FIRST US BANCSHARES, INC.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
FUSB$16.450.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001193125-26-211192
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001193125-26-337583
ITEM 2. 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 112 previous paragraphs and 114 current paragraphs.
60 unchanged; 43 reworded; 11 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 18 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 (11)
Current report
During the six months ended June 30, 2026, the banking industry continued to operate in an environment characterized by elevated economic uncertainty, inflation remaining above the Federal Reserve’s long-term objective, and generally stable labor market conditions. U.S. economic activity continued to expand during the first half of 2026. According to the U.S. Bureau of Economic Analysis’ advance estimate released on July 30, 2026, real gross domestic product ("GDP") increased at an annual rate of 1.5% during the second quarter of 2026, compared with 2.1% during the first quarter of 2026. This modest second-quarter growth reflected increases in consumer spending, investments and exports that were partially offset by decreased government spending.
Current report
Market interest rates, including U.S. Treasury yields, remained volatile and generally increased during the first six months of 2026, with increases accelerating following the inception of the military conflict with Iran in February 2026. The yield on the 10-year U.S. Treasury increased from approximately 4.18% at December 31, 2025 to approximately 4.44% at June 30, 2026, after reaching higher levels during May. This increase in longer-term rates reflected resilient economic data, despite elevated inflation expectations, supply disruptions resulting from the conflict in the Middle East, tariff-related price pressures, and changing market expectations regarding the timing and direction of future monetary policy actions. Kevin Warsh assumed the role of chairman of the Federal Reserve and Chairman of the Federal Open Market Committee (the "FOMC") in May 2026. In this role, Chairman Warsh has created five task forces to reexamine all aspects of monetary policy decision making, including the nature and level of communication by the FOMC, management of the Federal Reserve’s balance sheet, data used by the FOMC, productivity and the job market, and inflation. The timing, magnitude and effects of any changes in the policies or priorities of the Federal Reserve or the FOMC cannot be predicted with certainty at this time. At both its June and July 2026 meetings, the Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75% and continued to indicate that inflation remained elevated relative to its long-term objective.
Current report
Non-interest income totaled $2.2 million for the six months ended June 30, 2026, compared to $1.7 million for the six months ended June 30, 2025. The increase resulted primarily from $0.5 million in gains on sale of investment securities during the six months ended June 30, 2026 that did not occur during the corresponding period of 2025.
Current report
Non-interest expense totaled $15.0 million for the six months ended June 30, 2026, compared to $14.4 million for the six months ended June 30, 2025. The increased expense resulted primarily from inflationary increases in various expense categories, as well as increased occupancy expenses associated with expansion of the Company’s banking center footprint.
Current report
The Company remains focused on efforts in multiple commercial and consumer loan categories, seeking to enhance diversification while growing the portfolio. For the six months ended June 30, 2026, average total loan balances increased by $11.3 million, or 1.3%, compared to the six months ended June 30, 2025.
Current report
In the current environment, significant competitive pressure remains to acquire and maintain deposit balances. The Company remains focused on efforts to grow deposits while maintaining pricing discipline. Part of this strategy includes growth in deposit gathering banking centers. Consistent with these efforts, in May 2026, the Company opened a new banking center office in Daphne, Alabama to the public. This location represents the Bank’s initial deposit gathering facility in the Daphne/Mobile area. In addition, in April 2026, the Company purchased an office in Orange Beach, Alabama, which is expected to serve as a banking center following the completion of renovations. The location is expected to open to the public in 2027.
Current report
For the six months ended June 30, 2026, the Company recorded a provision for credit losses of $1.2 million, compared to $3.2 million for the six months ended June 30, 2025. The decreased provision comparing the first six months of 2026 to the corresponding period of 2025 resulted primarily from provisioning for specifically identified commercial loans in 2025. The credit issues associated with additional provisioning on these loans were resolved later in 2025 and, accordingly, the same level of provisioning was not repeated during the six months ended June 30, 2026. Net charge-offs totaled $1.1 million and $2.0 million for the six months ended June 30, 2026 and 2025, respectively.
Current report
NM: Not meaningful
Current report
Non-interest expense totaled $15.0 million during the six months ended June 30, 2026, compared to $14.4 million during the six months ended June 30, 2025. The increased expense resulted primarily from an increase in occupancy expenses associated with expansion of the Company’s banking center footprint, as well as inflationary increases in various other expense categories.
Current report
(1) Non-owner occupied office consists of 15 loans with an average loan size of $2.2 million. The properties are located in Tuscaloosa, AL, Birmingham, AL, and Chattanooga, TN.
Current report
(1) While the Indirect portfolio has contractual maturities of up to 15 years, the weighted average term to payoff has trended at less than 5 years.
Removed paragraphs (9)
Previous report
During the three months ended March 31, 2026, the banking industry continued to operate in an environment characterized by economic uncertainty, influenced by moderating, but still resilient, U.S. economic growth, inflation levels remaining above the Federal Reserve’s long-term objective, and a labor market that has shown signs of gradual softening. While U.S. gross domestic product (“GDP”) growth moderated from levels experienced during the middle of 2025, economic activity remained positive entering 2026, supported by consumer spending and business investment, though at a slower pace.
Previous report
During the first quarter of 2026, financial markets were significantly impacted by the onset of military conflict involving Iran beginning in late February 2026. The conflict, including disruptions to energy markets and shipping routes in the Strait of Hormuz, contributed to increased volatility across global financial markets and renewed upward pressure on inflation expectations. Oil prices increased sharply during the quarter, and global supply chain disruptions intensified, contributing to heightened economic uncertainty and raising concerns regarding the potential for slower economic growth or recessionary conditions should the conflict persist.
Previous report
Market interest rates, including U.S. Treasury yields, exhibited increased volatility during the first quarter of 2026 compared to the fourth quarter of 2025. While Treasury yields generally declined during the latter part of 2025 as markets anticipated monetary policy easing, yields moved higher during portions of the first quarter of 2026 in response to rising inflation expectations and geopolitical uncertainty associated with the Iran conflict. For example, the 10-year U.S. Treasury yield increased meaningfully following the onset of the conflict, reaching levels above those observed at year-end 2025, before experiencing periods of fluctuation as market sentiment shifted. The combination of moderating economic growth, inflation above target levels, geopolitical instability, and evolving expectations for monetary policy continues to create a challenging environment in which to predict future interest rate movements.
Previous report
Non-interest income remained relatively consistent, totaling $0.8 million for the three months ended March 31, 2026, compared to $0.9 million for the three months ended March 31, 2025.
Previous report
Non-interest expense increased to $7.3 million for the three months ended March 31, 2026, compared to $6.9 million for the three months ended March 31, 2025. The increase comparing the 2026 period to the 2025 period resulted from increases in a number of expense categories, primarily fees for professional services, occupancy, and salaries and benefits expense.
Previous report
Banking Center Growth
Previous report
During the three months ended March 31, 2026, the Company neared completion on renovation of a banking center office in Daphne, Alabama that was purchased from another financial institution. This location will serve as the Bank’s initial deposit gathering facility in the Daphne/Mobile area, and is expected to open to the public during the second quarter of 2026.
Previous report
For the three months ended March 31, 2026, the Company recorded a provision for credit losses of $0.3 million, compared to $0.5 million for the three months ended March 31, 2025. The decrease in provisioning comparing the two periods was primarily associated with a reduction in loan growth during the first quarter of 2026 compared to the first quarter of 2025, including the impact of the Company’s reserve for unfunded lending commitments. Net charge-offs totaled $0.5 million and $0.3 million for the three months ended March 31, 2026 and 2025, respectively.
Previous report
Non-interest expense totaled $7.3 million during the three months ended March 31, 2026, compared to $6.9 million during the three months ended March 31, 2025. The increase comparing the 2026 period to the 2025 period resulted from increases in a number of expense categories, primarily fees for professional services, occupancy, and salaries and benefits expense.
Reworded paragraphs (43)
Previous wording
The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture. The Bank operates and serves its customers through 15 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 17 states, including Alabama, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. The Bank is the Company’s only reportable operating segment upon which management makes decisions regarding how to allocate resources and assess performance.
Current wording
The Bank conducts a general commercial banking business and offers banking services such as demand, savings, individual retirement account and time deposits, personal and commercial loans, safe deposit box services and remote deposit capture. The Bank operates and serves its customers through 16 full-service banking offices located in Birmingham, Butler, Calera, Centreville, Daphne, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama; Knoxville and Powell, Tennessee; and Rose Hill, Virginia; as well as loan production offices in Mobile, Alabama and the Chattanooga, Tennessee area. The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals. The Bank also performs indirect lending through third-party retailers and currently conducts this lending in 17 states, including Alabama, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. The Bank is the Company’s only reportable operating segment upon which management makes decisions regarding how to allocate resources and assess performance.
Previous wording
Delivery of the best possible financial services to customers remains an overall operational focus of the Company. The Company recognizes that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 153 full-time equivalent employees (as of March 31, 2026), to ensure customer satisfaction and convenience.
Current wording
Delivery of the best possible financial services to customers remains an overall operational focus of the Company. The Company recognizes that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 152 full-time equivalent employees (as of June 30, 2026), to ensure customer satisfaction and convenience.
Previous wording
The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of March 31, 2026 to December 31, 2025, while comparing income and expense for the three months ended March 31, 2026 and 2025. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.
Current wording
The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of June 30, 2026 to December 31, 2025, while comparing income and expense for the six months ended June 30, 2026 and 2025. All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.
Previous wording
Uncertainty remains elevated with respect to U.S. fiscal and trade policy, including the ongoing and potential impacts of tariffs implemented by the Trump administration and the possibility of additional policy changes. Geopolitical risks, including the ongoing conflict involving Iran as well as continued unrest in the Middle East and Ukraine, persist and contribute to broader global economic uncertainty. These factors may continue to impact business sentiment, energy markets, supply chains, and overall economic activity.
Current wording
Uncertainty also remained elevated with respect to U.S. fiscal and trade policy, including the current and potential effects of tariffs implemented or announced by the Trump administration and the possibility of additional policy changes. Tariffs, higher energy costs, and other supply-related pressures may affect inflation, consumer demand, business investment, and global supply chains. Geopolitical risks, including the conflict involving Iran, continued unrest elsewhere in the Middle East, and the ongoing war in Ukraine, also contributed to broader global economic uncertainty. These factors may continue to affect business sentiment, commodity and energy markets, supply chains, financial markets, and overall economic activity.
Previous wording
In the Company’s local markets, competitive pressures for both loans and deposits have remained elevated during the first quarter of 2026. Competition for deposits continues to constrain the Company’s ability to significantly reduce funding costs despite the decline in market interest rates relative to peak levels in 2025. Commercial lending activity has remained measured as business customers continue to evaluate the potential impact of interest rate movements, geopolitical developments, and broader economic uncertainty on their operations. Consumer spending trends have remained mixed on a macroeconomic basis; however, the Company has continued to experience growth in consumer indirect lending, primarily within higher credit quality segments.
Current wording
In the Company’s local markets, competitive pressures for both loans and deposits remained elevated during the six months ended June 30, 2026. Commercial lending activity remained measured as business customers continued to assess the effects of elevated borrowing costs, interest rate movements, geopolitical developments, trade policy, and broader economic uncertainty on their operations and investment decisions. Consumer spending trends remained mixed on a macroeconomic basis; however, the Company continued to experience growth in consumer indirect lending, primarily within higher-credit-quality segments.
Previous wording
The competitive environment, combined with ongoing economic, geopolitical, and policy uncertainty, continues to present a challenging operating environment for maintaining and improving the Company’s net interest margin. Management continues to closely monitor these conditions and believes the Company remains well positioned to respond to a range of economic outcomes; however, adverse changes in economic conditions, credit quality, competitive dynamics, geopolitical developments, or interest rate movements could negatively impact the Company’s financial condition and results of operations.
Current wording
The competitive environment, together with elevated funding costs and ongoing economic, geopolitical, trade, and policy uncertainty, continues to present challenges to maintaining and improving the Company’s net interest margin. Management continues to closely monitor these conditions and believes the Company remains well positioned to respond to a range of economic outcomes. However, adverse changes in economic conditions, credit quality, loan demand, competitive dynamics, deposit pricing, geopolitical developments, trade or fiscal policy, or interest rate movements could negatively affect the Company’s financial condition and results of operations.
Previous wording
The Company earned net income of $1.9 million, or $0.33 per diluted common share, during the three months ended March 31, 2026, compared to $1.8 million, or $0.29 per diluted common share, for the three months ended March 31, 2025. Comparing the two periods, the increase in net income resulted primarily from increased interest income associated with growth in earning assets, as well as from a decrease in the Company’s provision for credit losses on loans and leases.
Current wording
The Company earned net income of $1.8 million, or $0.31 per diluted common share, during the three months ended June 30, 2026, compared to $0.2 million, or $0.03 per diluted common share, for the three months ended June 30, 2025. For the six months ended June 30, 2026, net income totaled $3.7 million, or $0.64 per diluted share, compared to $1.9 million, or $0.32 per diluted share, for the six months ended June 30, 2025. The increase in net income comparing both the three months and six months ended June 30, 2026 to the corresponding periods of 2025 resulted primarily from a decrease in the Company’s provision for credit losses on loans and leases, and to a lesser extent, realized gains on the sale of investment securities recorded during the 2026 periods. These increases in net income were partially offset by increases in non-interest expense comparing the six months ended June 30, 2026 to the six months ended June 30, 2025.
Previous wording
Summarized condensed consolidated statements of operations are included below for the three months ended March 31, 2026 and 2025.
Current wording
Summarized condensed consolidated statements of operations are included below for the three and six months ended June 30, 2026 and 2025.
Previous wording
The discussion that follows summarizes the most significant activity that drove changes in the Company’s operating results during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.
Current wording
The discussion that follows summarizes the most significant activity that drove changes in the Company’s operating results during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.
Previous wording
Net interest income increased by $0.3 million, or 3.6%, comparing the three months ended March 31, 2026 to the three months ended March 31, 2025. The increase resulted from growth in average interest-earning asset balances comparing the two periods. Average interest-earning assets increased by $86.3 million, or 8.4%, comparing the three months ended March 31, 2026 to the corresponding period of 2025. Earning asset growth was reflected in total loans, investment securities, federal funds sold and interest-bearing deposits with other financial institutions. The increase in interest income was partially offset by both volume and rate-related increases in interest expense associated with interest-bearing liabilities. While the increase in earning assets was favorable to the Company’s net interest income, net interest margin decreased as the average yield on interest-earnings assets declined at a faster pace than the average rate on interest-bearing liabilities. Net interest margin was 3.37% for the three months ended March 31, 2026, compared to 3.53% for the three months ended March 31, 2025.
Current wording
Net interest income increased by $0.3 million, or 1.9%, comparing the six months ended June 30, 2026 to the six months ended June 30, 2025. The increase resulted from growth in average interest-earning asset balances comparing the two periods. Average interest-earning assets increased by $48.2 million, or 4.6%, comparing the six months ended June 30, 2026 to the corresponding period of 2025. Earning asset growth was reflected in total loans, investment securities, federal funds sold and interest-bearing deposits with other financial institutions. The increase in interest income was partially offset by volume-related increases in interest expense associated with interest-bearing liabilities. While the increase in earning assets was favorable to the Company’s net interest income, net interest margin decreased as the average yield on interest-earnings assets declined at a faster pace than the average rate on interest-bearing liabilities. Net interest margin was 3.46% for the six months ended June 30, 2026, compared to 3.56% for the six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2026, the Company recorded a provision for credit losses of $0.3 million, compared to $0.5 million for the three months ended March 31, 2025. The decrease in provisioning comparing the two periods was primarily associated with a reduction in loan growth during the first quarter of 2026 compared to the first quarter of 2025, including the impact of the Company’s reserve for unfunded lending commitments. As of both March 31, 2026 and December 31, 2025, the Company’s allowance for credit losses ("ACL") on loans and leases as a percentage of total loans was 1.25%.
Current wording
For the six months ended June 30, 2026, the Company recorded a provision for credit losses of $1.2 million, compared to $3.2 million for the six months ended June 30, 2025. The decreased provision comparing the first half of 2026 to the corresponding period of 2025 resulted primarily from provisioning for specifically identified commercial loans in 2025. The credit issues associated with additional provisioning on these loans were resolved later in 2025, and accordingly, the same level of provisioning was not repeated during the six months ended June 30, 2026. As of June 30, 2026, the Company’s allowance for credit losses ("ACL") on loans and leases as a percentage of total loans was 1.26%, compared to 1.25% as of December 31, 2025.
Previous wording
As of March 31, 2026, the Company’s assets totaled $1,165.2 million, compared to $1,154.8 million as of December 31, 2025, an increase of 0.9%.
Current wording
As of June 30, 2026, the Company’s assets totaled $1,147.6 million, compared to $1,154.8 million as of December 31, 2025, a decrease of 0.6%.
Previous wording
Total loans decreased by $9.3 million, or 1.1%, as of March 31, 2026, compared to December 31, 2025, as growth in the multi-family residential real estate and indirect categories was offset by decreases primarily in the construction, non-residential commercial real estate and commercial and industrial (“C&I”) categories. The decrease in construction is consistent with the ebb and flow of projects in the Company's service territories. Construction loans are generally short-to-medium term loans that are expected to pay off or transfer to another loan category upon project completion. The decrease in non-residential commercial real estate was related to completed construction projects that moved into a permanent category, but were subsequently refinanced into the permanent market. The growth in the indirect category accelerated in the latter part of the first quarter of 2026, consistent with typical seasonal trends. The indirect lending platform focuses on consumer lending at the higher end of the credit spectrum. Collateral financed in the indirect portfolio primarily includes boats, recreational vehicles, campers, horse trailers and cargo trailers. The weighted average credit score of new indirect loans financed during the three months ended March 31, 2026 was 797, while the weighted average credit score for the entire portfolio was 783. While total loans decreased during the first quarter of 2026, average loan balances remained higher comparing the three months ended March 31, 2026 to the three months ended March 31, 2025, increasing by $26.7 million, or 3.2%.
Current wording
Total loans increased by $7.6 million, or 0.9%, as of June 30, 2026, compared to December 31, 2025. Loan growth in the construction and consumer indirect categories was partially offset by decreases in other categories, most notably in non-residential commercial real estate. The decrease in commercial real estate loans resulted primarily from the payoff of real estate projects that were anticipated in the normal course of the project life cycle. The growth in the construction category was consistent with economic growth in the Company’s service territories, while the growth in the indirect category was consistent with typical seasonal trends. The indirect lending platform focuses on consumer lending at the higher end of the credit spectrum. Collateral financed in the indirect portfolio primarily includes boats, recreational vehicles, campers, horse trailers and cargo trailers. The weighted average credit score of indirect loans funded was 785 as of June 30, 2026.
Previous wording
Nonperforming assets, including loans in non-accrual status and other real estate owned, totaled $1.8 million as of March 31, 2026, an increase from $1.6 million as of December 31, 2025. As a percentage of total assets, nonperforming assets increased to 0.16% as of March 31, 2026, compared to 0.14% as of December 31, 2025. Net charge-offs as a percentage of average loans totaled 0.23% during the three months ended March 31, 2026, compared to 0.13% during the three months ended March 31, 2025. The increase in net charge-offs comparing the two periods was due primarily to an increase in charge-offs associated with the indirect consumer portfolio.
Current wording
Nonperforming assets, including loans in non-accrual status, other real estate owned, and repossessed assets, totaled $1.9 million as of June 30, 2026, an increase from $1.6 million as of December 31, 2025. As a percentage of total assets, nonperforming assets increased to 0.17% as of June 30, 2026, compared to 0.14% as of December 31, 2025. Net charge-offs as a percentage of average loans totaled 0.27% during the six months ended June 30, 2026, compared to 0.47% during the six months ended June 30, 2025. The decrease in net charge-offs comparing the six months ended June 30, 2026, to the six months ended June 30, 2025 was due to the partial charge off in the six months ended June 30, 2025 of one individually evaluated commercial loan totaling $1.2 million that was not repeated in the six months ended June 30, 2026.
Previous wording
Total deposits increased by $10.9 million, or 1.1%, during the three months ended March 31, 2026, due primarily to an increase in interest-bearing demand deposits of $28.4 million, partially offset by a $4.7 million decrease in noninterest-bearing deposits and a $12.8 million decrease in time deposits. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $853.8 million, or 82.2% of total deposits, as of March 31, 2026, compared to $838.3 million, or 81.6% of total deposits, as of December 31, 2025. The average rate on deposits totaled 2.18% during the three months ended March 31, 2026, compared to 2.07% during the three months ended March 31, 2025. In the current environment, significant competitive pressure remains to acquire and maintain deposit balances.
Current wording
Total deposits decreased by $30.0 million, or 2.9%, during the six months ended June 30, 2026. Included in this decrease were $20.1 million in wholesale brokered time deposits that matured and were not replaced. The remaining decrease was comprised of reductions of $19.2 million in retail time deposits and $4.0 million in non-interest-bearing demand deposits, partially offset by an increase in interest-bearing demand deposits of $13.3 million. The decrease in wholesale deposits, as well as other interest-bearing time deposits, assisted management’s efforts to reduce overall deposit costs, while maintaining an appropriate level of core funding. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $835.2 million, or 83.7% of total deposits, as of June 30, 2026, compared to $838.3 million, or 81.6% of total deposits, as of December 31, 2025. The average rate on deposits totaled 2.08% during the six months ended June 30, 2026, compared to 2.07% during the six months ended June 30, 2025. While deposit costs increased slightly comparing the two six-month periods, the more recent trend in 2026 was favorable. Deposit costs decreased to 1.98% during the three months ended June 30, 2026, compared to 2.18% during the three months ended March 31, 2026, and 2.08% during the three months ended June 30, 2025.
Previous wording
As of March 31, 2026, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $85.4 million, or 7.3% of total assets, compared to $78.4 million, or 6.8% of total assets, as of December 31, 2025. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $181.5 million as of March 31, 2026, compared to $168.5 million as of December 31, 2025. During the three months ended March 31, 2026, the Company purchased $20.5 million of investment securities at market rates in existence at the time of purchase. These purchases, combined with the maturity and paydown of investment securities at lower rates, led to continued improvement in yield on the portfolio. The yield on investment securities, including both available-for-sale and held to maturity securities, totaled 3.89% during the three months ended March 31, 2026, compared to 3.44% during the three months ended March 31, 2025. As of March 31, 2026, the expected average life of securities in the investment portfolio was 3.8 years compared to 3.7 years as of December 31, 2025.
Current wording
As of June 30, 2026, the Company held cash, federal funds sold and securities purchased under reverse repurchase agreements totaling $63.8 million, or 5.6% of total assets, compared to $78.4 million, or 6.8% of total assets, as of December 31, 2025. Investment securities, including both the available-for-sale and held-to-maturity portfolios, totaled $166.0 million as of June 30, 2026, compared to $168.5 million as of December 31, 2025. During the six months ended June 30, 2026, the Company purchased $25.4 million of investment securities at market rates in existence at the time of purchase. In addition, the Company sold investment securities with a principal balance totaling $7.1 million and recorded a gain on sale totaling $0.5 million during the six months ended June 30, 2026. These purchases and sales, combined with the maturity and paydown of investment securities at lower rates, have led to continued improvement in yield on the portfolio. The average yield on investment securities, including both available-for-sale and held to maturity securities, totaled 3.92% for the six months ended June 30, 2026, compared to 3.45% for the six months ended June 30, 2025. As of June 30, 2026, the expected average life of securities in the investment portfolio was 3.6 years, compared to 3.7 years as of December 31, 2025.
Previous wording
As of March 31, 2026, shareholders’ equity totaled $104.6 million, or 9.0% of total assets, compared to $105.6 million, or 9.1% of total assets, as of December 31, 2025. While earnings, net of dividends paid, increased shareholders’ equity during the three months ended March 31, 2026, the increase was fully offset by share repurchases, combined with an increase in the Company’s accumulated other comprehensive loss resulting from the increasing interest rate environment during the period.
Current wording
As of June 30, 2026, shareholders’ equity totaled $104.3 million, or 9.09% of total assets, compared to $105.6 million, or 9.15% of total assets, as of December 31, 2025. While earnings, net of dividends paid, increased shareholders’ equity during the six months ended June 30, 2026, the increase was fully offset by share repurchases, combined with an increase in the Company’s accumulated other comprehensive loss resulting from the increasing interest rate environment and the sale of investment securities in gain positions during the period.
Previous wording
During both the three months ended March 31, 2026 and 2025, the Company declared cash dividends totaling $0.07 per share on its common stock.
Current wording
During both the six months ended June 30, 2026 and 2025, the Company declared cash dividends totaling $0.14 per share on its common stock.
Previous wording
During the three months ended March 31, 2026, the Company completed the repurchase of 146,500 shares of its common stock at a weighted average price of $15.03 per share. The repurchases were completed under the Company’s previously announced share repurchase program, which was expanded during the fourth quarter of 2025. As of March 31, 2026, 1,638,313 shares remained available for repurchase under the program.
Current wording
During the six months ended June 30, 2026, the Company completed the repurchase of 237,500 shares of its common stock at a weighted average price of $15.33 per share. The repurchases were completed under the Company’s previously announced share repurchase program, which was most recently expanded during the fourth quarter of 2025. As of June 30, 2026, 1,547,313 shares remained available for repurchase under the program.
Previous wording
During the three months ended March 31, 2026, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of March 31, 2026, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.85%. Its total capital ratio was 11.99%, and its Tier 1 leverage ratio was 8.85%.
Current wording
During the six months ended June 30, 2026, the Bank continued to maintain capital ratios at higher levels than required to be considered a “well-capitalized” institution under applicable banking regulations. As of June 30, 2026, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 10.85%. Its total capital ratio was 12.02%, and its Tier 1 leverage ratio was 9.16%.
Previous wording
The following tables show the average balances of each principal category of assets, liabilities and shareholders’ equity for the three months ended March 31, 2026 and 2025. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.
Current wording
The following tables show the average balances of each principal category of assets, liabilities and shareholders’ equity for the three and six months ended June 30, 2026 and 2025. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net interest margin is calculated for each period presented as net interest income divided by average total interest-earning assets.
Previous wording
Interest income increased by $0.9 million, comparing the three months ended March 31, 2026 to the three months ended March 31, 2025. The increase in interest income resulted from a $1.0 increase attributable to growth in average interest-earning assets, partially offset by a $0.1 million decrease attributable to lower average yields on interest-earning assets. With the exception of investment securities, yields in all earning asset categories declined comparing the three months ended March 31, 2026 to the three months ended March 31, 2025 as short-term interest rates generally declined comparing the two periods.
Current wording
Interest income increased by $0.7 million, comparing the six months ended June 30, 2026 to the six months ended June 30, 2025. The increase in interest income resulted from a $1.1 million increase attributable to growth in average interest-earning assets, partially offset by a $0.4 million decrease attributable to lower average yields on interest-earning assets. With the exception of investment securities, yields in all earning asset categories declined comparing the six months ended June 30, 2026 to the six months ended June 30, 2025, as short-term interest rates generally declined comparing the two periods.
Previous wording
Interest expense increased by $0.6 million, comparing the three months ended March 31, 2026 to the three months ended March 31, 2025. The increase resulted primarily from increases in both the average balance and rates paid on money market and time deposits. These increases were partially offset by reductions in both average balances and rates associated with demand deposits and borrowings.
Current wording
Interest expense increased by $0.4 million, comparing the six months ended June 30, 2026 to the six months ended June 30, 2025. The increase resulted primarily from an increase in volume associated with money market accounts, and to a lesser extent, increased rates on both money market and time deposits. These increases were partially offset by reductions in average balances of time deposits and borrowings, as well as rates associated with demand deposits, time deposits and borrowings.
Previous wording
The Company’s net interest income and net interest margin during the three months ended March 31, 2026 continued to be impacted by variability in the interest rate environment. Notably, between September and December 2025, the federal funds rate was reduced by 75 basis points, and generally, the Company’s interest-earning assets have repriced downward more quickly than interest-bearing liabilities, reducing the Company’s net interest margin to 3.37% during the three months ended March 31 2026, compared to 3.53% during the three months ended March 31, 2025. While management is continuing efforts to improve net interest margin, the results of these efforts cannot be fully predicted. Should market interest rates increase or decrease at significant levels, particularly over a short period of time, the Company’s net interest margin and net interest income could be negatively impacted.
Current wording
The Company’s net interest income and net interest margin during the six months ended June 30, 2026 continued to be impacted by variability in the interest rate environment. Notably, between September and December 2025, the federal funds rate was reduced by 75 basis points, and generally, the Company’s interest-earning assets repriced downward more quickly than interest-bearing liabilities, reducing the Company’s net interest margin to 3.46% during the six months ended June 30, 2026, compared to 3.56% during the six months ended June 30, 2025. While management is continuing efforts to improve net interest margin, the results of these efforts cannot be fully predicted. Should market interest rates increase or decrease at significant levels, particularly over a short period of time, the Company’s net interest margin and net interest income could be negatively impacted.
Previous wording
As of both March 31, 2026 and December 31, 2025, the Company’s ACL as a percentage of total loans and leases was 1.25%. While we believe that the methodologies and calculations that have been used in the determination of the ACL are adequate, the determination of the appropriateness of the ACL is complex and requires judgment by management about the effects of matters that are inherently uncertain. Factors beyond our control, such as changes in economic forecasts related to the national economy, changes in consumer behavior, or economic deterioration in service areas in which the Company operates, may negatively and materially affect asset quality and the adequacy of the ACL, as well as the resulting provision for credit losses.
Current wording
As of June 30, 2026, the Company’s ACL as a percentage of total loans and leases was 1.26%, compared to 1.25% as of December 31, 2025. Comparing June 30, 2026 to December 31, 2025, the ACL was increased by changes in economic forecasting associated with the Company’s credit forecasting model, including the expected impact of higher inflation and a higher Federal funds rate. While we believe that the methodologies and calculations that have been used in the determination of the ACL are adequate, the determination of the appropriateness of the ACL is complex and requires judgment by management about the effects of matters that are inherently uncertain. Factors beyond our control, such as changes in economic forecasts related to the national economy, changes in consumer behavior, or economic deterioration in service areas in which the Company operates, may negatively and materially affect asset quality and the adequacy of the ACL, as well as the resulting provision for credit losses.
Previous wording
The Company’s non-interest income remained relatively consistent, totaling $0.8 million for the three months ended March 31, 2026, compared to $0.9 million for the three months ended March 31, 2025. Management continues to evaluate opportunities to add non-interest revenue streams and grow existing streams; however, significant variation in non-interest income is not expected in the near term.
Current wording
Non-interest income increased to $2.2 million for the six months ended June 30, 2026, compared to $1.7 million for the six months ended June 30, 2025, primarily due to gains on the sale of investment securities totaling $0.5 million during the 2026 period. Management continues to evaluate opportunities to add non-interest revenue streams and grow existing streams; however, with the exception of sales of investment securities which cannot be predicted with certainty, significant variation in non-interest income is not expected in the near term.
Previous wording
The provision for income taxes was $0.5 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. The Company’s effective tax rate was 20.9% and 23.8%, respectively, for the same periods.
Current wording
The provision for income taxes was $1.0 million and $0.6 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s effective tax rate was 21.3% and 22.6%, respectively, for the same periods.
Previous wording
The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 3.8 years and 3.7 years as of March 31, 2026 and December 31, 2025, respectively.
Current wording
The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 3.6 years and 3.7 years as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive loss, a separate component of shareholders’ equity. As of March 31, 2026, available-for-sale securities totaled $181.1 million, or 99.8% of the total investment portfolio, compared to $168.1 million, or 99.7% of the total investment portfolio, as of December 31, 2025. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Current wording
Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive loss, a separate component of shareholders’ equity. As of June 30, 2026, available-for-sale securities totaled $165.6 million, or 99.8% of the total investment portfolio, compared to $168.1 million, or 99.7% of the total investment portfolio, as of December 31, 2025. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, corporate bonds, obligations of U.S. government-sponsored agencies, and obligations of state and political subdivisions.
Previous wording
Net unrealized losses in the available-for-sale portfolio totaled $2.1 million as of March 31, 2026, compared to $1.0 million as of December 31, 2025. The increase in unrealized losses in the portfolio resulted from changes in the interest rate environment, in particular, increases in market rates, particularly in the mid- to long-term part of the Treasury curve between December 31, 2025 and March 31, 2026. Net unrealized losses within the available-for-sale portfolio were recognized, net of tax, in accumulated other comprehensive loss.
Current wording
Net unrealized losses in the available-for-sale portfolio totaled $2.9 million as of June 30, 2026, compared to $1.0 million as of December 31, 2025. The increase in unrealized losses in the portfolio resulted from changes in the interest rate environment, in particular, increases in market rates, particularly in the mid- to long-term part of the Treasury curve between December 31, 2025 and June 30, 2026, as well as the sale of two residential mortgage-backed securities during the period. Management elected to sell these securities in an effort to realize gains, while providing cash flows that assisted in the reduction of wholesale brokered deposits. Net unrealized losses within the available-for-sale portfolio were recognized, net of tax, in accumulated other comprehensive loss.
Previous wording
The Company’s total loan portfolio decreased by $9.3 million, or 1.1%, as of March 31, 2026, compared to December 31, 2025. The tables below summarize loan balances by portfolio category, as well as the ACL, as of the end of each of the most recent five quarters as of March 31, 2026:
Current wording
The Company’s total loan portfolio increased by $7.6 million, or 0.9%, as of June 30, 2026, compared to December 31, 2025. The tables below summarize loan balances by portfolio category, as well as the ACL, as of the end of each of the most recent five quarters as of June 30, 2026:
Previous wording
As of March 31, 2026 and December 31, 2025, the composition of the construction, land development, and other land loans loan portfolio was as follows:
Current wording
As of June 30, 2026 and December 31, 2025, the composition of the construction, land development, and other land loans portfolio was as follows:
Previous wording
Total deposits increased to $1,038.8 million as of March 31, 2026, from $1,028.0 million as of December 31, 2025, an increase of 1.1%. The increase was due primarily to an increase in interest-bearing demand deposits of $28.4 million, partially offset by a $4.7 million decrease in noninterest-bearing deposits and a $12.8 million decrease in time deposits. Core deposits, which exclude time deposits of $250 thousand or more and all brokered deposits, provide a relatively stable funding source that supports earning assets. Core deposits totaled $853.8 million, or 82.2% of total deposits, as of March 31, 2026, compared to $838.3 million, or 81.6% of total deposits, as of December 31, 2025.
Current wording
Total deposits decreased by $30.0 million, or 2.9%, during the six months ended June 30, 2026. Included in this decrease were $20.1 million in wholesale brokered time deposits that matured and were not replaced. The remaining decrease was comprised of reductions of $19.2 million in retail time deposits and $4.0 million in non-interest-bearing demand deposits, partially offset by an increase in interest-bearing demand deposits of $13.3 million. The decrease in wholesale deposits, as well as other interest-bearing time deposits, assisted management’s efforts to reduce overall deposit costs, while maintaining an appropriate level of core funding. Core deposits, which exclude time deposits of $250 thousand or more and all wholesale brokered deposits, totaled $835.2 million, or 83.7% of total deposits, as of June 30, 2026, compared to $838.3 million, or 81.6% of total deposits, as of December 31, 2025.
Previous wording
Other interest-bearing liabilities that are used by the Company as an alternative source of funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances, and subordinated debt. As of March 31, 2026, other interest-bearing liabilities totaled 3.5% of total interest-bearing liabilities, compared to 2.5% as of December 31, 2025.
Current wording
Other interest-bearing liabilities that are used by the Company as an alternative source of funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances, and subordinated debt. As of June 30, 2026, other interest-bearing liabilities totaled 4.1% of total interest-bearing liabilities, compared to 1.2% as of December 31, 2025.
Previous wording
As of March 31, 2026, shareholders’ equity totaled $104.6 million, or 9.0% of total assets, compared to $105.6 million, or 9.1% of total assets, as of December 31, 2025. While earnings, net of dividends paid, increased shareholders’ equity during the three months ended March 31, 2026, the increase was fully offset by share repurchases, combined with an increase in the Company’s accumulated other comprehensive loss resulting from the increasing interest rate environment during the period. During both the three months ended March 31, 2026 and 2025, the Company declared cash dividends totaling $0.07 per share on its common stock.
Current wording
As of June 30, 2026, shareholders’ equity totaled $104.3 million, or 9.09% of total assets, compared to $105.6 million, or 9.15% of total assets, as of December 31, 2025. While earnings, net of dividends paid, increased shareholders’ equity during the six months ended June 30, 2026, the increase was fully offset by share repurchases, combined with an increase in the Company’s accumulated other comprehensive loss resulting from the increasing interest rate environment and the sale of investment securities in gain positions during the period. During both the six months ended June 30, 2026 and 2025, the Company declared cash dividends totaling $0.14 per share on its common stock.
Previous wording
In addition, during the three months ended March 31, 2026, the Company completed the repurchase of 146,500 shares of its common stock at a weighted average price of $15.03 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of March 31, 2026, 1,638,313 shares remained available for repurchase under the program. During the three months ended March 31, 2025, the Company repurchased 40,000 shares of its common stock at a weighted average price of $13.38 per share.
Current wording
In addition, during the six months ended June 30, 2026, the Company completed the repurchase of 237,500 shares of its common stock at a weighted average price of $15.33 per share. The repurchases were completed under the Company’s previously announced share repurchase program. As of June 30, 2026, 1,547,313 shares remained available for repurchase under the program.
Previous wording
The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold and securities purchased under reverse repurchase agreements, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $277.6 million as of March 31, 2026 and $274.7 million as of December 31, 2025. Investment securities forecasted to mature or reprice in one year or less were estimated to be $28.5 million and $27.5 million as of March 31, 2026 and December 31, 2025, respectively.
Current wording
The asset portion of the balance sheet provides liquidity primarily from the following sources: (1) excess cash and interest-bearing deposits in banks, (2) federal funds sold and securities purchased under reverse repurchase agreements, (3) principal payments and maturities of loans and (4) principal payments and maturities from the investment portfolio. Loans maturing or repricing in one year or less amounted to $133.2 million as of June 30, 2026 and $274.7 million as of December 31, 2025. Investment securities forecasted to mature or reprice in one year or less were estimated to be $22.6 million and $27.5 million as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
Although some securities in the investment portfolio have final maturities exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. The investment securities portfolio had an estimated average life of 3.8 years and 3.7 years as of March 31, 2026 and December 31, 2025, respectively. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.
Current wording
Although some securities in the investment portfolio have final maturities exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. The investment securities portfolio had an estimated average life of 3.6 years and 3.7 years as of June 30, 2026 and December 31, 2025, respectively. However, management does not rely solely upon the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.
Previous wording
The Company had no outstanding borrowings under FHLB advances as of both March 31, 2026 and December 31, 2025. The Company's use of FHLB advances varies depending on fluctuations in deposits and other funding sources, as well as their use in interest rate hedging strategies. The Company had up to $326.5 million and $324.1 million in remaining unused credit from the FHLB (subject to available collateral, which may include eligible investment securities and loans) as of March 31, 2026 and December 31, 2025, respectively.
Current wording
The Company had outstanding borrowings under FHLB advances of $20.0 million as of June 30, 2026, while as of December 31, 2025, the Company had no balances outstanding under FHLB advances. The Company's use of FHLB advances varies depending on fluctuations in deposits and other funding sources, as well as their use in interest rate hedging strategies. The Company had up to $309.6 million and $324.1 million in remaining unused credit from the FHLB (subject to available collateral, which may include eligible investment securities and loans) as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
The Company also has access to the FRB’s discount window. The discount window allows borrowing on pledged collateral that includes eligible investment securities and loans. The Company maintains pledges of its consumer indirect loan portfolio and selected investment securities with the FRB as collateral to provide immediate access to funding through the discount window. As of March 31, 2026 and December 31, 2025 the Company had $212.1 and $210.9 million, respectively, in unused borrowing capacity with the FRB’s discount window. As of both March 31, 2026 and December 31, 2025, the Bank had no outstanding federal funds purchased from the FRB's discount window.
Current wording
The Company also has access to the FRB’s discount window. The discount window allows borrowing on pledged collateral that includes eligible investment securities and loans. The Company maintains pledges of its consumer indirect loan portfolio and selected investment securities with the FRB as collateral to provide immediate access to funding through the discount window. As of June 30, 2026, the Company had $5.0 million in outstanding federal funds purchased from the FRB's discount window, while there were no outstanding federal funds purchased from the discount window as of December 31, 2025. As of June 30, 2026 and December 31, 2025 the Company had $191.6 million and $210.9 million, respectively, in unused borrowing capacity with the FRB’s discount window.
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