MainStreet Bancshares, Inc.

MAINSTREET BANCSHARES,** INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

Note1. Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements

Organization

MainStreet Bancshares, Inc. (the “Company”) is a financial holding company incorporated under the laws of the Commonwealth of Virginia whose primary activity is the ownership and management of MainStreet Bank (the “Bank”). On* October 12, 2021,the Company filed an election with the Federal Reserve Board to be a financial holding company in order to engage in a broader range of financial activities than are permitted for bank holding companies generally. The Company is authorized to issue 15,000,000 shares of common stock with a par value of $4.00 per share. Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock at a par value of $1.00 per share. There are currently 28,750 shares of preferred stock outstanding. The Company is regulated under the Bank Holding Company Act of1956,* as amended (“BHC Act”) and is subject to inspection, examination, and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

On* April 18, 2019,the Company completed the registration of its common stock with the Securities and Exchange Commission (the “SEC”) through its filing of a General Form for Registration of Securities on Form10* (“Form10”), pursuant to Section12(b) of the Securities Exchange Act of1934. The Company is considered an accelerated filer effective with the filing of the* December 31, 2024Annual Report on Form10*-K. We are also a “smaller reporting company” as defined in Exchange Act Rule12b-2. As such, we* may*elect to comply with certain reduced public company reporting requirements in reports that we file with the SEC.

The Company was approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of* April**22,* 2019. We were approved to list depositary shares of preferred stock on the Nasdaq Capital Market under the symbol “MNSBP” as of* September 16, 2020.*Each depositary share represents a 1/40 th ownership interest in a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock.

In* September**2021,* MainStreet Bancshares, Inc. established MainStreet Community Capital, LLC, a wholly owned subsidiary, to be a community development entity (“CDE”). This CDE will be an intermediary vehicle for the provision of loans and investments in Low-Income Communities (“LICs”). In* January 2022,*the Community Development Financial Institutions Fund (“CDFI”) of the United States Department of the Treasury certified MainStreet Community Capital, LLC as a registered CDE. MainStreet Community Capital's primary business objective is to apply for and receive New Market Tax Credit ("NMTC") allocations that are awarded and distributed annually.

The Bank is headquartered in Fairfax, Virginia where it also operates a branch. The Bank was incorporated on* March28,* 2003, and received its charter from the Bureau of Financial Institutions of the Commonwealth of Virginia (the “Bureau”) on* March16,* 2004. The Bank commenced regular operations on* May**26,* 2004, and is supervised by the Bureau and the Federal Reserve. The Bank is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. The Bank places special emphasis on serving the needs of retail customers, small and medium-sized businesses and professionals in the Washington, D.C. metropolitan area.

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Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim information and with the instructions to the Quarterly Report on Form10-Q, as applicable to a smaller reporting company. Accordingly, they donot include all the information and notes required by US GAAP for complete financial statements.

The financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The balances as of* December 31, 2025* have been derived from the audited consolidated financial statements. These interim period financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Form10-K for the year ended* December 31, 2025*, filed by the Company with the SEC on* March 13, 2026.The results of operations for thethree* andsix months ended* June 30, 2026* arenot necessarily indicative of the results that* maybe expected for the year ending December 31, 2026*, or any other period. The Company’s significant accounting policies followed in preparation of the unaudited consolidated financial statements, are disclosed in Note1 of the Notes to Consolidated Financial Statements in the2025 Form10-K. There have beenno significant changes to the application of significant accounting policies since* December 31, 2025*.

Principles of Consolidation – The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, the Bank and MainStreet Community Capital, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from the estimates.

Recently Adopted Accounting Developments

There wereno accounting standard updates adopted in thesix months ended* June 30, 2026*.

Impact of Recently Issued Accounting Pronouncements

In* November 2024,the Financial Accounting Standards Board (FASB) issued ASU2024*-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses.” ASU2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that arenot separately disaggregated quantitatively. The FASB subsequently issued ASU2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date”, which amends the effective date of ASU2024-03 to clarify that all public business entities are required to adopt the guidance in ASU2024-03 in annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.Early adoption of ASU2024*-03 is permitted. Implementation of ASU2024-03 * maybe applied prospectively or retrospectively. The Company doesnot* expect the adoption of ASU2024-03 to have a material impact on its consolidated financial statements.

In* November 2025,the Financial Accounting Standards Board (FASB) issued ASU2025*-08, “Financial Instruments—Credit Losses (Topic326): Purchased Loans.” The amendments in this ASU expand the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. This ASU is effective for annual reporting periods beginning after* December 15, 2026,and for interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements havenot* yet been issued or made available for issuance. If an entity adopts this ASU in an interim reporting period, it should apply it as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. The Company doesnot expect the adoption of ASU2025-08 to have a material impact on its consolidated financial statements.

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Note2. Investment Securities

The following tables summarize the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at* June 30, 2026* and* December 31, 2025* and the corresponding amounts of gross unrealized gains and losses, which are recognized in accumulated other comprehensive income (loss) for securities available-for-sale. The Company didnot record an allowance for credit losses ("ACL") on its securities available-for-sale or held-to-maturity portfolio as of* June 30, 2026* and* December 31, 2025*.

Investment securities available-for-sale was comprised of the following:

Investment securities held-to-maturity was comprised of the following:

Investment securities available-for-sale was comprised of the following:

Investment securities held-to-maturity was comprised of the following:

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For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis. The primary indicators of credit quality for the Company’s HTM portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. All of the Company’s HTM securities with credit risk are obligations of states and political subdivisions. For HTM securities that arenot rated, the Company evaluates the capital levels of the bond issuers on a quarterly basis. The Company’s HTM securities ACL was immaterial at* June 30, 2026* and* December 31, 2025*.

The following table presents the amortized cost of HTM securities as of* June 30, 2026* and* December 31, 2025* by security type and credit rating:

As of* June 30, 2026* and* December 31, 2025*, the Company hadno securities held-to-maturity that were past due30 days or more as to principal or interest payments. The Company hadno securities held-to-maturity classified as non-accrual as of* June 30, 2026* and* December 31, 2025*.

The scheduled maturities of securities available-for-sale and held-to-maturity at* June 30, 2026* were as follows:

The scheduled maturities of securities available-for-sale and held-to-maturity at* December 31, 2025* were as follows:

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One security with a fair value of $0.4 million was pledged as collateral to secure public funds at* June 30, 2026* and* December 31, 2025*, respectively.

The following tables summarize the fair value and unrealized loss positions of securities available-for-sale as of* June 30, 2026* and* December 31, 2025*, aggregated by security type and length of time that individual securities have been in a continuous loss position:

The factors considered in evaluating securities for impairment include whether the Bank intends to sell the security, whether it is more likely thannot that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security’s entire amortized cost basis. These unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, causing bond prices to decline, and arenot attributable to credit deterioration. Additionally, the issuers continue to make timely principal and interest payments. As such, there wasno allowance for credit losses on available-for-sale securities at* June 30, 2026*. For the subordinated debt securities, the Company evaluates the capital levels of the issuers on a quarterly basis. The following description provides the number of investment positions in an unrealized loss position and approximate duration of that loss position.

At* June 30, 2026*, there were nine tax-exempt municipal securities with a fair value totaling$4.3 million andtwo subordinated debt securities totaling $1.2 million in an unrealized loss position of less than12 months. At* June 30, 2026*, there were twenty-one collateralized mortgage backed securities with fair values totaling$15.0 million, eighteen subordinated debt securities totaling$7.3 million, nineteen tax-exempt municipal securities with a fair value totaling$12.6 million, ten taxable municipal securities with fair values totaling$7.7 million, andfive government agency securities with a fair value totaling$0.5 million in an unrealized loss position of more than12 months.

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The Company periodically invests in New Market Tax Credit (NMTC) opportunities, related primarily to certain community development projects. The Company receives tax credits related to these investments, for which the Company typically acts as a limited partner and therefore doesnot exert control over the operating or financial policies of the partnerships. These tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. On* January 1, 2024,the Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method. At June 30, 2026* and* December 31, 2025*, the balance of the investments in new market tax credits was$9.5 million and $10.7 million and the balance of the investments in Low-Income Housing Tax Credits (“LIHTC”) was $6.7 million and $7.0 million. These balances, as well as thenonmarketable securities that donot qualify for equity method accounting in the amount of $7.0 million as of* June 30, 2026* and$7.3 million as of* December 31, 2025*, are reflected in the other assets line on the Consolidated Statements of Financial Condition. During thethree-month period ended* June 30, 2026* and2025, the Company recognized amortization expense for the NMTC investments of$0.6 million and$0.5 million, and $0.1 million and $0.2 million for the LIHTC investments, respectively, which was included within the income tax expense line item on the Consolidated Statements of Income and the depreciation, amortization, and accretion, net line item on the Consolidated Statements of Cash Flows. During thesix-month period ended* June 30, 2026* and2025, the Company recognized amortization expense for the NMTC investments of $1.3 million and $1.1 million, and $0.3 million and $0.3 million for the LIHTC investments.

The restricted securities line on the Consolidated Statements of Financial Condition consist of the Federal Reserve Bank and Federal Home Loan Bank of Atlanta (“FHLB”) stock in the amount of $5.2 million and $1.5 million resp ectively, as of* June 30, 2026*, compared to $5.2 million and $1.6 million, respectively, as of* December 31, 2025*. We also had $126,800 and $124,000 in Community Bankers Bank stock and Atlantic Community Bankers Bank stock, respectively as of* June 30, 2026* and* December 31, 2025*.

Note3. Loans Receivable

Loans receivable were comprised of the following:

The unsecured consumer loans above include $0.2 million and $0.2 million of overdrafts reclassified as loans at* June 30, 2026* and* December 31, 2025*, respectively.

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The following tables present the amortized cost basis by segments of the loan portfolio summarized by aging categories as of* June 30, 2026* and* December 31, 2025*:

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The following tables summarize the activity in the allowance for credit losses on loans by loan class for thethree andsix months ended* June 30, 2026and2025*.

Allowance for Credit Losses By Portfolio Segment

The following table is a summary of the Company's non-accrual loans by major categories for the periods indicated.

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The following table represents the accrued interest receivables written off by reversing interest income during thethree andsix months ended* June 30, 2026and2025*.

During thesix months ended* June 30, 2026*, $0.2 million of accrued interest reversed in2025 was recovered. For thesix months ended* June 30, 2026*, interest income on loans was impacted by $0.5 million in net reversals.

The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans:

The following table details the amortized cost of collateral dependent loans for the periods indicated:

As of* June 30, 2026* and* December 31, 2025*, there wasone residential real estate loan totaling $0.5 million in the process of foreclosure.

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The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a weighted average remaining life model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses, given the measurement methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generallynot recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically,one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another type of concession, such as principal forgiveness,* may*be granted.

The Company didnot modify any loans to borrowers experiencing financial difficulty during thesix months ended* June 30, 2026*. The following table shows the amortized cost basis of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of loans and type of concession granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty during thethree andsix months ended* June 30, 2025*.

The Company monitors loan payments on modified loans on an ongoing basis to determine how the loan is performing under the modification and if the loan is considered to have a payment default. Of the loans modified during the12 months prior to* June 30, 2026* to borrowers experiencing financial difficulties,three loans totaling$11.6 million were over30 days past due as of* June 30, 2026*. One of these past due loans, with an amortized cost of$3.4 million, is a multifamily loan that initially received an interest rate reduction, and had a payment default during thethree months ended* June 30, 2026*. Allthree of these past due loans are individually evaluated for credit losses as of* June 30, 2026*. Of the loans modified during the12 months prior to* June 30, 2025* to borrowers experiencing financial difficulties,six loans for $25.8 million were over30 days past due andnone had a payment default during thethree months ended* June 30, 2025*. Five of these past due loans were individually evaluated for credit losses and thesixth loan was included in the general pool for allowance for credit lossesas of* June 30, 2025*.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Credit quality risk ratings include regulatory classifications of Pass, Watch, Criticized (Special Mention), Classified (Substandard), Doubtful, and Loss. Loans classified as Pass have quality metrics to support that the loan will be repaid according to the terms established. Loans classified as Watch have similar characteristics as Pass loans with some emerging signs of financial weaknesses that should be monitored closer. Loans classified as Watch are included in the Pass totals in the following tables. Loans classified as Criticized have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses* may*result in deterioration of prospects for repayment. Loans classified as Classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified Doubtful have all the weaknesses inherent in Classified loans with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a Loss are considered uncollectible and are charged to the allowance for credit losses.

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The following tables summarize the recorded investment in the Company's loans by aggregate Pass and categories of Criticized and Classified within the Company’s internal risk rating system by year of origination as of* June 30, 2026* and* December 31, 2025*. The following tables also summarize gross charge-offs, by year of origination as of and for thesix months ended* June 30, 2026* and as of and for the year ended* December 31, 2025*.

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Unfunded Commitments

The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit isnot unconditionally cancellable (i.e., the commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans. The allowance for credit losses for unfunded loan commitments of $0.5 million at* June 30, 2026*, $0.3 million at* December 31, 2025*, and $0.3 million at * June 30, 2025*, is separately classified on the balance sheet.

The following table presents the balance and activity in the allowance for credit losses for off-balance sheet credit exposure for thethree andsix months ended* June 30, 2026* and2025, respectively.

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Note4. Derivatives and Risk Management Activities

The Company uses derivative financial instruments (“derivatives”) primarily to assist customers with their interest rate risk management objectives. The Company classifies these items as free standing derivatives consisting of customer accommodation interest rate loan swaps (“interest rate loan swaps”). The Company enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Company simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Company receives a floating rate. These back-to-back interest rate loan swaps qualify as financial derivatives with fair values reported in “Other assets” and “Other liabilities” in the Consolidated Statements of Financial Condition. Changes in fair value are recorded in other non-interest expense and net tozero because of the identical amounts and terms of the interest rate loan swaps.

The following tables summarize key elements of the Company’s derivative instruments as of* June 30, 2026* and* December 31, 2025*.

The Company is able to recognize fee income upon execution of the interest rate swap contract. The Company didnot record any interest rate swap fee income for thethree andsix months ended* June 30, 2026* or2025.

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Note5. Fair Value Presentation

In accordance with FASB ASC820, “Fair Value Measurements and Disclosure”, the Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there areno quoted market prices for the Bank’s various financial instruments. In cases where quoted market prices arenot available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates* may**not* be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market for the asset or liability in an orderly transaction (that is,not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques* may*be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is the most representative of fair value under current market conditions.

In accordance with the guidance, a hierarchy of valuation techniques is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Bank’s market assumptions. Thethree levels of the fair value hierarchy under FASB ASC820 based on thesetwo types of inputs are as follows:

Level1 –Valuation is based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level2 –Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.

Level3 –Valuation is based on model-based techniques that useone or more significant inputs or assumptions that are unobservable in the market.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following describes the valuation techniques used by the Bank to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

Securities available-for-sale

Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level1). If quoted market prices arenot available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and* maydetermine the fair value of identical or similar securities by using pricing models that consider observable market data (Level2*). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level3 of the valuation hierarchy. As of* June 30, 2026*, and* December 31, 2025*, the Bank’s entire portfolio of available-for-sale securities are considered to be Level2 securities, with the exception oftwo subordinated debt securities andone preferred stock security which are considered Level3. The securities are classified as Level3 because their fair values are determined using significant unobservable inputs. Due to limited market activity, management’s fair-value estimates approximate the securities’ amortized cost.

Derivative asset (liability) – interest rate swaps on loans

As discussed in “Note4: “Derivatives and Risk Management Activities”, the Bank recognizes interest rate swaps at fair value on a recurring basis. The Bank has contracted with athird party vendor to provide valuations for these interest rate swaps using standard valuation techniques and therefore classifies such interest rate swaps as Level2.

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The following tables provide the fair value for assets required to be measured and reported at fair value on a recurring basis as of* June 30, 2026* and* December 31, 2025*:

The table below shows the activity to the fair value of levelthree instruments during thesix months ended* June 30, 2026*.

(1) The change in fair value from* December 31, 2025* to* June 30, 2026* is due to accretion of the underlying preferred stock security given that it was purchased at a discount. The change in fair value isnot due to fluctuating market conditions.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

Individually evaluated loans

Loans are individually evaluated when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans donot share common risk characteristics and arenot included within the collectively evaluated loans for determining the allowance for credit losses. The measurement of loss associated with individually evaluated loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral for commercial loans* maybe in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level2*). However, if the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements ifnot considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level3). For consumer loans, the collateral* maybe automobiles or other personal property, which is valued based on the liquidation value of the type of underlying collateral (Level3*).

Refer to the table below for individually evaluated loans measured at fair value as of* June 30, 2026*. There wereno individually evaluated loans measured at fair value as of* December 31, 2025*.

Other real estate owned

Other real estate owned is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Bank. If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level3. OREO is measured at fair value on a nonrecurring basis. Any initial fair value adjustment is charged against the Allowance for Credit Losses. Subsequent fair value adjustments are recorded in the period incurred and included in other non-interest expense on the Consolidated Statements of Income.

Refer to the table below for OREO measured at fair value as of* June 30, 2026* and* December 31, 2025*.

Property held for sale

This real estate property is carried in the property held for sale line item on the Consolidated Statements of Financial Condition as of* June 30, 2026* at fair value, based upon the transactional price if available, or the appraised value of the property. Refer to Note8 for additional information on the property held for sale.

The following table summarizes the value of the Bank's assets as of* June 30, 2026* and* December 31, 2025* that were measured at fair value on a nonrecurring basis during the period:

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Fair Value of Financial Instruments

FASB ASC825, Financial Instruments, requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that arenot required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented* may**not* necessarily represent the underlying fair value of the Company. In accordance with ASC825, the Company uses the exit price notion, rather than the entry price notion, in calculating the fair values of financial instrumentsnot measured at fair value on a recurring basis.

The following tables reflect the carrying amounts and estimated fair values of the Company’s financial instruments whether ornot recognized on the Consolidated Statement of Financial Condition at fair value.

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The above information shouldnot be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies* maynot* be meaningful. Assumptions utilized in the aggregation of fair value of our loan portfolio include prepayment rates, probability of default and loss given default, and discount rates on cash flows. Ourthird party valuation utilizes average data by homogenous loan segments nationwide and* maynot* properly reflect the characteristics of our specific portfolio. There wereno changes in methodologies or transfers between levels during the periods ended* June 30, 2026* and* December 31, 2025*.

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Note6. Earnings Per Common Share

Basic earnings per common share excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock which then shared in the earnings of the Company. There wereno such potentially dilutive securities outstanding in2026 or2025.

The weighted average number of shares used in the calculation of basic and diluted earnings per common share includes nonvested restricted shares of the Company’s common stock outstanding. Applicable guidance requires that outstanding nonvested share-based payment awards that contain voting rights and rights to non-forfeitable dividends participate in undistributed earnings with common shareholders.

Note7. Accumulated Other Comprehensive Loss

The following table presents the cumulative balances of the components of accumulated other comprehensive loss, net of deferred taxes, as of* June 30, 2026*,* December 31, 2025*, and* June 30, 2025*.

There wereno reclassifications during the periods ending* June 30, 2026*,* December 31, 2025*, and* June 30, 2025*.

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Note8: Property Held For Sale

During thethree months ended* June 30, 2025,the Company acquired a building complex for possible future bank premises. The complex consisted ofthree buildings and the associated land. Two buildings were designated as held for sale upon acquisition and are in the property held for sale line item on the Consolidated Statements of Financial Condition as of June 30, 2026*. The sales of thetwo buildings are currently expected to close in2026. The carrying amount of thetwo buildings designated as held for sale was $2.8 million as of* June 30, 2026*.

Note 9: Segment Reporting

The Company’s reportable segment is determined by the CFO, who is the designated chief operating decision maker, based upon information provided about the Company’s products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Company’s business components by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance and in the determination of allocating resources. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results, are used in assessing performance and establishing compensation. Interest on loans and investments and fees from deposit accounts, provide the revenues in the core banking operation. Interest expense, provision for credit losses, and salaries provide the significant expenses in the core banking operation. All operations are domestic. The results of operations for the Company’s single reporting segment are shown within the Consolidated Statements of Income and Consolidated Statements of Financial Condition.