BV Financial, Inc.
For the period ended Jun 30, 2026. Filed Aug 12, 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 12, 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-Q
Period ended 2026-03-31; filed 2026-05-11.
0001193125-26-216089
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCautionary Note Regarding Forward-Looking StatementsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001193125-26-346096
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCautionary Note Regarding Forward-Looking StatementsThe 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 66 previous paragraphs and 77 current paragraphs.
36 unchanged; 25 reworded; 10 added; 5 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 4 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
risks associated with cybersecurity threats, data breaches, ransomware attacks, or other failures in our operational or security systems and infrastructure, including the risks arising from our dependence on third-party service providers and vendors;
Current report
Net Income. Net income was $3.5 million, or $0.42 per diluted share, for the three months ended June 30, 2026 compared to $2.9 million, or $0.29 per diluted share, for the three months ended June 30, 2025. Net income was $4.6 million or $0.55 per diluted share for the six months ended June 30, 2026 compared to $5.0 million, or $0.50 per diluted share, for the six months ended June 30, 2025. The decrease in income for the six months ended June 30, 2026 was primarily due to the $2.2 million first quarter executive transition expense and the related tax impact.
Current report
Interest Expense. Interest expense decreased $443,000 or 14.2% to $2.7 million for the three months ended June 30, 2026 from $3.1 million at June 30, 2025. The decrease in interest expense was primarily due to the pay-off of the subordinated debentures in December 2025, and the early pay-off of FHLB borrowings which resulted in a gain (decrease in interest expense) in June 2026.
Current report
Interest expense decreased $710,000 or 11.2% to $5.6 million for the six months ended June 30, 2026 from $6.3 million at June 30, 2025. The decrease was primarily due to the pay-off of the subordinated debentures in December 2025 and the pay-off of the FHLB advances in June with the corresponding gain, partially offset by an increase in deposit expenses due primarily to higher average balances.
Current report
Net interest income was $18.6 million for the six months ended June 30, 2026, compared to $17.8 million in the six months ended June 30, 2025. The net interest margin for the six months ended June 30, 2026 was 4.47% compared to 4.24% for the six months ended June 30, 2025. The increase in net interest income was primarily due to higher yields earned on loans and lower interest expense due to the pay-off of the FHLB borrowings in 2026 and the pay-off of the subordinated debentures in December 2025.
Current report
For the six months ended June 30, 2026 noninterest income totaled $1.0 million compared to $1.2 million for the six months ended and June 30, 2025. The decrease was due to lower miscellaneous loan and deposit fees and the write-down of the former branch location.
Current report
Non-interest Expense. For the three months ended June 30, 2026, noninterest expense totaled $5.5 million compared to $5.8 million for the three months ended June 30, 2025. Decreases in compensation and benefits of $506,000 due lower staffing and lower expenses of the 2024 Equity plan was offset by increases in other categories. Occupancy expense increased by $97,000 primarily due to costs of repairing a branch location after a major water leak. Professional fees increased due to higher legal expenses, data processing expense increased due to new product implementation fees and other expenses increased due to higher loan-related expenses.
Current report
For the six months ended June 30, 2026, noninterest expense totaled $13.1 million as compared to $11.9 million in the six months ended June 30, 2025. Compensation and benefits expense increased $750,000 due to the $2.2 million cost of the executive transition in the first quarter offset by lower staffing and lower costs of the 2024 Equity plan. Occupancy expense increased by $109,000 due to the branch repair costs noted above and higher heating bills in the first quarter.
Removed paragraphs (5)
Previous report
system failure or cyber-security breaches of our information technology infrastructure;
Previous report
our ability to retain key employees;
Previous report
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 report
Interest Expense. Interest expense decreased $267,000 or 8.3% to $3.0 million for the three months ended March 31, 2026 from $3.2 million at March 31, 2025. Interest expense on FHLB advances for the three months ended March 31, 2026 was $319,000 compared to $171,000 for the three months ended March 31, 2025. The increase in interest expense on FHLB advances was due to the Bank's utilization of FHLB borrowings to replace the $35.0 million in subordinated debt issued in 2020 that was redeemed in December 2025.
Previous report
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.
Reworded paragraphs (25)
Previous wording
This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
Current wording
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
Previous wording
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
Current wording
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the ACL;
Previous wording
changes in the economic assumptions and methodology used to calculate the allowance for credit losses;
Current wording
changes in the economic assumptions and methodology used to calculate the ACL;
Previous wording
the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;
Current wording
the imposition of tariffs or other domestic or international governmental policies, trade restrictions and retaliatory measures impacting our borrowers and the broader economy;
Previous wording
the failure to maintain current technologies and/or successfully implement future information technology enhancements;
Current wording
the failure to maintain current technologies and/or successfully implement future information technology enhancements and the operational risks associated with the adoption of artificial intelligence and other emerging technologies;
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") 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.
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 commercial real estate 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 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 …
Excerpt shortened here; the source contains the full paragraph.
Previous 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.
Current wording
At June 30, 2026, we had a net deferred tax asset totaling $7.6 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 $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.
Current wording
Assets. Total assets were $877.9 million at June 30, 2026, a decrease of $34.3 million, or 3.8%, from $912.2 million at December 31, 2025. The decrease was due primarily to the decrease of $44.3 million in loans, partially offset by an increase of $13.2 million in cash and cash equivalents.
Previous 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.
Current wording
Cash and Cash Equivalents. Cash and cash equivalents increased $13.2 million, or 23.8%, to $68.9 million at June 30, 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
Loans. Loans receivable decreased $19.3 million, or 2.6%, to $735.6 million at March 31, 2026 from $754.9 million at December 31, 2025. Real estate loans decreased $11.3 million while consumer and commercial loans decreased $8.0 million.
Current wording
Loans. Loans receivable decreased $44.3 million, or 5.9%, to $710.6 million at June 30, 2026 from $754.9 million at December 31, 2025. Real estate loans decreased $32.1 million while consumer and commercial loans decreased $12.2 million.
Previous 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.
Current wording
Allowance for Credit Losses. The allowance for credit losses – loans decreased $223,000 to $6.2 million at June 30, 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 June 30, 2026 compared to 0.85% at December 31, 2025, while the allowance for credit losses to non-performing loans was 182.1% at June 30, 2026 compared to 284.7% at December 31, 2025.
Previous 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.
Current wording
Securities. Securities available for sale decreased by $1.0 million, or 3.0%, 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
Liabilities. Total liabilities decreased $1.2 million, or 0.16%, to $727.2 million at March 31, 2026 from $728.4 million at December 31, 2025. The decrease was due primarily to the decrease in deposits offset by an increase in other liabilities.
Current wording
Liabilities. Total liabilities decreased $33.7 million, or 4.6%, to $694.8 million at June 30, 2026 from $728.4 million at December 31, 2025. The decrease was due primarily to the decrease in FHLB borrowings of $35.0 million. The Company had no advances outstanding at June 30, 2026.
Previous wording
Deposits. Total deposits decreased $2.6 million, or 0.38% to $673.5 million at March 31, 2026 from $676.1 million at December 31, 2025. Interest-bearing deposits decreased $3.5 million, or 0.7%, to $534.2 million at March 31, 2026 from $537.7 million at December 31, 2025. Noninterest bearing deposits increased $1.0 million, or 0.7%, to $139.3 million at March 31, 2026 from $138.4 million at December 31, 2025.
Current wording
Deposits. Total deposits decreased $204,000, or 0.03% to $675.9 million at June 30, 2026 from $676.1 million at December 31, 2025. Interest-bearing deposits decreased $228,000, or 0.04%, to $537.5 million at June 30, 2026 from $537.7 million at December 31, 2025, while noninterest bearing deposits remained unchanged at $138.4 million.
Previous 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.
Current wording
Stockholders’ Equity. Stockholders’ equity decreased $603,000, or 0.3%, to $183.2 million at June 30, 2026 from $183.8 million at December 31, 2025 primarily due to stock repurchases offset by net income.
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 $2.2 million at March 31, 2026 and 2025, 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 $2.2 million and $2.3 million at June 30, 2026 and 2025, respectively.
Previous 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.
Current wording
Interest Income. Interest income decreased $61,000, or 0.5%, to $12.2 million for the three months ended June 30, 2026 from $12.3 million for the three months ended June 30, 2025. The decrease was due primarily to a decrease in interest income on loans and securities, partially offset by an increase in other interest income on cash and cash equivalents. Interest income on loans decreased $169,000, or 1.5%, to $11.2 million for the three months ended June 30, 2026 from $11.3 million for the three months ended June 30, 2025 due primarily to decreases in the average balances of $30.9 million. The weighted average yield on loans increased 17 basis points to 6.21% for the three months ended June 30, 2026 compared to 6.04% for the three months ended June 30, 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 increased $151,000 to $713,000 for the three months ended June 30, 2026 from $562,000 for the three months ended June 30, 2025 primarily due to an increase in average balance of $24.0 million.
Previous 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.
Current wording
Net Interest Income. Net interest income was $9.5 million for the three months ended June 30, 2026 compared to $9.2 million for the three months ended June 30, 2025. The net interest margin for the three months ended June 30, 2026 was 4.58% compared to 4.36% for the three months ended June 30, 2025. The increase in net interest income was primarily due to higher yields on interest earning assets and lower interest expense due to the pay-offs of subordinated debt and borrowings.
Previous 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.
Current wording
Provision for Credit Losses. The Company recorded a recovery of the provision for credit losses of $216,000 for the three months ended June 30, 2026 compared to a provision for credit losses of $178,000 for the three months ended June 30, 2025. Our allowance for credit losses - loans was $6.2 million at June 30, 2026 and $6.4 million at December 31, 2025. The ratio of our allowance for credit losses - loans to total loans was 0.87% at June 30, 2026 compared to 0.85% at December 31, 2025, while the allowance for credit losses - loans to non-performing loans was 182.1% at June 30, 2026 compared to 284.7% at December 31, 2025.
Previous 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.
Current wording
Non-interest Income. For the three months ended June 30, 2026, noninterest income totaled approximately $467,000 compared to $714,000 for the quarter ended June 30, 2025. The decrease was attributable to the $135,000 write-down of a former branch location to estimated sales proceeds and lower miscellaneous fees on loans and deposits.
Previous wording
Income Tax Expense. For the three months ended March 31, 2026, income tax expense was $961,000 for an effective tax rate of 46.8%. For the three months months ended March 31, 2025, income tax expense was $599,000 for an effective tax rate of 22.2%. The increase in the effective tax rate is primarily attributable to the non-deductible portion of the executive transition payment.
Current wording
For the six months ended June 30, 2026, income tax expense was $2.2 million for an effective tax rate of 32.9%. For the six months ended June 30, 2025, income tax expense was $1.7 million for an effective tax rate of 25.2%. The increase in the effective tax rate is primarily attributable to the non-deductible portion of the executive transition payment.
Previous wording
Asset Quality. Non-performing loans at March 31, 2026 totaled $2.6 million, compared to $2.3 million at December 31, 2025. The Company had no foreclosed real estate at either period. At March 31, 2026, the allowance for credit losses on loans was $6.4 million, which represented 0.87% of total loans and 282.9% of non-performing loans compared to $6.4 million at December 31, 2025, which represented 0.85% of total loans and 284.7% of non-performing loans.
Current wording
Asset Quality. Non-performing assets at June 30, 2026 totaled $3.4 million, all nonperforming loans, compared to $2.3 million at December 31, 2025, also all nonperforming loans. At June 30, 2026, the allowance for credit losses on loans was $6.2 million, which represented 0.87% of total loans and 182.1% of non-performing loans compared to $6.4 million at December 31, 2025, which represented 0.85% of total loans and 284.7% of non-performing loans.
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 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.
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 June 30, 2026, we had a $142.3 million available under a line of credit with the FHLB, with no borrowings outstanding. 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 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.
Current wording
While maturities and scheduled amortization of loans and securities can be 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 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.
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 June 30, 2026, the Company had $50.1 million in brokered deposits compared to $50.3 million in brokered deposits at June 30, 2025. In addition, we had $56.7 million of municipal deposits at June 30, 2026, which represented 8.4% of total deposits. The Bank's uninsured deposits totaled $150.1 million, or 22.2% of total deposits, of which $52.9 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $4.6 million were deposits of the Company at the Bank.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing
Current report — wording carried from elsewhere
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
Current report — wording carried from elsewhere
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
Current report — wording carried from elsewhere
The following table sets forth the effects of changing rates and volumes on our net interest income for the six months ended June 30, 2026 and 2025. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.
Current report — wording carried from elsewhere
Interest income increased $140,000 or 0.6%, to $24.3 million for the six months ended June 30, 2026 from $24.1 million for the six months ended June 30, 2025. The increase was due primarily to an increase in interest income on loans, partially offset by a decrease in interest on investment securities. Interest income on loans increased $233,000, or 1.1%, to $22.3 million for the six months ended June 30, 2026 from $22.1 million for the six months ended June 30, 2025 due primarily to an increase in the yields earned on the portfolio offset by lower balances. The weighted average yield on loans increased 19 basis points to 6.16% for the six months ended June 30, 2026 compared to 5.97% for the six months ended June 30, 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.
Current report — wording carried from elsewhere
Income Tax Expense. For the three months ended June 30, 2026, income tax expense was $1.3 million for an effective tax rate of 26.8%. For the three months ended June 30, 2025, income tax expense was $1.1 million for an effective tax rate of 27.3%.