MainStreet Bancshares, Inc.

Previous wording

The following discussion and analysis is intended as a review of significant factors affecting the Company’s consolidated financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K, which contains audited consolidated financial statements of the Company as of and for the year ended December 31, 2025, previously filed with the SEC on March 13, 2026. Results for the three and six months ended June 30, 2026 are not necessarily indicative of results for the year ending December 31, 2026 or any future period.

Current wording

The following discussion and analysis is intended as a review of significant factors affecting the Company’s consolidated financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K, which contains audited consolidated financial statements of the Company as of and for the year ended December 31, 2025, previously filed with the SEC on March 13, 2026. Results for the three and nine months ended September 30, 2026 are not necessarily indicative of results for the year ending December 31, 2026 or any future period.

Previous wording

MainStreet Bank is a community commercial bank incorporated in and chartered by the Commonwealth of Virginia. The Bank is a member of the Federal Reserve Bank of Richmond, and its deposits are insured by the FDIC. The Bank opened for business on May 26, 2004, and is headquartered in Fairfax, Virginia. We currently operate seven Bank branches; located in Herndon, Fairfax, McLean, Clarendon, Leesburg, and Middleburg in Virginia, and one in Washington D.C. The Bank has one subsidiary, a limited liability company, that it uses to hold real estate acquired through foreclosure.

Current wording

MainStreet Bank is a community commercial bank incorporated in and chartered by the Commonwealth of Virginia. The Bank is a member of the Federal Reserve Bank of Richmond, and its deposits are insured by the FDIC. The Bank opened for business on May 26, 2004, and is headquartered in Fairfax, Virginia. We currently operate seven Bank branches; located in Herndon, Fairfax, McLean, Clarendon, Leesburg, and Middleburg in Virginia, and one in Washington D.C. The Bank has five subsidiaries, which are limited liability companies, that it uses to hold real estate acquired through foreclosure.

Previous wording

Total interest income decreased$2.2 million for the three months ended June 30, 2026 from the same period in 2025. The decrease was primarily the result of a decrease in interest and fees on loans of$1.7 million, which was impacted bythe collection of $1.3 million of accrued interest on a fully repaid non-accrual loan duringthe three months ended June 30, 2025. Total interest expense decreased $1.6 million for thethree months ended June 30, 2026 from the same period in 2025 due to decreases in deposit interest expense described below. Net interest income decreased $0.6 million for the three months ended June 30, 2026 from the same period in 2025. The provision for credit losseswas $0.6 million for the three months ended June 30, 2026 compared to a recovery of credit losses of $0.5 million for the three months ended June 30, 2025. Non-interest income decreased $0.2 million for the three months ended June 30, 2026 from the same period in 2025. Thedecrease in non-interest income was primarily due to the gain on retirement of subordinated debt of $68,000 and gain on equity securities of $103,000 that took place during thethree months ended June 30, 2025 but not in thethree months ended June 30, 2026. Non-interest expense decreased by$2.2 million for thethree months ended June 30, 2026 compared to the same period in 2025, primarily due to decreases in salaries and employee benefits, outside services, furniture and equipment, advertising and marketing, and FDIC insurance expenses. Net income increased $0.1 million to$4.7 million for thethree months ended June 30, 2026 from$4.6 million for thethree months ended June 30, 2025.

Current wording

Total interest income increased$0.7 million for the three months ended September 30, 2026 from the same period in 2025. The increase was primarily the result of an increase in interest and fees on loans of$1.2 million. Total interest expense decreased $0.9 million for thethree months ended September 30, 2026 from the same period in 2025 due to decreases in deposit interest expense described below. Net interest income increased $1.7 million for the three months ended September 30, 2026 from the same period in 2025. The provision for credit losseswas $1.9 million for the three months ended September 30, 2026 compared to provision for credit losses of $0.1 million for the three months ended September 30, 2025. Non-interest income decreased $0.5 million for the three months ended September 30, 2026 from the same period in 2025. Non-interest expense increased by$0.2 million for thethree months ended September 30, 2026 compared to the same period in 2025. Net income decreased $0.9 million to$3.6 million for thethree months ended September 30, 2026 from$4.5 million for thethree months ended September 30, 2025.

Previous wording

Total interest income decreased $2.2 million or 6.4%, to $32.2 million for the three months ended June 30, 2026 from $34.4 million for the three months ended June 30, 2025, on a tax equivalent basis. The decrease was primarily the result of a decrease in interest and fees on loans of$1.7 million, which was impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan duringthe three months ended June 30, 2025. Total average interest-earning assets increased$64.3 million, to$2.08 billion for the three months ended June 30, 2026 from$2.02 billion for the same period in 2025 primarily because of an increase of$100.2 million in the average balance of loans offset by a decrease of $32.8 million in the average balance of federal funds sold and interest bearing deposits at other financial institutions and a$3.0 million decrease in the average balance of investment securities. The average yield on our interest-earning assets decreased 64 basis points to 6.20% for the three months ended June 30, 2026 as compared to 6.84% for thethree months ended June 30, 2025, which was impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan duringthe three months ended June 30, 2025. For the three months ended June 30, 2026, the Company reversed$108,000 in accrued interest income in relation to loans placed on non-accrual, as compared to$128,000 for thethree months ended June 30, 2025. During the three months ended June 30, 2026, $34,000 of accrued interest reversed in 2025 was recovered, for a net adjustment of $74,000 to interest income.

Current wording

Total interest income increased $0.7 million or 2.3%, to $33.3 million for the three months ended September 30, 2026 from $32.5 million for the three months ended September 30, 2025, on a tax equivalent basis. The increase was primarily the result of an increase in interest and fees on loans of$1.2 million. Total average interest-earning assets increased$112.6 million, to$2.11 billion for the three months ended September 30, 2026 from$1.99 billion for the same period in 2025 primarily because of an increase of$145.6 million in the average balance of loans offset by a decrease of $29.8 million in the average balance of federal funds sold and interest bearing deposits at other financial institutions and a$3.3 million decrease in the average balance of investment securities. The average yield on our interest-earning assets decreased 20 basis points to 6.27% for the three months ended September 30, 2026 as compared to 6.47% for thethree months ended September 30, 2025. For the three months ended September 30, 2026, the Company reversed$0.2 million in accrued interest income in relation to loans placed on non-accrual, as compared to$0.6 million for thethree months ended September 30, 2025.

Previous wording

Interest and fees on loans decreased $1.7 million, to$30.7 million for the three months ended June 30, 2026 from$32.4 million for the same period in 2025. There was a 73 basis point decrease in the average loans yields, which was 6.42% for the three months ended June 30, 2026 compared to 7.15% for thethree months ended June 30, 2025. Both of these decreases were primarily impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan duringthe three months ended June 30, 2025. The average balance of loans increased$100.2 million for the three months ended June 30, 2026 as compared to thethree months ended June 30, 2025. The weighted average interest rate of loans originated during the three months ended June 30, 2026 was 7.00%.

Current wording

Interest and fees on loans increased $1.2 million, to$31.8 million for the three months ended September 30, 2026 from$30.7 million for the same period in 2025. There was a 27 basis point decrease in the average loans yields, which was 6.48% for the three months ended September 30, 2026 compared to 6.75% for thethree months ended September 30, 2025. The Company is targeting loan growth in the Commercial Real Estate Owner Occupied and Commercial & Industrial segments, which are more competitive than other loan segments and can come with tighter spreads. The average balance of loans increased$145.6 million for the three months ended September 30, 2026 as compared to thethree months ended September 30, 2025.

Previous wording

Interest income on federal funds sold and interest-earning deposits decreased by $0.5 million to $0.6 million for the three months ended June 30, 2026, from $1.1 million for the three months ended June 30, 2025. The average balance of interest-earning deposits and federal funds sold decreased $32.8 million to $75.5 million for the three months ended June 30, 2026 from $108.3 million for the same period in 2025. The average yield on federal funds sold and interest-earning deposits decreased to 3.40% for the three months ended June 30, 2026 from 4.24% for the same period in 2025.

Current wording

Interest income on federal funds sold and interest-earning deposits decreased by $0.4 million to $0.6 million for the three months ended September 30, 2026, from $1.1 million for the three months ended September 30, 2025. The average balance of interest-earning deposits and federal funds sold decreased $29.8 million to $71.2 million for the three months ended September 30, 2026 from $100.9 million for the same period in 2025. Portions of the loan growth during the three months ended September 30, 2026 were funded with available cash. The average yield on federal funds sold and interest-earning deposits decreased to 3.50% for the three months ended September 30, 2026 from 4.21% for the same period in 2025.

Previous wording

Interest on investment securities was$0.8 million for the three months ended June 30, 2026 and $0.8 million for the three months ended June 30, 2025 on a fully tax-equivalent basis. Interest on investments in U.S. Government Agencies and U.S. Municipals was $0.4 million for the three months ended June 30, 2026 and $0.4 million for the three months ended June 30, 2025. Interest on mortgage-backed securities was$0.1 million and$0.1 million for the three months ended June 30, 2026 and June 30, 2025. Subordinated debt interest income was$0.2 million for the three months ended June 30, 2026, and$0.1 million for thethree months ended June 30, 2025. The average yield on taxable securities increased 18 basis points, to 3.45% and the average yield on tax-exempt securities increased 23 basis points, to 4.06% on a tax equivalent basis for the three months ended June 30, 2026, compared tothe same period in 2025. Due to the increase in average yield, interest on investment securities increased despite the average balance of investment securities decreasing by$3.0 million, to$85.3 million for the three months ended June 30, 2026, from$88.3 million for thethree months ended June 30, 2025.

Current wording

Interest on investment securities was$0.8 million for the three months ended September 30, 2026 and $0.8 million for the three months ended September 30, 2025 on a fully tax-equivalent basis. Interest on investments in U.S. Government Agencies and U.S. Municipals was $0.4 million for the three months ended September 30, 2026 and September 30, 2025. Interest on mortgage-backed securities was$0.1 million for the three months ended September 30, 2026 and September 30, 2025. Subordinated debt interest income was$0.2 million for the three months ended September 30, 2026, and$0.1 million for thethree months ended September 30, 2025. The average yield on taxable securities increased 29 basis points, to 3.57% and the average yield on tax-exempt securities increased 22 basis points, to 4.07% on a tax equivalent basis for the three months ended September 30, 2026, compared tothe same period in 2025. Due to the increase in average yield, interest on investment securities increased slightly despite the average balance of investment securities decreasing by$3.3 million, to$84.7 million for the three months ended September 30, 2026, from$87.9 million for thethree months ended September 30, 2025.

Previous wording

Total interest expense decreased $1.6 million to$13.9 million for the three months ended June 30, 2026 from$15.5 million for thethree months ended June 30, 2025, primarily due to a$1.8 million decrease in interest expense on interest bearing deposits and offset by a$0.1 million increase in total interest expense paid on borrowings.

Current wording

Total interest expense decreased $0.9 million to$14.4 million for the three months ended September 30, 2026 from$15.4 million for thethree months ended September 30, 2025, primarily due to a$1.1 million decrease in interest expense on interest bearing deposits and offset by a$0.2 million increase in total interest expense paid on borrowings.

Previous wording

Interest expense on deposits decreased $1.8 million to$12.9 million for the three months ended June 30, 2026 from$14.7 million for thethree months ended June 30, 2025 primarily as a result of a decrease in yields on cost of funds. Theaverage balance of interest-bearing deposits increased by$40.0 million to$1.54 billion during the three months ended June 30, 2026 as compared to$1.50 billion for thethree months ended June 30, 2025. Theincrease in the average balance of interest-bearing deposits was primarily a result of a$59.5 million increase in the average balance of money market deposit accounts and a$22.0 million increase in the average balance of savings and NOW deposits, offset by a$43.0 million decrease in the average balance of time deposits, during the three months ended June 30, 2026 as compared to thethree months ended June 30, 2025. The average cost of interest-bearing deposits was 3.38% for the three months ended June 30, 2026, compared to 3.94% for thethree months ended June 30, 2025. The average rate paid on money market deposits decreased 60 basis points to 3.34% for the three months ended June 30, 2026 from 3.94% for thethree months ended June 30, 2025. The average rate paid on interest-bearing demand deposits decreased 55 basis points to 3.03% for the three months ended June 30, 2026 from 3.58% for thethree months ended June 30, 2025. The average rate paid on savings and NOW deposits decreased 12 basis points to 1.20% for the three months ended June 30, 2026 from 1.32% for thethree months ended June 30, 2025. The average cost of time deposits decreased by 52 basis points to 3.87% for the three months ended June 30, 2026 as compared to 4.39% for thethree months ended June 30, 2025. The average balance of non-interest bearing demand deposits and other liabilities increased $24.3 million to$378.9 million for the three months ended June 30, 2026, compared to$354.6 million for thethree months ended June 30, 2025.

Current wording

Interest expense on deposits decreased $1.1 million to$13.4 million for the three months ended September 30, 2026 from$14.5 million for thethree months ended September 30, 2025 primarily as a result of a decrease in yields on cost of funds. Theaverage balance of interest-bearing deposits increased by$99.3 million to$1.58 billion during the three months ended September 30, 2026 as compared to$1.48 billion for thethree months ended September 30, 2025. Theincrease in the average balance of interest-bearing deposits was primarily a result of an$83.7 million increase in the average balance of money market deposit accounts and a$25.8 million increase in the average balance of savings and NOW deposits, offset by an $8.0 million decrease in the average balance of interest bearing demand deposits and a$2.2 million decrease in the average balance of time deposits, during the three months ended September 30, 2026 as compared to thethree months ended September 30, 2025. The average cost of interest-bearing deposits was 3.37% for the three months ended September 30, 2026, compared to 3.91% for thethree months ended September 30, 2025. The average rate paid on money market deposits decreased 61 basis points to 3.34% for the three months ended September 30, 2026 from 3.95% for thethree months ended September 30, 2025. The average rate paid on interest-bearing demand deposits decreased 63 basis points to 2.91% for the three months ended September 30, 2026 from 3.54% for thethree months ended September 30, 2025. The average rate paid on savings and NOW deposits decreased 31 basis points to 1.24% for the three months ended September 30, 2026 from 1.55% for thethree months ended September 30, 2025. The average cost of time deposits decreased by 44 basis points to 3.86% for the three months ended September 30, 2026 as compared to 4.30% for thethree months ended September 30, 2025. The average balance of non-interest bearing demand deposits and other liabilities increased $15.5 million to$371.1 million for the three months ended September 30, 2026, compared to$355.6 million for thethree months ended September 30, 2025.

Previous wording

Net interest income decreased approximately $0.6 million, or 2.9%, to $18.3 million for the three months ended June 30, 2026 from $18.9 million for thethree months ended June 30, 2025, on a tax equivalent basis. Our net interest-earning assets increased $16.9 million to$465.8 million for the three months ended June 30, 2026 from$449.0 million for thethree months ended June 30, 2025. The interest rate spread decreased by 11 basis points to 2.76% for the three months ended June 30, 2026 from 2.87% for thethree months ended June 30, 2025, on a tax equivalent basis. The net interest margin decreased by 22 basis points from 3.75% for thethree months ended June 30, 2025 to 3.53% for the three months ended June 30, 2026 on a tax equivalent basis. These decreases were primarily impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan duringthe three months ended June 30, 2025. The interest rate spread and net interest margin are more comparable for the three months ended June 30, 2026 and thethree months ended June 30, 2025 if the interest recovery is excluded. Refer to “Use of Certain Non-GAAP Financial Measures,” below, for a reconciliation of adjusted net interest margin.

Current wording

Net interest income increased approximately $1.7 million, or 9.8%, to $18.9 million for the three months ended September 30, 2026 from $17.2 million for thethree months ended September 30, 2025, on a tax equivalent basis. Our net interest-earning assets increased $7.6 million to$452.6 million for the three months ended September 30, 2026 from$445.1 million for thethree months ended September 30, 2025. The interest rate spread increased by 28 basis points to 2.81% for the three months ended September 30, 2026 from 2.53% for thethree months ended September 30, 2025, on a tax equivalent basis. The net interest margin increased by 13 basis points from 3.42% for thethree months ended September 30, 2025 to 3.55% for the three months ended September 30, 2026 on a tax equivalent basis. Refer to “Use of Certain Non-GAAP Financial Measures,” below, for a reconciliation of adjusted net interest margin.

Previous wording

The provision for credit losses, which is an operating expense, is maintained to ensure that the allowance for credit losses is maintained at levels we consider necessary and appropriate to absorb expected credit losses as of the balance sheet date. In determining the level of the allowance for credit losses on loans and off-balance sheet credit exposure, we consider past and current loss experience, evaluations of real estate collateral, current and future economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing loans. The amount of the allowance is based on estimates, and actual losses may vary from such estimates as more information becomes available over time or economic conditions change. This evaluation is inherently subjective, as it requires estimates and assumptions that are susceptible to signif icant revision as circumstances change or as more information becomes available. The allowance for credit losses is assessed monthly and provisions are made for credit losses as required in order to maintain the overall allowance.

Current wording

The provision for credit losses, which is an operating expense, is maintained to ensure that the allowance for credit losses is maintained at levels we consider necessary and appropriate to absorb expected credit losses as of the balance sheet date. In determining the level of the allowance for credit losses on loans and off-balance sheet credit exposure, we consider past and current loss experience, evaluations of real estate collateral, current and future economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing loans. The amount of the allowance is based on estimates, and actual losses may vary from such estimates as more information becomes available over time or economic conditions change. This evaluation is inherently subjective, as it requires estimatesand assumptions that are susceptible to significant revision as circumstances change or as more information becomes available. The allowance for credit losses is assessed monthly and provisions are made for credit losses as required in order to maintain the overall allowance.

Previous wording

The provision for credit losses on loans was $0.2 million for the three months ended June 30, 2026 given loan growth during the period, compared to a recovery of credit losses on loans of $0.5 million for the three months ended June 30, 2025. Loan originations, which totaled approximately$50.9 million for the three months ended June 30, 2025 increased $57.6 million to$108.5 million for the three months ended June 30, 2026. During the three months ended June 30, 2026, there were no charge-offs incurred and recoveries of$14,000 were received. During the three months ended June 30, 2025, there were$0.6 million in charge-offs incurred and recoveries of$0.7 million were received.

Current wording

The provision for credit losses on loans was$2.3 million for the three months ended September 30, 2026, compared to a recovery of credit losses on loans of$0.1 million for the three months ended September 30, 2025. The provision for credit losses on loans increased largelydue to the impact of a $1.4 million charge off in the commercial real estate portfolio tied to the sale of real property held as collateral and the resulting impact on the forecasted loss rates applied to pooled loans. During the three months ended September 30, 2026, there were $1.8 million charge-offs incurred and recoveries of$0.1 million were received. During the three months ended September 30, 2025, there were$0.2 million in charge-offs incurred and recoveries of$0.1 million were received. Loan originations, which totaled approximately$82.3 million for the three months ended September 30, 2025 decreased $36.3 million to$46.0 million for the three months ended September 30, 2026.

Previous wording

Theprovision for credit losses on off-balance sheet credit exposure was$0.3 million for the three months ended June 30, 2026 compared to arecovery of credit losses of$15,000 for thethree months ended June 30, 2025. Theprovision for credit losses on off-balance sheet credit exposure for the three months ended June 30, 2026 was primarily related to increases in unfunded commitment levels and fluctuations in utilization rates.

Current wording

Therecovery of credit losses on off-balance sheet credit exposure was$0.4 million for the three months ended September 30, 2026 compared to aprovision for credit losses of$0.2 million for thethree months ended September 30, 2025. Therecovery of credit losses on off-balance sheet credit exposure for the three months ended September 30, 2026 was primarily related to decreases in unfunded commitment levels and an increase in utilization rates.

Previous wording

Non-interest expense decreased $2.2 million, or 15.1%, to$12.5 million for the three months ended June 30, 2026, from$14.7 million for the three months ended June 30, 2025 primarily because of continued expense management efforts across the Company. Salaries and employee benefits decreased$0.8 million to$7.5 million for the three months ended June 30, 2026, from$8.3 million for the three months ended June 30, 2025 due to a decrease in full time employees compared to last year. Outside services, which includes professional fees for attorneys, accountants, consultants, and cloud services, decreased $0.8 million to$0.4 million for the three months ended June 30, 2026, from$1.3 million for the three months ended June 30, 2025. Furniture and equipment expenses decreased approximately$0.4 million to$0.8 million for the three months ended June 30, 2026, from$1.1 million for the three months ended June 30, 2025. FDIC insurance expense decreased $0.4 million to $0.5 million for the three months ended June 30, 2026, from $0.9 million for the three months ended June 30, 2025, due to the stabilized level of deposits compared to the temporary surge experienced at the end of 2025. Advertising and marketing expense decreased $0.1 million to $0.4 millionfor the three months ended June 30, 2026, from $0.5 million for the three months ended June 30, 2025. Other operating expenses increased $0.4 million to $1.6 million for the three months ended June 30, 2026, from $1.2 million primarily due to workout expenses as we work through a small number of problem credits.

Current wording

Non-interest expense increased $0.2 million, or 1.7%, to$12.9 million for the three months ended September 30, 2026, from$12.7 million for the three months ended September 30, 2025. Other operating expenses increased $0.4 million to $1.6 million for the three months ended September 30, 2026, from $1.2 million primarily due to workout expenses as we work through a small number of problem credits. Salaries and employee benefits increased $0.3 million to$7.6 million for the three months ended September 30, 2026, from$7.4 million for the three months ended September 30, 2025. Other real estate owned expenses were $0.2 million for the three months ended September 30, 2026 compared to none for the three months ended September 30, 2025. Outside services, which includes professional fees for attorneys, accountants, consultants, and cloud services, decreased $0.2 million to$0.4 million for the three months ended September 30, 2026, from$0.6 million for the three months ended September 30, 2025. Advertising and marketing expense decreased $0.2 million to $0.4 million for the three months ended September 30, 2026, from $0.6 million for the three months ended September 30, 2025.

Previous wording

Income tax expense increased $0.3 million or 27.5%, to$1.4 million for the three months ended June 30, 2026 from$1.1 million for the three months ended June 30, 2025. Theincrease in federal income tax expense for the three months ended June 30, 2026 compared to the same period a year ago was driven by increased estimated tax rates and theincrease in income before income taxes of$0.4 million, to income before income tax of$6.0 million for the three months ended June 30, 2026 compared to income before income tax expense of$5.7 million for the same period in the prior year. The Company accrues taxes based on an estimated tax rate basis using inputs and assumptions about pre-tax income. As the inputs and assumptions change, the estimated tax accruals will change throughout the year. The Company also invests in projects that have tax credit benefits in order to help reduce its overall tax liability, timing of these tax credits are layered into our overall assessment. At June 30, 2026, these tax credits exceed the total tax liability and therefore, are not fully utilized, which causes the effective income tax expense rate to increase. For the three months ended June 30, 2026, the Company had an effective income tax expense rate of 22.52%, compared to 18.82% for the three months ended June 30, 2025. The Company has included assessments in income tax expense for potential state tax liabilities which totaled$0.2 million for the three months ended June 30, 2026 and$0.1 million for thethree months ended June 30, 2025.

Current wording

Income tax expense increased $0.1 million or 15.8%, to$1.0 million for the three months ended September 30, 2026 from$0.9 million for the three months ended September 30, 2025. Theincrease in federal income tax expense for the three months ended September 30, 2026 compared to the same period a year ago was driven by increased estimated tax rates. The Company accrues taxes based on an estimated tax rate basis using inputs and assumptions about pre-tax income. As the inputs and assumptions change, the estimated tax accruals will change throughout the year. The Company also invests in projects that have tax credit benefits in order to help reduce its overall tax liability, timing of these tax credits are layered into our overall assessment. At September 30, 2026, these tax credits exceed the total tax liability and therefore, are not fully utilized, which causes the effective income tax expense rate to increase. For the three months ended September 30, 2026, the Company had an effective income tax expense rate of 22.37%, compared to 16.55% for the three months ended September 30, 2025. As earnings accelerate and the Company is able to fully utilize these tax credits, we anticipate our effective rate to decrease. The Company has included assessments in income tax expense for potential state tax liabilities which totaled$0.1 million for the three months ended September 30, 2026 and$0.1 million for thethree months ended September 30, 2025.

Previous wording

Comparison of Statements of Income for the Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of Statements of Income for the Nine Months Ended September 30, 2026 and 2025

Previous wording

Total interest income decreased $3.9 million for the six months ended June 30, 2026 from the same period in 2025. The decrease was primarily the result of adecrease in interest and fees on loans of$3.3 million, which was primarily due to interest rate changes and was also impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thesix months ended June 30, 2025. Total interest expense decreased $4.4 million for thesix months ended June 30, 2026 from the same period in 2025 due to decreases in deposit interest expense described below. Net interest income increased $0.4 million for thesix months ended June 30, 2026 from the same period in 2025. The provision for credit losses was $0.5 million for thesix months ended June 30, 2026 compared to a recovery of credit losses of$0.5 million for thesix months ended June 30, 2025. Non-interest income decreased $0.7 million for thesix months ended June 30, 2026 from the same period in 2025. Thedecrease in non-interest income was primarily due to a$0.7 million loss on sale of other real estate owned. Non-interest expense decreased by$3.9 million for thesix months ended June 30, 2026 compared to the same period in 2025, primarily due to decreases in salaries and employee benefits, outside services, furniture and equipment, advertising and marketing, and FDIC insurance expenses. Net income increased $1.7 million to$8.8 million for thesix months ended June 30, 2026 from$7.0 million for thesix months ended June 30, 2025.

Current wording

Total interest income decreased $3.2 million for the nine months ended September 30, 2026 from the same period in 2025. The decrease was primarily the result of adecrease in interest and fees on loans of$2.1 million, which was primarily due to interest rate changes and was also impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thenine months ended September 30, 2025. Total interest expense decreased $5.3 million for thenine months ended September 30, 2026 from the same period in 2025 due to decreases in deposit interest expense described below. Net interest income increased $2.1 million for thenine months ended September 30, 2026 from the same period in 2025. The provision for credit losses was $2.4 million for thenine months ended September 30, 2026 compared to a recovery of credit losses of$0.4 million for thenine months ended September 30, 2025. Non-interest income decreased $1.2 million for thenine months ended September 30, 2026 from the same period in 2025. Non-interest expense decreased by$3.7 million for thenine months ended September 30, 2026 compared to the same period in 2025, primarily due to decreases in salaries and employee benefits and outside services. Net income increased $0.8 million to$12.4 million for thenine months ended September 30, 2026 from$11.6 million for thenine months ended September 30, 2025.

Previous wording

Total interest income decreased $3.9 million or 5.8%, to $63.5 million for the six months ended June 30, 2026 from $67.4 million for thesix months ended June 30, 2025, on a tax equivalent basis. The decrease was primarily the result of a decrease in interest and fees on loans of$3.3 million, which was primarily due to interest rate changes and was impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thesix months ended June 30, 2025. Total average interest-earning assets increased $33.4 million, to$2.07 billion for thesix months ended June 30, 2026 from $2.03 billion for the same period in 2025 primarily because of anincrease of$57.4 million in the average balance of loans offset by adecrease of$21.2 million in the average balance of federal funds sold and interest bearing deposits at other financial institutions and a$2.7 million decrease in the average balance of investment securities. The average yield on our interest-earning assets decreased 50 basis points to 6.19% for thesix months ended June 30, 2026 as compared to 6.69% for thesix months ended June 30, 2025, which was primarily due to interest rate changes and was also impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thesix months ended June 30, 2025.

Current wording

Total interest income decreased $3.2 million or 3.2%, to $96.7 million for the nine months ended September 30, 2026 from $99.9 million for thenine months ended September 30, 2025, on a tax equivalent basis. The decrease was primarily the result of a decrease in interest and fees on loans of$2.1 million, which was primarily due to interest rate changes and was impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thenine months ended September 30, 2025. Total average interest-earning assets increased $63.8 million, to$2.08 billion for thenine months ended September 30, 2026 from $2.02 billion for the same period in 2025 primarily because of anincrease of$90.8 million in the average balance of loans offset by adecrease of$24.1 million in the average balance of federal funds sold and interest bearing deposits at other financial institutions and a$2.9 million decrease in the average balance of investment securities. The average yield on our interest-earning assets decreased 41 basis points to 6.22% for thenine months ended September 30, 2026 as compared to 6.63% for thenine months ended September 30, 2025, which was primarily due to interest rate changes and was also impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thenine months ended September 30, 2025.

Previous wording

Interest and fees on loans decreased $3.3 million, to$60.3 million for thesix months ended June 30, 2026 from$63.6 million for the same period in 2025. There was a 57 basis point decrease in the average loans yields, which was 6.42% for thesix months ended June 30, 2026 compared to 6.99% for thesix months ended June 30, 2025. These decreases were primarily due to interest rate changes and were impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thesix months ended June 30, 2025. The average balance of loans increased $57.4 million for thesix months ended June 30, 2026 as compared to thesix months ended June 30, 2025. The weighted average interest rate of loans originated during the six months ended June 30, 2026 was 6.98%.

Current wording

Interest and fees on loans decreased $2.1 million, to$92.1 million for thenine months ended September 30, 2026 from$94.2 million for the same period in 2025. There was a 48 basis point decrease in the average loans yields, which was 6.44% for thenine months ended September 30, 2026 compared to 6.92% for thenine months ended September 30, 2025. These decreases were primarily due to interest rate changes and were impacted by the collection of $1.3 million of accrued interest on a fully repaid non-accrual loan during thenine months ended September 30, 2025. Additionally, the Company is targeting loan growth in the Commercial Real Estate Owner Occupied and Commercial & Industrial segments, which are more competitive than other loan segments and can come with tighter spreads. The average balance of loans increased $90.8 million for thenine months ended September 30, 2026 as compared to thenine months ended September 30, 2025.

Previous wording

Interest income on federal funds sold and interest-earning deposits decreased by$0.7 million to$1.6 million for thesix months ended June 30, 2026, from$2.3 million for thesix months ended June 30, 2025. The average balance of interest-earning deposits and federal funds sold decreased $21.2 million to$88.8 million for thesix months ended June 30, 2026 from$110.0 million for the same period in 2025. The average yield on federal funds sold and interest-earning deposits decreased to 3.71% for thesix months ended June 30, 2026 from 4.24% for the same period in 2025.

Current wording

Interest income on federal funds sold and interest-earning deposits decreased by$1.1 million to$2.3 million for thenine months ended September 30, 2026, from$3.4 million for thenine months ended September 30, 2025. The average balance of interest-earning deposits and federal funds sold decreased $24.1 million to$82.8 million for thenine months ended September 30, 2026 from$106.9 million for the same period in 2025. The average yield on federal funds sold and interest-earning deposits decreased to 3.65% for thenine months ended September 30, 2026 from 4.23% for the same period in 2025 primarily due to federal funds effective rate changes during the three months ended December 31, 2025.

Previous wording

Interest on investment securities was$1.6 million for thesix months ended June 30, 2026 and$1.5 million for thesix months ended June 30, 2025 on a fully tax-equivalent basis. Interest on investments in U.S. Government Agencies and U.S. Municipals was$0.7 million for thesix months ended June 30, 2026 and$0.7 million for thesix months ended June 30, 2025. Interest on mortgage-backed securities was$0.2 million and$0.2 million for thesix months ended June 30, 2026 and June 30, 2025. Subordinated debt interest income was$0.3 million for thesix months ended June 30, 2026, and$0.3 million for thesix months ended June 30, 2025. The average yield on taxable securities increased 20 basis points, to 3.43% and the average yield on tax-exempt securities increased 24 basis points, to 4.07% on a tax equivalent basis for thesix months ended June 30, 2026, compared to the same period in 2025. Due to the increase in average yield, interest on investment securities increased despite the average balance of investment securities decreasing by$2.7 million, to$85.6 million for thesix months ended June 30, 2026, from$88.4 million for thesix months ended June 30, 2025.

Current wording

Interest on investment securities was$2.4 million for thenine months ended September 30, 2026 and$2.3 million for thenine months ended September 30, 2025 on a fully tax-equivalent basis. Interest on investments in U.S. Government Agencies and U.S. Municipals was$1.1 million for thenine months ended September 30, 2026 and September 30, 2025. Interest on mortgage-backed securities was$0.2 million and$0.3 million for thenine months ended September 30, 2026 and September 30, 2025. Subordinated debt interest income was$0.5 million for thenine months ended September 30, 2026, and$0.4 million for thenine months ended September 30, 2025, respectively. The average yield on taxable securities increased 23 basis points, to 3.48% and the average yield on tax-exempt securities increased 23 basis points, to 4.07% on a tax equivalent basis for thenine months ended September 30, 2026, compared to the same period in 2025. Due to the increase in average yield, interest on investment securities increased despite the average balance of investment securities decreasing by$2.9 million, to$85.3 million for thenine months ended September 30, 2026, from$88.2 million for thenine months ended September 30, 2025.

Previous wording

Total interest expense decreased $4.4 million to$27.6 million for thesix months ended June 30, 2026 from$31.9 million for thesix months ended June 30, 2025, primarily due to a$4.5 million decrease in interest expense on interest bearing deposits and a$58,000 increase in total interest expense paid on borrowings.

Current wording

Total interest expense decreased $5.3 million to$42.0 million for thenine months ended September 30, 2026 from$47.3 million for thenine months ended September 30, 2025, primarily due to a$5.6 million decrease in interest expense on interest bearing deposits offset by a$0.3 million increase in total interest expense paid on borrowings.

Previous wording

Interest expense on deposits decreased $4.5 million to$25.8 million for thesix months ended June 30, 2026 from$30.3 million for thesix months ended June 30, 2025 primarily as a result of a decrease in yields on cost of funds. Theaverage balance of interest-bearing deposits increased by$22.6 million to$1.53 billion during thesix months ended June 30, 2026 as compared to$1.51 billion for thesix months ended June 30, 2025. Theincrease in the average balance of interest-bearing deposits was primarily a result of a$44.4 million increase in the average balance of savings and NOW deposits, a$4.8 million increase in interest-bearing demand deposits, and a$7.1 million increase in the average balance of money market deposit accounts, offset by a$33.8 million decrease in the average balance of time deposits, during thesix months ended June 30, 2026 as compared to thesix months ended June 30, 2025. The average cost of interest-bearing deposits was 3.41% for thesix months ended June 30, 2026, compared to 4.06% for thesix months ended June 30, 2025. The average rate paid on money market deposits was 3.32% for thesix months ended June 30, 2026 compared to 3.96% for thesix months ended June 30, 2025. The average rate paid on interest-bearing demand deposits was 3.02% for thesix months ended June 30, 2026 compared to 3.69% for thesix months ended June 30, 2025. The average rate paid on savings and NOW deposits was 1.18% for thesix months ended June 30, 2026 compared to 1.32% for thesix months ended June 30, 2025. The average cost of time deposits was 3.94% for thesix months ended June 30, 2026 compared to 4.49% for thesix months ended June 30, 2025. The average balance of non-interest bearing demand deposits and other liabilities increased $20.1 million to$374.2 million for thesix months ended June 30, 2026, compared to$354.1 million for thesix months ended June 30, 2025.

Current wording

Interest expense on deposits decreased $5.6 million to$39.2 million for thenine months ended September 30, 2026 from$44.8 million for thenine months ended September 30, 2025 primarily as a result of a decrease in yields on cost of funds. Theaverage balance of interest-bearing deposits increased by$48.4 million to$1.54 billion during thenine months ended September 30, 2026 as compared to$1.50 billion for thenine months ended September 30, 2025. Theincrease in the average balance of interest-bearing deposits was primarily a result of a$38.2 million increase in the average balance of savings and NOW deposits, a$32.9 million increase in the average balance of money market deposit accounts, and a$1.3 million increase in interest-bearing demand deposits, offset by a$23.9 million decrease in the average balance of time deposits, during thenine months ended September 30, 2026 as compared to thenine months ended September 30, 2025. The average cost of interest-bearing deposits was 3.40% for thenine months ended September 30, 2026, compared to 4.01% for thenine months ended September 30, 2025. The average rate paid on money market deposits was 3.33% for thenine months ended September 30, 2026 compared to 3.96% for thenine months ended September 30, 2025. The average rate paid on interest-bearing demand deposits was 2.99% for thenine months ended September 30, 2026 compared to 3.66% for thenine months ended September 30, 2025. The average rate paid on savings and NOW deposits was 1.20% for thenine months ended September 30, 2026 compared to 1.41% for thenine months ended September 30, 2025. The average cost of time deposits was 3.92% for thenine months ended September 30, 2026 compared to 4.42% for thenine months ended September 30, 2025. The average balance of non-interest bearing demand deposits and other liabilities increased $18.5 million to$373.2 million for thenine months ended September 30, 2026, compared to$354.6 million for thenine months ended September 30, 2025.

Previous wording

Net interest income increased approximately$0.4 million, or 1.2%, to$35.9 million for thesix months ended June 30, 2026 from$35.4 million for thesix months ended June 30, 2025, on a tax equivalent basis. Our net interest-earning assets increased $10.1 million to$462.6 million for thesix months ended June 30, 2026 from$452.4 million for thesix months ended June 30, 2025. The interest rate spread increased by 11 basis points to 2.72% for thesix months ended June 30, 2026 from 2.61% for thesix months ended June 30, 2025, on a tax equivalent basis. The net interest margin decreased by 2 basis points from 3.52% for thesix months ended June 30, 2025 to 3.50% for thesix months ended June 30, 2026 on a tax equivalent basis. Refer to “Use of Certain Non-GAAP Financial Measures,” below, for a reconciliation of adjusted net interest margin.

Current wording

Net interest income increased approximately$2.1 million, or 4.0%, to$54.7 million for thenine months ended September 30, 2026 from$52.6 million for thenine months ended September 30, 2025, on a tax equivalent basis. Our net interest-earning assets increased $12.9 million to$459.2 million for thenine months ended September 30, 2026 from$446.3 million for thenine months ended September 30, 2025. The interest rate spread increased by 15 basis points to 2.75% for thenine months ended September 30, 2026 from 2.60% for thenine months ended September 30, 2025, on a tax equivalent basis. The net interest margin increased by 3 basis points from 3.49% for thenine months ended September 30, 2025 to 3.52% for thenine months ended September 30, 2026 on a tax equivalent basis. Refer to “Use of Certain Non-GAAP Financial Measures,” below, for a reconciliation of adjusted net interest margin.

Previous wording

The provision for credit losses, which is an operating expense, is maintained to ensure that the allowance for credit losses is maintained at levels we consider necessary and appropriate to absorb expected credit losses as of the balance sheet date. In determining the level of the allowance for credit losses on loans and off-balance sheet credit exposure, we consider past and current loss experience, evaluations of real estate collateral, current and future economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing loans. The amount of the allowance is based on estimates, and actual losses may vary from such estimates as more information becomes available over time or economic conditions change. This evaluation is inherently subjective, as it requires estimates and assumptions that are susceptible to signif icant revision as circumstances change or as more information becomes available. The allowance for credit losses is assessed monthly and provisions are made for credit losses as required in order to maintain the overall allowance.

Current wording

The provision for credit losses, which is an operating expense, is maintained to ensure that the allowance for credit losses is maintained at levels we consider necessary and appropriate to absorb expected credit losses as of the balance sheet date. In determining the level of the allowance for credit losses on loans and off-balance sheet credit exposure, we consider past and current loss experience, evaluations of real estate collateral, current and future economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing loans. The amount of the allowance is based on estimates, and actual losses may vary from such estimates as more information becomes available over time or economic conditions change. This evaluation is inherently subjective, as it requires estimates and assumptions that are susceptible to significant revision as circumstances change or as more information becomes available. The allowance for credit losses is assessed monthly and provisions are made for credit losses as required in order to maintain the overall allowance.

Previous wording

The provision for credit losses on loans was$0.2 million for thesix months ended June 30, 2026 given loan growth during the period, compared to a recovery of credit losses on loans of$0.5 million for thesix months ended June 30, 2025. Loan originations, which totaled approximately$96.8 million for thesix months ended June 30, 2025 increased $62.4 million to$159.2 million for thesix months ended June 30, 2026. During thesix months ended June 30, 2026, there were$0.3 million charge-offs incurred and recoveries of$37,000 were received. During thesix months ended June 30, 2025, there were$0.6 million charge-offs incurred and recoveries of$0.8 million were received.

Current wording

The provision for credit losses on loans was$2.6 million for thenine months ended September 30, 2026, compared to a recovery of credit losses on loans of$0.6 million for thenine months ended September 30, 2025. The provision for credit losses on loans increased largelydue to the impact of a $1.4 million charge off in the commercial real estate portfolio tied to the sale of real property held as collateral and the resulting impact on the forecasted loss rates applied to pooled loans, as well asdue to loan growth during thenine months ended September 30, 2026. During thenine months ended September 30, 2026, there were$2.1 million charge-offs incurred and recoveries of$0.2 million were received. During thenine months ended September 30, 2025, there were$0.9 million charge-offs incurred and recoveries of$0.8 million were received. Loan originations, which totaled approximately$169.8 million for thenine months ended September 30, 2025 increased $37.4 million to$207.2 million for thenine months ended September 30, 2026.

Previous wording

Theprovision for credit losses on off-balance sheet credit exposure was$0.2 million for thesix months ended June 30, 2026 compared to arecovery of credit losses of$15,000 for thesix months ended June 30, 2025. Theprovision for credit losses on off-balance sheet credit exposure for thesix months ended June 30, 2026 was primarily related to increases in unfunded commitment levels and fluctuations in utilization rates.

Current wording

Therecovery of credit losses on off-balance sheet credit exposure was$0.2 million for thenine months ended September 30, 2026 compared to aprovision for credit losses of$0.2 million for thenine months ended September 30, 2025. Therecovery of credit losses on off-balance sheet credit exposure for thenine months ended September 30, 2026 was primarily related to decreases in unfunded commitment levels and an increase in in utilization rates.

Previous wording

Non-interest income decreased $0.7 million, or 35.1%, to$1.3 million for thesix months ended June 30, 2026 from$2.0 million for thesix months ended June 30, 2025. Thedecrease in non-interest income was primarily due to a$0.7 million loss on the sale of other real estate owned during thesix months ended June 30, 2026. Additionally, the gain on retirement of subordinated debt of $128,000 and gain on equity securities of $103,000 that took place during thesix months ended June 30, 2025 were not recurring in thesix months ended June 30, 2026. These decreases are offset by an increase of $0.1 million in other non-interest income due to a prepayment fee recognized during thesix months ended June 30, 2026. The Company continues to focus on increasing non-interest income as it continues to add services that strategically benefit our customers.

Current wording

Non-interest income decreased $1.2 million, or 36.9%, to$2.0 million for thenine months ended September 30, 2026 from$3.1 million for thenine months ended September 30, 2025. Thedecrease in non-interest income was primarily due to$1.0 million in losses on the liquidation of other real estate owned during thenine months ended September 30, 2026. This decrease is offset by an increase of $0.1 million in other non-interest income due to prepayment fees recognized during thenine months ended September 30, 2026. Additionally, the gain on retirement of subordinated debt of $273,000 and gain on equity securities of $103,000 that took place during the nine months ended September 30, 2025 were not recurring in the nine months ended September 30, 2026. The Company continues to focus on increasing non-interest income as it continues to add services that strategically benefit our customers.

Previous wording

Non-interest expense decreased $3.9 million, or 13.3%, to$25.2 million for thesix months ended June 30, 2026, from$29.1 million for thesix months ended June 30, 2025 primarily because of continued expense management efforts across the Company. Salaries and employee benefits decreased $1.6 million to$15.1 million for thesix months ended June 30, 2026, from$16.7 million for thesix months ended June 30, 2025 due to a decrease in full time employees compared to last year. Outside services, which includes professional fees for attorneys, accountants, consultants, and cloud services, decreased $1.6 million to$0.9 million for thesix months ended June 30, 2026, from$2.5 million for thesix months ended June 30, 2025. Furniture and equipment expenses decreased approximately$0.6 million to$1.5 million for thesix months ended June 30, 2026, from$2.2 million for thesix months ended June 30, 2025. FDIC insurance expense decreased $0.3 million to $0.9 million for the six months ended June 30, 2026, from $1.2 million for the six months ended June 30, 2025, due to the stabilized level of deposits compared to the temporary surge experienced at the end of 2025. Advertising and marketing decreased approximately $0.3 million to $0.7 million for thesix months ended June 30, 2026, from $1.0 million for thesix months ended June 30, 2025. These decreases were offset by an increase in other real estate owned expenses of $0.2 million for thesix months ended June 30, 2026, compared to none for thesix months ended June 30, 2025. Other operating expenses increased $0.4 million to $3.0 million for the six months ended June 30, 2026, from $2.6 million primarily due to workout expenses as we work through a small number of problem credits.

Current wording

Non-interest expense decreased $3.7 million, or 8.8%, to$38.1 million for thenine months ended September 30, 2026, from$41.7 million for thenine months ended September 30, 2025 primarily because of continued expense management efforts across the Company. Outside services, which includes professional fees for attorneys, accountants, consultants, and cloud services, decreased $1.8 million to$1.3 million for thenine months ended September 30, 2026, from$3.1 million for thenine months ended September 30, 2025. Salaries and employee benefits decreased $1.3 million to$22.7 million for thenine months ended September 30, 2026, from$24.0 million for thenine months ended September 30, 2025 due to a decrease in full time employees compared to last year. Furniture and equipment expenses decreased approximately$0.8 million to$2.2 million for thenine months ended September 30, 2026, from$3.0 million for thenine months ended September 30, 2025. Advertising and marketing decreased approximately $0.5 million to $1.0 million for thenine months ended September 30, 2026, from $1.6 million for thenine months ended September 30, 2025. These decreases were offset by an increase in other real estate owned expenses of $0.4 million for thenine months ended September 30, 2026, compared to none for thenine months ended September 30, 2025. Other operating expenses increased $0.8 million to $4.6 million for the nine months ended September 30, 2026, from $3.8 million for the nine months ended September 30, 2025 primarily due to workout expenses as we work through a small number of problem credits.

Previous wording

Income tax expense increased $0.9 million or 49.8%, to$2.6 million for thesix months ended June 30, 2026 from$1.7 million for thesix months ended June 30, 2025. Theincrease in federal income tax expense for thesix months ended June 30, 2026 compared to the same period a year ago was driven by increased estimated tax rates and theincrease in income before income taxes of$2.6 million, to$11.4 million for thesix months ended June 30, 2026 compared to$8.8 million for the same period in the prior year. The Company accrues taxes based on an estimated tax rate basis using inputs and assumptions about pre-tax income. As the inputs and assumptions change, the estimated tax accruals will change throughout the year. The Company also invests in projects that have tax credit benefits in order to help reduce its overall tax liability, timing of these tax credits are layered into our overall assessment. At June 30, 2026, these tax credits exceed the total tax liability and therefore, are not fully utilized, which causes the effective income tax expense rate to increase. For thesix months ended June 30, 2026, the Company had an effective income tax expense rate of 22.97%, compared to 19.87% for thesix months ended June 30, 2025. The Company has included assessments in income tax expense for potential state tax liabilities which totaled$0.3 million for thesix months ended June 30, 2026 and$0.2 million for thesix months ended June 30, 2025.

Current wording

Income tax expense increased $1.0 million or 38.3%, to$3.7 million for thenine months ended September 30, 2026 from$2.6 million for thenine months ended September 30, 2025. Theincrease in federal income tax expense for thenine months ended September 30, 2026 compared to the same period a year ago was driven by increased estimated tax rates and theincrease in income before income taxes of$1.8 million, to$16.0 million for thenine months ended September 30, 2026 compared to$14.2 million for the same period in the prior year. The Company accrues taxes based on an estimated tax rate basis using inputs and assumptions about pre-tax income. As the inputs and assumptions change, the estimated tax accruals will change throughout the year. The Company also invests in projects that have tax credit benefits in order to help reduce its overall tax liability, timing of these tax credits are layered into our overall assessment. At September 30, 2026, these tax credits exceed the total tax liability and therefore, are not fully utilized, which causes the effective income tax expense rate to increase. For thenine months ended September 30, 2026, the Company had an effective income tax expense rate of 22.80%, compared to 18.60% for thenine months ended September 30, 2025. As earnings accelerate and the Company is able to fully utilize these tax credits, we anticipate our effective rate to decrease. The Company has included assessments in income tax expense for potential state tax liabilities which totaled$0.5 million for thenine months ended September 30, 2026 and $0.4 million for thenine months ended September 30, 2025.

Previous wording

Total assets increased $30.4 million, or 1.4%, to$2.24 billion at June 30, 2026 from$2.21 billion at December 31, 2025. Theincrease was primarily the result of anincrease in net loans of$86.5 million as of June 30, 2026, offset by adecrease in cash and cash equivalents of$53.5 million, adecrease of$1.3 million in other assets, adecrease of$0.9 million in investment securities discussed below, and a decrease in other real estate owned of $0.8 million.

Current wording

Total assets increased $22.2 million, or 1.0%, to$2.23 billion at September 30, 2026 from$2.21 billion at December 31, 2025. Theincrease was primarily the result of anincrease in net loans of$89.3 million as of September 30, 2026, offset by adecrease in cash and cash equivalents of$64.4 million to fund the loan growth during the period, and adecrease of$5.4 million in investment securities discussed below.

Previous wording

Investment securities decreased $0.9 million, or 1.2%, from$71.8 million at December 31, 2025 to$70.9 million at June 30, 2026. Thedecrease was primarily due to calls, maturities, and scheduled paydowns on available-for-sale securities. At June 30, 2026 and December 31, 2025, our held-to-maturity portion of the securities portfolio, at amortized cost, was$13.8 million. At June 30, 2026, the available-for-sale portion of the securities portfolio, at fair value, was$57.1 million compared to $58.0 million at December 31, 2025.

Current wording

Investment securities decreased $5.4 million, or 7.5%, from$71.8 million at December 31, 2025 to$66.4 million at September 30, 2026. Thedecrease was primarily due to calls, maturities, and scheduled paydowns on available-for-sale securities. At September 30, 2026 and December 31, 2025, our held-to-maturity portion of the securities portfolio, at amortized cost, was$13.3 million and $13.8 million. At September 30, 2026, the available-for-sale portion of the securities portfolio, at fair value, was$53.1 million compared to $58.0 million at December 31, 2025.

Previous wording

Net loans increased $86.5 million, or 4.7%, to$1.93 billion at June 30, 2026 from$1.84 billion at December 31, 2025. Residential real estate loans increased $23.8 million to$465.4 million at June 30, 2026 from$441.6 million at December 31, 2025. Commercial real estate loans increased by$56.1 million from$1.01 billion at December 31, 2025 to$1.07 billion at June 30, 2026. Commercial and industrial loans decreased by$5.6 million from$107.0 million at December 31, 2025 to$101.4 million at June 30, 2026. Construction and land development loans increased $12.2 million to$312.9 million at June 30, 2026 from$300.7 million at December 31, 2025. Consumer loans increased by$131,000 from$1.1 million at December 31, 2025 to$1.3 million at June 30, 2026.

Current wording

Net loans increased $89.3 million, or 4.8%, to$1.93 billion at September 30, 2026 from$1.84 billion at December 31, 2025. Residential real estate loans increased $34.2 million to$475.8 million at September 30, 2026 from$441.6 million at December 31, 2025. Commercial real estate loans increased by$59.5 million from$1.01 billion at December 31, 2025 to$1.07 billion at September 30, 2026. Commercial and industrial loans decreased by$13.2 million from$107.0 million at December 31, 2025 to$93.8 million at September 30, 2026. Construction and land development loans increased $9.7 million to$310.4 million at September 30, 2026 from$300.7 million at December 31, 2025. Consumer loans decreased by$0.5 million from$1.1 million at December 31, 2025 to$0.7 million at September 30, 2026.

Previous wording

The Company holds a concentration in commercial real estate loans. As of June 30, 2026, construction, land development and other land loans represented 103.5% of consolidated risk-based capital. Total commercial real estate loans as defined by the Agency guidance represented 379.3% of consolidated risk-based capital. During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio by 47%. At June 30, 2026, CRE loans as defined by the Agency guidance represented 59% of total loans, an increase of $54.5 million from December 31, 2025.

Current wording

The Company holds a concentration in commercial real estate loans. As of September 30, 2026, construction, land development and other land loans represented 102.1% of consolidated risk-based capital. Total commercial real estate loans as defined by the Agency guidance represented 374.9% of consolidated risk-based capital. During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio by 48%.

Previous wording

The total estimated stress test loss is deducted from capital and we recalculate the capital ratios. As shown in the tables below, as of June 30, 2026 and December 31, 2025, the post-stress capital ratios well exceed our Board target ratios as well as Agency minimums (with buffer). For Non-Owner Occupied CRE & Multifamily the stress test is bifurcated with a low-end loss estimate and high-end estimate. The Low Estimate produces loss amounts for loans that are flagged for default (per the model) and floors the loss amount at zero. The High Estimate executes similar to the low estimate but floors the Loss-Given-Default rate at 10%, per Basel Committee on Banking Supervision rules. It also has a collective loss held on all loans regardless of if the loan is flagged for default.

Current wording

The total estimated stress test loss is deducted from capital and we recalculate the capital ratios. As shown in the tables below, as of September 30, 2026 and December 31, 2025, the post-stress capital ratios well exceed Agency minimums (with buffer). For Non-Owner Occupied CRE & Multifamily the stress test is bifurcated with a low-end loss estimate and high-end estimate. The Low Estimate produces loss amounts for loans that are flagged for default (per the model) and floors the loss amount at zero. The High Estimate executes similar to the low estimate but floors the Loss-Given-Default rate at 10%, per Basel Committee on Banking Supervision rules. It also has a collective loss held on all loans regardless of if the loan is flagged for default.

Previous wording

Past due loans excluding non-performing loans, were$15.5 million as of June 30, 2026 compared to$33.3 million as of December 31, 2025. As of June 30, 2026, criticized loans increased $5.1 million and classified loans increased $31.5 million when compared to December 31, 2025, to a balance of$115.6 million and$115.7 million, respectively. The majority of classified loans is made up of seven relationships that experienced increases in operating costs, vacancies, and liquidity tightening as a result of the prolonged impacts of the federal government shut down, Washington D.C. government policies, and sustained elevated interest rates. Non-performing loans were$61.3 million at June 30, 2026, anincrease of$29.8 million compared to$31.5 million at December 31, 2025. Approximately 40% of this balance is attributable to two relationships and the remaining 60% is confined to eleven relationships that experienced liquidity constraints. Additionally, as interest rates rose significantly starting March 2022 and largely sustained despite recent rate cuts, management believes in taking a proactive approach to risk management in the loan portfolio, particularly as credits are due to reprice in a new rate environment. The Company routinely charges off potential exposure as identified and analyzed, and executes the best course of action expected to minimize any further loss exposure. All classified loans and non-performing loans are considered individually evaluated and have strong collateral positions, with good loan-to-value (LTVs) ratios. While non-performing loans increased during the quarter, the levels remain manageable and management is diligently working towards positive resolutions.

Current wording

The remaining 16% of non-performing loans is related to one relationship that is pursuing collateral liquidation. Management believes in taking a proactive approach to risk management in the loan portfolio, particularly as credits are due to reprice in a new rate environment. The Company routinely charges off potential exposure as identified and analyzed, and executes the best course of action expected to minimize any further loss exposure. All classified loans and non-performing loans are considered individually evaluated and are recourse loans backed by collateral, with good loan-to-value (LTV) ratios, and as such no reserves were required as of September 30, 2026. While non-performing loans increased since December 31, 2025, the levels remain manageable and management is diligently working towards positive resolutions.

Previous wording

Deposits increased $35.1 million, or 1.8% to$1.93 billion at June 30, 2026 from$1.90 billion at December 31, 2025. Our core deposits decreased $8.8 million, or 0.6%, to$1.39 billion at June 30, 2026 from$1.40 billion at December 31, 2025. Non-interest bearing demand deposits decreased $14.8 million, or 3.9%, to$363.9 million at June 30, 2026 from$378.7 million at December 31, 2025. Interest-bearing demand deposits decreased $5.3 million, or 4.4%, to$114.1 million at June 30, 2026 from$119.4 million at December 31, 2025. Time deposits decreased $10.9 million, or 1.4%, to$768.9 million at June 30, 2026 from$779.8 million at December 31, 2025. Money market deposits increased $43.4 million, or 8.7%, to$542.7 million at June 30, 2026 from$499.3 million at December 31, 2025. Savings and NOW deposits increased $22.9 million or 18.8% from$121.9 million at December 31, 2025 to$144.8 million at June 30, 2026.

Current wording

Deposits increased $24.8 million, or 1.3% to$1.92 billion at September 30, 2026 from$1.90 billion at December 31, 2025. Our core deposits increased $174.1 million, or 12.4%, to$1.57 billion at September 30, 2026 from$1.40 billion at December 31, 2025, which is impacted by a change in the law discussed below. Non-interest bearing demand deposits decreased $34.9 million, or 9.2%, to$343.8 million at September 30, 2026 from$378.7 million at December 31, 2025, as demands for our business customers' liquidity fluctuate throughout the year. Interest-bearing demand deposits decreased $17.8 million, or 14.9%, to$101.6 million at September 30, 2026 from$119.4 million at December 31, 2025. Time deposits increased $9.1 million, or 1.2%, to$788.9 million at September 30, 2026 from$779.8 million at December 31, 2025. Money market deposits increased $43.5 million, or 8.7%, to$542.8 million at September 30, 2026 from$499.3 million at December 31, 2025, as rate competition continues to drive customers to higher yielding products. Savings and NOW deposits increased $25.1 million or 20.6% from$121.9 million at December 31, 2025 to$147.0 million at September 30, 2026.

Previous wording

The Company uses wholesale deposits as a funding source in addition to customer deposits. Wholesale deposits provide a diversified and stable source of funding during times of market volatility. As of June 30, 2026, the Company had$542.5 million of total wholesale deposit balances, anincrease of$44.0 million compared to December 31, 2025, which totaled$498.5 million.

Current wording

The Company uses wholesale deposits as a funding source in addition to customer deposits. Wholesale deposits provide a diversified and stable source of funding during times of market volatility. As of September 30, 2026, the Company had$349.2 million of total wholesale deposit balances, adecrease of$149.3 million compared to December 31, 2025, which totaled$498.5 million. This decrease is impacted by the 21st Century ROAD to Housing Act (H.R. 6644) becoming law in the three months ended September 30, 2026, which modernized the limitations on reciprocal and custodial deposits to be included as core deposits for qualifying financial institutions.

Previous wording

The Company utilizes additional wholesale demand deposits to provide liquidity and more effectively balance our interest rate sensitivity. During the six months ended June 30, 2026 and 2025, total wholesale deposit funding accounted for approximately 36.3% of our interest expense.

Current wording

During the nine months ended September 30, 2026 and 2025, total wholesale deposit funding accounted for approximately 31.3% and 35.7% of our interest expense.

Previous wording

Each quarter the Bank files a bank call report with the FDIC, which has a specific way it defines wholesale brokered deposits. As of June 30, 2026, the Company had$534.6 million of wholesale deposits outstanding, as defined by FDIC, anincrease of$54.6 million from$480.0 million at December 31, 2025. In addition, up until July 11, 2026, pursuant to rule 12 CFR 337.6(e), well-capitalized and well-rated institutions were not required to treat reciprocal deposits as wholesale deposits up to the lesser of 20 percent of their total liabilities or $5 billion. Reciprocal core deposits exceeding this threshold were reported additionally as wholesale deposits for call report purposes only. As of June 30, 2026, the Company additionally reported$112.1 million in reciprocal deposits considered wholesale for call report purposes only, bringing regulatory defined wholesale deposits to$646.7 million as of June 30, 2026. As of December 31, 2025, the Company additionally reported$145.2 million in reciprocal deposits considered wholesale for call report purposes only, bringing regulatory defined wholesale deposits to$625.2 million as of December 31, 2025. As of June 30, 2026 and December 31, 2025, all of the Company's reciprocal deposits were core deposits from customers who placed their deposits in the reciprocal network for additional FDIC insurance coverage. On July 11, 2026, the 21st Century ROAD to Housing Act (H.R. 6644) became law. This act changed the threshold from 20 percent of total liabilities to 50 percent of the first $1 billion of total liabilities, 40 percent of the next $1 billion to $10 billion of total liabilities, and 30 percent of total liabilities in excess of $10 billion.

Current wording

Each quarter the Bank files a bank call report with the FDIC, which has a specific way it defines wholesale brokered deposits. As of September 30, 2026, the Company had$343.6 million of wholesale deposits outstanding, as defined by FDIC, adecrease of$136.4 million from$480.0 million at December 31, 2025. Up until July 11, 2026, pursuant to rule 12 CFR 337.6(e), well-capitalized and well-rated institutions were not required to treat reciprocal deposits as wholesale deposits up to the lesser of 20 percent of their total liabilities or $5 billion. Reciprocal core deposits exceeding this threshold were reported additionally as wholesale deposits for call report purposes only. On July 11, 2026, the 21st Century ROAD to Housing Act (H.R. 6644) became law. This act changed the threshold from 20 percent of total liabilities to 50 percent of the first $1 billion of total liabilities, 40 percent of the next $1 billion to $10 billion of total liabilities, and 30 percent of total liabilities in excess of $10 billion. As of September 30, 2026, the Company reported no additional reciprocal deposits considered to be wholesale deposits for call report purposes only. As of December 31, 2025, the Company additionally reported$145.2 million in reciprocal deposits considered wholesale for call report purposes only, bringing regulatory defined wholesale deposits to$625.2 million as of December 31, 2025. As of September 30, 2026 and December 31, 2025, all of the Company's reciprocal deposits were core deposits from customers who placed their deposits in the reciprocal network for additional FDIC insurance coverage. Additionally, under this new legislation, custodial deposits of eligible insured depository institutions with less than $10 billion in total assets are not considered brokered deposits up to a capped amount of 20% of total liabilities. As of September 30, 2026, all of the Company's custodial depositsare not considered brokered deposits.