MVB FINANCIAL CORP

Previous wording

We continue to adapt our business model due to challenging market conditions, primarily brought on by an environment of sustained higher interest rates, a slowing economy and multiple high-profile bank failures that occurred during the first half of 2023. Interest rates have remained at an elevated level through December 31, 2024, although the Federal Reserve did reduce its key interest rate to a range of 4.25% to 4.50% in December 2024. Lower loan balances are the result of slower market demand, the impact of loan amortization and payoffs and slower loan growth based on overall market conditions and portfolio management. We initiated the process of winding down our digital asset program account relationships, while maintaining operating accounts, during the second quarter of 2024. This decision was prompted by changing market conditions and profitability challenges that contributed to an unfavorable risk/reward dynamic. We remain committed to the gaming, payments and banking-as-a-service industries. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance core deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division.

Current wording

We continue to adapt our business model due to challenging market conditions, primarily due to the current interest rate environment and economy, as well as consideration of regulatory and geopolitical environments, among others. The Federal Reserve lowered its key interest rate to a range of 3.50% to 3.75% in December 2025. Higher loan balances primarily reflect the Bank's execution of its asset generation strategies that include the diversification of risk among loans with relatively smaller loan balances, as well as a focus on loans with fixed interest rates. We remain committed to the gaming, payments and banking-as-a-service industries. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance CoRe deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division. Additionally, we have expanded our compliance and risk management team to support the growth in these lines of business.

Previous wording

Net interest income decreased $14.1 million to $109.2 million, noninterest income increased $23.2 million to $42.9 million and noninterest expense increased $4.6 million to $122.2 million during 2024 compared to 2023. Our tax-equivalent yield on earning assets was 6.22% in 2024, compared to 6.20% in 2023. Total loans decreased by $218.1 million to $2.10 billion as of December 31, 2024 from $2.32 billion as of December 31, 2023. Our overall cost of interest-bearing liabilities was 4.07% in 2024 compared to 3.38% in 2023. The increase in the cost of interest-bearing liabilities outpaced the increase in the earning assets yield, which resulted in our tax-equivalent net interest margin decreasing to 3.67% at December 31, 2024 from 4.04% at December 31, 2023.

Current wording

Net interest income declined $1.8 million to $107.4 million, noninterest income increased $17.4 million to $60.3 million and noninterest expense declined $0.1 million to $122.1 million during 2025 compared to 2024. Our tax-equivalent yield on earning assets was 5.95% in 2025, compared to 6.22% in 2024. Total loans increased $243.0 million to $2.34 billion as of December 31, 2025 from $2.10 billion as of December 31, 2024. Our overall cost of interest-bearing liabilities was 3.43% in 2025 compared to 4.07% in 2024. Despite the decline in the cost of interest-bearing liabilities outpacing the decline in the earning assets yield, the shift in the mix of earning assets and the increase in interest-bearing liabilities resulted in our tax-equivalent net interest margin declining to 3.65% during the year ended December 31, 2025 from 3.67% during the year ended December 31, 2024.

Previous wording

Net income available to common shareholders in 2024 totaled $20.1 million, compared to $31.2 million in 2023, a decrease of $11.1 million. The 2024 earnings equated to a return on average assets of 0.6% and a return on average equity of 6.9%, compared to 2023 results of 0.9% and 11.4%, respectively. Basic and diluted earnings per share were $1.56 and $1.53, respectively, in 2024 compared to $2.46 and $2.40, respectively, in 2023.

Current wording

Net income available to common shareholders in 2025 totaled $26.9 million, compared to $20.1 million in 2024, an increase of $6.8 million. Earnings for 2025 equated to a return on average assets of 0.8% and a return on average equity of 8.7%, compared to 2024 results of 0.6% and 6.9%, respectively. Basic and diluted earnings per share were $2.11 and $2.06, respectively, in 2025 compared to $1.56 and $1.53, respectively, in 2024.

Previous wording

Tangible book value ("TBV") per common share was $23.37 and $22.43 as of December 31, 2024 and 2023, respectively. TBV per common share is a non-U.S. GAAP measure that we believe is helpful to interpreting financial results. A reconciliation of TBV per common share is included below.

Current wording

Tangible book value ("TBV") per common share was $26.17 and $23.37 as of December 31, 2025 and 2024, respectively. TBV per common share is a non-U.S. GAAP measure that we believe is helpful to interpreting financial results. A reconciliation of TBV per common share is included below.

Previous wording

Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities. Interest-earning assets include loans, investment securities and interest-bearing balances with banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds such as sweep accounts, repurchase agreements, subordinated debt and the senior term loan. Net interest income, which is the primary source of revenue for the Bank, is also impacted by changes in market interest rates and the mix of interest-earning assets and interest-bearing liabilities.

Current wording

Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities. Interest-earning assets include loans, investment securities and interest-bearing balances with banks. Interest-bearing liabilities include interest-bearing deposits and borrowed funds, such as sweep accounts, repurchase agreements and subordinated debt. Net interest income, which is the primary source of revenue for the Bank, is also impacted by changes in market interest rates and the mix of interest-earning assets and interest-bearing liabilities.

Previous wording

Net interest margin is calculated by dividing net interest income by average interest-earning assets and measures the net revenue generated by the Bank’s balance sheet. Net interest margin on a tax-equivalent basis was 3.67% and 4.04% in 2024 and 2023, respectively.

Current wording

Net interest margin is calculated by dividing net interest income by average interest-earning assets and measures the net revenue generated by our balance sheet. Net interest margin on a tax-equivalent basis was 3.65% and 3.67% in 2025 and 2024, respectively.

Previous wording

In 2024, the Federal Reserve lowered its key interest rate from a range of 5.25% to 5.50% to a range of 4.25% to 4.50% as of December 31, 2024. We continue to analyze methods to deploy assets into an earning asset mix to result in a stronger net interest margin. Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Current wording

During 2025, the Federal Reserve lowered its key interest rate from a range of 4.25% to 4.50% as of December 31, 2024 to a range of 3.50% to 3.75% as of December 31, 2025. We continue to analyze methods to deploy assets into an earning asset mix to result in a stronger net interest margin. Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Previous wording

Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities in an effort to maximize net interest, while maintaining an appropriate level of interest rate risk. Net interest spread on a tax-equivalent basis was 2.15% in 2024 compared to 2.82% in 2023. The difference between the net interest margin on a tax-equivalent basis and net interest spread on a tax-equivalent basis was 152 basis points in 2024 compared to 122 basis points in 2023. This was driven by the 69 basis point increase in the cost of interest-bearing liabilities outpacing the two basis point increase in yield on earning assets.

Current wording

Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities. Net interest spread on a tax-equivalent basis was 2.52% in 2025 compared to 2.15% in 2024. The difference between the net interest margin on a tax-equivalent basis and net interest spread on a tax-equivalent basis was 113 basis points in 2025 compared to 152 basis points in 2024. This was driven by the 64 basis point decline in the cost of interest-bearing liabilities outpacing the 27 basis point decline in yield on earning assets.

Previous wording

During 2024, net interest income declined $14.1 million, or 11.4%, and total interest income declined $4.0 million, or 2.1%. These declines were primarily driven by a $116.1 million decline in average total loans and a 40 basis point increase in the cost of funds as compared to 2023. The $116.1 million decline in average total loans during 2024 reflects declines of $51.0 million in average commercial loans, $38.0 million in average consumer loans and $26.5 million in average real estate loans. The yield on loans increased nine basis points during 2024.

Current wording

During 2025, net interest income declined $1.8 million, or 1.6%, and total interest income declined $10.5 million, or 5.7%. These declines were primarily driven by a $40.1 million decline in average total loans and a $34.2 million decline in average interest-bearing deposits with banks as compared to 2024. The $40.1 million decline in average total loans during 2025 reflects declines of $36.7 million in average real estate loans and $6.1 million in average consumer loans, partially offset by a $3.3 million increase in average commercial loans. The yield on total loans declined 32 basis points during 2025.

Previous wording

Average investment securities increased $28.7 million, or 8.5%, in 2024 as the result of a $40.6 million increase in taxable investments, partially offset by an $11.9 million decline in tax-exempt investments. The yield increased 42 basis points on taxable securities and declined 59 basis points on tax-exempt securities.

Current wording

Average investment securities increased $35.4 million, or 9.7%, in 2025 as the result of a $54.0 million increase in taxable investments, partially offset by an $18.5 million decline in tax-exempt investments. The yield increased 105 basis points on taxable securities and increased 40 basis points on tax-exempt securities.

Previous wording

Average interest-bearing liabilities declined $86.2 million, or 4.4%, in 2024, primarily as a result of declines of $175.9 million and $107.8 million in average NOW accounts and average money market checking accounts, respectively, partially offset by an increase of $184.0 million in average certificates of deposit.

Current wording

Average interest-bearing liabilities increased $100.8 million, or 5.4%, in 2025, primarily as a result of increases of $166.0 million in average NOW accounts, $19.5 million in average money market checking accounts and $13.0 million in savings accounts, partially offset by a decline of $96.2 million in average certificates of deposit.

Previous wording

Average interest-bearing deposits declined $60.1 million in 2024. Total interest expense increased $10.1 million, primarily due to an $11.4 million increase in deposit interest. The result was a 69 basis point increase in the cost of interest-bearing liabilities, from 3.38% in 2023 to 4.07% in 2024. This increase is primarily the result of a 75 basis point increase in the cost of deposits, reflecting a shift in the mix of average deposits driven by the highly-competitive deposit environment. There was also a 271 basis point increase in the cost of the senior term loan associated with unamortized debt issuance costs that were recorded as interest expense upon the repayment in May 2024. Further discussion on borrowings is included in Note 7 – Borrowed Funds accompanying the consolidated financial statements included elsewhere in this report.

Current wording

Total interest expense declined $8.7 million, primarily due to an $8.6 million decline in deposit interest expense. The result was a 64 basis point decline in the cost of interest-bearing liabilities, from 4.07% in 2024 to 3.43% in 2025. This decline is primarily the result of a 67 basis point decline in the cost of deposits, reflecting a shift in the mix of average deposits driven by the highly-competitive deposit environment, as well as decreasing interest rates. There was also a decline in the cost of funds related to the senior term loan that was repaid in May 2024. Further discussion on borrowings is included in Note 7 – Borrowed Funds accompanying the consolidated financial statements included elsewhere in this report.

Previous wording

Our provision for credit losses for 2024 was $3.5 million compared to a release of allowance for credit losses of $1.9 million for 2023. The provision for credit losses, which is a product of management's analysis, is recorded in response to forecasted losses over the remaining life of the loan and available-for-sale investment security portfolios. Further discussion on the provision for credit losses is included in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. The change from release of allowance to provision for credit losses is primarily the result of the level of recognized charge-offs within the loan portfolio, which was partially offset by changes to the outstanding balances of the loan portfolios, including decreases in the commercial, residential and consumer loan segments. The 2023 release was primarily the result of the sale of subprime automobile loans.

Current wording

Provision for credit losses was $8.7 million and $3.5 million in 2025 and 2024, respectively. The provision for credit losses, which is a product of management's analysis, is recorded in response to forecasted losses over the remaining life of the loan and available-for-sale investment security portfolios. Further discussion on the provision for credit losses is included in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. The increase in provision for credit losses is primarily the result of the level of recognized charge-offs within the portfolio, which was compounded by increases to the outstanding balances of the commercial loan portfolio, partially offset by decreases in the residential loan segment.

Previous wording

Total loan receivable balances decreased $217.5 million in 2024 versus a decrease of $55.0 million in 2023. The commercial loan portfolio decreased by $184.8 million in 2024, in comparison to a decrease of $9.2 million in 2023, while the consumer loan portfolio decreased by $8.8 million in 2024, in comparison to a decrease of $104.2 million in 2023. Additionally, the residential mortgage loan portfolio decreased by $21.8 million and $63.0 million in 2024 and 2023, respectively. Net charge-offs in 2024 totaled $4.4 million, in comparison to net charge-offs of $9.3 million in 2023. Lastly, the provision for credit losses was impacted by a $0.6 million decrease in the specific credit loss allocations in 2024, relative to a $0.1 million decrease in provision for such loan losses in 2023.

Current wording

Total loan receivable balances increased $243.0 million in 2025, compared to a decline of $217.5 million in 2024. The commercial loan portfolio increased by $292.5 million in 2025, compared to a decline of $184.8 million in 2024, while the consumer loan portfolio increased by $7.0 million in 2025, compared to a decline of $8.8 million in 2024. Additionally, the residential mortgage loan portfolio declined by $51.6 million and $21.8 million in 2025 and 2024, respectively. Net charge-offs in 2025 totaled $5.6 million, in comparison to net charge-offs of $4.4 million in 2024. Lastly, the provision for credit losses was impacted by a $0.9 million decline in the specific credit loss allocations in 2025, relative to a $0.6 million decline in provision for such loan losses in 2024.

Previous wording

Payment card and service charge income, consulting compliance income, equity method investment income or loss and gains or losses on sale of loans account for the majority of our noninterest income. From time to time, we also recognize gains or losses on acquisition and divestiture activity, sales of assets or our investment portfolio. Total noninterest income for 2024, 2023 and 2022 was $42.9 million, $19.7 million and $27.6 million, respectively.

Current wording

Payment card and service charge income, equity method investment income or loss, investments portfolio gains or losses and gains or losses on acquisition and divestiture activity generally account for the majority of our noninterest income. Total noninterest income for 2025, 2024 and 2023 was $60.3 million, $42.9 million and $19.7 million, respectively.

Previous wording

The increase in noninterest income for 2024 compared to 2023 was primarily the result of increases of $11.7 million in gain on sale of assets, $2.5 million in payment card and service charge income and $1.0 million in holding gains on equity securities. The gain on sale of assets in 2024 was primarily driven by the sale-leaseback transaction, resulting in a pre-tax gain on sale of assets of $11.8 million. For more information regarding the sale-leaseback transaction, refer to Note 4 – Premises and Equipment accompanying the consolidated financial statements included elsewhere in this report. Additionally, there was $1.4 million in equity method investment income from our mortgage segment, compared to equity method investment losses of $2.5 million in 2023. Gain on sale of available-for-sale investment securities was $0.7 million in 2024, compared to a loss of $1.5 million in 2023, and gain on sale of loans was $1.0 million in 2024, driven by government guaranteed loan sales, compared to a loss of $0.7 million on the sale of subprime automobile loans in 2023.

Current wording

The increase in noninterest income for 2025 compared to 2024 was primarily the result of a $34.2 million gain on divestiture activity from the sale of Victor, a $6.7 million increase in equity method investment income from our mortgage segment and a $2.5 million increase in holding gains on equity securities. For more information regarding the sale of Victor, refer to Note 24 – Acquisitions and Divestitures accompanying the consolidated financial statements included elsewhere in this report. These increases were partially offset by the $11.7 million gain on sale of assets in 2024 related to the sale-leaseback transaction, a $7.6 million net loss on the sale of available-for-sale investment securities in 2025 associated with our previously disclosed investment portfolio restructuring, a $4.1 million decline in compliance and consulting income and a $2.3 million decline in other operating income.

Previous wording

Noninterest expense was $122.2 million and $117.6 million in 2024 and 2023, respectively. The increase of noninterest expense relative to the year ended December 31, 2023 primarily reflects increases of $4.6 million in salaries and employee benefits and $3.0 million in professional fees, incurred to enhance our risk management and compliance related infrastructure.

Current wording

Noninterest expense was $122.1 million and $122.2 million in 2025 and 2024, respectively. The decline of noninterest expense relative to the year ended December 31, 2024 primarily reflects declines of $6.2 million in professional fees and $1.3 million in equipment depreciation and maintenance, offset by increase of $3.0 million in salaries and employee benefits, $2.4 million in other operating expenses, $1.3 million in software costs and $1.2 million in occupancy expense.

Previous wording

Approximately, 56% and 54% of noninterest expense for 2024 and 2023, respectively, related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations.

Current wording

Approximately, 58% and 56% of noninterest expense for 2025 and 2024, respectively, related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations.

Previous wording

In February 2023, we completed the sale of Chartwell for total consideration of $14.4 million in the form of a loan issued to the buyer, resulting in a gain on sale of $11.8 million. To facilitate a transition of the Chartwell services and support the onboarding and conversion of systems, we entered into a 60-day Employee Lease and Service Agreement, whereby we provided the purchaser with finance and accounting, human capital, information technology, marketing and record/data retention services. In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and December 31, 2023, respectively.

Current wording

In February 2023, we completed the sale of the Bank’s wholly-owned subsidiary, ProCo Global, Inc. (“Chartwell,” which does business under the registered trade name Chartwell Compliance) for total consideration of $14.4 million in the form of a loan issued to the buyer, resulting in a gain on sale of $11.8 million. Chartwell provides integrated regulatory compliance, state licensing, financial crimes prevention and enterprise risk management services that include consulting, outsourcing, testing and training solutions. To facilitate a transition of the Chartwell services and support the onboarding and conversion of systems, we entered into a 60-day Employee Lease and Service Agreement, whereby we provided the purchaser with finance and accounting, human capital, information technology, marketing and record/data retention services. In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and 2023, respectively. The fees paid related to this contract were not material for the year ended December 31, 2025.

Previous wording

We incurred income tax expense of $6.1 million and $8.1 million in 2024 and 2023, respectively. Our effective tax rate was 23% and 21% in 2024 and 2023, respectively. Our effective tax rate is affected by certain permanent tax differences caused by statutory requirements in the tax code. The largest permanent difference relates to tax-exempt interest income related to municipal investments and loans held by us. Other, smaller permanent differences arise from income derived from life insurance purchased on certain key employees and directors and meals and entertainment expenses. For 2024, we expect to file tax returns in 28 states.

Current wording

We incurred income tax expense of $9.9 million and $6.1 million in 2025 and 2024, respectively. Our effective tax rate was 26.9% and 23.2% in 2025 and 2024, respectively. Our effective tax rate is affected by certain permanent tax differences caused by statutory requirements in the tax code. The largest permanent differences relate to income tax credits and executive compensation. Other permanent differences arise from interest income on municipal bonds and bank owned life insurance. For 2025, we expect to file tax returns in 29 states.

Previous wording

Our return on average assets was 0.6% in 2024, compared to 0.9% in 2023. The decline in 2024 is a result of an $11.1 million, or 35.6%, decline in earnings, which is partially offset by a $73.3 million, or 2.2%, decline in average total assets as compared to 2023. The decline in average total assets was primarily the result of a $116.1 million, or 5.0%, decline in average total loans, partially offset by increases of $28.7 million, or 8.5%, and $7.7 million, or 1.9%, in average investment securities and average interest-bearing deposits with banks, respectively.

Current wording

Our return on average assets was 0.8% in 2025, compared to 0.6% in 2024. The increase in 2025 is a result of a $6.8 million, or 34.1%, increase in earnings and a $26.3 million, or 0.8%, decline in average total assets as compared to 2024. The decline in average total assets was primarily the result of a $40.1 million, or 1.8%, decline in average total loans and a $34.2 million, or 8.1%, decline in average interest-bearing deposits with banks, partially offset by an increase of $35.4 million, or 9.7%, in average investment securities.

Previous wording

Our return on average stockholders’ equity was 6.9% in 2024, compared to 11.4% in 2023. The decline in 2024 is a result of an $11.1 million, or 35.6%, decline in earnings and an $18.2 million, or 6.7%, increase in average equity to $292.2 million.

Current wording

Our return on average stockholders’ equity was 8.7% in 2025, compared to 6.9% in 2024. The increase in 2025 is a result of an $6.8 million, or 34.1%, increase in earnings, partially offset by a $17.9 million, or 6.1%, increase in average equity to $310.1 million.

Previous wording

Cash and cash equivalents totaled $317.9 million at December 31, 2024, compared to $398.2 million at December 31, 2023. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs. Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands.

Current wording

Cash and cash equivalents totaled $244.1 million at December 31, 2025, compared to $317.9 million at December 31, 2024. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs. Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands.

Previous wording

At December 31, 2024, all investment securities are available-for-sale or equity securities. Management believes the available-for-sale classification provides flexibility in terms of managing the portfolio for liquidity, yield enhancement and interest rate risk management opportunities. The increase in investment securities balances during 2024 was driven by purchases of available-for-sale mortgage-backed securities. At December 31, 2024, the amortized cost of available-for-sale investment securities totaled $445.5 million, resulting in a net unrealized loss in the investment portfolio of $33.9 million. Management has the intent and ability to hold the investments to maturity and they are all high quality investments. Declines in the fair values of these securities can be attributed to general market conditions, rather than credit-related conditions. The municipal securities continue to give us the ability to pledge and to decrease the effective tax rate.

Current wording

At December 31, 2025, all investment securities are available-for-sale or equity securities. Management believes the available-for-sale classification provides flexibility in terms of managing the portfolio for liquidity, yield enhancement and interest rate risk management opportunities. At December 31, 2025, the amortized cost of available-for-sale investment securities totaled $426.1 million, resulting in a net unrealized loss in the investment portfolio of $15.6 million. Management has the intent and ability to hold the investments to maturity and they are all high quality investments. Declines in the fair values of these securities can be attributed to general market conditions, rather than credit-related conditions. The municipal securities continue to give us the ability to pledge and to decrease the effective tax rate.

Previous wording

At December 31, 2024, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in nine companies with a carrying value of $36.5 million. Investments in our top four equity securities represented $34.1 million, or 93.4%, of our total Fintech investment portfolio at December 31, 2024. The Fintech equity securities do not have readily determinable fair values and are recorded at cost and adjusted for observable price changes for underlying transactions for identical or similar investments.

Current wording

At December 31, 2025, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in 11 companies with a carrying value of $41.3 million. Investments in our top four equity securities represented $37.6 million, or 91.1%, of our total Fintech investment portfolio at December 31, 2025. The Fintech equity securities do not have readily determinable fair values and are recorded at cost and adjusted for observable price changes for underlying transactions for identical or similar investments.

Previous wording

Our primary market areas are North Central West Virginia, Northern Virginia, North Carolina and South Carolina. Our loan portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, home equity lines of credit and consumer lending. Loans receivable totaled $2.10 billion as of December 31, 2024, a decrease of $217.5 million from $2.32 billion as of December 31, 2023.

Current wording

Our primary market areas are North Central West Virginia, Northern Virginia, Maryland, North Carolina and South Carolina. Our loan portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, home equity lines of credit and consumer lending. Loans receivable totaled $2.34 billion as of December 31, 2025, an increase of $243.0 million from $2.10 billion as of December 31, 2024.

Previous wording

At December 31, 2024, commercial and non-residential real estate loans represented the largest portion of the portfolio at 67.5%. Commercial and non-residential real estate loans totaled $1.42 billion at December 31, 2024, compared to $1.60 billion at December 31, 2023. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.

Current wording

At December 31, 2025, commercial and non-residential real estate loans represented the largest portion of the portfolio at 72.9%. Commercial and non-residential real estate loans totaled $1.71 billion at December 31, 2025, compared to $1.42 billion at December 31, 2024. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.

Previous wording

Residential real estate loans to retail customers account for the second largest portion of the loan portfolio, comprising 31.0%. Residential real estate loans totaled $650.7 million at December 31, 2024, compared to $672.5 million at December 31, 2023. Management believes residential real estate lending continues to represent a primary focus due to the lower risk factors associated with this type of loan and the opportunity to provide service to both those in the primary North Central West Virginia and Northern Virginia markets, as well as those in the surrounding areas as management deems appropriate.

Current wording

Residential real estate loans to retail customers account for the second largest portion of the loan portfolio, comprising 25.6%. Residential real estate loans totaled $599.1 million at December 31, 2025, compared to $650.7 million at December 31, 2024. Management believes residential real estate lending continues to represent a primary focus due to the lower risk factors associated with this type of loan and the opportunity to provide service to both those in the primary North Central West Virginia and Northern Virginia markets, as well as those in the surrounding areas as management deems appropriate.

Previous wording

At December 31, 2024, Special Mention loans amounted to $50.4 million. The balance is comprised of 52 loans, which include four loans totaling $12.1 million to a single borrower for retail commercial real estate projects, an $8.9 million line of credit secured by a borrowing base, a $7.7 million commercial real estate loan to a senior care facility and a $2.5 million commercial term loan to finance a business acquisition. In addition, there are 45 loans to various unrelated borrowers totaling $19.1 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. These are loans for which information about the borrowers’ possible credit problems causes management to have doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.

Current wording

At December 31, 2025, Special Mention loans amounted to $30.3 million. The balance is comprised of 25 loans, which include one $9.5 million loan for an office commercial real estate project, two commercial real estate loans totaling $11.0 million to senior care facilities and a $2.6 million commercial loan to finance a business acquisition. In addition, there are 21 loans to various unrelated borrowers totaling $7.2 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. Special Mention loans include loans for which information about the borrowers' possible credit problems causes management to have doubts as to the borrowers' ability to comply with the loan repayment terms in the future.

Previous wording

There were 54 additional loans that management identified as Substandard loans, totaling $76.8 million as of December 31, 2024. These loans include a $18.0 million loan to a skilled nursing facility, $17.7 million in three loans to finance hospitality properties to three related borrowers and a $13.5 million loan to finance a multifamily real estate property. In addition, there are 49 loans to various unrelated borrowers totaling $27.6 million in commercial, HELOC, installment and mortgage loans. These are loans where known information about the borrowers’ credit problems causes management to have serious doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.

Current wording

There were 39 additional loans that management identified as Substandard loans, totaling $49.7 million as of December 31, 2025. These loans include three loans to separate borrowers totaling $12.7 million secured by commercial real estate office properties, a $12.3 million loan to finance a multifamily real estate property and a $4.1 million loan to a hotel. In addition, there are 34 loans to various unrelated borrowers totaling $20.6 million in commercial, HELOC, installment and mortgage loans. Substandard loans include loans where known information about the borrowers’ credit problems causes management to have serious doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.

Previous wording

At December 31, 2024, commercial and non-residential real estate loans comprised the largest component of the loan portfolio. Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 22.7% of total loans receivable at December 31, 2024. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry. Loans that are not secured by real estate are typically secured by accounts receivable, mortgages or equipment. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers, in numerous different industries, primarily located in our market areas.

Current wording

At December 31, 2025, commercial and non-residential real estate loans comprised the largest component of the loan portfolio. Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 27.8% of total loans receivable at December 31, 2025. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry. Loans that are not secured by real estate are typically secured by accounts receivable, mortgages or equipment. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers, in numerous different industries, primarily located in our market areas.

Previous wording

As of December 31, 2024, the Bank's concentration of loans for construction, land development and other land as a percentage of capital totaled 31.3% and the Bank's CRE loan concentration, excluding owner-occupied loans, as a percentage of capital totaled 222.0%.

Current wording

As of December 31, 2025, the Bank's concentration of loans for construction, land development and other land as a percentage of capital totaled 30.3% and the Bank's CRE loan concentration, excluding owner-occupied loans, as a percentage of capital totaled 293.0%.

Previous wording

Overall, these concentrations have weighted average LTVs between 47% - 63%. The “Other” segment above contains all CRE loan types outside of the five listed. These Other concentrations are not tracked through scorecards, and are immaterial to the CRE loan portfolio.

Current wording

Overall, these concentrations have weighted average LTVs between approximately 45% and 64%. The “Other” segment above contains all CRE loan types outside of the five listed. The loans included in the Other concentration primarily include mixed use CRE loans and are not tracked through scorecards.

Previous wording

Nursing Homes are mainly originated through purchased participation from third-party banks. These loans typically are made to skilled nursing facilities ("SNF") and are secured by the subject properties. A majority of these loans are bridge to U.S. Department of Housing and Urban Development loans and have a three to five year term. As of December 31, 2024, these borrowers are in 21 different states. This concentration contains a single classified note, well secured by multiple SNF properties in Michigan.

Current wording

Nursing Homes are mainly originated through purchased participation from third-party banks. These loans typically are made to skilled nursing facilities ("SNF") and are secured by the subject properties. A majority of these loans are bridge to U.S. Department of Housing and Urban Development loans and have a three to five year term. As of December 31, 2025, these borrowers are in 20 different states. This concentration containstwo unrelated Special Mention notes totaling $11.0 million, well secured by SNF properties in Florida and North Carolina, respectively.

Previous wording

Multifamily borrowers are mainly located in the Northern Virginia and North Central West Virginia areas and are heavily concentrated in three loans to two unrelated borrowers. These three loans make up more than 60% of the total concentration.

Current wording

Multifamily borrowers are mainly located in the Northern Virginia and North Central West Virginia areas and are heavily concentrated in four loans to three unrelated borrowers. These four loans make up more than 76% of the total concentration.

Previous wording

Management continually monitors the risk in the loan portfolio through the review of the monthly delinquency reports and the Loan Review Committee. The Loan Review Committee is responsible for the determination of the adequacy of the ACL. This analysis involves both experience of the portfolio to date and the makeup of the overall portfolio. Specific loss estimates are derived for individual loans based on specific criteria such as current delinquent status, related deposit account activity, where applicable and changes in the local and national economy. When appropriate, we also consider public knowledge and verifiable information from the local market to assess risks to specific loans and the loan portfolios as a whole.

Current wording

Management continually monitors the risk in the loan portfolio through the review of the monthly delinquency reports and the Loan Review Committee. The Loan Review Committee is responsible for the determination of the adequacy of the ACL. This analysis involves both experience of the portfolio to date and the makeup of the overall portfolio. Specific loss estimates are derived for individually analyzed loans based on specific criteria such as current delinquent status, related deposit account activity, where applicable and changes in the local and national economy. Loans are moved to individual analysis when, based on current information and events, the loan no longer exhibits similar risk characteristics as its pool and we analyze the loan individually on a collateral or cash flow basis. When appropriate, we also consider public knowledge and verifiable information from the local market to assess risks to individually analyzed loans and the loan portfolios as a whole.

Previous wording

At December 31, 2024 and 2023, individually analyzed loans totaled $43.2 million and $11.8 million, respectively. The increase in individually analyzed loans is primarily due to the addition of two commercial real estate loans totaling $31.5 million. A portion of the ACL of $1.3 million and $1.9 million was allocated to cover any loss in individually analyzed loans at December 31, 2024 and 2023, respectively. Loans past due more than 30 days were $45.5 million and $14.0 million, respectively, at December 31, 2024 and 2023.

Current wording

At December 31, 2025 and 2024, individually analyzed loans totaled $31.6 million and $43.2 million, respectively. The decrease in individually analyzed loans is primarily due to the payoff of a commercial real estate loan of $18.0 million. A portion of the ACL of $0.4 million and $1.3 million was allocated to cover any loss in individually analyzed loans at December 31, 2025 and 2024, respectively. Loans past due more than 30 days were $28.5 million and $45.5 million, respectively, at December 31, 2025 and 2024.

Previous wording

Nonperforming assets consist of loans that are no longer accruing interest and real estate acquired through foreclosure. When interest accruals are suspended, accrued interest income is reversed and charged to earnings. When, in management’s judgment, the borrower’s ability to make periodic interest and principal payments resumes and collectability is no longer in doubt, which is evident by the receipt of six consecutive months of regular, on-time payments, the loan is eligible to be returned to accrual status. Interest income on loans would have increased by $1.6 million, $0.8 million and $0.5 million for 2024, 2023 and 2022, respectively, if loans had performed in accordance with their terms.

Current wording

Nonperforming assets consist of loans that are no longer accruing interest and real estate acquired through foreclosure. When interest accruals are suspended, accrued interest income is reversed and charged to earnings. When, in management’s judgment, the borrower’s ability to make periodic interest and principal payments resumes and collectability is no longer in doubt, which is evident by the receipt of six consecutive months of regular, on-time payments, the loan is eligible to be returned to accrual status. Interest income on loans would have increased by $1.9 million, $1.6 million and $0.8 million for 2025, 2024 and 2023, respectively, if loans had performed in accordance with their terms.

Previous wording

Loans classified as Special Mention totaled $50.4 million and $83.8 million as of December 31, 2024 and December 31, 2023, respectively. The decrease of $33.4 million, or 39.9%, was concentrated in the commercial loan portfolio. This decrease is primarily the result of the risk downgrade to either Substandard or Doubtful of 12 loans to 10 relationships, totaling $36.3 million. Of the 20 loans recently downgraded to Special Mention, there were five commercial loans totaling $12.2 million to three relationships for government lending, a commercial business acquisition loan for $2.5 million and a $2.3 million commercial real estate construction loan. Offsetting this increase was the upgrading of a note secured by a senior care facility totaling $4.0 million. There were also two Special Mention notes that were paid off during the year totaling $0.7 million. These included one commercial note and one HELOC.

Current wording

Loans classified as Special Mention totaled $30.3 million and $50.4 million as of December 31, 2025 and December 31, 2024, respectively. The decrease of $20.1 million, or 39.9%, was concentrated in the commercial loan portfolio. This decrease is primarily the result of 12 Special Mention notes that were paid off during the year totaling $25.5 million. These included nine commercial notes, one residential mortgage and two HELOCs. Seven commercial loans totaling $6.5 million and eight residential mortgages totaling $1.0 million were upgraded to Pass during the year. One commercial note with a government guarantee totaling $0.3 million was charged off during the year, and there were risk downgrades to either Substandard or Doubtful of 11 commercial loans totaling $8.0 million and one residential mortgage of $0.4 million. These reductions were partially offset by 11 loans totaling $21.3 million recently downgraded to Special Mention, including one commercial loan for $9.5 million secured by an office building, and a commercial loan for $3.4 million secured by a skilled nursing facility. There were also two loans upgraded from Substandard to Special Mention totaling $0.6 million.

Previous wording

Loans classified as Doubtful totaled $3.4 million and $4.6 million as of December 31, 2024 and December 31, 2023, respectively. The decrease of $1.2 million, or 26.1%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as two charge offs of commercial loans totaling $0.5 million secured by heavy equipment and vehicles. As of December 31, 2024, there is $0.2 million in in calculated credit loss reserve allocation against these 16 Doubtful loans.

Current wording

Loans classified as Doubtful totaled $3.2 million and $3.4 million as of December 31, 2025 and December 31, 2024, respectively. The decrease of $0.2 million, or 5.9%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as payoffs of two commercial loans to a single borrower totaling $0.2 million secured by business assets. One residential mortgage totaling $0.1 million was upgraded to Pass during the year, and six commercial loans totaling $1.7 million were downgraded to Doubtful during the period, including two loans to a single borrower totaling $1.4 million, secured by business assets. As of December 31, 2025, there is an immaterial calculated credit loss reserve allocation against these Doubtful loans.