FIRST NATIONAL CORP /VA/
For the period ended Mar 31, 2026. Filed May 13, 2026.
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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.
Mar 31, 2026 · Filed May 13, 2026
FXNC$30.42+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001437749-25-035092
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001437749-26-016708
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 93 current paragraphs.
56 unchanged; 25 reworded; 12 added; 31 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 36 previous and 31 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 (12)
Current report
In February of 2026, the Company announced plans to sell two of its banking offices and consolidate three others into nearby locations. The transactions, which include the sale of two standalone banking offices in North Carolina located in Roanoke Rapids and Louisburg, and the consolidation of three offices in Virginia into proximate existing branches, are expected to close in the second half of 2026 following receipt of required regulatory approvals, customer notification and vendor conversion availability. This will reduce the number of banking offices from 33 to 28. These actions are designed to streamline operations, reduce overhead, and allow the Bank to better allocate resources toward delivering enhanced customer service, innovative digital banking solutions, and continued support for the communities it serves. For additional information, see the Company's Form 8-K dated February 11, 2026, referenced herein at Exhibit 2.
Current report
Net income increased $3.3 million to $4.9 million, or $0.54 per diluted share, for the three months ended March 31, 2026, compared to $1.6 million, or $0.18 per diluted share, for the same period in 2025. Return on average assets was 0.98% and return on average equity was 10.51% for the first quarter of 2026, compared to 0.32% and 3.85%, respectively, for the same period in 2025.
Current report
The increase in net income resulted primarily from a $1.2 million increase in net interest income after provision and a decrease in noninterest expenses of $2.4 million primarily related to the Touchstone acquisition.
Current report
Net interest income increased by $1.2 million as total interest expense decreased by $918 thousand and total interest income increased by $307 thousand. Net interest income was positively impacted by a $17.0 million, or 0.9%, increase in average earning assets with a 2-basis point increase in yield and an $8.9 million, or 0.7%, increase in interest bearing liabilities with a 30-basis point decrease in yield. Net interest income was positively impacted by a 22-basis point increase in the net interest margin to 3.99%.
Current report
Noninterest income increased by $213 thousand in thefirst quarter of 2026 primarily from increases in other operating income and ATM and check card fees, offset by a decrease in services charges on deposit accounts. The other operating income increase was driven by income from limited partnership investments in SBIC.
Current report
Noninterest expenses decreased by $2.4 million and were primarily attributable to a $1.9 million decrease in merger expenses, a $368 thousand decrease in data processing expense, and a $298 thousand decrease in internet banking expense. The decreases are primarily driven by fewer merger related expenses following the operational merger of Touchstone in the first quarter of prior year. The decreases in noninterest expenses were partially offset by a $293 thousand increase in salaries and employee benefits.
Current report
Net income increased $3.3 million to $4.9 million, or $0.54 per diluted share, for the three months ended March 31, 2026, compared to $1.6 million, or $0.18 per diluted share, for the same period in 2025. Return on average assets was 0.98% and return on average equity was 10.51% for the first quarter of 2026, compared to 0.32% and 3.85%, respectively, for the same period in 2025. The increase in net income resulted primarily from a $1.6 million increase in net interest income after provision and a $2.4 million decrease in noninterest expenses, primarily related to the Touchstone acquisition.
Current report
Net interest income increased $1.2 million, or 7.0%, to $18.7 million for thefirst quarter of 2026 compared to the same period in the prior year. Total interest expense decreased by $918 thousand, and interest income increased by $307 thousand. Net interest income was positively impacted by a 22-basis point increase in the net interest margin and a $17.0 million, or 0.9%, increase in average earning assets which was offset by an $8.9 million, or 0.7%, increase in average interest-bearing liabilities.
Current report
The increase in total interest income was attributable to a $378 thousand, or 1.8%, increase in interest income and fees on loans and a $472 thousand, or 35.9%, increase in taxable interest on securities, offset by a $501 thousand, or 30.0%, decrease in interest on deposits in banks. The increase in interest income on loans was impacted by net accretion income related to acquisition accounting of $211 thousand in the first quarter of 2026 compared to net amortization expense of $36 thousand in the first quarter of 2025. Interest income on securities increased consistent with purchases since prior year.
Current report
Noninterest income increased $213 thousand, or 5.9%, to $3.8 million for thefirst quarter of 2026, compared to the same period of 2025. The increase resulted from increases in other operating income of $191 thousand and ATM and check card fees of $51 thousand, offset by a decrease in services charges of $89 thousand. The other operating income increase was driven by income from limited partnership investments in SBIC.
Current report
Noninterest expenses decreased $2.4 million, or 12.8%, to $16.0 million for the three-month period ended March 31, 2026, compared to the same period one year ago. The decrease was primarily attributable to a $1.9 million, or 100%, decrease in merger expenses, a $368 thousand, or 48.3%, decrease in data processing expense, and a $298 thousand, or 84.9%, decrease in internet banking expense, and $187 thousand, or 45.2%, decrease in FDIC expense. The decreases in merger expenses, data processing expense, and interest banking expenses were driven by the Touchstone merger and operating two core systems until operational merger in the first quarter of 2025. The decrease in FDIC expense was due to changes to financial ratios in the assessment calculation driven by the dividend distributed to the Company during the second quarter of 2025. The decreases in noninterest expenses were partially offset by a $293 thousand increase in salaries and employee benefits.
Current report
The Company has one issuance of subordinated debt at March 31, 2026 that consists of $9.5 million outstanding of 4.00% fixed-to-floating rate subordinated notes due 2032. The original issuance of $10 million was assumed during the acquisition of Touchstone, and the Company repurchased $500 thousand of the notes during the second quarter of 2025 when the noteholder bank was acquired.
Removed paragraphs (31)
Previous report
Acquisition of Touchstone Bankshares, Inc.
Previous report
On October 1, 2024, the Company completed the acquisition of Touchstone. Immediately following the Merger, Touchstone Bank, the wholly owned subsidiary of Touchstone, was merged with and into First Bank. Following the Merger, the former branches of Touchstone Bank assumed in the Merger continued to operate in Virginia as Touchstone Bank, a division of First Bank, and, in North Carolina, as Touchstone Bank, a division of First Bank, Strasburg, Virginia, until the system integration was completed in February 2025. Following the system integration, the former branches of Touchstone Bank now operate in Virginia as First Bank and in North Carolina as First Bank of the Commonwealth. The combined company delivers banking services through thirty-three branch offices in Virginia and North Carolina and three loan production offices, in addition to a wide array of online banking services. The Company incurred merger costs totaling $2.0 million and $7.2 million for the nine months ended September 30, 2025, and year ended December 31, 2024, respectively.
Previous report
Net income increased $3.4 million to $5.6 million, or $0.62 per diluted share, for the three months ended September 30, 2025, compared to $2.2 million, or $0.36 per diluted share, for the same period in 2024. Return on average assets was 1.09% and return on average equity was 12.43% for the third quarter of 2025, compared to 0.62% and 7.28%, respectively, for the same period in 2024.
Previous report
The increase in net income resulted primarily from an $8.1 million increase in net interest income after provision, partially offset by a $5.3 million increase in noninterest expenses, both primarily related to the Touchstone acquisition.
Previous report
Net interest income increased by $6.5 million as total interest income increased by $7.6 million and was partially offset by a $1.1 million increase in total interest expense. Net interest income was positively impacted by a $522.8 million, or 38.0%, increase in average earning assets which was offset by a $382.0 million, or 41.1%, increase in interest bearing liabilities. Net interest income was also positively impacted by a 41-basis point increase in the net interest margin to 3.84%.
Previous report
Noninterest income increased by $1.3 million in thethird quarter of 2025 primarily from increases in services charges, ATM and check card fees, fees for other customer services, income from BOLI, and bargain purchase gain. This also grew primarily due to the increase in deposits related to the Touchstone acquisition.
Previous report
Noninterest expenses increased by $5.3 million and were primarily attributable to a $2.6 million increase in salaries and employee benefits, a $1.6 million in other operating expense, a $438 thousand increase in amortization expense, a $440 thousand increase in occupancy expense, a $330 thousand increase in equipment expense, and a $205 thousand increase in data processing expense. The increases are primarily driven by the Touchstone merger resulting in increased operating expenses due to operating additional offices, increased data processing expenses with increased customer transactions, and amortization expense due to core deposit intangible accretion on deposits acquired from Touchstone.
Previous report
Net income increased $4.3 million to $12.2 million, or $1.35 per diluted share, for thenine months ended September 30, 2025, compared to $7.9 million, or $1.26 per diluted share, for the same period in 2024. Return on average assets was 0.81% and return on average equity was 9.47% for thenine months ended September 30, 2025, compared to 0.73% and 8.84%, respectively, for the same period in 2024.
Previous report
The $4.3 million increase in net income resulted primarily from a $20.2 million increase in net interest income after provision, offset by $18.3 million increase in noninterest expenses. Noninterest expense increased due to merger expenses of $2.0 million and additional operating expenses resulting from operating and staffing additional branches and duplicative expenses for data processing that were incurred until the system integration in February.
Previous report
Net interest income increased by $20.2 million as total interest income increased by $23.4 million and was partially offset by a $3.2 million increase in total interest expense. Primarily as a result of the Touchstone merger, net interest income was positively impacted by a $526.3 million, or 38.5%, increase in average earning assets which was offset by a $379.1 million, or 40.8%, increase in average interest bearing liabilities. Net interest income was also positively impacted by a 49-basis point increase in the net interest margin to 3.85%.
Previous report
Provision for credit losses decreased by $1.2 million for thenine months ended September 30, 2025. For thenine months ended September 30, 2025, provision for credit losses totaled $1.9 million and was comprised of a $1.8 million provision for credit losses on loans, a $113 thousand provision for credit losses on unfunded commitments, and a $12 thousand recovery of credit losses on securities held-to-maturity. For the same period of 2024, the provision for credit losses totaled $3.1 million.
Previous report
Noninterest income increased by $2.1 million in thenine months ended September 30, 2025 from increases in services charges, ATM and check card fees, and brokered mortgage fees, income from BOLI, and bargain purchase gain, offset by a decrease in other operating income related to a loan recovery of a previously acquired loan recognized in 2024.
Previous report
Noninterest expenses increased by $18.3 million and were primarily attributable to a $7.6 million increase in salaries and employee benefits, a $1.2 million increase in merger expense, a $3.7 million increase in other operating expense, a $1.4 million increase in occupancy expense, a $1.1 million increase in data processing expense, a $1.3 million increase in amortization expense, and a $1.1 million increase in equipment expense. The increase is primarily driven by the Touchstone merger resulting in increased operating expenses due to operating additional branches, duplicative expenses incurred prior to system integration, and amortization expense due to core deposit intangible accretion on deposits acquired from Touchstone.
Previous report
Net income increased $3.4 million to $5.6 million, or $0.62 per diluted share, for the three months ended September 30, 2025, compared to $2.2 million, or $0.36 per diluted share, for the same period in 2024. Return on average assets was 1.09% and return on average equity was 12.43% for the third quarter of 2025, compared to 0.62% and 7.28%, respectively, for the same period in 2024. The increase in net income resulted primarily from an $8.1 million increase in net interest income after provision, partially offset by a $5.3 million increase in noninterest expenses, both primarily related to the Touchstone acquisition.
Previous report
Nine Month Period Ended September 30, 2025
Previous report
Net income increased $4.3 million to $12.2 million, or $1.35 per diluted share, for the nine months ended September 30, 2025, compared to $7.9 million, or $1.26 per diluted share, for the same period in 2024. Return on average assets was 0.81% and return on average equity was 9.47% for the nine months ended September 30, 2025, compared to 0.73% and 8.84%, respectively, for the same period in 2024.
Previous report
The $4.3 million increase in net income resulted primarily from a $20.2 million increase in net interest income after provision, offset by a $18.3 million increase in noninterest expenses. Noninterest expense increased due to merger expenses of $2.0 million and additional operating expenses resulting from operating and staffing additional branches and duplicative expenses for data processing that were incurred until system integration in February.
Previous report
Net interest income increased $6.5 million, or 55.7%, to $18.3 million for thethird quarter of 2025 compared to the same period in the prior year. Total interest income increased by $7.6 million, which was partially offset by interest expense, which increased by $1.1 million. Net interest income was positively impacted by a 41-basis point increase in the net interest margin and a $522.8 million, or 38.0%, increase in average earning assets which was offset by a $382.0 million, or 41.1%, increase in average interest bearing liabilities.
Previous report
The increase in total interest income was attributable to a $7.0 million, or 48.0%, increase in interest income and fees on loans. The increase in interest income on loans was attributable to a 9-basis point increase in yield and a 45.4% increase in average balances compared to the same period in the prior year due to the merger with Touchstone.
Previous report
Nine Month Period Ended September 30, 2025
Previous report
Net interest income increased $20.2 million, or 59.3%, to $54.3 million for thenine months ended September 30, 2025, compared to the same period in the prior year. Total interest income increased by $23.4 million, which was partially offset by interest expense, which increased by $3.2 million. Net interest income was positively impacted by a 50-basis point increase in the net interest margin and a $526.3 million, or 38.5%, increase in average earning assets which was offset by a $379.1 million, or 40.8%, million increase in average interest bearing liabilities.
Previous report
The increase in total interest income was attributable to a $21.7 million, or 51.7%, increase in interest income and fees on loans. The increase in interest income on loans was attributable to a 16-basis point increase in yield and a 47.6% increase in average balances compared to the same period in the prior year due to the merger with Touchstone.
Previous report
The increase in total interest expense was attributable to a $3.8 million increase in interest expense on deposits and a $1.2 million increase on interest on subordinated debt, offset by a $1.8 million decrease in interest expense on other borrowings. Although net interest margin was positively impacted by a 32-basis point decrease in the cost of interest-bearing deposits, the higher interest expense resulted from a 47.5% increase in average interest-bearing deposit balances. The increase in deposits and subordinated debt was due to assumed liabilities from the Touchstone merger. The lower interest expense on other borrowings resulted from the payoff of $50.0 million of borrowings at the end of 2024.
Previous report
The net interest margin was 3.85% for thenine months ended September 30, 2025, compared to 3.36% for the same period in the prior year. When compared to thenine months ended September 30, 2024, the net interest margin increased by 49-basis points as the yield on earning assets continued to increase at a similar pace as in prior quarters, while the cost of funds decreased when compared to prior quarterly periods consistent with the federal funds rate cuts in late 2024. The yield on earning assets was also positively impacted by net accretion income related to acquisition accounting of $914 thousand, or a 6-basis point incremental increase to the net interest margin.
Previous report
The provision for credit losses totaled $1.9 million for thenine-month period ended September 30, 2025, compared to $3.1 million for the same period of the prior year. The provision was comprised of a $1.8 million provision for credit losses on loans, which was partially offset by a $12 thousand recovery of credit losses on held-to-maturity securities and a $113 thousand provision for credit losses on unfunded commitments. As compared to the same period the prior year, the decrease in the provision for credit losses is driven by increases in the specific reserves on loans during the third quarter of 2024. Net charge-offs for the first nine months of 2025 totaled $3.8 million compared to $2.4 million for the first nine months of 2024. The increase in the level of net-charge offs has resulted in a decline in the ratio of allowance to total loans from 1.28% at September 30, 2024 to 1.01% at September 30, 2025. The loss model has been updated in 2025 to reflect the most recent bank and peer group loss rates, economic forecasts, prepayment speeds and curtailment rates for each loan category.
Previous report
Noninterest income increased $1.3 million, or 40.5%, to $4.5 million for thethird quarter of 2025, compared to the same period of 2024. The increase resulted from increases in service charges of $310 thousand, ATM and check card fees of $402 thousand, brokered mortgage fees of $74 thousand, income from BOLI of $93 thousand, and $304 thousand in bargain purchase gain. The bargain purchase gain resulted from a higher-than-expected tax refund related to the final Touchstone tax filing.
Previous report
Noninterest income increased $2.1 million, or 20.8%, to $12.0 million for thenine months ended September 30, 2025, compared to the same period of 2024. The increase resulted from increases in service charges of $1.1 million, ATM and check card fees of $947 thousand, brokered mortgage fees of $297 thousand, income from BOLI of $270 thousand, and $304 thousand in bargain purchase gain. The increases in noninterest income were offset by a decrease in other operating income of $1.1 million from a recovery recognized in 2024 on a loan that was acquired through a business combination in 2021. The bargain purchase gain resulted from a higher-than-expected tax refund related to the final Touchstone tax filing.
Previous report
Noninterest expenses increased $5.3 million, or 50.9%, to $15.8 million for the three-month period ended September 30, 2025, compared to the same period one year ago. The increase was primarily attributable to $2.6 million, or 43.2%, increase in salaries and employee benefits, a $1.5 million, or 168.9%, increase in other operating expense, $440 thousand, or 75.2%, increase in occupancy expense, a $205 thousand, or 70.7%, increase in data processing expense, and a $438 thousand increase in amortization expense. The increases in salary and benefits, other operating expenses, occupancy expense, and data processing expense were primarily driven by the Touchstone merger resulting in increased operating expenses due to an increase in the number of employees, operating additional branches, and increased data processing expenses with increased customer transactions. Amortization expense increased due to core deposit intangible accretion on deposits acquired from Touchstone. These increases were offset by a decrease of $219 thousand, or 100.0%, in merger expenses compared to the same period in the prior year.
Previous report
Noninterest expenses increased $18.3 million, or 59.0%, to $49.3 million for thenine-month period ended September 30, 2025, compared to the same period one year ago. The increase was primarily attributable to a $7.6 million, or 42.9%, increase in salaries and employee benefits, a $3.7 million, or 152.7%, increase in other operating expense, a $1.2 million, or 157.2%, increase in merger expenses, a $1.4 million, or 82.1%, increase in occupancy expense, a $1.3 million increase in amortization expense, a $1.1 million, or 151.9%, increase in data processing expense, and a $1.1 million, or 56.3%, increase in equipment expense. The increase in salaries and benefits reflects additional expenses due to an increase in the number of employees, increase in incentives, stock compensation expense, and salary and benefit increases from the prior year. The increase in merger expenses was primarily driven by expenses incurred in the first quarter of 2025 to facilitate system integration through conversion expenses and contract terminations. Other operating expenses, occupancy expense, data processing expense, and equipment expense primarily increased due to operating additional branches, increased data processing expenses with increased customer transactions, and duplicative expenses incurred prior to system integration. Amortization expense increased due to core deposit intangible accretion on deposits acquired from Touchstone.
Previous report
The Company had three issuances of Subordinated debt at September 30, 2025. The Company assumed two of the subordinated debt issuances from the acquisition of Touchstone. The subordinated debt assumed consisted of an $8.0 million issuance of 6.00% fixed-to-floating rate subordinated notes due 2030. The floating rate period for these subordinated notes began August 15, 2025. In October 2025, the Company called the $8 million in subordinated debt, at par, to be redeemed on November 15, 2025. The subordinated debt assumed also consisted of a $10.0 million issuance of 4.00% fixed-to-floating rate subordinated notes due 2032. During the second quarter of 2025, a $500 thousand tranche of the $10.0 million issuance became available to payoff early since the recipient bank was acquired. The Company paid off this portion of the debt for $420 thousand and recognized an $80 thousand gain on the redemption of the subordinated debt.
Previous report
During the third quarter of 2025, the Company called $5 million in subordinated debt due 2030, at par, that was redeemed on October 1, 2025. There is no gain or loss expected with these redemptions. The Company believes that these capital redemptions will have minimal impact on our total risk-based capital ratio while improving our profitability in future periods.
Reworded paragraphs (25)
Previous wording
First National Corporation (the Company) makes forward-looking statements in this Form 10-Q that are subject to risks and uncertainties. These forward-looking statements include, but are not limited to, statements regarding profitability, liquidity, adequacy of capital, allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and the impact of the Company's acquisition (the Merger) of Touchstone Bankshares, Inc. (Touchstone), as well as certain financial and other goals. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by factors including:
Current wording
First National Corporation (the Company) makes forward-looking statements in this Form 10-Q that are subject to risks and uncertainties. These forward-looking statements include, but are not limited to, statements regarding profitability, liquidity, adequacy of capital, allowance for credit losses, interest rate sensitivity, market risk, and growth strategy, as well as certain financial and other goals. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by factors including:
Previous wording
Because of these and other uncertainties, actual results may be materially different from the results indicated by these forward-looking statements. In addition, past results of operations do not necessarily indicate future results. The following discussion and analysis of the financial condition at September 30, 2025 and statements of income of the Company for the three andnine months ended September 30, 2025 and 2024 should be read in conjunction with the consolidated financial statements and related notes included in Part I, Item 1, of this Form 10-Q and in Part II, Item 8, of the Form 10-K for the period ending December 31, 2024. The statements of income for the three andnine months ended September 30, 2025 may not be indicative of the results to be achieved for the year.
Current wording
Because of these and other uncertainties, actual results may be materially different from the results indicated by these forward-looking statements. In addition, past results of operations do not necessarily indicate future results. The following discussion and analysis of the financial condition at March 31, 2026 and statements of income of the Company for thethree months ended March 31, 2026 and 2025 should be read in conjunction with the consolidated financial statements and related notes included in Part I, Item 1, of this Form 10-Q and in Part II, Item 8, of the Form 10-K for the period ending December 31, 2025. The statements of income for thethree months ended March 31, 2026 may not be indicative of the results to be achieved for the year.
Previous wording
The Bank offers loan, deposit, and wealth management products and services. Loan products and services include consumer loans, residential mortgages, home equity loans, and commercial loans. Deposit products and services include checking accounts, treasury management solutions, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. Wealth management services include estate planning, investment management of assets, trustee under an agreement, trustee under a will, individual retirement accounts, and estate settlement. Customers include small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations. The Bank’s office locations are well-positioned in attractive markets along the Interstate 81, Interstate 66, and Interstate 64 corridors in the Shenandoah Valley, the Roanoke Valley, south-central regions of Virginia, the Richmond MSA, and northern North Carolina. Within this market area, there are diverse types of industry including medical and professional services, manufacturing, retail, warehousing, government, hospitality, and higher education. The Bank’s products and services are delivered through 33 bank branch offices, three loan production offices, and one customer service center in a retirement community. For the location and general character of each of these offices, see Item 2 of the Company's Form 10-K for the year ended December 31, 2024. Many of the Bank’s services are also delivered through the Bank’s mobile banking platforms and a network of ATMs located throughout its market area.
Current wording
The Bank offers loan, deposit, and wealth management products and services. Loan products and services include consumer loans, residential mortgages, home equity loans, and commercial loans. Deposit products and services include checking accounts, treasury management solutions, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. Wealth management services include estate planning, investment management of assets, trustee under an agreement, trustee under a will, individual retirement accounts, and estate settlement. Customers include small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations. The Bank’s office locations are well-positioned in attractive markets along the Interstate 81, Interstate 66, and Interstate 64 corridors in the Shenandoah Valley, the Roanoke Valley, south-central regions of Virginia, the Richmond MSA, and northern North Carolina. Within this market area, there are diverse types of industry including medical and professional services, manufacturing, retail, warehousing, government, hospitality, and higher education. The Bank’s products and services are delivered through 33 bank offices, one loan production offices, and one customer service center in a retirement community. For the location and general character of each of these offices, see Item 2 of the Company's Form 10-K for the year ended December 31, 2025. Many of the Bank’s services are also delivered through the Bank’s mobile banking platforms and a network of ATMs located throughout its market area.
Previous wording
The primary source of revenue is from net interest income earned by the Bank. Net interest income is the difference between interest income and interest expense and typically represents between 70% and 90% of the Company’s total revenue. Interest income is determined by the amount of interest-earning assets outstanding during the period and the interest rates earned on those assets. The Bank’s interest expense is a function of the amount of interest-bearing liabilities outstanding during the period and the interest rates paid. In addition to net interest income, noninterest income is the other source of revenue for the Company. Noninterest income is derived primarily from service charges on deposits, fee income from wealth management services, and ATM and check card fees.
Current wording
The primary source of revenue is from net interest income earned by the Bank. Net interest income is the difference between interest income and interest expense and typically represents between 75% and 85% of the Company’s total revenue. Interest income is determined by the amount of interest-earning assets outstanding during the period and the interest rates earned on those assets. The Bank’s interest expense is a function of the amount of interest-bearing liabilities outstanding during the period and the interest rates paid. In addition to net interest income, noninterest income is the other source of revenue for the Company. Noninterest income is derived primarily from service charges on deposits, fee income from wealth management services, and ATM and check card fees.
Previous wording
Primary expense categories are salaries and employee benefits, which comprised 54% of noninterest expenses for thenine months ended September 30, 2025, followed by other operating expense, which comprised 12% of noninte rest expenses. The provision for credit losses is also typically a primary expense of the Bank. The provision is determined by factors that include net charge-offs, asset quality, economic conditions, and loan growth. Changing economic conditions caused by inflation, recession, unemployment, or other factors beyond the Company’s control have a direct correlation with asset quality, net charge-offs, and ultimately the required provision for credit losses.
Current wording
Primary expense categories are salaries and employee benefits, which comprised 56% of noninterest expenses for thethree months ended March 31, 2026, followed by other operating expense, which comprised 10% of noninte rest expenses. The provision for credit losses is also typically a primary expense of the Bank. The provision is determined by factors that include net charge-offs, asset quality, economic conditions, and loan growth. Changing economic conditions caused by inflation, recession, unemployment, or other factors beyond the Company’s control have a direct correlation with asset quality, net charge-offs, and ultimately the required provision for credit losses.
Previous wording
Our provision for credit losses decreased by $1.5 million for thethird quarter of 2025. The provision for credit losses totaled $193 thousand and was comprised of a $200 thousand provision for credit losses on loans, an $8 thousand provision for credit losses on unfunded commitments, and a $14 thousand recovery of credit losses on securities held-to-maturity. For the same period of 2024, the provision for credit losses totaled $1.7 million.
Current wording
Our provision for credit losses decreased by $382 thousand for thefirst quarter of 2026. The provision for credit losses totaled $450 thousand and was comprised of a $521 thousand provision for credit losses on loans, a $56 thousand reduction in provision for credit losses on unfunded commitments, and a $15 thousand reduction in the credit losses on securities held-to-maturity. For the same period of 2025, the provision for credit losses totaled $832 thousand.
Previous wording
The increase in total interest expense was attributable to a $1.3 million increase in interest expense on deposits and a $409 thousand increase on interest on subordinated debt, offset by a $600 thousand decrease in interest expense on other borrowings. The net interest margin was positively impacted by a 34-basis point decrease in the cost of interest-bearing deposits. The higher interest expense resulted from a 48.1% increase in average interest-bearing deposit balances. The increase in deposits and subordinated debt was due to assumed liabilities from the Touchstone merger. The lower interest expense on other borrowings resulted from the payoff of $50.0 million of borrowings at the end of 2024.
Current wording
The decrease in total interest expense was attributable to a $624 thousand, or 10.3%, decrease in interest expense on deposits and a $299 thousand, or 64.0%, decrease on interest expense on subordinated debt. The net interest margin was positively impacted by a 23-basis point decrease in the cost of interest-bearing deposits. The decrease in subordinated debt and related interest expense was due to redemptions of subordinated debt during the fourth quarter of prior year.
Previous wording
The net interest margin was 3.84% for thethird quarter of 2025 compared to 3.43% for the same period in the prior year. When compared to thethird quarter of 2024, the net interest margin increased by 41-basis points as the yield on earning assets continued to increase at a similar pace as in prior quarters, while the cost of funds decreased when compared to prior quarterly periods consistent with the federal funds rate cuts in late 2024. The yield on earning assets was not materially impacted by net accretion income related to acquisition accounting of $43 thousand in the third quarter with no incremental increase or decrease to the net interest margin.
Current wording
The net interest margin was 3.99% for thefirst quarter of 2026 compared to 3.77% for the same period in the prior year. When compared to thefirst quarter of 2025, the net interest margin increased by 22-basis points with the cost of funds decrease consistent with the federal funds rate cuts in late 2025. The yield on earning assets was impacted by net accretion income related to acquisition accounting of $211 thousand in the first quarter for a 4-basis point increase to the net interest margin.
Previous wording
The provision for credit losses totaled $193 thousand for the three-month period ended September 30, 2025, compared to $1.7 million for the same period of the prior year. The provision was comprised of a $200 thousand provision for credit losses on loans, a $15 thousand recovery of credit losses on held-to-maturity securities and an $8 thousand provision for credit losses on unfunded commitments. As compared to the same period of the prior year, the decrease in provision for credit losses is driven by a decrease in the specific reserves on loans during the third quarter of 2025. The decrease in provision resulted in a lower allowance to total loans of 1.01% at September 30, 2025 compared to 1.05% at June 30, 2025.
Current wording
The provision for credit losses totaled $450 thousand for the three-month period ended March 31, 2026, compared to $832 thousand for the same period of the prior year. The provision was comprised of a $521 thousand provision for credit losses on loans, a $15 thousand reduction in provision of credit losses on held-to-maturity securities, and a $56 thousand reduction in provision of credit losses on unfunded commitments. As compared to the same period of the prior year, the decrease in provision for credit losses is driven by a decrease in the specific reserves on loans during the quarter. The decrease in provision resulted in a lower allowance to total loans of 1.00% at March 31, 2026 compared to 1.02% at March 31, 2025.
Previous wording
Income tax expense increased $725 thousand to $1.3 million for thethird quarter of 2025, compared to the same period one year ago. The effective tax rate for thethird quarter of 2025 was 18.6% compared to 19.5% for the same period in 2024. The Company’s income tax expense differed from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the three months ended September 30, 2025 and 2024. The difference was a result of net permanent tax deductions, primarily comprised of tax-exempt interest income, income from bank owned life insurance, and nondeductible merger expenses. A more detailed discussion of the Company’s tax calculation is contained in Note 12 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
Income tax expense increased $884 thousand to $1.2 million for thefirst quarter of 2026, compared to the same period one year ago. The effective tax rate for thefirst quarter of 2026 was 19.5% compared to 15.7% for the same period in 2025. The Company’s income tax expense differed from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the three months ended March 31, 2026 and 2025. The difference was a result of net permanent tax deductions, primarily comprised of tax-exempt interest income, income from bank owned life insurance, and nondeductible merger expenses. A more detailed discussion of the Company’s tax calculation is contained in Note 12 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Previous wording
Assets totaled $2.03 billion at September 30, 2025, which was an increase of $20.5 million or 1.4% (annualized) from December 31, 2024. The asset composition changed during the first nine months of the year as interest-bearing deposits in banks increased by $27.6 million and loans, net of the allowance for credit losses, decreased by $31.4 million, while total securities increased by $27.5 million.
Current wording
Assets totaled $2.076 billion at March 31, 2026, which was an increase of $37.8 million or 7.4% (annualized) from December 31, 2025. The asset composition did not significantly change during the first three months of the year as interest-bearing deposits in banks increased by $25.1 million and loans, net of the allowance for credit losses, increased by $14.7 million, while total securities decreased by $1.5 million.
Previous wording
Total liabilities increased by $5.8 million during thenine-month period ended September 30, 2025, primarily from changes in customer deposits. Deposit balances and the composition of deposits as of September 30, 2025 did not change significantly as noninterest-bearing deposits, savings and interest-bearing deposits, and time deposits decreased$8.7 million, increased $7.5 million, and increased $7.0 million, respectively from December 31, 2024.
Current wording
Total liabilities increased by $35.5 million during thethree-month period ended March 31, 2026, primarily from changes in customer deposits. Deposit balances and the composition of deposits as of March 31, 2026 changed as noninterest-bearing deposits increased$14.4 million, savings and interest-bearing deposits increased $26.8 million, and time deposits decreased $3.5 million from December 31, 2025.
Previous wording
Total shareholders’ equity increased by $14.7 million during the first nine months of 2025, primarily from an $8.0 million increase in retained earnings and a $5.5 million reduction in accumulated other comprehensive loss. The decrease in accumulated other comprehensive loss was attributable to unrealized holding gains in the available-for-sale securities portfolio. The Bank's capital ratios continued to exceed the minimum capital requirements for regulatory purposes.
Current wording
Total shareholders’ equity increased by $2.4 million during the first three months of 2026, primarily from a $3.4 million increase in retained earnings and a $1.2 million reduction in accumulated other comprehensive loss. The decrease in accumulated other comprehensive loss was attributable to unrealized holding losses in the available-for-sale securities portfolio. The Bank's capital ratios continued to exceed the minimum capital requirements for regulatory purposes.
Previous wording
Loans totaled $1.419 billion at September 30, 2025, which was a $31.4 million or 8.7% (annualized) decrease from December 31, 2024, and a $436.7 million, or 44.5%, increase over September 30, 2024.The change in loans over the periods did not have a significant impact on the composition of the loan portfolio. The loan portfolio was primarily comprised of loans secured by one-to-four family residential real estate, loans secured by commercial real estate, and commercial and industrial loans, which totaled 37%, 48%, and 8% of the loan portfolio, respectively, at September 30, 2025, and 37%, 46%, and 10%of the loan portfolio, respectively, at December 31, 2024.
Current wording
Loans totaled $1.450 billion at March 31, 2026, which was a $14.7 million or 4.1% (annualized) increase from December 31, 2025, and a $14.5 million, or 4.0% (annualized), increase over March 31, 2025.The change in loans over the periods did not have a significant impact on the composition of the loan portfolio. The loan portfolio was primarily comprised of loans secured by one-to-four family residential real estate, loans secured by commercial real estate, and commercial and industrial loans, which totaled 36%, 49%, and 8% of the loan portfolio, respectively, at March 31, 2026, and 36%, 48%, and 8% of the loan portfolio, respectively, at December 31, 2025.
Previous wording
The loan portfolio includes loans that were acquired through business combinations and loans that were purchased through a third-party loan originator. Loans acquired through business combinations included unaccreted discounts, net of unamortized premiums totaling $13.5 million and $14.3 million, as of September 30, 2025 and December 31, 2024, respectively. Loans purchased from a third-party that originated and serviced loans to health care professionals totaled $15.1 million as of September 30, 2025, which included unamortized premiums totaling $4.5 million, compared to loans totaling $19.0 million as of December 31, 2024, which included unamortized premiums totaling $5.8 million.
Current wording
The loan portfolio includes loans that were acquired through business combinations and loans that were purchased through a third-party loan originator. Loans acquired through business combinations included unaccreted discounts, net of unamortized premiums totaling $12.9 million and $13.2 million, as of March 31, 2026 and December 31, 2025, respectively. Loans purchased from a third-party that originated and serviced loans to health care professionals totaled $12.7 million as of March 31, 2026, which included unamortized premiums totaling $3.7 million, compared to loans totaling $14.1 million as of December 31, 2025, which included unamortized premiums totaling $4.1 million.
Previous wording
Management classifies non-performing assets as non-accrual loans and OREO. Non-performing assets totaled $6.1 million and $7.0 million at September 30, 2025 and December 31, 2024, representing approximately 0.30% and 0.35% of total assets, respectively. Nonaccrual loans totaled $5.7 million and $7.0 million at September 30, 2025 and December 31, 2024, respectively. There was no OREO at September 30, 2025 and $53 thousand at December 31, 2024. The Bank did not have any consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings were in process as of September 30, 2025. Loans past due 90 days or more and accruing interest totaled$388 thousand and $365 thousand at September 30, 2025 and December 31, 2024, respectively.
Current wording
Management classifies non-performing assets as non-accrual loans and OREO. Non-performing assets totaled $4.4 million and $4.7 million at March 31, 2026 and December 31, 2025, representing approximately 0.21% and 0.23% of total assets, respectively. Nonaccrual loans totaled $4.4 million and $4.7 million at March 31, 2026 and December 31, 2025, respectively. There was no OREO at March 31, 2026 and December 31, 2025. The Bank did not have any consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings were in process as of March 31, 2026. There were no loans past due 90 days or more and accruing interest at March 31, 2026 and December 31, 2025.
Previous wording
On September 30, 2025 commercial and industrial loans and residential real estate loans comprised 46% and 36% of non-performing assets, respectively. Non-performing assets could increase due to other loans identified by management as potential problem loans. Other potential problem loans are defined as performing loans that possess certain risks, including the borrower’s ability to pay and the collateral value securing the loan, that management has identified that may result in the loans not being repaid in accordance with their terms. Other potential problem loans totaled $10.0 million and $9.1 million at September 30, 2025 and December 31, 2024, respectively. The amount of other potential problem loans in future periods may be dependent on economic conditions and other factors influencing a customers’ ability to meet their debt requirements.
Current wording
On March 31, 2026 commercial and industrial loans and residential real estate loans comprised 52% and 47% of non-performing assets, respectively. Non-performing assets could increase due to other loans identified by management as potential problem loans. Other potential problem loans are defined as performing loans that possess certain risks, including the borrower’s ability to pay and the collateral value securing the loan, that management has identified that may result in the loans not being repaid in accordance with their terms. Other potential problem loans totaled $2.8 million and $6.4 million at March 31, 2026 and December 31, 2025, respectively. The amount of other potential problem loans in future periods may be dependent on economic conditions and other factors influencing a customers’ ability to meet their debt requirements.
Previous wording
The Company purchased commercial and industrial loans between October 2021 and October 2023 from a third-party finance company that originated and serviced loans to health care professionals. The finance company operated a program that historically provided credit support to the Company through, among other things, the repurchase of their loans and unamortized loan premiums when loans did not pay according to the loan agreements. The finance company no longer offers this credit support. On September 30, 2025, loans purchased from the finance company totaled $15.1 million, which was comprised of $10.6 million of loan balances and unamortized premiums totaling $4.5 million. As of September 30, 2025, $1.7 million of these loans were non-accrual including premiums totaling $590 thousand and thus were individually evaluated. Specific reserves on these individually evaluated loans totaled $1.2 million and were included in the Company’s allowance for credit losses on loans. The remaining $13.4 million of loans with premiums totaling $3.9 million were considered performing and were included in the calculation of the general reserve component of the allowance for credit losses. Premiums are amortized over the life of the loans using the effective interest method. On September 30, 2025, there was a total of 134 loans purchased from the finance company included in the Company’s loan portfolio with a weighted average maturity of 6.0 years.
Current wording
The Company purchased commercial and industrial loans between October 2021 and October 2023 from a third-party finance company that originated and serviced loans to health care professionals. The finance company operated a program that historically provided credit support to the Company through, among other things, the repurchase of their loans and unamortized loan premiums when loans did not pay according to the loan agreements. The finance company no longer offers this credit support. On March 31, 2026, loans purchased from the finance company totaled $12.7 million, which was comprised of $9.0 million of loan balances and unamortized premiums totaling $3.7 million. As of March 31, 2026, $1.8 million of these loans were non-accrual including premiums totaling $638 thousand and thus were individually evaluated. Specific reserves on these individually evaluated loans totaled $1.2 million and were included in the Company’s allowance for credit losses on loans. The remaining $10.9 million of loans with premiums totaling $3.0 million were considered performing and were included in the calculation of the collectively evaluated component of the allowance for credit losses. Premiums are amortized over the life of the loans using the effective interest method. On March 31, 2026, there was a total of 123 loans purchased from the finance company included in the Company’s loan portfolio with a weighted average maturity of 5.1 years.
Previous wording
Management believes, based upon its review and analysis, that the Bank has sufficient reserves to cover expected losses inherent within the loan portfolio. For each period presented, the provision for credit losses charged to expense was based on management’s judgment after taking into consideration all factors connected with the collectability of the existing portfolio. Management considers economic conditions, historical losses, past due percentages, internally generated loan quality reports, prepayment speeds, curtailment rates for each loan category and other relevant factors when evaluating the loan portfolio. There can be no assurance, however, that an additional provision for credit losses will not be required in the future, including as a result of changes in the qualitative factors underlying management’s estimates and judgments, changes in accounting standards, adverse developments in the economy, on a national basis or in the Company’s market area, loan growth, or changes in the circumstances of particular borrowers. For further discussion regarding the allowance for credit losses, see “Critical Accounting Policies” above.
Current wording
Management believes, based upon its review and analysis, that the Bank has sufficient reserves to cover expected losses inherent within the loan portfolio. For each period presented, the provision for credit losses charged to expense was based on management’s judgment after taking into consideration all factors connected with the collectability of the existing portfolio. Management considers economic conditions, historical losses, past due percentages, internally generated loan quality reports, prepayment speeds, curtailment rates for each loan category and other relevant factors when evaluating the loan portfolio. The allowance for credit losses on loans totaled $14.7 million, or 1.00% of total loans on March 31, 2026, compared to $14.7 million, or 1.02% of total loans on December 31, 2025. The decrease in allowance for credit losses to total loans from the prior period is primarily driven by lower individually analyzed loans balances following charge-offs recorded during the quarter. There can be no assurance, however, that an additional provision for credit losses will not be required in the future, including as a result of changes in the qualitative factors underlying management’s estimates and judgments, changes in accounting standards, adverse developments in the economy, on a national basis or in the Company’s market area, loan growth, or changes in the circumstances of particular borrowers. For further discussion regarding the allowance for credit losses, see “Critical Accounting Policies” above.
Previous wording
On September 30, 2025 securities totaled$305.5 million, an increase of $28.2 million, or 10.2%, from $277.3 millionat December 31, 2024. Investment securities are comprised of U.S. Treasury securities, U.S. agency and mortgage-backed securities, obligations of state and political subdivisions, corporate debt securities, and restricted securities. As of September 30, 2025, neither the Company nor the Bank held any derivative financial instruments in their respective investment security portfolios. Gross unrealized gains in the available for sale portfolio totaled $360 thousand and $62 thousand at September 30, 2025 and December 31, 2024, respectively. Gross unrealized losses in the available for sale portfolio totaled $15.8 million and $22.1 million at September 30, 2025 and December 31, 2024, respectively. Gross unrealized gains in the held to maturity portfolio totaled $29 thousand and $8 thousand at September 30, 2025 and December 31, 2024, respectively. Gross unrealized losses in the held to maturity portfolio totaled $7.3 million and $11.0 million at September 30, 2025 and December 31, 2024, respectively. The change in the unrealized gains and losses of investment securities from December 31, 2024 to September 30, 2025 was related to changes in market interest rates and was not related to credit concerns of the issuers.
Current wording
On March 31, 2026 securities totaled$324.6 million, a decrease of $1.4 million, or 1.8% (annualized), from $326.0 millionat December 31, 2025. Investment securities are comprised of U.S. Treasury securities, U.S. agency and mortgage-backed securities, obligations of state and political subdivisions, corporate debt securities, and restricted securities. As of March 31, 2026, neither the Company nor the Bank held any derivative financial instruments in their respective investment security portfolios. Gross unrealized gains in the available for sale portfolio totaled $120 thousand and $363 thousand at March 31, 2026 and December 31, 2025, respectively. Gross unrealized losses in the available for sale portfolio totaled $16.3 million and $14.8 million at March 31, 2026 and December 31, 2025, respectively. Gross unrealized gains in the held to maturity portfolio totaled $10 thousand and $98 thousand at March 31, 2026 and December 31, 2025, respectively. Gross unrealized losses in the held to maturity portfolio totaled $7.2 million and $6.8 million at March 31, 2026 and December 31, 2025, respectively. The change in the unrealized gains and losses of investment securities from December 31, 2025 to March 31, 2026 was related to changes in market interest rates and was not related to credit concerns of the issuers.
Previous wording
Deposits totaled $1.810 billion on September 30, 2025, which was a $5.8 million, or 0.6%, increase from December 31, 2024, and a $556.3 million, or 44.4%, increase from September 30, 2024. Noninterest-bearing deposits, savings and interest-bearing deposits, and time deposits, totaled 28%, 52%, and 20%, of total deposits, respe ctively on September 30, 2025, compared to 29%, 51%, and 20%, on December 31, 2024, and 31%, 53%, and 16%, on September 30, 2024. The composition of the deposit portfolio remained largely consistent with the prior period. The significant deposit growth year-over-year was primarily due to the Touchstone acquisition.
Current wording
Deposits totaled $1.837 billion on March 31, 2026, which was a $37.7 million, or 8.4% (annualized), increase from December 31, 2025, and a $12.3 million, or 2.7% (annualized), increase from March 31, 2025. Noninterest-bearing deposits, savings and interest-bearing deposits, and time deposits, totaled 28%, 52%, and 20%, of total deposits, respe ctively on March 31, 2026, compared to 28%, 52%, and 20%, on December 31, 2025, and 30%, 50%, and 20%, on March 31, 2025. The composition of the deposit portfolio remained largely consistent with the prior period.
Previous wording
Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, and available lines of credit totaled $783.2 million on September 30, 2025, $758.0 million on December 31, 2024, and $499.1 million on September 30, 2024.
Current wording
Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, and available lines of credit totaled $764.2 million on March 31, 2026, $819.0 million on December 31, 2025, and $800.2 million on March 31, 2025.
Previous wording
The Bank maintains liquidity to fund loan growth and to meet potential demand from deposit customers, including potential volatile deposits. The estimated amount of uninsured customer deposits totaled $555.0 million on September 30, 2025, $537.0 million on December 31, 2024, and $400.1 million on September 30, 2024. Excluding municipal deposits, the estimated amount of uninsured customer deposits totaled $473.4 million on September 30, 2025, $319.1 million on December 31, 2024, and $322.6 million on September 30, 2024.
Current wording
The Bank maintains liquidity to fund loan growth and to meet potential demand from deposit customers, including potential volatile deposits. The estimated amount of uninsured customer deposits totaled $558.9 million on March 31, 2026, $538.2 million on December 31, 2025, and $549.3 million on March 31, 2025. Excluding municipal deposits that have collateral pledged, the estimated amount of uninsured customer deposits totaled $461.3 million on March 31, 2026, $448.8 million on December 31, 2025, and $458.7 million on March 31, 2025.
Previous wording
Commitments to extend credit, which amounted to $288.1 million at September 30, 2025, and $212.9 million at September 30, 2024, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based on management’s credit evaluation of the customer.
Current wording
Commitments to extend credit, which amounted to $295.9 million at March 31, 2026, and $289.9 million at March 31, 2025, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based on management’s credit evaluation of the customer.
Previous wording
Commercial and standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments if deemed necessary. At September 30, 2025 and December 31, 2024, the Bank had $13.1 million and $15.6 million in outstanding standby letters of credit, respectively.
Current wording
Commercial and standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments if deemed necessary. At March 31, 2026 and December 31, 2025, the Bank had $2.9 million and $3.1 million in outstanding standby letters of credit, respectively.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Comparing the Nine-Month Periods Ending September 30, 2025 and September 30, 2024
Previous report — wording carried elsewhere
Income tax expense increased$826 thousand to $2.9 million for thefirst nine months of 2025, compared to the same period one year ago. The effective tax rate for thefirst nine months 2025 was 18.9% compared to 20.4% for the same period in 2024. The Company’s income tax expense differed from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the nine months ended September 30, 2025, and 2024. The difference was a result of net permanent tax deductions, primarily comprised of tax-exempt interest income, income from bank owned life insurance, and nondeductible merger expenses. A more detailed discussion of the Company’s tax calculation is contained in Note 12 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.