COMMUNITY BANCORP /VT
For the period ended Mar 31, 2026. Filed May 15, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
CMTV$47.00+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001654954-25-013041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001654954-26-004950
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 124 current paragraphs.
75 unchanged; 46 reworded; 3 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 34 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
The average volume of money market accounts decreased 1.5% for the three-month period ended March 31, 2026, compared to the same period in 2025, and the average rate paid on these deposits decreased 42 bps. The decrease in average volume was driven primarily by cyclical decreases in the average volume of municipal deposit accounts during the third and fourth quarters of 2025.
Current report
(1) Conservation Buffer is calculated based on risk-weighted assets and does not apply to calculations of average assets.
Current report
(2) Applicable to banks, but not bank holding companies.
Removed paragraphs (6)
Previous report
Given the Company’s northern Vermont market area, management is assessing the potential risk to the local economy from recent trade policy developments between the United States and Canada. Canada is Vermont’s largest international trading partner; many businesses that rely on trade with Canada are now at risk of experiencing increased costs, reduced sales, and a sense of uncertainty about the future. Although management continues to evaluate the potential impact on the Company’s customers, trade negotiations are on-going, and the ultimate effect on these businesses remains uncertain. In light of these challenges, the Company’s own strategic focus will be to safeguard its balance sheet while supporting its customers and communities.
Previous report
The average volume of money market accounts increased 30.7% and 30.8%, respectively, for the three- and nine-month periods ended September 30, 2025, compared to the same periods in 2024, while the average rate paid on these deposits decreased 11 bps and increased 17 bps, respectively.
Previous report
(1) Consists of commercial loans totaling $66 thousand within 1 year, $2.6 million in 2 – 5 years and $504 thousand in 6 – 15 years; and consumer loans of $0, $362 thousand and $7.2 million in those maturity categories, respectively.
Previous report
The Company utilized borrowing capacity during 2023 and the first quarter of 2024 under the BTFP, a temporary loan facility established by the FRB in March 2023 to provide additional liquidity to financial institutions in the wake of several high-profile bank failures. The Company’s BTFP borrowings are collateralized by U.S. Agency and U.S. Government Securities, valued at par. The BTFP ceased extending new loans on March 11, 2024. The BTFP loans matured and were repaid during the first quarter of 2025.
Previous report
The Company’s advances under the BTFP as of the balance sheet dates were as follows:
Previous report
Following consultation with the FRBB, the Board has approved for repurchase the remaining 15 shares of the Company's Series A Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock. The shares were redeemed at par ($100,000 per share), plus the accrued quarterly dividend through the redemption date. The redemption was completed during the fourth quarter of 2025.
Reworded paragraphs (46)
Previous wording
The following discussion analyzes the consolidated financial condition of Community Bancorp. and its wholly owned subsidiary, Community National Bank, as of September 30, 2025 and December 31, 2024, and its consolidated results of operations for the three-month and nine-month interim periods presented. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide its statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two-year, rather than a three-year, period and provide certain other smaller reporting company scaled disclosures where management deems it appropriate.
Current wording
The following discussion analyzes the consolidated financial condition of Community Bancorp. and its wholly owned subsidiary, Community National Bank, as of March 31, 2026 and December 31, 2025, and its consolidated results of operations for the three-month interim period and one year period presented. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide its statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two-year, rather than a three-year, period and provide certain other smaller reporting company scaled disclosures where management deems it appropriate.
Previous wording
The Company’s consolidated assets as of September 30, 2025, were $1.23 billion compared to $1.25 billion as of December 31, 2024, a decrease of 1.8%. Changes in the asset base included an increase in loans of $33.9 million, however, there was a decrease in overnight deposits of $52 million, or 51.5%. The increase in the loan portfolio was primarily attributable to increases of $18.7 million in residential first and Jr. lien loans, $9.2 million in CRE loans, $3.0 million in municipal loans and $3.0 million in purchased loans. While cash funded the increase in the loan portfolio, the decrease in overnight deposits reflects decreases in deposit balances, payoff of borrowings that matured during the first quarter of 2025, as well as the purchase of approximately $30.0 million in brokered time deposits.
Current wording
The Company’s consolidated assets as of March 31, 2026, were $1.24 billion compared to $1.29 billion as of December 31, 2025, a decrease of 4.1%. Changes in the asset base included an increase in loans of $18.6 million, which was more than offset by a decrease in overnight deposits of $61.2 million, or 52.6%. The increase in the loan portfolio was primarily attributable to increases of $4.3 million in residential first and Jr. lien loans, $6.0 million in CRE loans, $2.0 million in municipal loans and $7.0 million in C&I loans. While cash funded the increase in the loan portfolio, the decrease in overnight deposits reflects typical and expected first quarter deposit runoff, particularly in government agency and non arbitrage accounts.
Previous wording
Total deposits as of September 30, 2025, were $1.01 billion compared to $1.0 billion as of December 31, 2024, an increase of approximately $6.7 million, or 0.7%. Year to date, time deposits increased $32.4 million, or 17.3% and savings accounts increased $812 thousand, or 0.6%, while demand and interest-bearing transaction accounts collectively decreased $12.5 million, or 2.5%, and money market funds decreased $14.0 million, or 8.3%. Borrowed funds decreased $26.3 million, or 36.3%, from December 31, 2024, due primarily to maturities in the BTFP funds, partially offset by new FHLBB advances.
Current wording
Total deposits as of March 31, 2026, were $1.02 billion compared to $1.07 billion as of December 31, 2025, a decrease of $52.9 million, or 4.9%. Year to date, time deposits increased $7.9 million, or 3.6% and savings accounts increased $5.4 million, or 3.8%, while demand and interest-bearing transaction accounts collectively decreased $28.1 million, or 5.4%, and money market funds decreased $38.2 million, or 20.4%. Borrowed funds remained level from December 31, 2025.
Previous wording
Total interest income increased approximately $1.4 million, or 10.4%, for the third quarter of 2025, and $4.8 million, or 11.9%, for the first nine months of 2025, compared to the respective periods in 2024. The growth in the volume of the loan portfolio and origination of loans at higher interest rates, as well as adjustable-rate loans repricing to current market rates, helped to support the increase in interest income in both comparison periods.
Current wording
Total interest income increased $1.5 million, or 10.3%, for the first quarter of 2026, compared to the same period in 2025. The growth in the volume of the loan portfolio and origination of loans at higher interest rates, as well as adjustable-rate loans repricing to current market rates, helped to support the increase in interest income in the comparison period.
Previous wording
Total interest expense decreased $400 thousand, or 7.5%, for the third quarter of 2025, and increased $45 thousand, or 0.3%, for the first nine months of 2025, compared to the respective periods in 2024. While the rate environment continues to put pressure on the Company’s funding costs, including competitive deposit pricing, the year-over-year increase of $1.8 million, or 17.9%, in interest expense on the Company’s interest bearing deposit accounts was more than offset by a decrease of $1.9 million, or 56.2% in interest expense on borrowed funds due to the decrease in the average volume of borrowed funds. Please refer to the interest rate sensitivity discussion in the Interest Rate Risk and Asset and Liability Management section of this Management’s Discussion and Analysis for more information on the impact that the actions of the FRB’s FOMC in regulating interest rates, and changes in the yield curve, could have on our net interest income.
Current wording
Total interest expense decreased $7 thousand, or 0.1%, for the first quarter of 2026, compared to the same period in 2025. The year-over-year increase of $15 thousand, or 4%, in interest expense on the Company’s borrowed funds was more than offset by a decrease of $21 thousand, or 8.5% in interest expense on junior subordinated debentures due to a decrease in the floating rate associated with these funds. Please refer to the interest rate sensitivity discussion in the Interest Rate Risk and Asset and Liability Management section of this Management’s Discussion and Analysis for more information on the impact that the actions of the FRB’s FOMC in regulating interest rates, and changes in the yield curve, could have on our net interest income.
Previous wording
The credit loss expense for the third quarter of 2025 was $258,753 compared to $460,745 for the same quarter of 2024 and $990,853 for the first nine months of 2025 compared to $1,105,906 for the same period in 2024, resulting in decreases between periods of $201,992, or 43.8% and $115,053, or 10.4%, respectively. In determining the current period credit loss expense management considers a number of factors, including loan growth and changes in balances of the loan categories within the current portfolio, changes in forecasts, historical loss rates and various qualitative factors, which management reviews and adjusts, as appropriate, in its ACL calculation to better reflect expected credit losses in the loan portfolio. Please refer to Note 5 of the unaudited consolidated financial statements as well as the ACL and credit loss expense discussion in the Credit Risk section of this MD&A.
Current wording
The credit loss expense for the first quarter of 2026 was $391,505 compared to $325,054 for the same period in 2025, resulting in an increase of $66,451, or 20.4%, between periods. In determining the current period credit loss expense management considers a number of factors, including loan growth and changes in balances of the loan categories within the current portfolio, changes in forecasts, historical loss rates and various qualitative factors, which management reviews and adjusts, as appropriate, in its ACL calculation to better reflect expected credit losses in the loan portfolio. Please refer to Note 5 of the unaudited consolidated financial statements as well as the ACL and credit loss expense discussion in the Credit Risk section of this MD&A.
Previous wording
Consolidated net income for the third quarter of 2025 increased $1.6 million, or 52.4%, to $4.7 million compared to $3.1 million for the same quarter of 2024, and increased $3.7 million, or 42.3%, to $12.3 million for the first nine months of 2025 compared to $8.7 million for the same period in 2024. The increases in net interest income after credit loss expense of $2.1 million for the third quarter of 2025 and $4.8 million for the first nine months of 2025, compared to the respective periods in 2024, were significant contributing factors to the increases in net income. This change, along with significant changes in non-interest income and non-interest expense, are discussed in the appropriate sections of this Management’s Discussion and Analysis.
Current wording
Consolidated net income for the first quarter of 2026 increased $844 thousand, or 23.9%, to $4.4 million compared to $3.5 million for the same period in 2025, primarily due to the increase in net interest income of $1.4 million after credit loss expense. This change, along with significant changes in non-interest income and non-interest expense, are discussed in the appropriate sections of this Management’s Discussion and Analysis.
Previous wording
Equity capital increased to $111.9 million, with a book value per share of $19.64 as of September 30, 2025, compared to $98.0 million and a book value per share of $17.24 as of December 31, 2024. Please refer to the section of this Management’s Discussion and Analysis titled “LIQUIDITY AND CAPITAL RESOURCES” for a discussion in of the changes in the Company’s equity capital for the nine months ended September 30, 2025.
Current wording
Equity capital increased to $116.8 million, with a book value per share of $20.88 as of March 31, 2026, compared to $113.7 million and a book value per share of $20.36 as of December 31, 2025. Please refer to the section of this Management’s Discussion and Analysis titled “LIQUIDITY AND CAPITAL RESOURCES” for a discussion in of the changes in the Company’s equity capital for the three months ended March 31, 2026.
Previous wording
On September 18, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on November 1, 2025, to shareholders of record on October 15, 2025, an increase of 4% from the previous quarterly cash dividend and the fourth annual increase since 2020.
Current wording
On March 18, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on May 1, 2026, to shareholders of record on April 26, 2026 (as adjusted on April 15, 2026).
Previous wording
Effective July 31, 2025, the Company’s affiliate, CFS Partners, redeemed the one third limited liability company membership and distributional interests of Guaranty Bancorp, Inc. (“Guaranty”), immediately prior to consummation of Guaranty’s merger with and into Bar Harbor Bankshares. Under the terms of the redemption agreement, beginning March 1, 2025, Guaranty Bancorp agreed to forego its distributional interest in CFS Partners through the closing date of the redemption. Accordingly, beginning March 1, 2025, the Company’s share of the profit and loss from the operations of CFS Partners’ sole subsidiary, CFSG, increased from one-third to 50%, and effective on July 31, 2025, the Company’s non-economic membership (governance) interest in CFS Partners likewise increased to 50%. The Company does not have a controlling interest in CFS Partners and will continue to account for its investment using the equity method.
Current wording
Effective July 31, 2025, the Company’s affiliate, CFS Partners, redeemed the one third limited liability company membership and distributional interests of Guaranty Bancorp, Inc. (“Guaranty”), immediately prior to consummation of Guaranty’s merger with and into Bar Harbor Bankshares. Under the terms of the redemption agreement, beginning March 1, 2025, Guaranty Bancorp agreed to forego its distributional interest in CFS Partners through the closing date of the redemption. Accordingly, beginning March 1, 2025, the Company’s share of the profit and loss from the operations of CFS Partners’ sole subsidiary, CFSG, increased from one-third to 50%, and effective on July 31, 2025, the Company’s non-economic membership (governance) interest in CFS Partners likewise increased to 50%. The Company does not have a controlling interest in CFS Partners and accounts for its investment using the equity method.
Previous wording
These policies are described in the Company’s 2024 Annual Report on Form 10-K in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and in Note 1 (Significant Accounting Policies) to the audited consolidated financial statements. Aside from adjustments in qualitative factors and other economic indicators in the calculation of the ACL, there were no material changes during the first nine months of 2025 in the Company’s critical accounting policies.
Current wording
These policies are described in the Company’s 2025 Annual Report on Form 10-K in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and in Note 1 (Significant Accounting Policies) to the audited consolidated financial statements. Aside from adjustments in qualitative factors and other economic indicators in the calculation of the ACL, there were no material changes during the first three months of 2026 in the Company’s critical accounting policies.
Previous wording
The Company’s net income for the third quarter of 2025 was $4.7 million, or $0.84 per common share, compared to $3.1 million, or $0.55 per common share for the same quarter of 2024, and for the first nine months of 2025 was $12.3 million, or $2.18 per common share, compared to $8.7 million, or $1.55 per common share, for the same period in 2024. Core earnings (NII) were $10.5 million for the third quarter of 2025, compared to $8.7 million for the same period of 2024 and $29.8 million for the first nine months of 2025, compared to $25.1 million for the same period in 2024. Interest and fees on loans, the major component of interest income, increased $1.5 million, or 11.5% for the third quarter of 2025 compared to the same period of 2024 and increased $4.6 million, or 12.7% for the first nine months of 2025 compared to the same period in 2024. Interest paid on deposits, which is the major component of total interest expense, increased $89 thousand, or 2.4% for the third quarter of 2025 and increased $1.8 million, or 17.9% for the first nine months of 2025, compared to the respective periods in 2024, driven primarily by increased deposit balances. Interest on borrowed funds decreased $496 thousand, or 42.8%, for the third quarter of 2025 compared to the same quarter of 2024 and decreased $1.9 million, or 56.2%, for the first nine months of 2025 compared to the same period in 2024, primarily due to a decrease in the average volume of borrowed funds in both comparison periods. Market pressure on deposit rates has stabilized and a decrease in wholesale funding has resulted in an improved net interest margin and net interest spread.
Current wording
The Company’s net income for the first quarter of 2026 was $4.4 million, or $0.78 per common share, compared to $3.5 million, or $0.62 per common share, for the same period in 2025. Core earnings (NII) before credit loss expense were $10.9 million for the first three months of 2026, compared to $9.4 million for the same period in 2025. Interest and fees on loans, the major component of interest income, increased $1.2 million, or 9.2% for the first quarter of 2026 compared to the same period in 2025. Interest paid on deposits, which is the major component of total interest expense, decreased $9 thousand, or 0.2% for the first quarter of 2026 compared to the same period in 2025, driven primarily by adjustments to relationship pricing on deposits. Interest on borrowed funds increased $15 thousand, or 4.0%, for the first quarter of 2026 compared to the same quarter of 2025, due to an increase in the average volume of borrowed funds between periods despite a decrease in the average rate paid.
Previous wording
The Company’s tax-exempt interest income of $746,706 and $762,126 for the three months ended September 30, 2025 and 2024, respectively, and $2.4 million and $2.0 million for the nine months ended September 30, 2025 and 2024, respectively, was derived from loans to local municipalities of $70.1 million and $65.5 million, and tax-exempt municipal investment securities of $10.1 million and $10.5 million, as of September 30, 2025 and 2024, respectively.
Current wording
The Company’s tax-exempt interest income of $718,134 and $727,753 for the three months ended March 31, 2026 and 2025, respectively, was derived from loans to local municipalities of $64.1 million and $70.4 million, and tax-exempt municipal investment securities of $10.2 million and $10.1 million, as of March 31, 2026 and 2025, respectively.
Previous wording
The average volume of interest-earning assets for the three- and nine-month periods ended September 30, 2025 increased 4.7% and 6.2%, respectively, compared to the same periods last year, and the average yield on interest-earning assets increased 26 bps and 28 bps in the respective periods.
Current wording
The average volume of interest-earning assets for the three-month period ended March 31, 2026 increased 5.4% compared to the same period last year, and the average yield on interest-earning assets increased 23 bps.
Previous wording
The average volume of loans increased over the three- and nine-month comparison periods of 2025 versus 2024 by 7.8% and 8.8%, respectively, and the average yield on loans increased 18 bps and 22 bps, respectively. Loans accounted for 84.6% and 84.0% of the average interest-earning asset portfolio for the three- and nine-month periods ended September 30, 2025, compared to 82.2% and 82.0%, respectively, for the same periods last year. Interest earned on the loan portfolio as a percentage of total interest income was 92.1% and 91.8%, respectively, for the three- and nine-month periods in 2025 compared to 91.2% and 91.1%, respectively, for the same periods in 2024.
Current wording
The average volume of loans increased over the three-month comparison period of 2026 versus 2025 by 3.9%, and the average yield on loans increased 28 bps. Loans accounted for 81.6% of the average interest-earning asset portfolio for the three-month period ended March 31, 2026, compared to 82.8% for the same period last year. Interest earned on the loan portfolio as a percentage of total interest income was 90.0% for the three-month period in 2026 compared to 91.0% for the same period in 2025.
Previous wording
The average volume of the taxable investment portfolio (classified as AFS) decreased 10.1% and 11.0%, respectively, during the three- and nine-month periods ended September 30, 2025, compared to the same periods last year, while the average yield increased 32 bps and 21 bps, respectively, between periods. There were purchases of taxable AFS investment securities during the first nine months of 2025, however maturities and paydowns on this portfolio in 2024 and into 2025 exceeded purchases during the same time period, accounting for the decrease in average volume year over year.
Current wording
The average volume of the taxable investment portfolio (classified as AFS) decreased 12.1% during the three-month period ended March 31, 2026, compared to the same period last year, while the average yield increased 15 bps between periods.
Previous wording
The average volume of the tax-exempt investment portfolio (classified as AFS) for the three- and nine-month periods ended September 30, 2025 decreased 0.4% and 0.2% respectively, while the average tax equivalent yield increased 21 bps and 15 bps, respectively. There were no tax-exempt bond purchases during the first nine months of 2025, accounting for the decrease in average volume in this portfolio.
Current wording
The average volume of the tax-exempt investment portfolio (classified as AFS) for the three-month period ended March 31, 2025 increased 0.1% and the tax equivalent yield decreased six bps. There were no tax-exempt bond purchases during the first three months of 2026, however the fair value of the portfolio has increased, accounting for the increase in average volume in this portfolio.
Previous wording
The average volume of sweep and interest-earning accounts, which consists primarily of an interest-bearing account at the FRBB, decreased 10.6% and increased 91.3%, respectively, for the three- and nine-months ended September 30, 2025, compared to the same periods in 2024. The average volume grew steadily during the last half of 2024 with the influx of customer deposit accounts, primarily municipal deposit accounts. The average yield on these funds decreased 80 bps and 86 bps, respectively, for the three- and nine-month periods ended September 30, 2025, versus the same periods in 2024.
Current wording
The average volume of sweep and interest-earning accounts, which consists primarily of an interest-bearing account at the FRBB, increased 141.5% for the three-month period ended March 31, 2026, compared to the same period in 2025. The average volume grew steadily throughout 2025 with the influx of customer deposit accounts, primarily municipal deposit accounts. The average yield on these funds decreased 67 bps for the three-month period ended March 31, 2026, versus the same period in 2025.
Previous wording
The average volume of interest-bearing liabilities for the three- and nine-month periods ended September 30, 2025 increased 3.5% and 5.6%, respectively, compared to the same periods in 2024, while the average rate paid on interest-bearing liabilities decreased 27 bps and 11 bps, respectively.
Current wording
The average volume of interest-bearing liabilities for the three-month period ended March 31, 2026 increased 4.1% compared to the same period in 2025, and the average rate paid on interest-bearing liabilities decreased 10 bps.
Previous wording
The average volume of interest-bearing transaction accounts decreased 5.4% and increased 0.4%, respectively, for the three- and nine-month periods ended September 30, 2025, compared to the same periods of 2024, reflecting moderate growth year over year. The average rate paid on these accounts decreased 24 bps and 10 bps, respectively, between comparison periods. Interest-bearing transaction accounts comprised 30.2% and 31.8% of the average interest-bearing liabilities portfolio for the three- and nine-month periods ended September 30, 2025, compared to 33.0% and 33.5%, respectively, for the same periods last year. Interest paid on these funds accounted for 23.7% and 25.7%, respectively, of total interest expense for the three- and nine-month periods of 2025 compared to 26.3% and 27.1%, respectively, for the same periods in 2024.
Current wording
The average volume of interest-bearing transaction accounts decreased 0.1% for the three-month period ended March 31, 2026, compared to the same period in 2025, while the average rate paid on these accounts decreased three bps between comparison periods. Interest-bearing transaction accounts comprised 31.9% of the average interest-bearing liabilities portfolio for the three-month period ended March 31, 2026, compared to 33.3% for the same period last year. Interest paid on these funds accounted for 26.7% of total interest expense for the three-month period of 2026 compared to 27.2% for the same period in 2025.
Previous wording
The average volume of savings accounts decreased 1.0% and 3.2%, respectively, for the three- and nine-month periods ended September 30, 2025, compared to the same periods in 2024. There was no change in the average rate paid on these accounts in the three- and nine- month periods ended September 30, 2025 compared to 2024.
Current wording
The average volume of savings accounts increased 2.1% for the three-month period ended March 31, 2026, compared to the same period in 2025, with no change in the average rate paid on these accounts.
Previous wording
The average volume of time deposits increased 27.0% and 34.5%, respectively, for the three- and nine-month periods ended September 30, 2025, compared to the same periods in 2024, while the average rate paid decreased 53 bps and 12 bps, respectively.
Current wording
The average volume of time deposits increased 19.7% for the three-month period ended March 31, 2026, compared to the same period in 2025, and the average rate paid decreased 24 bps. The increase in the average volume is attributable to CD promotional products offered throughout 2025 and into 2026.
Previous wording
The average volume of repurchase agreements increased 14.4% and 36.6%, respectively, for the three- and nine-month periods ended September 30, 2025, compared to the same periods in 2024, and the average rate paid increased 14 bps and 12 bps, respectively, between comparison periods.
Current wording
The average volume of repurchase agreements decreased 8.9% for the three-month period ended March 31, 2026, compared to the same period in 2025, and the average rate paid increased 32 bps between comparison periods.
Previous wording
The Company utilized borrowed funds to fund loan growth and cover deposit outflows during 2023 and into the first and second quarters of 2024, but as deposit accounts began to increase, the need for these funds decreased, accounting for the 38.1% and 51.9% decrease in average volume of borrowed funds during the three- and nine-month periods ended September 30, 2025, respectively, compared to the same periods in 2024. The average rate paid on borrowed funds decreased as well by 41 bps and 52 bps for the three- and nine-month periods ended September 30, 2025, respectively, compared to the same periods in 2024.
Current wording
As deposit accounts decreased during 2025, the need for borrowed funds increased, accounting for the 9.9% increase in average volume of borrowed funds during the three-month period ended March 31, 2026, compared to the same period in 2025. The average rate paid on borrowed funds decreased by 21 bps for the three-month period ended March 31, 2026, compared to the same period in 2025.
Previous wording
In summary, between the three- and nine-month periods ended September 30, 2025 and 2024, the average yield on interest-earning assets increased 26 bps and 28 bps for the three- and nine-month periods and the average rate paid on interest-bearing liabilities decreased 27 bps and 11 bps, respectively. Net interest spread increased 53 bps and 39 bps, respectively, for the three- and nine-month periods ended September 30, 2025 versus the same periods in 2024, and the net interest margin increased 50 bps and 39 bps, respectively.
Current wording
In summary, between the three-month periods ended March 31, 2026 and 2025, the average yield on interest-earning assets increased 23 bps and the average rate paid on interest-bearing liabilities decreased 10 bps. Net interest spread increased 33 bps for the three-month period ended March 31, 2026 versus the same period in 2025, and the net interest margin increased 32 bps between comparison periods.
Previous wording
Total non-interest income increased $88,380, or 4.4%, and $319,376 or 5.9%, respectively, for the three and nine months ended September 30, 2025, compared to the same periods in 2024, with significant changes noted in the following:
Current wording
Total non-interest income increased $166,731, or 10.6%, for the three months ended March 31, 2026, compared to the same period in 2025, with significant changes noted in the following:
Previous wording
Total non-interest expense increased $84,840, or 1.3%, and $684,135 or 3.6%, for the three and nine months ended September 30, 2025, compared to the same periods in 2024, with significant changes noted in the following:
Current wording
Total non-interest expense increased $553,748, or 8.5% for the three months ended March 31, 2026, compared to the same period in 2025, with significant changes noted in the following:
Previous wording
The provision for income taxes increased $422,063, or 72.2%, for the third quarter of 2025 and $806,607 or 48.0%, for the first nine months of 2025 compared to the same periods in 2024, which is consistent with the increase in income before income taxes. Tax credits, which consist of credits from affordable housing investments and NMTC, amounted to $249,612 and $174,612, for the third quarter of 2025 and 2024, and $748,836 and $523,836, respectively, for the first nine months of 2025 and 2024. The Company’s investment in a project during the last quarter of 2024 generated NMTC for that quarter and for the nine months of 2025, accounting for the increase in tax credits between comparison periods.
Current wording
The provision for income taxes increased $212,441, or 32.1%, for the first quarter of 2026 compared to the same period in 2025, which is the consistent with the increase in income before income taxes. Tax credits, which consist of credits from affordable housing investments and NMTC, amounted to $249,612 for the first quarter of 2026 and 2025.
Previous wording
Amortization expense related to the affordable housing investments and NMTC is included as a component of income tax expense and amounted to $148,890 and $149,202, for the third quarter of 2025 and 2024 and $446,670 and $447,606, respectively, for the first nine months of 2025 and 2024. These investments provide tax benefits, including tax credits, and are designed to provide a targeted effective annual yield between 5% and 7%.
Current wording
Amortization expense related to the affordable housing investments and NMTC is included as a component of income tax expense and amounted to $257,433 and $148,890, respectively, for the first quarter of 2026 and 2025. These investments provide tax benefits, including tax credits, and are designed to provide a targeted effective annual yield between 5% and 7%.
Previous wording
The increase in the loan portfolio during the first nine months of 2025 was primarily attributable to increases in CRE loans, residential real estate 1 st lien loans, residential junior lien loans as well as purchased loans.
Current wording
The increase in the loan portfolio during the first three months of 2026 was primarily attributable to increases in CRE loans, residential real estate 1 st lien loans, as well as municipal loans.
Previous wording
The decrease in the securities AFS portfolio at September 30, 2025 is attributable to the combined effect during the first nine months of the year of purchases totaling $18.1 million and a decrease of $6.6 million in unrealized losses reflected in OCI, which was more than offset by maturities of $16.5 million and principal payments on MBS, ABS and CMO investments totaling $15.0 million. In management’s view, the size of the AFS securities portfolio is appropriate and proportional to the overall asset base, as this portfolio serves a significant role in the Company’s liquidity position.
Current wording
The decrease in the securities AFS portfolio at March 31, 2026 is attributable to the combined effect during the first three months of the year of an increase of $208 thousand in unrealized losses reflected in OCI, as well as maturities of $2.1 million and principal payments on MBS, ABS and CMO investments totaling $4.5 million. The cash flow resulting from maturities and other principal payments was used to fund loan growth. In management’s view, the size of the AFS securities portfolio is appropriate and proportional to the overall asset base, as this portfolio serves a significant role in the Company’s liquidity position.
Previous wording
The decrease in interest-bearing transactions accounts at September 30, 2025 from year end 2024 is attributable to a decrease of $10.1 million, or 22.7% in a CFSG deposit account, and a decrease of $13.7 million or 12.5%, in ICS accounts. The decrease in money market accounts was primarily driven by a decrease of $26.3 million, or 59.2% in ICS accounts. The increase in time deposits is attributable to an increase in brokered time deposits. In addition to the brokered time deposits, the Company used overnight deposits to cover maturities in borrowed funds during the first nine months of 2025 and used those funds to cover fluctuations in aggregate deposits during the same period, enabling the Company to rely less on other sources of funding.
Current wording
The decrease in interest-bearing transactions accounts at March 31, 2026 from year end 2025 is attributable to a decrease of $5.9 million, or 13.9% in a CFSG deposit account, and a decrease of $4.9 million or 4.0%, in ICS accounts. The decrease in money market accounts was primarily driven by a decrease of $20.8 million, or 42.7% in ICS accounts.
Previous wording
Estimated deposits in excess of the FDIC insurance level amounted to $262.7 million as of September 30, 2025 and $258.0 million as of December 31, 2024. The estimated balance of $43.1 million of uninsured time deposits as of September 30, 2025 was made up of time CDs of $39.6 million and retirement accounts of $3.5 million. Increments of maturity of these time deposits are summarized as follows:
Current wording
Estimated deposits in excess of the FDIC insurance level amounted to $234.5 million as of March 31, 2026 and $261.7 million as of December 31, 2025. The estimated balance of $51.9 million of uninsured time deposits as of March 31, 2026 was made up of time CDs of $47.7 million and retirement accounts of $4.2 million. Increments of maturity of these time deposits are summarized as follows:
Previous wording
Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with the Company’s financial instruments also change, thereby impacting NII, the primary component of the Company’s earnings. Fluctuations in interest rates can also have an impact on liquidity. The ALCO uses an outside consultant to perform rate shock simulations to the Company's net interest income, as well as a variety of other analyses. It is ALCO’s function to provide the assumptions used in the modeling process. Assumptions used in prior period simulation models are regularly tested by comparing projected NII with actual NII. The ALCO utilizes the results of the simulation model to quantify the estimated exposure of NII and liquidity to sustain interest rate changes. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all interest-earning assets and interest-bearing liabilities reflected on the Company’s balance sheet. The model also simulates the balance sheet’s sensitivity to a prolonged flat rate environment. All rate scenarios are simulated, assuming a parallel shift of the yield curve; however further simulations are performed utilizing non-parallel changes in the yield curve, including an inverted yield curve. The results of this sensitivity analysis are compared to the ALCO policy limits which specify a maximum tolerance level for NII exposure over a 1-year horizon, assuming no balance sheet growth, given a 200 bp shift upward and a 100 bp shift downward in interest rates.
Current wording
Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with the Company’s financial instruments also change, thereby impacting NII, the primary component of the Company’s earnings. Fluctuations in interest rates can also have an impact on liquidity. The ALCO uses an outside consultant to perform rate shock simulations to the Company's net interest income, as well as a variety of other analyses. It is ALCO’s function to provide the assumptions used in the modeling process. Assumptions used in prior period simulation models are regularly tested by comparing projected NII with actual NII. The ALCO utilizes the results of the simulation model to quantify the estimated exposure of NII and liquidity to sustain interest rate changes. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all interest-earning assets and interest-bearing liabilities reflected on the Company’s balance sheet. The model also simulates the balance sheet’s sensitivity to a prolonged flat rate environment. All rate scenarios are simulated, assuming a parallel shift of the yield curve; however further simulations are performed utilizing non-parallel changes in the yield curve, including an inverted yield curve. The results of this sensitivity analysis are compared to the ALCO policy limits which specify a maximum tolerance level for NII exposure over a 1-year horizon, assuming no balance sheet growth, given a 200 bp shift upward and a 200 bp shift downward in interest rates.
Previous wording
As of September 30, 2025, the Company had $12,887,000 in principal amount of Junior Subordinated Debentures due December 15, 2037, which bear interest at a quarterly floating rate equal to 3-month CME SOFR, as adjusted by a spread adjustment factor of 0.26161, plus 2.85%. The quarterly floating rate in effect on the debentures was 7.43% for the September 2025 payment, compared to a floating rate of 8.45% for the September 2024 payment.
Current wording
As of March 31, 2026, the Company had $12,887,000 in principal amount of Junior Subordinated Debentures due December 15, 2037, which bear interest at a quarterly floating rate equal to 3-month CME SOFR, as adjusted by a spread adjustment factor of 0.26161, plus 2.85%. The quarterly floating rate in effect on the debentures was 6.83% for the March 2026 payment, compared to a floating rate of 7.47% for the March 2025 payment.
Previous wording
Residential mortgage loans represented 28.3% of the Company’s loan balances as of September 30, 2025, compared to 27.4% as of December 31, 2024. The Company maintains a residential mortgage loan portfolio of traditional mortgage products and does not offer higher risk loan products, such as option adjustable-rate mortgage products, high loan-to-value products, interest only mortgages, subprime loans and products with deeply discounted teaser rates. Residential mortgages with loan-to-value ratios exceeding 80% are generally covered by PMI. A 90% loan-to-value residential mortgage product without PMI is only available to borrowers with excellent credit and low debt-to-income ratios and has not been widely originated. As of September 30, 2025, junior lien home equity products made up 15.7% of the residential mortgage portfolio with maximum loan-to-value ratios (including prior liens) of 80%. The Company also originates some home equity loans with loan-to-value ratios greater than 80% under an insured loan program with stringent underwriting criteria.
Current wording
Residential mortgage loans represented 29.2% of the Company’s loan balances as of March 31, 2026, compared to 29.3% as of December 31, 2025. The Company maintains a residential mortgage loan portfolio of traditional mortgage products and does not offer higher risk loan products, such as option adjustable-rate mortgage products, high loan-to-value products, interest only mortgages, subprime loans and products with deeply discounted teaser rates. Residential mortgages with loan-to-value ratios exceeding 80% are generally covered by PMI. A 90% loan-to-value residential mortgage product without PMI is only available to borrowers with excellent credit and low debt-to-income ratios and has not been widely originated. As of March 31, 2026, junior lien home equity products made up 15.9% of the residential mortgage portfolio with maximum loan-to-value ratios (including prior liens) of 80%. The Company also originates some home equity loans with loan-to-value ratios greater than 80% under an insured loan program with stringent underwriting criteria.
Previous wording
The Company experienced solid growth in the CRE loan portfolios, which is consistent with its strategic focus on commercial lending. Commercial & industrial, purchased, CRE and municipal loans collectively comprised 71.4% of the Company’s loan portfolio as of September 30, 2025, compared to 72.3% as of December 31, 2024. The largest components of the CRE portfolio were $131.5 million in owner-occupied CRE and $165.8 million in non-owner occupied CRE as of September 30, 2025, compared to $125.5 million and $154.6 million, respectively, as of December 31, 2024.
Current wording
The Company experienced solid growth in the CRE loan portfolio, which is consistent with its strategic focus on commercial lending. Commercial & industrial, purchased, CRE and municipal loans collectively comprised 69.3% of the Company’s loan portfolio as of March 31, 2026, compared to 71.7% as of December 31, 2025. The largest components of the CRE portfolio were $142.0 million in owner-occupied CRE and $181.9 million in non-owner occupied CRE as of March 31, 2026, compared to $125.5 million and $154.6 million, respectively, as of December 31, 2025.
Previous wording
Risk in the Company’s commercial & industrial and CRE loan portfolios is mitigated in part by government guarantees issued by federal agencies such as the SBA and RD. As of September 30, 2025, the Company had $29.0 million in guaranteed loans with guaranteed balances of $19.8 million, compared to $25.5 million in guaranteed loans with guaranteed balances of $17.2 million as of December 31, 2024. PPP loans with outstanding balances of $15 thousand as of September 30, 2025, and $43 thousand as of December 31, 2024, are included in these totals, all of which carry a 100% guarantee through the SBA, subject to borrower eligibility requirements.
Current wording
Risk in the Company’s commercial & industrial and CRE loan portfolios is mitigated in part by government guarantees issued by federal agencies such as the SBA and RD. As of March 31, 2026, the Company had $24.4 million in guaranteed loans with guaranteed balances of $16.9 million, compared to $24.2 million in guaranteed loans with guaranteed balances of $16.7 million as of December 31, 2025. PPP loans with outstanding balances of $0 as of March 31, 2026, and $8 thousand as of December 31, 2025, are included in these totals, which carried a 100% guarantee through the SBA, subject to borrower eligibility requirements.
Previous wording
The decrease in the credit loss expense on loans in both periods of 2025 compared to the same periods of 2024, was due in part to changes in the economic forecast, prepayments speeds, loan curtailments and adjustments to certain qualitative factors used in the model, despite the increase in the volume of the loan portfolio. The increase in the OBS credit exposure for the three months ended September 30, 2025 is attributable to an increase in unfunded loan commitments under contract and the decrease in the nine months ended September 30, 2025 is attributable to a decrease in unfunded commitments.
Current wording
The increase in the credit loss expense on loans in the first months of 2026 compared to the same period in 2025, was due in part to an increase in certain qualitative factors as well as an increase in the volume of the loan portfolio. The decrease in the OBS credit exposure between periods is attributable to a decrease in unfunded loan commitments under contract.
Previous wording
The third quarter ACL analysis indicated that the reserve balance of $10.8 million as of September 30, 2025, was sufficient to cover expected credit losses that are probable and estimable as of the measurement date. As discussed in Note 5 of the accompanying unaudited interim consolidated financial statements, included in the ACL calculation for the third quarter of 2025 are adjustments to certain qualitative factors made by management, including an increase in the risk status of the qualitative factors for external factors in the purchased loan and residential Jr. lien segments to reflect uncertainty regarding the impact of the government shutdown as well as an increase in the risk status of volume and terms in the residential Jr. lien segment to reflect the increase in volume of these loans.
Current wording
The first quarter ACL analysis indicated that the reserve balance of $11.3 million as of March 31, 2026, was sufficient to cover expected credit losses that are probable and estimable as of the measurement date. As discussed in Note 5 of the accompanying unaudited interim consolidated financial statements, included in the ACL calculation for the first quarter of 2026 was an adjustment made by management to increase the risk status of the qualitative factor for criticized & classified in the commercial and CRE segments to reflect increases in criticized & classified loans in these segments.
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