John Marshall Bancorp, Inc.

Previous 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.

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.

Previous wording

These disclosures should not be viewed as a substitute for or more important than 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, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.

Current wording

These disclosures should not be viewed as a substitute for or more important than 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, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis. Please refer to the table below for a reconciliation of these non-GAAP to comparable GAAP financial measures.

Previous 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:

Current wording

In addition to historical information, this report 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, Eagle, the combined company or otherwise relating to the proposed transaction of the Company and Eagle (the “proposed transaction”). 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 or expressions of confidence. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in or implied by such forward-looking statements as a result of a variety of factors, many of which are beyond the control of the Company, Eagle and the combined company. Caution should be exercised against placing undue reliance on forward-looking statements. Factors which could cause actual results to differ materially include, but are not limited to, the following:

Previous wording

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary note.

Current wording

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made and are based on information available at that time; and neither the Company nor Eagle undertakes, and each of them specifically disclaims, any obligation or duty to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or otherwise update such forward-looking statements, whether written or oral, except as required by applicable securities laws. The foregoing list of factors is not exhaustive, and other factors that may affect actual results or future events may emerge from time to time. Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results.

Previous wording

As of June 30, 2026, the Company had total consolidated assets of $2.40 billion, total loans net of unearned income of $2.01 billion, total deposits of $1.99 billion and total shareholders’ equity of $273.8 million.

Current wording

As of September 30, 2026, the Company had total consolidated assets of $2.44 billion, total loans net of unearned income of $2.01 billion, total deposits of $2.06 billion and total shareholders’ equity of $277.1 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 June 30, 2026 and 2025 and the selected income statement data for the three and six months ended June 30, 2026 and June 30, 2025 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 September 30, 2026 and 2025 and the selected income statement data for the three and nine months ended September 30, 2026 and September 30, 2025 have been derived from our consolidated financial statements.

Previous wording

Net interest income for the six months ended June 30, 2026 increased $4.8 million or 16.6% compared to the same period of 2025, driven primarily by the increases in average balances and yields of the loan portfolio in combination with the decrease in rates of interest-bearing deposits.

Current wording

Net interest income for the nine months ended September 30, 2026 increased $7.0 million or 15.7% compared to the same period of 2025, driven primarily by the increases in average balances and yields of the loan portfolio in combination with the decrease in rates of interest-bearing deposits. The annualized net interest margin for the nine months ended September 30, 2026 was 2.92% as compared to 2.66% for the same period in the prior year.

Previous wording

The Company recorded a $281 thousand provision for credit losses for the six months ended June 30, 2026 compared to a $707 thousand provision for credit losses for the six months ended June 30, 2025. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Current wording

The Company recorded a $38 thousand recovery of provision for credit losses for the nine months ended September 30, 2026 compared to a $1.1 million provision for credit losses for the nine months ended September 30, 2025. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Previous wording

Non-interest expense increased $1.9 million or 11.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 predominantly due to a $1.5 million or 14.6% increase in salaries and employee benefits, as a result of increases in incentive compensation, higher mark-to-market adjustments on the Company’s non-qualified deferred compensation plan and the impact of the annual salary merit increase. Other expenses increased $302 thousand or 6.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Increases were primarily in state franchise tax and FDIC insurance, due to higher assessment bases, and an increase in marketing expense. Furniture and equipment expenses increased $62 thousand or 9.8% for the six months ended June 30, 2026 compared to the same period in 2025. The increase was due to investment and maintenance in technology.

Current wording

Non-interest expense increased $1.5 million or 5.9% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 predominantly due to a $957 thousand or 6.0% increase in salaries and employee benefits, as a result of increases in incentive compensation, the impact of the annual salary merit increase and higher cost of the healthcare insurance benefits. Additionally, the period included merger and acquisition expenses of $332 thousand coupled with a $159 thousand or 2.1% increase in other expenses driven by higher state franchise tax and FDIC insurance, due to an increase in respective assessment bases. Core non-interest expense (Non-GAAP) increased $1.2 million or 4.6% during the nine months ended September 30, 2026 compared to the same period in 2025.

Previous wording

The following table presents the average balance for each principal balance sheet category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the six months ended June 30, 2026 and 2025.

Current wording

The following table presents the average balance for each principal balance sheet category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the nine months ended September 30, 2026 and 2025.

Previous wording

Tax-equivalent net interest income increased $4.8 million or 16.7% for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in fully tax-equivalent net interest income was driven by the increase in average balances and yields of the loan portfolio in combination with a decrease in the cost of interest-bearing deposits.

Current wording

Tax-equivalent net interest income increased $7.0 million or 15.8% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase in fully tax-equivalent net interest income was driven by the increase in average balances and yields of the loan portfolio in combination with a decrease in the cost of interest-bearing deposits.

Previous wording

The net interest margin was 2.93% for the six months ended June 30, 2026, compared to 2.63% for the six months ended June 30, 2025. The 30 basis points increase in net interest margin was due to a combination of a 29 basis point decrease in the cost of interest-bearing liabilities and a nine basis point increase in yields in interest-earning assets coupled with higher average loan balances.

Current wording

The net interest margin was 2.92% for the nine months ended September 30, 2026, compared to 2.66% for the nine months ended September 30, 2025. The 26 basis point increase in net interest margin was due to a combination of a 25 basis point decrease in the cost of interest-bearing liabilities and an eight basis point increase in yields in interest-earning assets coupled with higher average loan balances.

Previous wording

The cost of interest-bearing liabilities was 3.14% for the six months ended June 30, 2026 compared to 3.43% for the six months ended June 30, 2025. Rates declined across all deposit categories, most notably in time deposits, money market accounts, and NOW deposit accounts, which declined 36 basis points, 32 basis points, and 22 basis points, respectively. Total cost of borrowings declined from 4.55% in the prior year period to 4.48% in the current year period, mainly as a result of refinancing a maturing Federal Home Loan Bank of Atlanta (“FHLB”) advance at a lower rate of interest during the first quarter of 2026.

Current wording

The cost of interest-bearing liabilities was 3.16% for the nine months ended September 30, 2026 compared to 3.41% for the nine months ended September 30, 2025. Rates declined across all deposit categories, most notably in time deposits, money market accounts, and NOW deposit accounts, which declined 33 basis points, 27 basis points, and 18 basis points, respectively. Total cost of borrowings declined from 4.54% in the prior year period to 4.46% in the current year period, mainly as a result of an 11 basis point decline in the rate of Federal Home Loan Bank advances.

Previous wording

The loan portfolio’s yield for the six months ended June 30, 2026 was 5.50% compared to 5.41% for the six months ended June 30, 2025, as variable rate loans repriced at higher prevailing rates subsequent to the second quarter of 2025. Average loans increased $108.2 million between the six months ended June 30, 2026 and 2025, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to June 30, 2025.

Current wording

The loan portfolio’s yield for the nine months ended September 30, 2026 was 5.51% compared to 5.42% for the nine months ended September 30, 2025, as variable rate loans repriced at higher prevailing rates subsequent to the third quarter of 2025. Average loans increased $105.3 million between the nine months ended September 30, 2026 and 2025, which was primarily attributable to origination volume in the residential mortgage, commercial investor real estate and construction & development loan portfolios subsequent to September 30, 2025.

Previous wording

The yield on interest-bearing deposits due from banks for the six months ended June 30, 2026 was 3.72% compared to 4.48% for the six months ended June 30, 2025. The decrease of 76 basis points was due to three fed funds rate cuts totaling 75 basis points, which occurred after June 30, 2025.

Current wording

The yield on interest-bearing deposits due from banks for the nine months ended September 30, 2026 was 3.73% compared to 4.46% for the nine months ended September 30, 2025. The decrease of 73 basis points was due to a declining federal funds rate since September 30, 2025.

Previous wording

Interest income increased by $3.7 million or 6.7% to $58.9 million on a fully tax-equivalent basis for the six months ended June 30, 2026 compared to $55.2 million for the six months ended June 30, 2025, driven by both an increase in rates and volume on interest-earning assets, primarily attributable to the Company’s loan portfolio.

Current wording

Interest income increased by $6.1 million or 7.2% to $90.3 million on a fully tax-equivalent basis for the nine months ended September 30, 2026 compared to $84.2 million for the nine months ended September 30, 2025, driven by both an increase in rates and volume on interest-earning assets, primarily attributable to the Company’s loan portfolio.

Previous wording

Fully tax-equivalent interest income on loans increased $3.8 million or 7.6% as a result of increases in rates and volume. Average loans increased $108.2 million between the six months ended June 30, 2026 and 2025, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to June 30, 2025.

Current wording

Fully tax-equivalent interest income on loans increased $5.7 million or 7.5% as a result of increases in rates and volume. Average loans increased $105.3 million between the nine months ended September 30, 2026 and 2025, which was primarily attributable to origination volume in the residential mortgage, commercial investor real estate and construction & development loan portfolios subsequent to September 30, 2025.

Previous wording

Fully tax-equivalent interest income on investment securities increased $322 thousand or 13.6%, as a result of higher securities rates. The yield on investment securities increased to 2.39% for the six months ended June 30, 2026 as compared to 2.07% for the six months ended June 30, 2025.

Current wording

Fully tax-equivalent interest income on investment securities increased $646 thousand or 18.2%, as a result of higher securities rates. The yield on investment securities increased to 2.46% for the nine months ended September 30, 2026 as compared to 2.08% for the nine months ended September 30, 2025.

Previous wording

Interest income on interest-bearing deposits in other banks decreased $421 thousand or 15.3% as a result of a 76 basis point decline in yield, which was directly related to three fed funds rate cuts totaling 75 basis points since June 30, 2025.

Current wording

Interest income on interest-bearing deposits in other banks decreased $264 thousand or 6.1% as a result of a 73 basis point decline in yield, which was directly related to a declining federal funds rate since September 30, 2025.

Previous wording

Interest expense decreased $1.1 million to $25.0 million for the six months ended June 30, 2026 compared to $26.1 million for the six months ended June 30, 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 interest-bearing deposit accounts in conjunction with the decrease in federal funds benchmark interest rates that took place starting in September of 2025.

Current wording

Interest expense decreased $974 thousand to $38.5 million for the nine months ended September 30, 2026 compared to $39.5 million for the nine months ended September 30, 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 interest-bearing deposit accounts in conjunction with the decrease in federal funds benchmark interest rates that took place subsequent to September of 2025.

Previous wording

The Company recorded a $281 thousand provision for credit losses for the six months ended June 30, 2026 compared to a $707 thousand provision for credit losses for the six months ended June 30, 2025. The provision for credit losses for the six months ended June 30, 2026 that is directly attributable to the funded loan portfolio was $528 thousand, while unfunded commitments provision was a recovery of $247 thousand.

Current wording

The Company recorded a $38 thousand recovery of provision for credit losses for the nine months ended September 30, 2026 compared to a $1.1 million provision for credit losses for the nine months ended September 30, 2025. The provision for credit losses for the nine months ended September 30, 2026 that is directly attributable to the funded loan portfolio was $130 thousand, while unfunded commitments provision was a recovery of $168 thousand.

Previous wording

The provision for credit losses during the six months ended June 30, 2026 was primarily a result of changes in the composition and volume of the loan portfolio in combination with the impact of charge-offs of three commercial SBA 7(a) loans recorded during the second quarter of 2026. See “Asset Quality” below for additional information on the credit quality of the loan portfolio.

Current wording

The provision for credit losses during the nine months ended September 30, 2026 was primarily a result of changes in the composition and volume of the loan portfolio in combination with the impact of charge-offs of three commercial SBA 7(a) loans recorded during the second quarter of 2026, partially offset by the improving forecasted economic variables during the period. See “Asset Quality” below for additional information on the credit quality of the loan portfolio.

Previous wording

Non-interest income increased $716 thousand or 70.8% during the six months ended June 30, 2026 compared to the same period of 2025. The increase was primarily attributable to a $835 thousand gain as a result of the sale of an unaffiliated company in which the Company held an equity investment unit, in combination with a $53 thousand increase in other charges and fees due to higher early termination fees on customer’s time deposits, and a $48 thousand increase in other operating income driven by the receipt of a class action settlement claim from a health insurance carrier. These increases were partially offset by a $153 thousand decrease in bankers insurance commission coupled with a $91 thousand decline in gain on sale of SBA 7(a) loans, due to lower sales volume.

Current wording

Non-interest income increased $331 thousand or 19.9% during the nine months ended September 30, 2026 compared to the same period of 2025. The increase was primarily attributable to an $835 thousand gain as a result of the sale of Bearing Insurance in which the Company held an equity investment unit coupled with a $68 thousand increase in other charges and fees due to higher early termination fees on customers’ time deposits. These increases were partially offset by a $211 thousand decrease in bankers’ insurance commission due to the sale of Bearing Insurance investment unit, a $173 thousand decline in gain on sale of SBA 7(a) loans, due to lower sales volume, a $101 decline in swap fee income, and a $98 thousand decrease in mark-to-market adjustments on investments related to the Company’s non-qualified deferred compensation plan.

Previous wording

The following table summarizes non-interest expense for the six months ended June 30, 2026 and 2025.

Current wording

The following table summarizes non-interest expense for the nine months ended September 30, 2026 and 2025.

Previous wording

Non-interest expense increased $1.9 million or 11.2% during the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $1.5 million increase in salaries and employee benefits, as a result of increases in incentive compensation tied to performance, higher mark-to-market adjustments on the Company’s non-qualified deferred compensation plan and the impact of the annual salary merit increase. Incentive compensation accruals can fluctuate materially from period to period, based upon the Company’s financial performance and conditions measured against, among other evaluation criteria, our strategic plan and budget. At the end of each year, the ultimate determination of the incentive compensation is approved by the Board of Directors. Advertising expense increased $93 thousand mainly due to various public relations and advertising initiatives. State franchise taxes increased $91 thousand due to a higher assessment base, mainly a result of the growth of the Company’s shareholder’s equity during the period.

Current wording

Non-interest expense increased $1.5 million or 5.9% during the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $957 thousand increase in salaries and employee benefits, as a result of increases in incentive compensation tied to performance, the impact of the annual salary merit increase and higher cost of the healthcare insurance benefits. Incentive compensation accruals can fluctuate materially from period to period, based upon the Company’s financial performance and conditions measured against, among other evaluation criteria, our strategic plan and budget. At the end of each year, the ultimate determination of the incentive compensation is approved by the Board of Directors. During the period, the Company incurred $332 thousand in merger and acquisition expenses associated with the pending merger with Eagle. State franchise taxes and FDIC insurance increased $112 thousand and $52 thousand, respectively, due to an increase in respective assessment bases.

Previous wording

Income tax expense increased $902 thousand or 31.6% to $3.8 million for the six months ended June 30, 2026 compared to $2.9 million for the six months ended June 30, 2025. Our effective tax rate for the six months ended June 30, 2026 was 22.3% compared to 22.4% for the same period ended June 30, 2025.

Current wording

Income tax expense increased $1.6 million or 37.1% to $5.9 million for the nine months ended September 30, 2026 compared to $4.3 million for the nine months ended September 30, 2025. Our effective tax rate for the nine months ended September 30, 2026 was 22.2% compared to 22.0% for the same period ended September 30, 2025.

Previous wording

Net interest income for the three months ended June 30, 2026 increased $2.4 million or 16.1% to $17.3 million compared to $14.9 million for the three months ended June 30, 2025, as a result of higher average balances and yields of loans coupled with the lower cost of interest-bearing deposits. During the same period, interest income increased $1.9 million or 6.8%, driven by higher interest income on loans, while interest expense declined by $0.5 million or 3.9%, predominantly due to lower interest expense on interest-bearing deposit categories. The annualized net interest margin for the three months ended June 30, 2026 was 2.99% as compared to 2.69% for the same period in 2025.

Current wording

Net interest income for the three months ended September 30, 2026 increased $2.2 million or 14.0% to $17.8 million compared to $15.6 million for the three months ended September 30, 2025, as a result of higher average balances and yields of loans coupled with the lower cost of interest-bearing deposits. During the same period, interest income grew $2.4 million or 8.1%, driven by higher interest income on loans, while interest expense increased by $0.2 million or 1.2%, predominantly due to higher interest expense on interest-bearing deposit categories. The annualized net interest margin for the three months ended September 30, 2026 was 2.91% compared to 2.72% for the same period in 2025.

Previous wording

The Company recorded a $258 thousand provision for credit losses for the three months ended June 30, 2026 compared to $537 thousand for the three months ended June 30, 2025. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Current wording

The Company recorded a $318 thousand recovery of provision for credit losses for the three months ended September 30, 2026 compared to a provision expense of $356 thousand for the three months ended September 30, 2025. Additional discussion of the provision for credit losses is included below under the headingProvision for Credit Losses.

Previous wording

Tax-equivalent net interest income increased $2.4 million or 16.1% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, driven primarily by higher average balances and yields of the loan portfolio coupled with the lower rates on interest-bearing deposits.

Current wording

Tax-equivalent net interest income increased $2.2 million or 14.1% for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, driven primarily by higher average balances and yields of the loan portfolio coupled with the lower rates on interest-bearing deposits.

Previous wording

The net interest margin was 2.99% for the three months ended June 30, 2026, compared to 2.69% for the three months ended June 30, 2025. The 30 basis point increase in net interest margin was primarily due to a 26 basis point reduction in rates on interest-bearing deposits and an 11 basis point increase in yields on the Company’s loans. In addition, average loans increased $110.5 million between the three months ended June 30, 2025 and the three months ended June 30, 2026, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to June 30, 2025.

Current wording

The net interest margin was 2.91% for the three months ended September 30, 2026, compared to 2.72% for the three months ended September 30, 2025. The 19 basis point increase in net interest margin was primarily due to an 18 basis point reduction in rates on interest-bearing deposits and a 10 basis point increase in yields on the Company’s loans. In addition, average loans increased $99.7 million between the three months ended September 30, 2026 and 2025, which was primarily attributable to origination volume in the residential mortgage, commercial investor real estate and construction & development loan portfolios subsequent to September 30, 2025.

Previous wording

The loan portfolio’s yield for the three months ended June 30, 2026 was 5.53% compared to 5.42% for the three months ended June 30, 2025. The increase of 11 basis points was primarily attributable to an increase in yield on the Company’s commercial real estate portfolio along with higher average loan balances.

Current wording

The loan portfolio’s yield for the three months ended September 30, 2026 was 5.54% compared to 5.44% for the three months ended September 30, 2025. The increase of 10 basis points was primarily attributable to an increase in yields on the Company’s residential mortgage and commercial real estate portfolios along with higher average loan balances.

Previous wording

The yield on interest-bearing deposits due from banks for the three months ended June 30, 2026 was 3.73% compared to 4.48% for the three months ended June 30, 2025. The decrease of 75 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 September 30, 2026 was 3.75% compared to 4.44% for the three months ended September 30, 2025. The decrease of 69 basis points was directly attributable to the declining federal funds rate over the preceding twelve months.

Previous wording

The cost of interest-bearing liabilities was 3.13% for the three months ended June 30, 2026 compared to 3.38% for the three months ended June 30, 2025. Rates declined across all deposit categories, most notably in time deposits, money market accounts, and savings accounts, which declined by 35 basis points, 28 basis points, and 18 basis points, respectively.

Current wording

The cost of interest-bearing liabilities was 3.20% for the three months ended September 30, 2026 compared to 3.37% for the three months ended September 30, 2025. Rates declined across all deposit categories, most notably in time deposits, money market accounts, and NOW accounts, which declined by 29 basis points, 20 basis points, and nine basis points, respectively.

Previous wording

Interest income increased $1.9 million or 6.9% to $29.8 million on a fully tax-equivalent basis for the three months ended June 30, 2026 compared to $27.9 million for the three months ended June 30, 2025, driven primarily by higher average balances and yields on the Company’s loan portfolio.

Current wording

Interest income increased $2.4 million or 8.2% to $31.3 million on a fully tax-equivalent basis for the three months ended September 30, 2026 compared to $29.0 million for the three months ended September 30, 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 $2.0 million or 8.0% as a result of volume and rates increases. Average loans increased $110.5 million between the three months ended June 30, 2026 and the three months ended June 30, 2025, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to June 30, 2025.

Current wording

Fully tax-equivalent interest income on loans increased $1.9 million or 7.2% as a result of volume and rates increases. Average loans increased $99.7 million between the three months ended September 30, 2026 and the three months ended September 30, 2025, which was primarily attributable to origination volume in the residential mortgage, commercial investor real estate and construction & development loan portfolios subsequent to September 30, 2025.

Previous wording

Fully tax-equivalent interest income on investment securities increased $195 thousand or 16.2% primarily as a result of an increase in rates. The yield on investment securities increased to 2.46% at June 30, 2026 from 2.11% at June 30, 2025.

Current wording

Fully tax-equivalent interest income on investment securities increased $324 thousand or 27.6% primarily as a result of an increase in rates. The yield on investment securities increased to 2.60% for the three months ended September 30, 2026 from 2.10% for the three months ended September 30, 2025.

Previous wording

Interest expense decreased $502 thousand or 3.9% to $12.4 million for the three months ended June 30, 2026 compared to $12.9 million for the three months ended June 30, 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.

Current wording

Interest expense increased $163 thousand or 1.2% to $13.5 million for the three months ended September 30, 2026 compared to $13.3 million for the three months ended September 30, 2025, primarily due to an increase in volume of interest-bearing deposits, partially offset by a decrease in rates on 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 subsequent to September of 2025.

Previous wording

The Company recorded a $258 thousand provision for credit losses for the three months ended June 30, 2026 compared to $537 thousand for the three months ended June 30, 2025. The provision for credit losses for the three months ended June 30, 2026 that is directly attributable to the funded loan portfolio was $385 thousand, while provision for credit losses on unfunded loan commitments was a recovery of $127 thousand.

Current wording

The Company recorded a $318 thousand recovery of provision for credit losses for the three months ended September 30, 2026 compared to a provision expense of $356 thousand for the three months ended September 30, 2025. The provision for credit losses for the three months ended September 30, 2026 that is directly attributable to the funded loan portfolio was a recovery of $397 thousand, while provision for credit losses on unfunded loan commitments was an expense of $79 thousand.

Previous wording

See “Asset Quality” section below for additional information on the credit quality of the loan portfolio.

Current wording

The recovery of provision for credit losses on funded loans during the most recent quarter reflected a change in the loan portfolio mix in combination with the improved forecasts of unemployment rate and gross domestic product. See “Asset Quality” section below for additional information on the credit quality of the loan portfolio.

Previous wording

Income tax expense increased $530 thousand to $2.0 million for the three months ended June 30, 2026 compared to $1.5 million for the three months ended June 30, 2025. Our effective tax rate for the three months ended June 30, 2026 was 22.3% compared to 22.5% for the same period ended June 30, 2025.

Current wording

Income tax expense increased $695 thousand to $2.2 million for the three months ended September 30, 2026 compared to $1.5 million for the three months ended September 30, 2025. Our effective tax rate for the three months ended September 30, 2026 was 22.2% compared to 21.3% for the same period ended September 30, 2025.