BANK OF THE JAMES FINANCIAL GROUP INC

ents

Consolidated Balance Sheets

(dollar amounts in thousands, except share and per share amounts) (2026 unaudited)

Consolidated Statements of Income

(dollar amounts in thousands, except per share amounts) (unaudited)

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Consolidated Statements of Comprehensive Income

(dollar amounts in thousands) (unaudited)

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Consolidated Statements of Cash Flows

(dollar amounts in thousands) (unaudited)

Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended March 31, 2026 and 2025

(dollar amounts in thousands, except share amounts) (unaudited)

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Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation

Bank of the James Financial Group, Inc. (the “Company”) operates primarily in the area commonly referred to as Region 2000, which encompasses the Town of Altavista, Amherst County, Appomattox County, the Town of Bedford, Bedford County, Campbell County, and the City of Lynchburg. In addition to its primary market area, the Company serves markets including Charlottesville, Roanoke, Blacksburg, Harrisonburg, Lexington, Buchanan, Nellysford, and Wytheville, Virginia.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, considered necessary for a fair presentation of the Company’s financial position as of March 31, 2026 and December 31, 2025, and the results of its operations for the three months ended March 31, 2026 and 2025, have been included. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year.

Additional information concerning the Company’s organization and business, accounting policies, and other related information is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in that report.

Note 2 –Significant Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the allowance for credit losses on loans (“ACL”).

Significant Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, actual results could differ from those estimates, and such differences may be material. Certain accounting policies inherently require a greater degree of judgment and are more susceptible to change.

The Company’s significant accounting policies are described in the notes to the audited consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K. There have been no material changes in the Company’s significant accounting policies or their application since December 31, 2025.

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Note 3 – Earnings Per Common Share (EPS)

The following is a summary of the earnings per share calculation for the three months ended March 31, 2026 and 2025 (dollars in thousands, except share data):

There wereno potentially dilutive common shares outstanding for the three months ended March 31, 2026 and 2025. Accordingly, basic and diluted earnings per common share were the same for each period.

Note 4 – Debt

Capital Notes

On April 13, 2020, the Company commenced a private placement of unregistered, unsecured notes (the “2020 Offering”). Between April 13, 2020 and July 8, 2020, the Company issued an aggregate principal amount of $10.05 million of 3.25% fixed-rate subordinated notes (the “2020 Notes”). Interest on the 2020 Notes was payable quarterly in arrears.

The 2020 Notes matured on June 30, 2025, at which time the Company repaid the entire outstanding principal balance of $10.05 million, together with accrued interest of approximately $82,000. The repayment of the principal balance is reflected as a financing activity in the Consolidated Statements of Cash Flows.

There wereno subordinated notes outstanding at March 31, 2026 or December 31, 2025.

Other Long Term Debt

On December 29, 2021, the Company borrowed $11.0 million from National Bank of Blacksburg (“NBB”) pursuant to a secured promissory note (the “NBB Note”). The NBB Note originally bore interest at a rate of 4.00% and was amortized over afifteen-year period, with a balloon payment of approximately $9.4 million due on December 31, 2024. The NBB Note is secured by a first-priority lien on approximately 4.95% of the Bank’s common stock. A portion of the proceeds was used to finance the acquisition of Pettyjohn, Wood & White, Inc., the Company’s wholly-owned investment advisory subsidiary.

On June 30, 2022, the Company entered into a modification agreement with NBB, effective July 1, 2022, pursuant to which the balloon payment date was extended to December 31, 2026 from December 31, 2024, and the interest rate was reduced to 3.90% from 4.00%.

On August 18, 2025, the Company entered into a Second Note Modification Agreement and Allonge (the “Second Allonge”) with NBB, effective September 30, 2025. Under the terms of the Second Allonge, the maturity date of the NBB Note was extended to August 31, 2030, the interest rate was increased to 5.65% per annum from 3.90%, and the repayment terms were modified to require 60 equal monthly installments of principal and interest of approximately $62,000, beginning September 30, 2025, with a final balloon payment of approximately $7.4 million due at maturity. The Second Allonge also provides the Company with the option, upon any prepayment of principal of $1.0 million or more, to

Note 4 – Debt (continued)

request a one-time recast of the amortization schedule over the remaining term of the loan without changing the maturity date or interest rate.

At March 31, 2026 and December 31, 2025, the outstanding principal balance of the NBB Note was approximately $8.7 million and $8.8 million, respectively.

The Company evaluated the Second Allonge in accordance with applicable accounting guidance and concluded that the modification should be accounted for as a debt modification rather than a debt extinguishment. Accordingly, the carrying amount of the NBB Note continues to be reported as “Other borrowings” in the Consolidated Balance Sheets.

Note 5 –Fair Value Measurements

Determination of Fair Value

The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

Fair value is best determined using quoted market prices. However, in many instances, quoted market prices are not available for the Company’s financial instruments. In such cases, fair value is estimated using present value or other valuation techniques, which are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Accordingly, the estimated fair values may not be realized in an immediate settlement of the instrument.

The fair value guidance establishes a consistent framework for measuring fair value and requires consideration of market participant assumptions under current market conditions. In situations where there has been a significant decrease in the volume or level of activity for an asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such cases, determining fair value requires the use of significant judgment, and the selected value represents management’s best estimate within a range of reasonable outcomes.

Fair Value Hierarchy

In accordance with ASC Topic 820, Fair Value Measurement, the Company categorizes financial assets and financial liabilities measured at fair value into a three-level hierarchy based on the observability of inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable inputs.

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets.

Level 3 — Unobservable inputs that are significant to the fair value measurement. The Company's Level 3 measurements consist of IRLCs measured on a recurring basis and certain collateral-dependent loans measured on a non-recurring basis, each described below.

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Fair Value on a Recurring Basis

Securities Available-for-Sale

The fair values of securities available-for-sale are primarily determined using quoted market prices or, when such prices are not available, by using valuation models, quoted prices of securities with similar characteristics, or discounted cash flow analyses.

Securities are classified within the fair value hierarchy based on the observability of inputs used in the valuation. Securities for which quoted prices in active markets are available for identical assets would be classified within Level 1 of the fair value hierarchy. However, the Company’s securities generally do not trade in active markets on a daily basis.

Accordingly, the Company’s securities available-for-sale are classified within Level 2 of the fair value hierarchy. Level 2 securities include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, asset-backed, and other securities. These valuations are based on observable inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, and benchmark securities.

In limited circumstances, where significant inputs are unobservable, securities would be classified within Level 3 of the fair value hierarchy. The Company hadno securities classified as Level 3 at March 31, 2026 or December 31, 2025.

Derivatives Assets/Liabilities – Interest Rate Lock Commitments (IRLCs)

The Company recognizes interest rate lock commitments (“IRLCs”) at fair value. The fair value of IRLCs is estimated based on the price of the underlying loans obtained from investors for loans expected to be delivered on a best-efforts basis, adjusted for the probability that the commitments will fund.

IRLCs are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including the estimated pull-through rate.

The below tables summarize the Company’sfinancial assets that were measured at fair value on a recurring basis during the period presented.

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The following table provides additional quantitative information about assets measured at fair value on a recurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):

(1)Weighted based on the relative value of the instruments

(1) Weighted based on the relative value of the instruments

There wereno transfers of financial assets between hierarchy levels during the three months ended March 31, 2026.

During the three months ended March 31, 2026, the fair value of Level 3 assets consisted entirely of IRLCs, which decreased from $99,000 at December 31, 2025 to $13,000 at March 31, 2026; there wereno purchases, sales, or settlements of Level 3 instruments during the period. The change reflects the net effect of new rate lock commitments issued and existing commitments closed or expired during the period.

Fair Value on a Non-recurring Basis

Collateral Dependent Loans with an ACL

In accordance with ASC 326, the Company may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay, collateral deficiencies, the relative risk grade of the loan, and economic conditions affecting the borrower’s industry, among other factors.

A loan is considered collateral dependent when, based on management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

In these cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting such loans is evaluated by appraisal services using methodologies consistent with the Uniform Standards of Professional Appraisal Practice.

Based on management’s evaluation, a $1 thousand fair value adjustment was recorded on collateral-dependent loans during the quarter ended March 31, 2026. As of March 31, 2026 and December 31, 2025, the Company had $10.42 million and $10.24 million, respectively, in collateral-dependent loans with associated allowances for credit losses of $73 thousand and $72 thousand, respectively.

The following table provides additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):

*Includes loans charged down to the net realizable value of the collateral.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value. These loans consist primarily of one-to-four family residential mortgage loans originated for sale in the secondary market. Fair value is based on prices currently offered by secondary market investors for similar loans using observable market data. Due to the short duration between origination and sale, the carrying value of loans held for sale approximates fair value. These loans are classified within Level 2 of the fair value hierarchy. At March 31, 2026 and December 31, 2025, the Company had loans held for sale of $2.88 million and $3.47 million, respectively. No nonrecurring fair value adjustments were recorded on loans held for sale at March 31,

2026 or December 31, 2025. Gains and losses on the sale of loans are recorded in “Gain on sales of loans held for sale” in the Consolidated Statements of Income.

Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of financial instruments, including those financial assets and financial liabilities that are not measured at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments and their placement in the fair value hierarchy at March 31, 2026, and December 31, 2025, were as follows (dollars in thousands):

(1) Carrying amount is net of unearned income and the ACL.

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Note 5 – Fair Value Measurements (continued)

(1) Carrying amount is net of unearned income and the ACL.

Note 6 – Securities

The following tables summarize the Bank’s holdings for securities held-to-maturity and available-for-sale as of March 31, 2026 and December 31, 2025 (dollars in thousands) are summarized below:

The following tables present the fair value of securities available-for-sale as of March 31, 2026 and December 31, 2025, and the related unrealized losses. Management uses month-end valuations in determining whether securities are in an unrealized loss position (dollars in thousands).

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At March 31, 2026, the Company held 134 securities (all of which are securities available-for-sale) in an unrealized loss position. Of these securities,27 were rated AAA,91 were rated AA,3 were rated A,4 were rated BBB, and 9 were not rated. In addition,58 of these securities were municipal obligations,64 were backed directly or indirectly by the U.S. government or its agencies,10 were issued by publicly traded U.S. corporations, and 2 were issued by non-publicly traded U.S. corporations.

The Company monitors the credit quality of its municipal and corporate securities through periodic reviews of the issuers’ financial condition, including cash flow and revenue performance, as well as other economic factors that may affect the issuers’ ability to service and repay the debt.

The Company evaluated available-for-sale securities in an unrealized loss position at March 31, 2026 and determined that the decline in fair value was not attributable to credit-related factors. This conclusion was based on several factors, including: (i) the high credit quality of the securities; (ii) unrealized losses being primarily attributable to changes in

market interest rates; (iii) the contractual terms of the securities do not permit settlement at amounts less than amortized cost; (iv) issuers continuing to make timely principal and interest payments; and (v) the Company’s intent and ability to hold the securities until recovery of their amortized cost basis. Accordingly, no allowance for credit losses was recorded on available-for-sale securities at March 31, 2026.

The Company’s held-to-maturity securities consist primarily of obligations issued or guaranteed by the U.S. government or its agencies and are rated investment grade or higher. Accordingly, no allowance for credit losses was recorded on held-to-maturity securities at March 31, 2026 or December 31, 2025.

At March 31, 2026 and December 31, 2025, all held-to-maturity and available-for-sale securities were current, withno securities past due or on nonaccrual. There were no sales of available-for-sale securities during the three months ended March 31, 2026 and 2025.

As of March 31, 2026 and December 31, 2025, the Company had approximately (market values):

$50,086,000 and $50,500,000, respectively, of available-for-sale securities pledged as collateral for public deposits;

$38,697,000 and $38,893,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit; and

$25,626,000 and $26,342,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.

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The amortized costs and fair values of securities at March 31, 2026, by contractual maturity, are shown below (dollars in thousand). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Note 7 – Business Segments

Segment Overview

The Company reports three business segments:

1. Community Banking – Provides loans, deposits, and related banking services to retail and commercial customers primarily in Central Virginia. Revenue is primarily from net interest income.

2. Mortgage Banking – Originates residential mortgage loans for sale into the secondary market, typically with servicing released. Revenue consists mainly of gains on loan sales.

3. Investment Advisory – Offers investment advisory andfinancial planning services through Pettyjohn, Wood & White, Inc. Revenue is primarily fee-based, tied to assets under management (AUM).

Segments refer business to one another when appropriate. Robert R. Chapman III, President of the Company, is the Chief Operating Decision Maker (CODM). The CODM evaluates performance and allocates resources based on segment profit (pre-tax income). Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance. Segment accounting policies are consistent with those in the consolidated financial statements.

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Significant Expense Categories.

Significant segment expenses are reviewed regularly by the CODM and included in segment profit measures are separately presented. For the three months ended March 31, 2026 and 2025, these significant approximate expenses included:

Community Banking: Salaries and employee benefits ($4.33 million and $3.74 million in 2026 and 2025, respectively); data processing ($475 thousand and $820 thousand); professional and other outside expenses ($711 thousand and $1.66 million); equipment ($723 thousand and $646 thousand); and occupancy ($573 thousand and $535 thousand).

Mortgage Banking: Salaries and employee benefits ($720 thousand and $622 thousand in 2026 and 2025, respectively); credit-related expenses ($120 thousand and $131 thousand); and occupancy costs ($32 thousand in both periods).

Investment Advisory: Salaries and employee benefits ($450 thousand and $417 thousand in 2026 and 2025, respectively); and amortization of intangible assets ($140 thousand in both periods).

Expenses not identified as significant are presented within “Other segment items” and include general and administrative costs that support the segments’ operations, including travel, liability and property insurance, and contribution expenses.

Supplemental Segment Data

Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance:

Community Banking: Total loans held for investment, net of allowance, were $649.1 million at March 31, 2026, compared to $661.4 million at December 31, 2025 and $642.4 million at March 31, 2025. Deposits totaled $959.2 million at March 31, 2026, compared to $944.1 million at December 31, 2025 and $918.5 million at March 31, 2025.

Investment Advisory: AUM were $1.01 billion at March 31, 2026, compared to $1.03 billion at December 31, 2025 and $886.9 million at March 31, 2025.

Segment financial information, including significant expense categories and supplemental metrics, is presented in the tables below, along with reconciliations to consolidated financial statements for the three months ended March 31, 2026 and 2025 (dollars in thousands).

(1)Primarily intercompany service fees and dividends eliminated in consolidation.

(1)Primarily intercompany service fees and dividends eliminated in consolidation.

Note 8 – Loans and allowance for credit losses

The Company’s primary portfolio segments align with the methodology applied in estimating the allowance for credit losses and are reflected in the disclosures as of and for the periods indicated, as set forth below. Management has determined that the classifications presented below are appropriate for identifying and managing risk within the loan portfolio.

Commercial and Commercial Real Estate

Commercial loans are primarily underwritten based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided. Borrower cash flows may not meet expectations, and the value of collateral securing these loans can fluctuate. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include personal guarantees. Short-term loans may be made on an unsecured basis. For loans secured by accounts receivable, the availability of funds for repayment may substantially depend on the borrower’s ability to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans, with the collateral serving as a secondary source of repayment. Commercial real estate lending typically involves higher loan principal amounts, with repayment generally dependent on the successful operation of the property or the business conducted on the property. These loans may be more adversely affected by conditions in the real estate markets or the general economy. The properties securing the Company’s commercial real estate portfolio are diverse but are geographically concentrated almost entirely within the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In general, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. Management also tracks the level of owner-occupied versus non-owner-occupied commercial real estate loans.

Consumer and Residential

Consumer and residential segments consist of residential mortgage loans and personal loans. The consumer loan segment includes home equity lines of credit (HELOCs) and other second mortgages. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, while consumer personal loans may be secured by personal assets such as automobiles or recreational vehicles, or may be unsecured, such as small installment loans and certain lines of credit.

For residential mortgage loans secured by 1–4 family, generally owner-occupied residences, the Company typically establishes a maximum loan-to-value ratio. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be affected by economic conditions in the market area, such as unemployment levels. Repayment can also be impacted by changes in property values. Risk is mitigated by the smaller individual loan amounts and the diversification provided by a large number of borrowers.

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A summary of loans, net of deferred costs of $672,000 and $629,000 as of March 31, 2026 and December 31, 2025, respectively, is as follows (dollars in thousands):

The following table presents the amortized cost basis of collateral dependent loans by loan segment:

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The following tables present the activity in the allowance for credit losses for the three-month periods ended and the distribution of the allowance by segment as of March 31, 2026, and 2025 (dollars in thousands).

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In the second quarter of 2025, the Company, in collaboration with its third-party model vendor and as part of ongoing model governance, implemented updates to the quantitative CECL loss models for collectively evaluated loan segments that use discounted cash flow techniques (all segments other than agricultural loans, which uses the weighted-average remaining life method). The updates (i) revised certain maximum loss-rate parameters and (ii) incorporated additional post-COVID historical loss data into the loss history used to estimate expected credit losses. As a result of these updates, expected loss rates declined across affected segments, most notably in the commercial real estate and consumer segments, contributing to a reduction in the allowance for credit losses as a percentage of loans in those segments. The updated model specifications were first reflected in the second quarter 2025 provision for credit losses and have remained in use through March 31, 2026, with no further specification changes. Economic forecasts are refreshed each quarter as part of the Company’s standard CECL process. Provision activity for the first quarter of 2026 reflected the ongoing application of these models, together with normal portfolio dynamics, updated economic forecasts, and changes in loan composition and balances.

Credit Quality Indicators

The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis.

Below is a summary and definition of the Bank’s risk rating categories:

We segregate commercial and commercial real estate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows:

“Pass.” These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan.

“Monitor.” These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable.

“Special Mention.” These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events.

“Substandard.” These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. Asubstandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance andfinancial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due.

“Doubtful.” These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility ofloss is extremely high.

“Loss.” These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off.

There wereno loans classified as doubtful or loss at March 31, 2026 or December 31, 2025.

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The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of March 31, 2026 (dollars in thousands).

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The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of December 31, 2025 (dollars in thousands).

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The following table details the gross charge-offs of loans by year of origination for the three months ended March 31, 2026 and March 31, 2025 (dollars in thousands).

The following tables present loans on nonaccrual status by class as of March 31, 2026 and December 31, 2025 (dollars in thousands):

Interest income on nonaccrual loans is recognized only when received in cash. The Company didnot record any interest income on nonaccrual loans during the three months ended March 31, 2026 or 2025. The Company also reversed all previously accrued but unpaid interest on nonaccrual loans during the three months ended March 31, 2026 and 2025. If interest on these loans had been accrued, such income would have been approximately $86,000 for the three months ended March 31, 2026 and $37,000 for the same period in 2025.

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The following tables present an aging analysis of the loan portfolio by class and past due as of March 31, 2026 and December 31, 2025 (dollars in thousands):

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Occasionally, the Bank modifies loans for borrowers experiencing financial difficulties by providing principal forgiveness, term extensions, interest rate reductions, or payment deferrals. Because the effect of most modifications is already included in the allowance for credit losses due to the measurement methodologies used in its estimate, the allowance is typically not adjusted upon modification. When principal forgiveness is provided, the amount forgiven is charged against the allowance for credit losses.

There wereno loan modifications for borrowers experiencing financial difficulty during the three months ended March 31, 2026 or March 31, 2025. As of March 31, 2026, no previously modified loans had defaulted within the past twelve months.

ACL on Unfunded Commitments

The Company maintains an allowance for credit losses on off-balance sheet credit exposures, including unfunded loan commitments, letters of credit, and other commitments to extend credit, to the extent that such commitments are not unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is recorded as a liability and is adjusted through a provision for (or recovery of) credit losses in the Consolidated Statements of Income.

The estimate of the allowance for credit losses on unfunded commitments includes consideration of the likelihood that funding will occur, which is based on historical funding experience derived from internal data, as well as an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The Company applies the same loss rates used in estimating the allowance for credit losses on loans to the portion of commitments expected to be funded.

The allowance for credit losses on unfunded commitments was $619,000 at March 31, 2026 and $674,000 at December 31, 2025, and is included in other liabilities in the Consolidated Balance Sheets.

The following table presents the activity in the allowance for credit losses on unfunded commitments for the three months ended March 31, 2026 and 2025 (dollars in thousands):

Other Real Estate Owned

At March 31, 2026 and December 31, 2025, the Company hadno consumer mortgage loans secured by residential real estate for which foreclosure proceedings were in process. The Bank hadno Other Real Estate Owned (“OREO”) at March 31, 2026 or December 31, 2025.

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Note 9 – Recent accounting pronouncements and other authoritative guidance

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments require public business entities to provide additional disaggregated disclosures of certain expense categories included in the income statement captions, along with related qualitative information, in both interim and annual reporting periods.

In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. The amendments are effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for periods after the effective date or retrospectively to all prior periods presented.

The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statement disclosures; however, the adoption is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

Note 10 - Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are issued. Recognized subsequent events are those that provide additional evidence about conditions that existed as of the balance sheet date, including the estimates inherent in the preparation of the financial statements. Non-recognized subsequent events are those that provide evidence about conditions that did not exist at the balance sheet date but arose after that date.

Community Bank Leverage Ratio Final Rule

On April 23, 2026, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly adopted a final rule modifying the community bank leverage ratio (“CBLR”) framework. The final rule lowers the CBLR requirement from greater than 9% to greater than 8% and extends the grace period during which a qualifying community banking organization that temporarily fails to satisfy the qualifying criteria may continue to use the CBLR framework from two consecutive quarters to four consecutive quarters, subject to a limit of eight quarters in any rolling five-year period and provided the institution maintains a leverage ratio greater than 7%. The final rule does not change existing eligibility criteria. The final rule is effective July 1, 2026. The Bank has not elected to use the CBLR framework and continues to calculate its regulatory capital ratios under the generally applicable risk-based capital rules. Management is evaluating whether to opt into the CBLR framework when the final rule becomes effective. The adoption of the final rule is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

Other Subsequent Events

Management has reviewed events occurring through the date the financial statements were available to be issued and has determined that no other subsequent events occurred requiring accrual or disclosure, other than those already disclosed in the footnotes to the Company’s unaudited consolidated financial statements as of March 31, 2026.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Resu