BV Financial, Inc.

Previous wording

statements of our goals, financial performance, intentions and expectations;

Current wording

statements of our goals, financial condition and performance, intentions and expectations;

Previous wording

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit losses expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Investor CRE loans are made nationwide, therefore, management deems it appropriate to utilize national loss rates when evaluating this portfolio. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and non-accrual loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Federal Reserve Board for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the neccessity and amount of any forward-looking adjustment. The establishment of the ACL is significantly affected by management's judgment and by economic and other uncertainties, and different amounts may be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the ACL for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit losses expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Investor CRE loans are made nationwide, therefore, management deems it appropriate to utilize national loss rates when evaluating this portfolio. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and non-accrual loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Federal Reserve Board for national gross domestic product ("GDP") and the national unemployment rate. The model compares the average history of loss rates described above to the forecasted GDP and unemployment to determine the necessity and amount of any forward-looking adjustment. The establishment of the ACL is significantly affected by management's judgment and by economic and other uncertainties, and different amounts may be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the ACL for reasonableness and, as a result of such reviews, we ma…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

At September 30, 2025, we had a net deferred tax asset totaling $9.3 million. In accordance with 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. 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 subjective and are reviewed on a regular basis as regulatory, economic 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

At March 31, 2026, we had a net deferred tax asset totaling $7.4 million. In accordance with 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. 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 subjective and are reviewed on a regular basis as regulatory, economic 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

Assets. Total assets were $909.4 million at September 30, 2025, a decrease of $2.4 million, or 0.27%, from $911.8 million at December 31, 2024. The decrease was due primarily to the Company utilizing cash to repay $15.0 million in borrowings from the FHLB, offset by an increase in loans.

Current wording

Assets. Total assets were $910.9 million at March 31, 2026, a decrease of $1.3 million, or 0.15%, from $912.2 million at December 31, 2025. The decrease was due primarily to the decrease of $19.3 million in loans, partially offset by an increase of $18.9 million in cash and cash equivalents.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents decreased $7.0 million, or 9.9%, to $63.5 million at September 30, 2025 from $70.5 million at December 31, 2024. The decrease in cash was primarily a result of the pay-off of FHLB borrowings offset by deposit growth and securities repayments.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $18.9 million, or 33.9%, to $74.6 million at March 31, 2026 from $55.7 million at December 31, 2025. The increase in cash was primarily a result of the pay-downs in loans.

Previous wording

Allowance for Credit Losses. The allowance for credit losses – loans decreased $325,000 to $8.2 million at September 30, 2025 compared to $8.5 million at December 31, 2024. The ratio of our allowance for credit losses to total loans was 1.10% at September 30, 2025 compared to 1.15% at December 31, 2024, while the allowance for credit losses to non-performing loans was 233.5% at September 30, 2025 compared to 212.5% at December 31, 2024.

Current wording

Allowance for Credit Losses. The allowance for credit losses – loans decreased $38,000 to $6.4 million at March 31, 2026 compared to $6.4 million at December 31, 2025. The ratio of our allowance for credit losses to total loans was 0.87% at March 31, 2026 compared to 0.85% at December 31, 2025, while the allowance for credit losses to non-performing loans was 282.9% at March 31, 2026 compared to 284.7% at December 31, 2025.

Previous wording

Securities. Securities available for sale decreased by $2.8 million, or 7.5%, from December 31, 2024 as paydowns and maturities were not fully replaced with new purchases. The held-to-maturity portfolio experienced a slight decrease due to paydowns.

Current wording

Securities. Securities available for sale decreased by $336,000, or 1.0%, from December 31, 2025 as paydowns and maturities were not fully replaced with new purchases. The held-to-maturity portfolio experienced a slight decrease due to paydowns.

Previous wording

Stockholders’ Equity. Stockholders’ equity decreased $5.3 million, or 2.7%, to $190.2 million at September 30, 2025 from $195.5 million at December 31, 2024 a due to $17.7 million in stock repurchases offset by net income, a decrease in the accumulative other comprehensive loss and the impact of equity compensation plans.

Current wording

Stockholders’ Equity. Stockholders’ equity decreased $167,000, or 0.1%, to $183.6 million at March 31, 2026 from $183.8 million at December 31, 2025 a due to $2.0 million in stock repurchases offset by net income, and the impact of equity compensation plans.

Previous wording

Comparison of Operating Results for the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of Operating Results for the Three Months Ended March 31, 2026 and 2025

Previous wording

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods 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 are included in the computation of average balances only. 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. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $2.3 million and $2.1 million at September 30, 2025 and 2024, respectively.

Current wording

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods 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 are included in the computation of average balances only. 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. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $2.3 million and $2.2 million at March 31, 2026 and 2025, respectively.

Previous wording

Net Income. Net income was $3.7 million or $0.41 per diluted share for the three months ended September 30, 2025 compared to $3.8 million or $0.35 per diluted share for the three months ended September 30, 2024. Net income was $8.7 million or $0.88 per diluted share for the nine months ended September 30, 2025 compared to $9.8 million or $0.91 per diluted share for the nine months ended September 30, 2024. The decreases were due to higher compensation expenses and smaller credits to the provision for credit losses offsetting higher net interest and other income.

Current wording

Net Income. Net income was $1.1 million or $0.13 per diluted share for the three months ended March 31, 2026 compared to $2.6 million or $0.21 per diluted share for the three months ended March 31, 2025. The decreases were due to higher compensation expenses and smaller credits to the provision for credit losses offsetting higher net interest and other income. As previously disclosed in a Form 8-K filed with the Securities and Exchange Commission, compensation expense for the quarter includes the $2.2 million payment made to the former Co-President and CEO upon his retirement

Previous wording

Interest Income. Interest income increased $377,000, or 3.10%, to $12.5 million for the three months ended September 30, 2025 from $12.2 million for the three months ended September 30, 2024. The increase was due primarily to an increase in interest income on loans, partially offset by a decrease in other interest income on cash and cash equivalents. Interest income on loans increased $1.0 million, or 9.5%, to $11.5 million for the three months ended September 30, 2025 from $10.5 million for the three months ended September 30, 2024 due to increases in the average balance and average yield on loans. The average balance of loans increased $52.9 million, or 7.7%, to $743.1 million for the three months ended September 30, 2025 from $690.2 million for the three months ended September 30, 2024. The weighted average yield on loans increased 10 basis points to 6.15% for the three months ended September 30, 2025 compared to 6.05% for the three months ended September 30, 2024, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash and cash equivalents decreased $559,000 to $633,000 for the three months ended September 30, 2025 from $1.2 million for the three months ended September 30, 2024 primarily due to a decrease in average balance of $28.5 million.

Current wording

Interest Income. Interest income increased $201,000, or 1.69%, to $12.1 million for the three months ended March 31, 2026 from $11.9 million for the three months ended March 31, 2025. The increase was due primarily to an increase in interest income on loans, partially offset by a decrease in other interest income on cash and cash equivalents. Interest income on loans increased $402,000, or 3.7%, to $11.1 million for the three months ended March 31, 2026 from $10.7 million for the three months ended March 31, 2025 due primarily to increases in the average yield on loans. The weighted average yield on loans increased 22 basis points to 6.11% for the three months ended March 31, 2026 compared to 5.89% for the three months ended March 31, 2025, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash and cash equivalents decreased $138,000 to $605,000 for the three months ended March 31, 2026 from $743,000 for the three months ended March 31, 2025 primarily due to a decrease in average balance of $1.6 million and a decrease in teh average yield.

Previous wording

Net Interest Income. Net interest income was $9.4 million for the three months ended September 30, 2025 compared to $9.3 million for the three months ended September 30, 2024. The net interest margin for the three months ended September 30, 2025 was 4.40% compared to 4.49% for the three months ended September 30, 2024. The increase in net interest income was due to higher average balances of interest earning assets and higher yields on these assets offset by a higher average balance of deposits and higher rates paid on deposits.

Current wording

Net Interest Income. Net interest income was $9.1 million for the three months ended March 31, 2026 compared to $8.6 million for the three months ended March 31, 2025. The net interest margin for the three months ended March 31, 2026 was 4.36% compared to 4.12% for the three months ended March 31, 2025. The increase in net interest income was due primarily to the Bank's utilization of lower cost Federal Home Loan Bank borrowings to replace the $35.0 million in subordinated debt that was paid off in December 2025 and higher rates earned on the loan portfolio, offset by lower yields on other interest-earning assets.

Previous wording

Provision for Credit Losses. We recorded a reversal of the provision for credit losses of $1.0 million for the three months ended September 30, 2025 compared to a reversal of the provision for credit losses of $714,000 for the three months ended September 30, 2024. We recorded a reversal of the provision for credit losses of 539,000 for the nine months ended September 30, 2025 compared to a reversal of the provision for credit losses of $806,000 for the nine months ended September 30, 2024. Our allowance for credit losses was $8.2 million at September 30, 2025 compared to $8.5 million at December 31, 2024. The ratio of our allowance for credit losses to total loans was 1.10% at September 30, 2025 compared to 1.15% at December 31, 2024, while the allowance for credit losses to non-performing loans was 233.5% at September 30, 2025 compared to 212.5% at December 31, 2024.

Current wording

Provision for Credit Losses. The Company recorded a reversal of the provision for credit losses of $11,000 for the three months ended March 31, 2026 compared to a provision for credit losses of $297,000 for the three months ended March 31, 2025. Our allowance for credit losses was $6.4 million at March 31, 2026 and December 31, 2025. The ratio of our allowance for credit losses to total loans was 0.87% at March 31, 2026 compared to 0.85% at December 31, 2025, while the allowance for credit losses to non-performing loans was 282.88% at March 31, 2026 compared to 284.72% at December 31, 2025.

Previous wording

Non-interest Income. For the three months ended September 30, 2025, noninterest income totaled approximately $684,000 compared to $696,000 for the quarter ended September 30, 2024.

Current wording

Non-interest Income. For the three months ended March 31, 2026, noninterest income totaled approximately $528,000 compared to $530,000 for the quarter ended March 31, 2025.

Previous wording

Non-interest Expense. For the three months ended September 30, 2025, noninterest expense totaled $5.9 million compared to $5.5 million in the three months ended September 30, 2024. Compensation and benefits increased $570,000, primarily due to the costs of the 2024 equity incentive plan. For the quarter ended September 30, 2024, the expenses of the 2024 equity incentive plan were only applicable for one month based on the grant dates of the awards. All other expense categories combined decreased by $165,000 in the quarter ended September 30, 2025 when compared to the quarter ended September 30, 2024.

Current wording

Non-interest Expense. For the three months ended March 31, 2026, noninterest expense totaled $7.6 million compared to $6.2 million in the three months ended March 31, 2025. Compensation and benefits expenses increased $1.3 million, or 27.8% primarily due to the executive payout noted above and regular merit salary increases somewhat offset by lower equity compensation costs of $0.5 million. All other expense categories combined increased by $164,000 in the quarter ended March 31, 2026 when compared to the quarter ended March 31, 2025.

Previous wording

Liquidity. Liquidity describes our ability to meet 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. At September 30, 2025, we had a $162.5 million line of credit with the FHLB, and $23.0 million of FHLB in unfunded letters of credit used to secure municipal deposits. The Company also has a $20.0 million short-term unsecured facility from a correspondent bank.

Current wording

Liquidity. Liquidity describes our ability to meet 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. At March 31, 2026, we had a $108.4 million available under a line of credit with the FHLB. The Company also has a $20.0 million short-term unsecured facility from a correspondent bank.

Previous wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments, including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. We are committed to maintaining a strong liquidity position.

Current wording

While maturities and scheduled amortization of loans and securities can be a predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments, including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. We are committed to maintaining a strong liquidity position.

Previous wording

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. 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, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At September 30, 2025, the Company had $50.3 million in brokered deposits compared to $10.0 million in brokered deposits at September 30, 2024. In addition, we had $55.3 million of municipal deposits at September 30, 2025, which represented 8.3% of total deposits. The Bank's uninsured deposits totaled $167.6 million, or 24.5% of total deposits, of which $48.2 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $19.2 million were deposits of the Company at the Bank.

Current wording

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. 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, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At March 31, 2026, the Company had $50.3 million in brokered deposits compared to $50.0 million in brokered deposits at March 31, 2025. In addition, we had $58.9 million of municipal deposits at March 31, 2026, which represented 8.7% of total deposits. The Bank's uninsured deposits totaled $149.5 million, or 22.0% of total deposits, of which $53.7 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $6.1 million were deposits of the Company at the Bank.