BV Financial, Inc.
For the period ended Dec 31, 2025. Filed Mar 27, 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 27, 2026
BVFL$21.57-1.1%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 2025-03-27.
0000950170-25-045947
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-27.
0001193125-26-128285
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 117 previous paragraphs and 116 current paragraphs.
70 unchanged; 36 reworded; 10 added; 11 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 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 (10)
Current report
Net income increased $1.8 million, or 15.1%, to $13.5 million for the year ended December 31, 2025, compared to $11.7 million for the year ended December 31, 2024. The increase was due primarily to an increase of $3.0 million in interest income and an increase in the recovery of provision for credit losses of $2.2 million, offset by a $1.3 million increase in interest expense, a $1.7 million increase in non-interest expense, and a $700,000 increase in income tax expense.
Current report
Cash and cash equivalents decreased $14.8 million, or 21.0%, to $55.7 million at December 31, 2025 from $70.5 million at December 31, 2024 as excess cash was used to fund loans and repay the Company's subordinated debt.
Current report
Total liabilities increased $12.1 million, or 1.7%, to $728.4 million at December 31, 2025 from $716.3 million at December 31, 2024. The increase was primarily due to an increase in deposits of $24.6 million, partially offset by a decrease in borrowings of $14.9 million.
Current report
The Company had $35.0 million of FHLB borrowings at December 31, 2025 compared to $15.0 million in FHLB borrowings at December 31, 2024. The increased borrowings from the FHLB replaced the $35.0 million in subordinated debt issued in 2020 and paid off in 2025.
Current report
Stockholders’ equity decreased $11.7 million or 6.0%, to $183.8 million at December 31, 2025 primarily due to $30.0 million in stock repurchases, offset by $13.5 million of net income and $4.2 million in other adjustments, primarily equity compensation. During the year, the Company repurchased 1,823,997 shares of common stock at an average cost of $16.23.
Current report
Interest expense on advances from the FHLB increased by $277,000 for the year ended December 31, 2025 as the Bank utilized FHLB borrowings to replace the $35.0 million in subordinated debt issued in 2020.
Current report
For the year ended December 31, 2025, the Company recorded a credit of $2.4 million compared to a credit of $203,000 for the year ended December 31, 2024. During the fourth quarter, based on a recommendation from a third-party validation report on the CECL model and methodology, the Company expanded the number of independent variables used in the forecast economic adjustment. The Company added the Federal Reserve’s forecast of the unemployment rate to the regression analysis that had previously used only the Federal Reserve’s forecast of GDP. This change resulted in a decrease in the required ACL-Loans in the fourth quarter of $945,000. The remaining decrease in the calculated required ACL-loans was primarily due to formula-driven qualitative factor adjustments for loan segment growth and asset quality.
Current report
Non-interest income increased $206,000 to $2.7 million for the year ended December 31, 2025 from $2.5 million for the year ended December 31, 2024.
Current report
Other operating expenses decreased by $507,000 or (20.7%) due to decreases in outside service fees, IT repairs and maintenance and miscellaneous loan expenses.
Current report
growing core deposit accounts;
Removed paragraphs (11)
Previous report
Stockholders’ equity decreased $3.6 million, or 1.8%, to $195.5 million at December 31, 2024, primarily due to the $17.8 million of repurchased common stock, partially offset by the $11.7 million in net income.
Previous report
Net income decreased $2.0 million, or 14.5%, to $11.7 million for the year ended December 31, 2024, compared to $13.7 million for the year ended December 31, 2023. The decrease was due primarily to an increase of $2.1 million in noninterest expense and a $1.2 million decrease in noninterest income, partially offset by a $1.0 million increase in net interest income.
Previous report
Cash and cash equivalents decreased $3.2 million, or 4.4%, to $70.5 million at Decemer 31, 2024 from $73.7 million at December 31, 2023.
Previous report
Foreclosed Real Estate.
Previous report
Foreclosed real estate decreased by $11,000 or 6.5%.
Previous report
Total liabilities increased $30.1 million or 4.4%, to $716.3 million at December 31, 2024 from $686.2 million at December 31, 2023. The increase was primarily due to a increase in total deposits of $17.4 million, and an increase in borrowings of $12.6 million.
Previous report
The Company had $15.0 million of Federal Home Loan Bank borrowings at December 31, 2024 compared to $0 million in Federal Home Loan Bank borrowings at December 31, 2023.
Previous report
Interest expense on advances from the FHLB decreased by $1.4 million for the year ended December 31, 2024 as the Bank had a no advances outstanding for the majority of the year.
Previous report
The provision for credit losses for the year ended December 31, 2024 was a credit of $203,000 compared to a credit of $45,000 for the year ended December 31, 2023. Note 4 of the consolidated financial statements detail the impacts of the adoption of the standard.
Previous report
Non-interest income decreased $1.2 million to $2.5 million for the year ended December 31, 2024 from $3.8 million for the year ended December 31, 2023. For the year ended December 31, 2023, the Company recognized a gain of $709,000 on the sale of foreclosed real estate and $225,000 in excess life insurance proceeds and a $188,000 gain on the sale of a closed branch office building.
Previous report
growing our volume of core deposit accounts;
Reworded paragraphs (36)
Previous wording
Summary of Financial Condition and Operating Results. At December 31, 2024, we had $911.8 million in consolidated assets, an increase of $26.6 million, or 3.0%, from $885.3 million at December 31, 2023. The increase was due primarily to a $33.0 million increase in net loans receivable to $729.2 million at December 31, 2024, and a $2.5 million increase in available for-for-sale securities, partially offset by a decrease of $3.2 million in cash and cash equivalents and a $4.2 million decrease in held to maturity securities. Total liabilities increased $30.1 million, or 4.4%, from $686.2 million at December 31, 2023 to $716.3 million at December 31, 2024. The increase was primarily due to an increase in total deposits of $17.4 million, and an increase in borrowings of $12.6 million.
Current wording
Summary of Financial Condition and Operating Results. At December 31, 2025, we had $912.2 million in consolidated assets, an increase of $392,000, or 0.04%, from $911.8 million at December 31, 2024. The increase was due primarily to a $19.2 million increase in net loans receivable to $748.5 million at December 31, 2025, partially offset by a $14.8 million decrease in cash and cash equivalents and a $4.0 million decrease in securities available for sale. Total liabilities increased $12.1 million, or 1.7%, from $716.3 million at December 31, 2024 to $728.4 million at December 31, 2025. The increase was primarily due to an increase in total deposits of $24.6 million, partially offset by a decrease in borrowings of $14.9 million.
Previous wording
Stockholders’ equity decreased $3.6 million or 1.8%, to $195.5 million at December 31, 2024. During the year, the Company repurchased 1.1 million shares of common stock at an average cost of $16.27. The reduction in stockholders equity resulting from the repurchase program exceeded net income and other adjustments.
Current wording
Stockholders’ equity decreased $11.7 million or 6.0%, to $183.8 million at December 31, 2025, primarily due to $30.0 million in stock repurchases, offset by $13.5 million of net income and $4.2 million in other adjustments, primarily equity compensation. During the year, the Company repurchased 1,823,997 shares of common stock at an average cost of $16.23.
Previous wording
Grow our loan portfolio with an emphasis on commercial real estate and residential mortgage lending. While we intend to continue to focus on the origination of commercial real estate loans, we intend to remain a residential mortgage lender in our market area and maintain a balance between the commercial real estate and residential mortgage portfolios. We originated $77.5 million of commercial real estate and $14.2 million of residential mortgages loans during the year ended December 31, 2024. At December 31, 2024, $411.3 million, or 55.8%, of our total loan portfolio consisted of commercial real estate loans and $241.7 million, or 32.8%, of our total loan portfolio consisted of residential mortgages. Additionally, the Bank purchased a package of $14.0 million of one-to-four family owner occupied residential mortgages.
Current wording
Grow our loan portfolio with an emphasis on commercial real estate and residential mortgage lending. While we intend to continue to focus on the origination of commercial real estate loans, we intend to remain a residential mortgage lender in our market area and maintain a balance between the commercial real estate and residential mortgage portfolios. We originated $52.8 million of commercial real estate and $32.9 million of residential mortgages loans during the year ended December 31, 2025. At December 31, 2025, $401.4 million, or 53.2%, of our total loan portfolio consisted of commercial real estate loans and $258.5 million, or 34.2%, of our total loan portfolio consisted of residential mortgages.
Previous wording
Manage credit risk to maintain a low level of non-performing assets. We believe that maintaining strong asset quality is paramount to our long-term success. We follow conservative underwriting guidelines with sound loan administration, and focus on originating loans secured by real estate. This includes enhanced loan monitoring of higher risk portfolio segments, higher risk individual loans and larger relationships within the portfolio, and frequent loan grade review. In 2024, our largest loan on non-accrual, a $3.8 million investor commercial real estate loan paid off. Our non-performing assets totaled $4.2 million, or 0.46% of total assets, at December 31, 2024. Our total non-performing loans to total loans ratio was 0.54% at December 31, 2024.
Current wording
Manage credit risk to maintain a low level of non-performing assets. We believe that maintaining strong asset quality is paramount to our long-term success. We follow conservative underwriting guidelines with sound loan administration, and focus on originating loans secured by real estate. This includes enhanced loan monitoring of higher risk portfolio segments, higher risk individual loans and larger relationships within the portfolio, and frequent loan grade review. Our non-performing assets totaled $2.3 million, or 0.25% of total assets, at December 31, 2025. Our total non-performing loans to total loans ratio was 0.30% at December 31, 2025.
Previous wording
Increase core deposits with an emphasis on non-interest-bearing deposits. Deposits are our primary source of funds for lending and investment. Core deposits (which we define as all deposits except for time deposits) were 70.8% of total deposits at December 31, 2024. In particular, non-interest-bearing demand deposits were 19.9% of our total deposits at December 31, 2024. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending and retail relationships.
Current wording
Increase core deposits with an emphasis on non-interest-bearing deposits. Deposits are our primary source of funds for lending and investment. Core deposits (which we define as all deposits except for time deposits) were 69.8% of total deposits at December 31, 2025. In particular, non-interest-bearing demand deposits were 20.5% of our total deposits at December 31, 2025. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending and retail relationships.
Previous wording
Goodwill. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year BV Financial may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if BV Financial elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of BV Financial’s market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.
Current wording
Goodwill. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. BV Financial may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if BV Financial elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of BV Financial’s market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.
Previous wording
Deferred Income Taxes. At December 31, 2024, we had a net deferred tax asset totaling $8.9 million. In accordance with Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.
Current wording
Deferred Income Taxes. At December 31, 2025, we had a net deferred tax asset totaling $7.6 million. In accordance with Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.
Previous wording
Total assets were $911.8 million at December 31, 2024, an increase of $26.5 million, or 3.0%, from $885.3 million at December 31, 2023. The increase was due primarily to a $33.0 million increase in net loans receivable to $729.2 million at December 31, 2024, and a $2.5 million increase in securities available for sale partially offset by a $4.2 million decrease in securities held to maturity, a $3.2 million decrease in cash and cash equivalents and decreases in premises and equipment and other assets.
Current wording
Total assets were $912.2 million at December 31, 2025, an increase of $392,000, or 0.04%, from $911.8 million at December 31, 2024. The increase was due primarily to a $19.2 million increase in net loans receivable to $748.5 million at December 31, 2025, offset by a $14.8 million decrease in cash and cash equivalents, and a $4.0 million decrease in securities available for sale.
Previous wording
Securities available for sale (“AFS”) increased $2.5 million, or 7.2%, to $37.3 million at December 31, 2024 from $34.8 million at December 31, 2023. Securities held to maturity (HTM) decreased $4.2 million or 41.2% to $6.0 million at December 31, 2024. Maturities and paydowns in the HTM portfolio were replaced, as deemed necessary by securities in the AFS portfolio.
Current wording
Securities available for sale (“AFS”) decreased $4.0 million, or 10.8%, to $33.2 million at December 31, 2025 from $37.3 million at December 31, 2024. Securities held to maturity ("HTM") decreased $243,000 or 4.1% to $5.7 million at December 31, 2025. The decreases were due to pay-downs and maturities.
Previous wording
Management monitors and manages the investment portfolio on a monthly basis and believes the inherent risks in the portfolio are acceptable. AFS securities are reviewed each quarter to determine whether a decline in the fair value of the securities is a result of a deterioration in credit quality. No reserve for credit losses has been recorded on AFS securities.
Current wording
Management monitors and manages the investment portfolio on a monthly basis and believes the risks inherent in the portfolio are acceptable. AFS securities are reviewed each quarter to determine whether a decline in the fair value of the securities is a result of a deterioration in credit quality. No reserve for credit losses has been recorded on AFS securities.
Previous wording
Gross unrealized losses on AFS securities at December 31, 2024 and 2023 were $2.3 million and $2.7 million, respectively. The unrealized losses are the result of changes in interest rates since the securities were issued. The Company intends to, and has the ability to, hold investment securities with unrealized losses until they mature, at which time the Company will receive pay-offs in full for the security.
Current wording
Gross unrealized losses on AFS securities at December 31, 2025 and 2024 were $1.6 million and $2.3 million, respectively. The unrealized losses are the result of changes in interest rates since the securities were issued. The Company intends to, and has the ability to, hold investment securities with unrealized losses until they mature, at which time the Company expects to receive pay-offs in full for the security.
Previous wording
The AFS portfolio holds 96%, or $35.7 million of its portfolio in securities issued by Government Sponsored Enterprises ("GSE") backed by the full faith and credit of the United States Government. The remainder of the portfolio consists of bonds issued by bank holding companies.
Current wording
The AFS portfolio holds 91%, or $31.7 million, of its portfolio in securities issued by Government Sponsored Enterprises ("GSE") backed by the full faith and credit of the United States Government. The remainder of the portfolio consists of bonds issued by bank holding companies.
Previous wording
The held-to-maturity ("HTM") portfolio consists of $2.8 million in securities issued by GSEs and $3.2 million in securities issued by bank holding companies. At December 31, 2024 and 2023, the securities in the HTM portfolio not issued by a GSE has an allowance for credit loss of $4,000 and $6,000, respectively.
Current wording
The HTM portfolio consists of $2.5 million in securities issued by GSEs and $3.2 million in securities issued by bank holding companies. At December 31, 2025 and 2024, the securities in the HTM portfolio not issued by a GSE had an allowance for credit loss of $2,000 and $4,000, respectively.
Previous wording
Net loans receivable increased $33.0 million, or 4.74%, to $729.2 million at December 31, 2024 from $696.2 million at December 31, 2023. Increases in investor commercial real estate, 1-4 family owner occupied, construction loans and commercial loans offset decreases in owner occupied commercial real estate loans, non-owner occupied 1-4 family loans, farm loans, consumer loans and loans guaranteed by the U.S. Government.
Current wording
Net loans receivable increased $19.2 million, or 2.6%, to $748.5 million at December 31, 2025 from $729.2 million at December 31, 2024. Increases in 1-4 family owner occupied, construction loans and commercial loans offset decreases in owner occupied commercial real estate loans, commercial investor loans, non-owner occupied one- to four- family loans, farm loans, consumer loans and loans guaranteed by the U.S. Government.
Previous wording
Total deposits increased $17.4 million, or 2.7%, to $651.5 million at December 31, 2024 from $634.1 million at December 31, 2023. Interest-bearing deposits increased $36.3 million, or 7.5%, to $521.8 million at December 31, 2024 from $492.1 million at December 31, 2023. Noninterest bearing deposits decreased $12.3 million, or 8.7%, to $129.7 million at December 31, 2024 from $142.0 million at December 31, 2023. The Company utilized $50 million in brokered certificates of deposits with five year terms to replace a $16.5 million reduction in retail certificates of deposit and to fund loan growth.
Current wording
Total deposits increased $24.6 million, or 3.8%, to $676.1 million at December 31, 2025 from $651.5 million at December 31, 2024. Interest-bearing deposits increased $16.0 million, or 3.1%, to $537.7 million at December 31, 2025 from $521.8 million at December 31, 2024, primarily due to the $14.0 million increase in certificates of deposit. Noninterest bearing deposits increased $8.6 million, or 6.7%, to $138.4 million at December 31, 2025 from $129.7 million at December 31, 2024.
Previous wording
The following tables set forth average balance sheets, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees totaled $2.2 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively.
Current wording
The following tables set forth average balance sheets, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees totaled $2.2 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.
Previous wording
The Company reported net income of $11.7 million or $1.09 per diluted share for the year ended December 31, 2024 compared to net income of $13.7 million or $1.47 per diluted share for the year ended December 31, 2023.
Current wording
The Company reported net income of $13.5 million or $1.43 per diluted share for the year ended December 31, 2025 compared to net income of $11.7 million or $1.09 per diluted share for the year ended December 31, 2024.
Previous wording
Total interest income increased 7.52 % for the year ended December 31, 2024 when compared to the year ended December 31, 2023. Interest income on loans increased by $3.3 million or 8.6%. Higher yields on loans contributed $2.6 million to the increase while an increase in the average balance outstanding contributed $673,000 to the increase.
Current wording
Total interest income increased 3.0 million, or 6.48% for the year ended December 31, 2025 when compared to the year ended December 31, 2024. Interest income on loans increased by $4.6 million or 11.2%. Higher yields on loans contributed $2.0 million to the increase while an increase in the average balance outstanding contributed $2.6 million to the increase.
Previous wording
Interest income on investment securities available-for-sale increased by $163,000 or 14.1% as the increase in yields on new purchases and the adjustable-rate portion of the portfolio offset a decline in the average balance of AFS investments.
Current wording
Interest income on investment securities available-for-sale increased by $7,000 or 0.5% as the increase in yields on new purchases were offset by a decline in the average balance of AFS investments.
Previous wording
Interest income on investment securities held-to-maturity decreased $53,000 or 14.4%, primarily due to lower average balances in these securities.
Current wording
Interest income on investment securities held-to-maturity decreased $129,000 or 41.1%, primarily due to lower average balances in these securities.
Previous wording
Other interest income primarily consists of interest earned on overnight cash investments. Interest income in this category decreased by $108,000, or 2.6%, primarily due to lower average balances.
Current wording
Other interest income primarily consists of interest earned on overnight cash investments. Interest income in this category decreased by $1.4 million, or 35.7%, primarily due to lower average balances.
Previous wording
Total interest expense increased by $2.3 million or 25.1% to $11.5 million for the year ended December 31, 2024 from $9.2 million for the year ended December 31, 2023. The increase in the cost of interest-bearing deposits was the primary driver in the increase in total interest expense.
Current wording
Total interest expense increased by $1.3 million or 11.4% to $12.8 million for the year ended December 31, 2025 from $11.5 million for the year ended December 31, 2024. Both the increase in the average balance of deposits and borrowings and the cost of interest-bearing deposits drove the increase in total interest expense.
Previous wording
Interest paid on interest-bearing deposits increased by $3.4 million or 61.1% for the year ended December 31, 2024 compared to the year ended December 31, 2023. The impact of higher rates paid offset a lower average balance on these deposits. Higher rates paid on deposits were influenced by, among other factors, the Federal Reserve rate increases during the year, intense competition for deposits in the Bank's market area, and a greater percentage of deposits consisting of higher-yielding certificates of deposit. Non-interest bearing deposits decreased in the year as customers took advantage of higher market interest rates to redeploy their excess cash into interest-bearing products.
Current wording
Interest paid on interest-bearing deposits increased by $1.7 million or 18.4% for the year ended December 31, 2025 compared to the year ended December 31, 2024. Higher rates paid on deposits were influenced by, among other factors, intense competition for deposits in the Bank's market area, and a greater percentage of deposits consisting of higher-yielding certificates of deposit. Non-interest bearing deposits decreased in the year as customers took advantage of higher market interest rates to redeploy their excess cash into interest-bearing products.
Previous wording
Interest expense on subordinated debt increased by $286,000, or 13.2%, during the year. The increase was due primarily to the pay-off of $3.0 million in junior subordinated debt which included the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000.
Current wording
Interest expense on subordinated debt decreased by $628,000, or 25.6%, during the year. The decrease was due primarily to the pay-off of $3.0 million in junior subordinated debt which included the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 during 2024.
Previous wording
Net interest income was $35.2 million for the year ended December 31, 2024, compared to $34.2 million in the year ended December 31, 2023. The net interest margin for the year ended December 31, 2024 was 4.27% compared to 4.23% for the year ended December 31, 2023.
Current wording
Net interest income before the provision for credit losses was $36.9 million for the year ended December 31, 2025, compared to $35.2 million in the year ended December 31, 2024. The net interest margin for the year ended December 31, 2025 was 4.35% compared to 4.27% for the year ended December 31, 2024.
Previous wording
The $203,000 credit to the provision for credit losses consisted of a $347,000 credit to the allowance for credit losses - loans and a $2,000 credit to the allowance for credit losses - HTM securities offset by an allowance of $146,000 in the allowances for credit losses for off balance sheet commitments. In the year ended December 31, 2023, net recoveries of previously charged-off loans totaled $314,000. These recoveries directly reduced the required increase in the allowance for credit losses-loans.
Current wording
The $2.4 million credit to the provision for credit losses consisted of a $2.2 million credit to the allowance for credit losses - loans, and a $2,000 credit to the allowance for credit losses - HTM securities and a $259,000 credit to the allowance for off balance sheet commitments. In the year ended December 31, 2025, net recoveries of previously charged-off loans totaled $83,000. These recoveries directly reduced the required amount of the allowance for credit losses-loans.
Previous wording
Non-interest expense increased $2.1 million to $21.5 million for the year ended December 31, 2024 from $19.4 million for the year ended December 31, 2023. The increase was due primarily to increases in compensation and benefits due to increases in salaries and the costs of the equity awards granted after the stockholders approved the 2024 Equity Incentive Plan.
Current wording
For the year ended December 31, 2025 noninterest expense totaled $23.2 million compared to $21.5 million for the year ended December 31, 2024. Compensation and benefits increased by 15.9% due to a full year of costs of the equity awards granted after the stockholders approved the 2024 Equity Incentive Plan compared to four months of costs of the plan in 2024. During the year ended December 31, 2025 expense related to this plan was $3.9 million as compared to $1.5 million in the year ended December 31, 2024.
Previous wording
Income tax expense for the year ended December 31, 2024 was $4.7 million resulting in an effective tax rate of 28.5%. Income tax expense for the year ended December 31, 2023 was $4.9 million resulting in an effective tax rate of 26.4%.
Current wording
Income tax expense for the year ended December 31, 2025 was $5.4 million resulting in an effective tax rate of 28.5%. Income tax expense for the year ended December 31, 2024 was $4.7 million resulting in an effective tax rate of 28.5%.
Previous wording
The tables above indicate that at December 31, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 3.27% increase in net interest income. In the event of an instantaneous parallel 200 basis point decrease in interest rates, we would experience a 5.31% decrease in net interest income.
Current wording
The tables above indicate that at December 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 4.12% increase in net interest income. In the event of an instantaneous parallel 200 basis point decrease in interest rates, we would experience a 8.66% decrease in net interest income.
Previous wording
New assets (loans & investment securities) will be placed on the balance sheet at the lower current market interest rates.
Current wording
New assets (loans and investment securities) will be placed on the balance sheet at the lower current market interest rates.
Previous wording
The table above indicates that at December 31, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 2.36% increase in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience an 6.55% decrease in EVE. As indicated in the table above, our EVE falls considerably in the instantaneous down scenarios due to the value of the low or zero rate non-maturing deposit portfolio declining as the theoretical spread between the cost of these deposits and new assets declines. In the up scenarios, the value of these instruments increases less as the model assumes a significant lag before these rates increase.
Current wording
The table above indicates that at December 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 5.41% increase in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience an 14.15% decrease in EVE. As indicated in the table above, our EVE falls considerably in the instantaneous down scenarios due to the value of the low or zero rate non-maturing deposit portfolio declining as the theoretical spread between the cost of these deposits and new assets declines. In the up scenarios, the value of these instruments increases less as the model assumes a significant lag before these rates increase.
Previous wording
Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Atlanta. At December 31, 2024 and December 31, 2023, we had $157.5 million and $150.0 million available under a line of credit with the Federal Home Loan Bank of Atlanta, and had $15.0 million and $0 million outstanding as of December 31, 2024 and December 31, 2023, respectively, with the Federal Home Loan Bank of Atlanta. In addition, at December 31, 2024 and December 31, 2023, the Bank had $23.0 million and $25.0 million in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the Federal Home Loan Bank of Atlanta.
Current wording
Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the FHLB of Atlanta. At December 31, 2025 and December 31, 2024, we had $171.6 million and $157.5 million available under a line of credit with the FHLB of Atlanta, and had $35.0 million and $15 million outstanding as of December 31, 2025 and December 31, 2024, respectively, with the FHLB of Atlanta. In addition, at December 31, 2025 and December 31, 2024, the Bank had $29.0 million and $23.0 million in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the FHLB of Atlanta.
Previous wording
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $16.1 million and $15.2 million for the years ended December 31, 2024 and 2023, respectively. Net cash (used in) provided by investing activities, which consists primarily of investments in loans and securities, was $(32.5) million and $(35.2) million for the years ended December 31, 2024 and 2023, respectively. Net cash provided by (used in) financing activities, consisting primarily of changes in deposits and advances and the repayment of advances to the Federal Home Loan Bank, was $13.2 million and $25.1 million for the years ended December 31, 2024 and 2023, respectively.
Current wording
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $19.0 million and $16.1 million for the years ended December 31, 2025 and 2024, respectively. Net cash used in investing activities, which consists primarily of investments in loans and securities, was $13.3 million and $32.5 million for the years ended December 31, 2025 and 2024, respectively. Net cash provided by used in financing activities, consisting primarily of changes in deposits and advances and the repayment of advances to the FHLB, was $20.5 million for the year ended December 31, 2025 compared to net cash provided of $13.2 million for the year ended December 31, 2024.
Previous wording
We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Time deposits that are scheduled to mature in less than one year from December 31, 2024 totaled $107.5 million. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Current wording
We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Time deposits that are scheduled to mature in less than one year from December 31, 2025 totaled $79.9 million. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Previous wording
Capital Resources. At December 31, 2024, BayVanguard Bank exceeded all of its regulatory capital requirements, and was categorized as well capitalized at December 31, 2024. Management is not aware of any conditions or events since the most recent notification that would change our category.
Current wording
Capital Resources. At December 31, 2025, BayVanguard Bank exceeded all of its regulatory capital requirements, and was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change our category.
Previous wording
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At December 31, 2024, we had outstanding commitments to extend credit of $51.3 million and $592,000 of letters of credit. See Note 4 to the consolidated financial statements for further information.
Current wording
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At December 31, 2025, we had outstanding commitments to extend credit of $45.9 million and $832,000 of letters of credit. See Note 4 to the consolidated financial statements for further information.