John Marshall Bancorp, Inc.

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 and tax-equivalent net interest margin.

Current wording

This discussion and analysis contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (“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. The non-GAAP measure used in this report is tax-equivalent net interest income.

Previous wording

In addition to historical information, this Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition and results of operations. Factors that could have a material adverse effect on the operations of the Company and the Bank include, but are not limited to, the following:

Current wording

In addition to historical information, this Form 10-Q of John Marshall Bancorp, Inc. (the “Company”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition and results of operations. Factors that could have an adverse effect on the operations of the Company and its wholly-owned subsidiary, John Marshall Bank (the “Bank”), include, but are not limited to, the following:

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 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 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 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.

Previous wording

As of September 30, 2025, the Company had total consolidated assets of $2.32 billion, total loans net of unearned income of $1.94 billion, total deposits of $1.97 billion and total shareholders’ equity of $259.7 million.

Current wording

As of March 31, 2026, the Company had total consolidated assets of $2.35 billion, total loans net of unearned income of $1.97 billion, total deposits of $1.99 billion and total shareholders’ equity of $268.1 million.

Previous wording

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of September 30, 2025 and 2024 and the selected income statement data for the three and nine months ended September 30, 2025 and 2024 have been derived from our consolidated financial statements.

Current wording

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of March 31, 2026 and 2025 and the selected income statement data for the three months ended March 31, 2026 and March 31, 2025 have been derived from our consolidated financial statements.

Previous wording

The Company reported net income of $5.4 million for the three months ended September 30, 2025, an increase of $1.2 million or 27.6% when compared to $4.2 million for the three months ended September 30, 2024. Diluted earnings per common share were $0.38 for the three months ended September 30, 2025, compared to diluted earnings per common share of $0.30 for the three months ended September 30, 2024, an increase of 26.7%.

Current wording

The Company reported net income of $6.1 million for the three months ended March 31, 2026, an increase of $1.3 million or 26.8% when compared to $4.8 million for the three months ended March 31, 2025. Diluted earnings per common share were $0.43 for the three months ended March 31, 2026, compared to diluted earnings per common share of $0.34 for the three months ended March 31, 2025, an increase of 26.5%.

Previous wording

Net interest income for the three months ended September 30, 2025 increased $2.4 million or 18.6% to $15.6 million compared to $13.2 million for the three months ended September 30, 2024, driven primarily by the lower cost of interest-bearing deposits coupled with higher average balances and yields of loans. During the same period, interest income increased $0.5 million or 1.8%, driven by higher interest income on loans, while interest expense declined by $1.9 million or 12.6%, predominantly due to lower interest expense on time deposits, money market accounts, and borrowings. The annualized net interest margin for the three months ended September 30, 2025 was 2.72% as compared to 2.30% for the same period in 2024. The annualized tax-equivalent net interest margin (Non-GAAP) for the three months ended September 30, 2025 was 2.73% as compared to 2.30% for the same period in 2024.

Current wording

Net interest income for the three months ended March 31, 2026 increased $2.4 million or 17.1% to $16.5 million compared to $14.1 million for the three months ended March 31, 2025, driven primarily by the lower cost of interest-bearing deposits coupled with higher average balances and yields of loans. During the same period, interest income increased $1.8 million or 6.5%, driven by higher interest income on loans, while interest expense declined by $0.6 million or 4.8%, predominantly due to lower interest expense on time deposits, interest-bearing demand deposits, and money market accounts. The annualized net interest margin for the three months ended March 31, 2026 was 2.87% as compared to 2.58% for the same period in 2025.

Previous wording

The Company recorded a $356 thousand provision for credit losses for the three months ended September 30, 2025 compared to a provision for credit losses of $400 thousand for the three months ended September 30, 2024. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Current wording

The Company recorded a $23 thousand provision for credit losses for the three months ended March 31, 2026 compared to a provision for credit losses of $170 thousand for the three months ended March 31, 2025. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Previous wording

Non-interest income decreased $325 thousand during the nine months ended September 30, 2025 compared to the same period of 2024. The decrease was primarily driven by a $306 thousand decrease on the recorded gain on sale of the government guaranteed portion of the SBA 7(a) loans due to decreased sale activity along with a $53 thousand decrease in insurance commissions. These decreases were partially offset by a $66 thousand increase to the mark-to-market adjustments on the Company’s nonqualified deferred compensation plan and a $37 thousand increase in swap fee income.

Current wording

Non-interest income decreased $221 thousand during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This decrease was primarily attributable to a $149 thousand decrease in insurance commissions, in combination with a $37 thousand decrease in mark-to-market adjustments on investments related to the Company’s nonqualified deferred compensation (“NQDC”) plan and a $30 thousand decline in gains recorded on sales of the guaranteed portions of the SBA 7(a) loans.

Previous wording

Non-interest expense increased $1.0 million or 12.5% during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a $796 thousand or 16.3% increase in salaries and employee benefits, as discussed in the year-to-date results above. Other expenses grew due to a combination of higher state franchise taxes and general operating expenses. These increases were partially offset by lower occupancy expense, resulting from the negotiation of more favorable rents on three branch locations.

Current wording

Non-interest expense increased $0.7 million or 8.2% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a $522 thousand or 10.2% increase in salaries and employee benefits, as a result of increases in employee headcount coupled with annual salary merit increases. Other expenses grew $124 thousand due to a combination of higher state franchise taxes and Federal Deposit Insurance Corporation (“FDIC”) insurance, due to higher assessment bases, partially offset by lower marketing expense.

Previous wording

The ROAA for the three months ended September 30, 2025 and September 30, 2024 was 0.94% and 0.73%, respectively. The ROAE for the three months ended September 30, 2025 and September 30, 2024 was 8.31% and 7.00%, respectively.

Current wording

The ROAA for the three months ended March 31, 2026 and March 31, 2025 were 1.06% and 0.87%, respectively. The ROAE for the three months ended March 31, 2026 and March 31, 2025 were 9.19% and 7.76%, respectively.

Previous wording

Tax-equivalent net interest margin as presented above is calculated by dividing tax-equivalent net interest income by total average earning assets. Net interest income, on a tax-equivalent basis, is a financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes. Tax-equivalent net interest income is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The following table, “Tax-Equivalent Net Interest Income,” reconciles net interest income to tax-equivalent net interest income, which is a non-GAAP measure.

Current wording

Tax-equivalent net interest income is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The following table, “Tax-Equivalent Net Interest Income,” reconciles net interest income to tax-equivalent net interest income, which is a non-GAAP measure.

Previous wording

Tax-equivalent net interest income increased $2.4 million or 18.6% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, driven primarily by the lower rates on interest-bearing deposits and an increase in loan yields coupled with the increase in the average balance of loans and the reduction in the average balance of borrowings.

Current wording

Tax-equivalent net interest income increased $2.4 million or 17.2% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven primarily by higher average balances and yields of the loan portfolio coupled with the lower rates on interest-bearing deposits.

Previous wording

On a fully tax-equivalent basis, the net interest margin was 2.73% for the three months ended September 30, 2025, compared to 2.30% for the three months ended September 30, 2024. The 43 basis points increase in net interest margin was primarily due to a 49 basis points reduction in rates on interest-bearing deposits and an 11 basis points increase in yields on the Company’s loans. In addition, average loans increased $93.8 million between the three months ended September 30, 2025 and the three months ended September 30, 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

Current wording

The net interest margin was 2.87% for the three months ended March 31, 2026, compared to 2.58% for the three months ended March 31, 2025. The 29 basis point increase in net interest margin was primarily due to a 34 basis point reduction in rates on interest-bearing deposits and an eight basis point increase in yields on the Company’s loans. In addition, average loans increased $105.9 million between the three months ended March 31, 2025 and the three months ended March 31, 2026, which was primarily attributable to origination volume in the construction and development, and residential mortgage loan portfolios subsequent to March 31, 2025.

Previous wording

The loan portfolio’s yield for the three months ended September 30, 2025 was 5.44% compared to 5.33% for the three months ended September 30, 2024. The increase of 11 basis points was primarily attributable to increase in yields on the Company’s commercial real estate and residential mortgage portfolios along with higher average loan balances.

Current wording

The loan portfolio’s yield for the three months ended March 31, 2026 was 5.47% compared to 5.39% for the three months ended March 31, 2025. The increase of eight basis points was primarily attributable to increase in yield on the Company’s residential mortgage portfolio along with higher average loan balances.

Previous wording

The yield on interest-bearing deposits due from banks for the three months ended September 30, 2025 was 4.44% compared to 5.46% for the three months ended September 30, 2024. The decrease of 102 basis points was directly attributable to three fed funds rate cuts totaling 75 basis points over the preceding twelve months.

Current wording

The yield on interest-bearing deposits due from banks for the three months ended March 31, 2026 was 3.71% compared to 4.47% for the three months ended March 31, 2025. The decrease of 76 basis points was directly attributable to three fed funds rate cuts totaling 75 basis points over the preceding twelve months.

Previous wording

Interest income increased by $0.5 million or 1.8% to $29.0 million on a fully tax-equivalent basis for the three months ended September 30, 2025 compared to $28.5 million for the three months ended September 30, 2024, driven primarily by higher average balances and yields on the Company’s loan portfolio.

Current wording

Interest income increased $1.8 million or 6.6% to $29.1 million on a fully tax-equivalent basis for the three months ended March 31, 2026 compared to $27.3 million for the three months ended March 31, 2025, driven primarily by higher average balances and yields on the Company’s loan portfolio.

Previous wording

Fully tax-equivalent interest income on loans increased by $1.9 million or 7.8% as a result of volume and rates increases. Average loans increased $93.8 million between the three months ended September 30, 2025 and the three months ended September 30, 2024, which was primarily attributable to origination volume in the investor real estate, construction and development, and residential mortgage loan portfolios subsequent to September 30, 2024.

Current wording

Fully tax-equivalent interest income on loans increased $1.8 million or 7.2% as a result of volume and rates increases. Average loans increased $105.9 million between the three months ended March 31, 2025 and the three months ended March 31, 2026, which was primarily attributable to origination volume in the construction and development and residential mortgage loan portfolios subsequent to March 31, 2025.

Previous wording

Interest income on interest-bearing deposits in other banks decreased by $1.3 million as a result of decreases in rates and volume. Average interest-bearing deposits in other banks decreased $68.3 million between the three months ended September 30, 2025 and September 30, 2024.

Current wording

Interest income on interest-bearing deposits in other banks decreased $128 thousand as a result of a decrease in rates, partially offset by an increase in volume. The yield on interest-bearing deposits in other banks decreased from 4.47% to 3.71%, while average balances increased $10.8 million from $120.9 million to $131.7 million between March 31, 2025 and March 31, 2026.

Previous wording

Interest expense decreased by $1.9 million to $13.3 million for the three months ended September 30, 2025 compared to $15.3 million for the three months ended September 30, 2024, primarily due to a decrease in rates on deposits and, to a lesser extent, the decrease in volume of borrowings. The decrease in rates on deposits was mainly a result of the repricing of the Company’s deposit accounts in conjunction with the decrease in benchmark interest rates that took place starting in September of 2024.

Current wording

Interest expense decreased $635 thousand to $12.6 million for the three months ended March 31, 2026 compared to $13.2 million for the three months ended March 31, 2025, primarily due to a decrease in rates on interest-bearing deposits, partially offset by an increase in volume of interest-bearing deposits. The decrease in rates on deposits was mainly a result of the repricing of the Company’s deposit accounts in conjunction with the decrease in federal funds benchmark interest rates that took place starting in September of 2025.

Previous wording

The Company recorded a $356 thousand provision for credit losses for the three months ended September 30, 2025 compared to a provision for credit losses of $400 thousand for the three months ended September 30, 2024. The provision for credit losses for the three months ended September 30, 2025 that is directly attributable to the funded and unfunded loan portfolios was $415 thousand and a recovery of $59 thousand, respectively.

Current wording

The Company recorded a $23 thousand provision for credit losses for the three months ended March 31, 2026 compared to a provision for credit losses of $170 thousand for the three months ended March 31, 2025. The provision for credit losses for the three months ended March 31, 2026 that is directly attributable to the funded loan portfolio was $143 thousand, while provision for credit losses on unfunded loan commitments was a recovery of $120 thousand.

Previous wording

Non-interest income was $653 thousand for the three months ended September 30, 2025 compared to $617 thousand for the same period in the prior year. The $36 thousand increase in non-interest income was primarily attributable to a $101 thousand increase in customer swap fee income, partially offset by a $54 thousand reduction in gains recorded on sales of the guaranteed portions of SBA 7(a) loans due to lower sale activity.

Current wording

Non-interest income was $284 thousand for the three months ended March 31, 2026 compared to $505 thousand for the same period in the prior year. The $221 thousand decrease in non-interest income was primarily attributable to a $149 thousand decrease in insurance commissions, in combination with a $37 thousand decrease in mark-to-market adjustments on investments related to the Company’s NQDC plan and a $30 thousand decline in gains recorded on sales of the guaranteed portions of the SBA 7(a) loans.

Previous wording

Income tax expense increased $352 thousand to $1.5 million for the three months ended September 30, 2025 compared to $1.1 million for the three months ended September 30, 2024. Our effective tax rate for the three months ended September 30, 2025 was 21.3% compared to 20.7% for the same period ended September 30, 2024.

Current wording

Income tax expense increased $372 thousand to $1.7 million for the three months ended March 31, 2026 compared to $1.4 million for the three months ended March 31, 2025. Our effective tax rate for the three months ended March 31, 2026 was 22.3% compared to 22.2% for the same period ended March 31, 2025.

Previous wording

The Company’s total assets increased $89.6 million or 4.0% to $2.32 billion at September 30, 2025 compared to $2.23 billion at December 31, 2024. The increase in total assets was predominantly attributable to increases in the Company’s loan portfolio and interest-bearing deposits in banks, which grew by $65.9 million or 3.5% and $38.3 million or 32.8% during the year, respectively, partially offset by a $16.6 million decrease in available-for-sale and held-to-maturity investment securities.

Current wording

The Company’s total assets increased $19.8 million or 0.8% to $2.35 billion at March 31, 2026 compared to $2.33 billion at December 31, 2025. The increase in total assets was predominantly attributable to an increase in the Company’s interest-bearing deposits in banks, which grew by $17.6 million or 14.2%. All other asset categories, including the Company’s loan portfolio, stayed relatively unchanged since December 31, 2025.

Previous wording

The Company’s total liabilities increased $76.5 million or 3.8% to $2.06 billion at September 30, 2025 compared to $1.99 billion at December 31, 2024. The increase in total liabilities was almost entirely due to a $76.4 million or 4.0% increase in total deposits.

Current wording

The Company’s total liabilities increased $17.3 million or 0.8% to $2.08 billion at March 31, 2026 compared to $2.07 billion at December 31, 2025. The increase in total liabilities was almost entirely due to a $15.4 million or 0.8% increase in total deposits, predominantly driven by a $25.5 million or 5.9% increase in non-interest bearing deposits.

Previous wording

Shareholders’ equity increased $13.1 million or 5.3% to $259.7 million at September 30, 2025 compared to $246.6 million at December 31, 2024. The increase in shareholders’ equity was primarily attributable to net income earned during the current year coupled with a decrease in accumulated other comprehensive loss due to lower market interest rates during the nine months ended September 30, 2025. This increase was partially offset by cash dividends paid and increased share count from shareholder option exercises and restricted share award issuances. The decrease in accumulated other comprehensive loss was attributable to an increase in the market value of our available-for-sale investment portfolio. Book value per share was $18.27 as of September 30, 2025 compared to $17.28 as of December 31, 2024, an increase of 5.7%. During the nine months ended September 30, 2025, the Company repurchased 95,103 shares of its common stock at a weighted average price of $17.33. The aggregate year-to-date repurchase activity was accretive to the Company’s book value per share.

Current wording

Shareholders’ equity increased $2.5 million or 0.9% to $268.1 million at March 31, 2026 compared to $265.6 million at December 31, 2025. The increase in shareholders’ equity was primarily attributable to net income earned during the current year, partially offset by cash dividends paid and a reduction of additional paid-in capital due to the Company’s share repurchases during the three months ended March 31, 2026. Book value per share was $19.00 as of March 31, 2026 compared to $18.69 as of December 31, 2025, an increase of 1.7%. During the three months ended March 31, 2026, the Company repurchased 103,507 shares of its common stock at a weighted average price of $19.69.

Previous wording

The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $205.7 million at September 30, 2025 and $222.3 million at December 31, 2024. The investment portfolio provides liquidity, interest income, credit risk diversification, means to manage interest rate sensitivity and 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 September 30, 2025 and December 31, 2024.

Current wording

The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $213.8 million at March 31, 2026 and $212.3 million at December 31, 2025. The investment portfolio provides liquidity, interest income, credit risk diversification, means to manage interest rate sensitivity and 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 $7.7 million and $2.9 million, respectively, at March 31, 2026 compared to $7.6 million and $2.8 million, respectively, at December 31, 2025.

Previous wording

The Company purchased $14.0 million of investment securities during the nine months ended September 30, 2025, which were comprised of $13.0 million of agency mortgage-backed securities and $1.0 million of agency collateralized mortgage obligation securities. The Company did not sell any fixed income investment securities during the nine months ended September 30, 2025. The Company had $34.4 million in maturities and principal repayments on securities during the nine months ended September 30, 2025, which were comprised of $14.1 million of U.S. agency mortgage-backed securities, $10.8 million of U.S. Treasuries, $5.0 million of U.S. government and federal agencies securities and $4.5 million of U.S. agency collateralized mortgage obligation securities.

Current wording

The Company purchased seven agency mortgage-backed fixed income securities, designated as available-for-sale, with the total carrying amount of $15.0 million and a weighted average purchase yield of 4.08% during the three months ended March 31, 2026. The Company did not sell any fixed income investment securities during the three months ended March 31, 2026. The Company had $13.1 million in maturities and principal repayments on securities during the three months ended March 31, 2026, which were comprised of $5.7 million of U.S. agency mortgage-backed securities, $4.3 million of U.S. Treasuries, $2.0 million of U.S. government and federal agencies securities and $1.1 million of U.S. agency collateralized mortgage obligation securities.

Previous wording

In the prevailing rate environments as of September 30, 2025 and December 31, 2024, the Company’s fixed income investment portfolio had an estimated weighted average remaining life of approximately 4.1 years and 4.2 years, respectively. The available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years at both September 30, 2025 and December 31, 2024, respectively. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.4 years and 6.0 years as of September 30, 2025 and December 31, 2024, respectively.

Current wording

In the prevailing rate environments as of both March 31, 2026 and December 31, 2025, the Company’s fixed income investment portfolio had an estimated weighted average remaining life of approximately 3.9 years. The available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.2 years and 3.1 years at March 31, 2026 and December 31, 2025, respectively. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 4.9 years and 5.2 years as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

Gross loans, net of unearned income, increased $65.9 million to $1.94 billion as of September 30, 2025 compared to $1.87 billion as of December 31, 2024. The increase in loans from December 31, 2024, was primarily attributable to growth in commercial real estate loans, construction and development loans, and residential mortgage loans. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns.

Current wording

Gross loans, net of unearned income, decreased $1.6 million to $1.97 billion as of March 31, 2026 compared to $1.98 billion as of December 31, 2025. The decrease in loans from December 31, 2025, was primarily attributable to a decline in residential real estate loans, partially offset by a growth in construction and development loans. 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 did not have any nonaccrual loans as of September 30, 2025 or December 31, 2024 nor were there any loans placed on nonaccrual during those periods. A loan is placed on nonaccrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection. As a result, the Company did not have any interest income that would have been recognized on nonaccrual loans for the three and nine months ended September 30, 2025 or the three and nine months ended September 30, 2024.

Current wording

The Company’s asset quality remained strong during the quarter ended March 31, 2026. The Company recorded no charge-offs during the period and had no other real estate owned assets as of March 31, 2026. During the most recent quarter, management placed one SBA 7(a) loan in the total amount of $984 thousand on non-accrual status, representing the Company’s only non-accrual loan as of March 31, 2026. As a result, the Company reversed uncollected accrued interest receivable in the total amount of $9 thousand. The entire outstanding loan amount is fully guaranteed by the SBA. This is the only non-accrual loan since the third quarter of 2019. The Company charged-off the unguaranteed portion of the loan in the total amount of $361 thousand during the fourth quarter of 2025. The Company has submitted the guaranty purchase to the SBA and expects to receive the full guarantee payment. The Company did not have any nonaccrual loans as of December 31, 2025. A loan is placed on nonaccrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection.

Previous wording

The Company recorded $1 thousand and $2 thousand of net recoveries during the three and nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, the allowance for loan credit losses was $19.7 million or 1.02% of outstanding loans, net of unearned income, compared to $18.7 million or 1.01% of outstanding loans, net of unearned income, at December 31, 2024. The increase in the allowance as a percentage of outstanding loans, net of unearned income, was primarily a result of changes in the composition of the loan portfolio coupled with the updates to the economic forecast and considerations of qualitative factors.

Current wording

The Company recorded $35 thousand of net recoveries during the three months ended March 31, 2026 and had no net charge-offs or recoveries during the three months ended March 31, 2025. At March 31, 2026, the allowance for loan credit losses was $20.0 million or 1.01% of outstanding loans, net of unearned income, compared to $19.8 million or 1.00% of outstanding loans, net of unearned income, at December 31, 2025. Management continues to assess credit risk exposure and monitor macroeconomic indicators that may impact borrower behavior and repayment capacity. Management believes the current allowance for credit losses is appropriate given the composition and performance of the loan portfolio.

Previous wording

The following tables summarize the Company’s loan loss experience by loan portfolio for the three and nine months ended September 30, 2025 and 2024.

Current wording

The following table summarizes the Company’s loan loss experience by loan portfolio for the three months ended March 31, 2026 and March 31, 2025.

Previous wording

Total deposits increased $76.4 million or 4.0% to $1.97 billion as of September 30, 2025 compared to $1.89 billion as of December 31, 2024.

Current wording

Total deposits increased $15.4 million or 0.8% to $1.99 billion as of March 31, 2026 compared to $1.97 billion as of December 31, 2025.

Previous wording

Non-interest bearing demand deposits increased $13.6 million or 3.1% to $446.9 million as of September 30, 2025 compared to $433.3 million at December 31, 2024. Non-interest bearing demand deposits represented 22.7% and 22.9% of total deposits at September 30, 2025 and December 31, 2024, respectively.

Current wording

Non-interest bearing demand deposits increased $25.5 million or 5.9% to $458.2 million as of March 31, 2026 compared to $432.7 million at December 31, 2025. Non-interest bearing demand deposits represented 23.1% and 21.9% of total deposits at March 31, 2026 and December 31, 2025, respectively.

Previous wording

Interest-bearing deposits, which include NOW accounts, regular savings accounts, money market accounts, and time deposits, increased $62.8 million or 4.3% to $1.52 billion as of September 30, 2025 compared to $1.46 billion December 31, 2024. Interest-bearing deposits represented 77.3% and 77.1% of total deposits at September 30, 2025 and December 31, 2024, respectively.

Current wording

Interest-bearing deposits, which include NOW accounts, regular savings accounts, money market accounts, and time deposits, decreased $10.0 million or 0.7% to $1.53 billion as of March 31, 2026 compared to $1.54 billion as of December 31, 2025. Interest-bearing deposits represented 76.9% and 78.1% of total deposits at March 31, 2026 and December 31, 2025, 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, reciprocal IntraFi Money Market® deposits and reciprocal 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 September 30, 2025 and December 31, 2024, 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, regular savings accounts, time deposits, reciprocal IntraFi Demand® deposits, reciprocal IntraFi Money Market® deposits and reciprocal IntraFi CD® deposits. Core deposits totaled $1.69 billion or 84.8% of total deposits and $1.67 billion or 84.7% of total deposits at March 31, 2026 and December 31, 2025, 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 $843.4 million at September 30, 2025 and $816.7 million at December 31, 2024. Included in these amounts were $160.6 million and $157.4 million of public fund deposits that are collateralized as of September 30, 2025 and December 31, 2024, respectively. Deposits that were not insured or not collateralized represented 35% of total deposits at both September 30, 2025 and December 31, 2024, respectively.

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 $887.3 million at March 31, 2026 and $853.4 million at December 31, 2025. Included in these amounts were $162.8 million and $161.8 million of public fund deposits that are collateralized as of March 31, 2026 and December 31, 2025, respectively. Deposits that were not insured or not collateralized represented 36.5% and 35.1% of total deposits at March 31, 2026 and December 31, 2025, respectively.

Previous wording

Shareholders’ equity increased $13.1 million or 5.3% to $259.7 million at September 30, 2025 compared to $246.6 million at December 31, 2024. During the nine months ended September 30, 2025, the increase in shareholders’ equity was primarily attributable to a $11.0 million increase in retained earnings, a result of the year-to-date net income exceeding the amount of dividends paid, coupled with a $2.9 million decrease in accumulated other comprehensive loss, due to lower market interest rates. Book value per share was $18.27 as of September 30, 2025 compared to $17.28 as of December 31, 2024.

Current wording

Shareholders’ equity increased $2.5 million or 0.9% to $268.1 million at March 31, 2026 compared to $265.6 million at December 31, 2025. During the three months ended March 31, 2026, the increase in shareholders’ equity was primarily attributable to a $4.8 million increase in retained earnings, partially offset by a $1.9 million decrease in additional paid-in capital due to the Company’s share repurchases coupled with a $0.4 million increase in accumulated other comprehensive loss on the Company’s available-for-sale securities. Book value per share was $19.00 as of March 31, 2026 compared to $18.69 as of December 31, 2025.

Previous wording

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 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. The Company repurchased 15,660 and 95,103 shares of its outstanding common stock under the program during the three and nine months ended September 30, 2025, respectively.

Current wording

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 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. The Company repurchased 103,507 shares of its outstanding common stock under the program during the three months ended March 31, 2026.