. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security.
Current wording
The following table summarizes the maturity composition of our investment securities as of December 31, 2025, including the weighted average yield of each maturity range. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security.
Previous wording
Gross loans net of unearned income increased $12.7 million or 0.7% to $1.87 billion as of December 31, 2024 compared to $1.85 billion as of December 31, 2023. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns.
Current wording
growth in construction & development loans and residential mortgage loans, partially offset by a decline in commercial owner-occupied real estate loans. All other portfolios remained relatively unchanged during 2025. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns.
Previous wording
The Company’s asset quality remained strong during the year ended December 31, 2024. The Company had no non accrual loans and OREO as of December 31, 2024 and December 31, 2023. The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025.
Current wording
The Company’s asset quality remained strong during the year ended December 31, 2025. The Company had no non accrual loans and OREO as of December 31, 2025 and December 31, 2024. During the twelve months ended December 31, 2025, the Company charged-off one commercial business SBA 7(a) loan in the total amount of $361 thousand. The charged-off amount represented the unguaranteed portion of the loan. The Company has submitted a reimbursement claim to the SBA for the guaranteed portion of the loan in the amount of $1.1 million and expects to be paid in full by the end of the first quarter of 2026. The guaranteed portion of the loan was 90 days past due and still accruing interest as of December 31, 2025. The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025.
Previous wording
The Company made one loan modification to a borrower experiencing financial difficulty during the twelve months ended December 31, 2024. As of December 31, 2024, the outstanding principal balance of the loan was $1.5 million which represents 3.16% of the Commercial Non-Real Estate Loans - Commercial loan segment. The loan was modified to provide a combination of interest rate and term extension. As of December 31, 2024, this loan was current and paying in accordance with the modified terms. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023.
Current wording
The Company did not make any loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2025.
Previous wording
The Company recorded net recoveries of $2 thousand during the year ended December 31, 2024 compared to net recoveries of $2 thousand during the year ended December 31, 2023. At December 31, 2024, the allowance for loan credit losses was $18.7 million, or 1.00% of outstanding loans, net of unearned income, compared to $19.5 million, or 1.05% of outstanding loans, net of unearned income, at December 31, 2023. The decrease in the allowance as a percentage of outstanding loans, net of unearned income, was primarily a result of changes in the Company’s loss driver analysis and assumptions, changes in the composition of the loan portfolio, improved economic forecasts used in the quantitative portion of the model and considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.
Current wording
The Company recorded net charge-offs of $359 thousand during the year ended December 31, 2025 compared to net recoveries of $2 thousand during the year ended December 31, 2024. At December 31, 2025, the allowance for loan credit losses was $19.8 million, or 1.00% of outstanding loans, net of unearned income, compared to $18.7 million, or 1.00% of outstanding loans, net of unearned income, at December 31, 2024. The increase in the allowance for loan credit losses during the current year is predominantly attributable to the growth of the loan portfolio along with the impact of management’s assessment of qualitative factors, mainly related to the evaluation of the existing local economic conditions, as well as considerations of the concentrations of the Company’s loan segments. These factors contributing to an increase in allowance for credit losses were partially offset by the previously mentioned charge-off of the commercial business SBA 7(a) loan.
Previous wording
Total deposits decreased $14.2 million or 0.7% to $1.89 billion as of December 31, 2024 compared to $1.91 billion as of December 31, 2023.
Current wording
Total deposits increased $79.9 million or 4.2% to $1.97 billion as of December 31, 2025 compared to $1.89 billion as of December 31, 2024.
Previous wording
Non-interest bearing demand deposits increased $21.9 million or 5.3% to $433.3 million as of December 31, 2024 compared to $411.4 million at December 31, 2023. Non-interest bearing demand deposits represented 22.9% and 21.6% of total deposits at December 31, 2024 and December 31, 2023, respectively.
Current wording
Non-interest bearing demand deposits decreased $0.6 million or 0.1% to $432.7 million as of December 31, 2025 compared to $433.3 million at December 31, 2024. Non-interest bearing demand deposits represented 21.9% and 22.9% of total deposits at December 31, 2025 and December 31, 2024, respectively.
Previous wording
Interest-bearing deposits, which include NOW accounts, regular savings accounts, money market accounts, and time deposits, decreased $36.1 million or 2.41% to $1.46 billion as of December 31, 2024 compared to $1.50 billion as of December 31, 2023. Interest-bearing deposits represented 77.1% and 78.4% of total deposits at December 31, 2024 and December 31, 2023, respectively.
Current wording
Interest-bearing deposits, which include NOW accounts, savings accounts, money market accounts, and time deposits, increased $80.4 million or 5.5% to $1.54 billion as of December 31, 2025 compared to $1.46 billion as of December 31, 2024. Interest-bearing deposits represented 78.1% and 77.1% of total deposits at December 31, 2025 and December 31, 2024, respectively.
Previous wording
The Company focuses on funding asset growth with deposit accounts, with an emphasis on core deposit growth, as its primary source of deposits. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts, time deposits, reciprocal IntraFi Demand® deposits, IntraFi Money Market® deposits and IntraFi CD® deposits. Core deposits totaled $1.62 billion or 85.4% of total deposits and $1.58 billion or 82.7% of total deposits at December 31, 2024 and December 31, 2023, respectively.
Current wording
The Company focuses on funding asset growth with deposit accounts, with an emphasis on core deposit growth, as its primary source of deposits. Core deposits consist of checking accounts, NOW accounts, money market accounts, savings accounts, time deposits, reciprocal IntraFi Demand® deposits, IntraFi Money Market® deposits and IntraFi CD® deposits. Core deposits totaled $1.67 billion or 84.7% of total deposits and $1.62 billion or 85.4% of total deposits at December 31, 2025 and December 31, 2024, respectively.
Previous wording
The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $816.7 million at December 31, 2024 and $802.8 million at December 31, 2023. Included in these amounts were $157.4 million and $168.7 million of public fund deposits that are collateralized by securities as of December 31, 2024 and December 31, 2023, respectively. Deposits that were not insured or not collateralized by securities represented 35% and 33% of total deposits, respectively, as of December 31, 2024 and December 31, 2023.
Current wording
The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $853.4 million at December 31, 2025 and $816.7 million at December 31, 2024. Included in these amounts were $161.8 million and $157.4 million of public fund deposits that are collateralized by securities as of December 31, 2025 and December 31, 2024, respectively. Deposits that were not insured or not collateralized by securities represented 35.1% of total deposits at both December 31, 2025 and December 31, 2024.
Previous wording
Shareholders’ equity increased $16.7 million or 7.3% to $246.6 million at December 31, 2024 compared to $229.9 million at December 31, 2023. The increase in shareholders’ equity was primarily attributable to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss, which was due to decreases in unrealized losses on our available-for-sale investment portfolio from market value increases. This increase was partially offset by increased cash dividends paid. Book value per share was $17.28 as of December 31, 2024 compared to $16.25 as of December 31, 2023.
Current wording
Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The year-over-year change in book value per share was primarily due to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss, resulting from an increase in the market value of our available-for-sale investment portfolio. This increase was partially offset by the cash dividend paid and increased share count from shareholder option exercises and restricted share award issuances. The share issuances were partially offset by the Company’s share repurchases during the period.
Previous wording
In August of 2023, the Company’s Board of Directors authorized the extension of the Company’s stock repurchase program that was originally adopted in August of 2021. Under the stock repurchase program, the Company may repurchase up to 700,000 shares of its outstanding common stock. The stock repurchase program will expire on August 31, 2025 or earlier if all the authorized shares have been repurchased. The Company repurchased 3,003 shares at $16.48 per share during the twelve months ended December 31, 2024.
Current wording
up to 700,000 shares of its common stock, par value of $0.01 per share, or approximately 5% of its outstanding shares of common stock. The stock repurchase program will expire on August 31, 2026, or earlier if all the authorized shares have been repurchased. During the twelve months ended December 31, 2025, the Company repurchased 135,640 shares of its outstanding common stock at a weighted average price of $17.80. The aggregate repurchase activity was accretive to the Company’s book value per share.
Previous wording
In addition to the liquidity provided by balance sheet cash flows, the Company supplements its liquidity with additional sources such as secured borrowing credit lines with the FHLB and the Reserve Bank. Specifically, the Company has pledged a portion of its loan portfolio to the FHLB and the Reserve Bank. Based on collateral pledged as of December 31, 2024, the total FHLB available borrowing capacity was $462.2 million. Additional borrowing capacity with the Reserve Bank was approximately $104.0 million as of December 31, 2024.
Current wording
In addition to the liquidity provided by balance sheet cash flows, the Company supplements its liquidity with additional sources such as secured borrowing credit lines with the FHLB and the Federal Reserve Bank. Specifically, the Company has pledged a portion of its loan portfolio to the FHLB and the Federal Reserve Bank. Based on collateral pledged as of December 31, 2025, the total FHLB available borrowing capacity was $454.8 million. Additional borrowing capacity with the Federal Reserve Bank was approximately $139.5 million as of December 31, 2025. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at December 31, 2025.
Previous wording
Total liquidity, defined as cash and cash equivalents, unencumbered securities at fair value, and available secured borrowing capacity, was $727.3 million at December 31, 2024 compared to $638.9 million at December 31, 2023. The Company’s liquidity position represented 110.3% of uninsured, non-collateralized deposits at December 31, 2024.
Current wording
Total liquidity, defined as cash and cash equivalents, unencumbered securities at fair value, and available secured borrowing capacity, was $827.0 million at December 31, 2025 compared to $727.3 million at December 31, 2024. The Company’s liquidity position represented 119.6% of uninsured, non-collateralized deposits at December 31, 2025.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
(2) The Company did not have any loans on non-accrual as of December 31, 2025 or December 31, 2024.
Current report — wording carried from elsewhere
represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume.
Current report — wording carried from elsewhere
In August of 2025, the Company’s Board of Directors authorized the extension of the Company’s stock repurchase program that was originally adopted in August of 2021. Under the stock repurchase program, the Company may repurchase
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
GAAP financial measure, a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.
Previous report — wording carried elsewhere
Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings, and is the Company’s primary revenue source. Net interest income is affected by overall balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings. The Company’s interest-earning assets include loans, investment securities and interest-bearing deposits in other banks, while our interest-bearing liabilities include interest-bearing deposits and borrowings. Net interest margin represents the difference between interest