FVCBankcorp, Inc.
For the period ended Dec 31, 2025. Filed Mar 16, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 16, 2026
FVCB$16.25-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-20.
0001675644-25-000035
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-16.
0001675644-26-000017
Item 7. 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 157 previous paragraphs and 160 current paragraphs.
88 unchanged; 54 reworded; 15 added; 15 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 20 previous and 20 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 (15)
Current report
Critical Accounting Estimates
Current report
•Nonin terest income for 2025 increased $1.1 million, or 44%, to $3.6 million for the year ended December 31, 2025, comp ared to $2.5 million for the year ended December 31, 2024. This increase was primarily driven by an increase in our minority investments of $871 thousand to $1.2 million for the year ended December 31, 2025.
Current report
•Noninterest expense was $37.6 millionand $35.8 million for the years ended December 31, 2025 and 2024, respec tively, an increase of $1.8 million, or 5%. This increase was primarily a result of an increase in salaries and benefits expense, which increased due to the filling of open positions and market adjustments to existing positions along with an increase in the incentive compensation expense for 2025.
Current report
Noninterest expense was $37.6 million and $35.8 million for the years ended December 31, 2025 and 2024, respectively, an increase of $1.8 million, or 5%. The increase in noninterest expense was primarily a result of an increase in salaries and benefits expense, which increased $1.4 million due to the filling of open positions and market adjustments to existing positions along with an increase in the incentive compensation expense for 2025.
Current report
Net interest income for the year ended December 31, 2025 was $63.8 million comp ared to $55.6 million for the year ended December 31, 2024, an increase of $8.2 million, or 15%. The increase in net interest income was primarily due to an increase in interest income, which increased $5.1 million, or 4%, to $118.4 million for the year ended December 31, 2025 as compared to $113.3 million for the same period of 2024. Additionally, a decrease in interest expense of $3.1 million, or 5%, for the year ended December 31, 2025 as compared to 2024, also contributed to the growth in net interest income.
Current report
Total average interest-bearing deposits increased $86.6 million to $1.54 billion at December 31, 2025 compared to $1.45 billion at December 31, 2024. Interest expense on deposits decreased $1.2 million to $52.0 million for the year ended December 31, 2025 compared to $53.2 million for the year ended December 31, 2024, primarily as a result of the decrease in interest rates in 2025, which decreased the cost of interest-bearing deposits 28 basis points to 3.38% for the year ended December 31, 2025, compared to 3.66% for the year ended December 31, 2024. Average noninterest-bearing deposits decreased $4.8 million, or 1%, to $363.8 million at December 31, 2025, compared to $368.6 million at
Current report
We recorded income from our minority membership interests totaling $1.2 million and$376 thousand for the years ended December 31, 2025 and 2024, respectively. This income is primarily attributable to our membership interest in ACM. The increase in earnings at ACM is a direct result of continued success in executing their strategic growth and geographic diversification initiatives, resulting in a 19% increase in loan originations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Current report
Commercial and industrial loans increased $116.7 million to $453.4 million at December 31, 2025, an increase of 35%, from $336.7 million at December 31, 2024. The increase in commercial and industrial loans was a result of an
Current report
increase in loan originations during 2025 in addition to an increase in the our warehouse lending facility which totaled
Current report
Total wholesale funding (which includes wholesale deposits and FHLB adva nces) decreased $15.0 million, or 5%, to $285.0 million at December 31, 2025 from $300.0 million at December 31, 2024. A portion of these funds have pay-fixed/receive-floating interest rate swaps to reduce funding costs. We terminated cash flow hedges with notional amounts of $80 million and recorded a net gain of $91 thousand (which was recorded in noninterest-income) for the year ended December 31, 2025, reducing the notional amount of our interest rate swaps to $170 million at December 31, 2025.
Current report
Shareholders' equity at December 31, 2025 was $253.6 million, an increase of $18.2 million, compared to $235.4 million at December 31, 2024. Net income recordedfor the year ended December 31, 2025 contr ibuted $22.1 million to the increase in shareholders' equity. Accumulated other comprehensive loss decreased $3.7 million for the year ended December 31, 2025, primarily as a result of the increase in the market value of our investment securities portfolio. During 2025, we repurchased 572,310 shares of our common stock at a total cost of $6.7 million. All of these shares have been canceled and returned to the status of authorized but unissued.
Current report
We provide banking services to customers that are licensed to do business in the cannabis industry, primarily in Virginia, Maryland and the District of Columbia. These customers include multi-state operators, fully integrated state-wide operators, independent dispensary/cultivation licensees, as well as provisional cannabis licensees. We maintain stringent written policies and procedures related to the on-boarding of such businesses and to the monitoring and maintenance of such business accounts.
Current report
In accordance with federal regulatory guidance and industry best practices, our cannabis banking business is conducted through a comprehensive, defined, and multi-department process, which includes extensive compliance and onboarding due diligence with subsequent involvement by bank experts in cannabis in our operations, branch, treasury management, lending, and credit departments. We perform a multilayered due diligence review of a cannabis business before the business is on-boarded, including site visits and confirmation that the business is properly licensed by the state in which it is conducting business. Throughout the relationship, we continue to monitor the business, including additional site visits, to ensure that the cannabis business continues to meet strict requirements, including maintenance of required licenses. We perform periodic financial reviews of the business and monitor the business in accordance with the Bank Secrecy Act of 1970 and other state requirements.
Current report
While we are providing banking services to customers that are engaged in growing, processing, and sales of both medical and adult use cannabis in a manner that complies with applicable state law, such customers engaged in those activities currently violate federal law. While we are not aware of any instance of a federally-insured financial institution being subject to such liability, the strict enforcement of federal laws regarding cannabis could result in our inability to continue to provide banking services to these customers and we could have legal action taken against us by the federal government. There is an uncertainty of the potential impact to our consolidated financial statements if the federal government should take action against us. As of December 31, 2025, we have not accrued an amount for the potential impact of any such actions.
Current report
The following is a summary of the level of business activities with our cannabis customers: Deposit and loan balances at December 31, 2025 were approximately $129.5 million, or 6% of total deposits, and $193.6 million, or 10% oftotal loans, respectively. Deposit and loan balances at December 31, 2024 were approximately $100.0 million, or 5% of total deposits, and $108.3 million, or 6% of total loans, respectively.
Removed paragraphs (15)
Previous report
On August 31, 2021, we announced that the Bank made an investment in ACM for $20.4 million to obtain a 28% ownership interest in ACM. The Bank provides a warehouse lending facility to ACM, which includes a construction-to-permanent financing line, and has developed portfolio mortgage products to diversify our held for investment loan portfolio.
Previous report
Critical Accounting Policies
Previous report
•Noninterest income for 2024 increased to $2.5 million compared to loss of $13.4 million for 2023. This increase was primarily driven by the loss related to the sales of available-for-sale securities during 2023.
Previous report
•Noninterest expense was $35.8 million and $36.7 million for the years ended December 31, 2024 and 2023, respectively, a decrease of $842 thousand, or 2%. This decrease was primarily a result of a decrease in salaries and benefits expense through reduced staffing associated with process improvements through our investment in technology.
Previous report
Noninterest expense was $35.8 million and $36.7 million for the years ended December 31, 2024 and 2023, respectively, a decrease of $842 thousand, or 2%. The decrease in noninterest expense was primarily a result of a decrease in salaries and benefits expense, which decreased $1.9 million, a result of reduced staffing and process improvements through technology investments. Included in noninterest expense for the year ended December 31, 2023 was $457 thousand related to office space reductions and severance costs.
Previous report
Net interest income for the year ended December 31, 2024 was $55.6 million compared to $54.4 million for the year ended December 31, 2023, an increase of $1.2 million, or 2%. The increase in net interest income is primarily due to an increase in loan interest income, as we have actively managed our maturing commercial real estate loan portfolio and further diversified our loan mix toward commercial & industrial loans, which generally earn higher yields, along with the repricing of our variable rate loan portfolio and new loan originations. Additionally, our yield on earning assets increased partially as a result of the balance sheet repositionings we completed during 2023.
Previous report
Average interest-earning assets decreased $64.2 million, or 3%, to $2.12 billion at December 31, 2024 compared to $2.19 billion at December 31, 2023. This decrease was primarily related to the sales of investment securities available-for-sale that were completed during 2023, decreasing the average balances of our investment securities by $79.0 million. Total interest income increased $6.7 million, or 6%, to $113.3 million for the year ended December 31, 2024 compared to $106.6 million for the year ended December 31, 2023. Average rate significantly improved interest income during 2024, as rate contributed $5.9 million in interest income.
Previous report
Years Ended December 31,2024 and 2023
Previous report
We recorded income from our minority membership interest in ACM totaling $376 thousand for the year ended December 31, 2024, compared to a loss of $1.1 million for same period of 2023.
Previous report
Income Taxes
Previous report
We review our balance sheet and interest rate sensitivity on an ongoing basis as part of our asset/liability risk management process. During 2024, with the expectation that short-term interest rates would continue to remain elevated, we modeled various scenarios to improve balance sheet efficiency, reduce our cost of funds, improve margin and our capital ratios. As a result, we surrendered $48.0 million of our BOLI. These policies yielded a 2.74% return (3.34% on a tax-equivalent basis). This transaction resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation. The projected earn-back period was approximately one year. We used these proceeds to pay down our high cost funding and fund new loan growth.
Previous report
At December 31, 2023, we downgraded an owner-occupied commercial real estate loan totaling $19.9 million to substandard due to concerns regarding the financial condition of this borrower’s parent company. During the third quarter ended September 30, 2024, the parent company closed on long term financing, strengthening its overall financial condition. As a result, we upgraded this loan to a pass rating.
Previous report
At December 31, 2024 and 2023, there were no performing loans considered potential problem loans. Potential problem loans are defined as loans that are not included in the 90 days or more past due, nonaccrual, or rest ructured categories, but for which known information about possible credit problems causes us to be uncertain as to the ability of the borrowers to comply with the present loan repayment terms which may in the future result in disclosure in the past due, nonaccrual or restructured loan categories. We take a conservative approach with respect to risk rating loans in our portfolio. Based upon the status as a potential problem loan, these loans receive heightened scrutiny and ongoing intensive risk management. Additionally, our allowance for credit losses on loans estimation methodology adjusts expected losses to calibrate the likelihood of a default event to occur through the use of risk ratings.
Previous report
Total wholesale funding (which includes wholesale deposits and FHLB advances) decreased $30.4 million, or 9%, during 2024 to $299.9 million from $330.3 million at December 31, 2023.
Previous report
Shareholders' equity at December 31, 2024 was $235.4 million, an increase of $18.2 million, compared to $217.1 million at December 31, 2023. Net income recorded for the year ended December 31, 2024 contributed $15.1 million to the increase in shareholders' equity. Accumulated other comprehensive loss decreased $894 thousand for the year ended December 31, 2024, primarily due to gains recognized from other comprehensive income related to our cash flow hedges.
Reworded paragraphs (54)
Previous wording
Net interest income is our primary source of revenue. We define revenue as net interest income plus noninterest income. We manage our balance sheet and interest rate risk exposure to maximize, and concurrently stabilize, net interest income. We do this by monitoring our liquidity position and the spread between the interest rates earned on interest-earning assets and the interest rates paid on interest-bearing liabilities. We attempt to minimize our exposure to interest rate risk, but are unable to eliminate it entirely. In addition to managing interest rate risk, we also analyze our loan portfolio for exposure to credit risk. Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit. In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from minority membership interest in ACM, merchant services fee income, insurance commission income, income from bank owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.
Current wording
Net interest income is our primary source of revenue. We define revenue as net interest income plus noninterest income. We manage our balance sheet and interest rate risk exposure to maximize, and concurrently stabilize, net interest income. We do this by monitoring our liquidity position and the spread between the interest rates earned on interest-earning assets and the interest rates paid on interest-bearing liabilities. We attempt to minimize our exposure to interest rate risk, but are unable to eliminate it entirely. In addition to managing interest rate risk, we also analyze our loan portfolio for exposure to credit risk. Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit. In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from our minority membership interest in ACM, merchant services fee income, insurance commission income, income from bank owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.
Previous wording
Accounting Standards Codification ("ASC") 326 requires that an estimate of expected credit losses be immediately recognized and reevaluated over the contractual life of the financial asset. The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off.
Current wording
Accounting Standards Codification ("ASC") 326 requires that an estimate of expected credit losses be immediately recognized and reevaluated over the contractual life of the financial asset. The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio.
Previous wording
•Total assets increased to $2.20 billion compared to $2.19 billion at December 31, 2024 and 2023, respectively, an increase of $8.4 million.
Current wording
•Total assets increased to $2.29 billion at December 31, 2025 compared to $2.20 billion at December 31, 2024, anincrease of $93.3 million.
Previous wording
•Total loans, net of deferred fees, increased $41.7 million, or 2%, from December 31, 2023 to December 31, 2024. Asset quality remains sound with nonperforming loans and loans past due 90 days or more as a percentage of total assets of 0.58% at December 31, 2024, compared to 0.08% at December 31, 2023.
Current wording
•Total loans, net of deferred fees, increased $71.0 million, or 4%, from December 31, 2024 to December 31, 2025. Asset quality remains sound with nonperforming loans and loans past due 90 days or more as a percentage of total assets of 0.47% at December 31, 2025, compared to 0.58% at December 31, 2024.
Previous wording
•Total deposits increased $25.3 million or 1%, from December 31, 2023 to December 31, 2024. Noninterest-bearing deposits were $365.7 million at December 31, 2024, or 19.5% of total deposits. At December 31, 2024, core deposits, which exclude wholesale deposits, increased $20.7 million from December 31, 2023, or 1%.
Current wording
•Total deposits increased $126.7 million or 7%, from December 31, 2024 to December 31, 2025. Noninterest-bearing deposits were $363.2 million at December 31, 2025, or 18% of total deposits. At December 31, 2025, core deposits, which exclude wholesale deposits, increased $91.6 million from December 31, 2024, or 6%.
Previous wording
•Net income was $15.1 million for the year ended December 31, 2024 compared to $3.8 million for 2023. During 2024, we surrendered $48.0 million in BOLI policies, which resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation. For the year ended December 31, 2023, net income included after-tax losses totaling $12.2 million related to the sale of $101.7 million in book value available-for-sale investment securities and nonrecurring noninterest expense totaling $457 thousand related to office space reductions and severance costs. Commercial bank operating earnings (non-GAAP), which excludes the securities sales and other nonrecurring items discussed more fully below under "Results of Operations", for the year ended December 31, 2024 and 2023 was $17.4 million and $16.3 million, respectively. For a reconciliation of this non-GAAP information which excludes the effect of these non-recurring items, please refer to the table below.
Current wording
•Net income was $22.1 million forthe year ended December 31, 2025 compared to $15.1 million for 2024, an increase of $7.0 million, or 46%. During 2025, we unwound $80 million of our pay-fixed/receive floating interest rate swaps, resulting in a pre-tax gain of $91 thousand. During 2024, we surrendered $48.0 million in BOLI policies, which resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation. Commercial bank operating earnings (non-GAAP), which excludes these nonrecurring items, for the years ended December 31, 2025 and 2024 was $22.0 million and $17.4 million, respectively. For a reconciliation of this non-GAAP information which excludes the effect of these non-recurring items, please refer to the table below.
Previous wording
•Net interest income increased $1.2 million, or 2%, to $55.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. Interest income on loans increased $8.3 million and interest expense on deposits increased $5.9 million for 2024 compared to 2023. Net interest margin for 2024 was 2.62% compared to 2.49% for 2023, an increase of 13 basis points, or 5%.
Current wording
•Net interest income increased $8.2 million, or 15%, to $63.8 million for the year ended December 31, 2025 compared to $55.6 million for the year ended December 31, 2024. Interest income on loans increased $2.2 million and interest expense on deposits decreased $1.2 million for 2025 compared to 2024. Net interest margin for 2025 was 2.92%compared to 2.62% for 2024, an increase of 30 basis points, or 11%.
Previous wording
•The provision for credit losses totaled $6 thousand in 2024, compared to a provision for credit losses totaling $132 thousand in 2023. The decrease in the provision for credit losses in 2024 was the result of the decline in our real estate concentration qualitative factor, which reduced the qualitative portion of the ACL during 2024.
Current wording
•The provision for credit losses totaled $1.6 million in 2025, compared to a provision for credit losses totaling $6 thousand in 2024. The increase in the provision for credit losses for 2025 was primarily a result of the increase in total loans as well as changes in the distribution of loans within the segments of our portfolio.
Previous wording
We recorded net income of $15.1 million, or $0.82 per diluted common share, for the year ended December 31, 2024, compared to net income of $3.8 million, or $0.21 per diluted common share for the year ended December 31, 2023. Net income for 2024 includes the surrender of certain BOLI policies with an aggregate cash surrender value of $48.0 million. Upon the surrender, we received a cash payout and were required to accrue additional income tax on the appreciation of those policies which had previously been treated as tax-exempt income. This resulted in additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand. The tax penalties related to the surrender of the BOLI were recorded in income tax expense. The net proceeds of the BOLI surrender were reinvested in our loan portoflio. For the year ended December 31, 2023, net income included after-tax losses totaling $12.2 million related to the sale of $102.5 million in book value available-for-sale investment securities. Commercial bank operating earnings (non-GAAP), which exclude the taxes associated with the BOLI surrender, securities losses, and other nonrecurring expense items that were recorded during 2024 and 2023, were $17.4 million and $16.3 million, respectively. Diluted commercial bank operating earnings per share (non-GAAP) for the year ended December 31, 2024 and 2023 were $0.95 and $0.90, respectively.
Current wording
We recorded net income of $22.1 million, or $1.21 per diluted common share, for the year ended December 31, 2025, compared to net income of $15.1 million, or $0.82 per diluted common share for the year ended December 31, 2024. Included in net income for the year ended December 31, 2025 is a pre-tax gain of $91 thousand resulting from the unwind of $80 million of our pay-fixed/receive floating interest rate swaps. Net income for 2024 includes the surrender of certain BOLI policies with an aggregate cash surrender value of $48.0 million. Upon the surrender, we received a cash payout and were required to accrue additional income tax on the appreciation of those policies which had previously been treated as tax-exempt income. This resulted in additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand. The tax penalties related to the surrender of the BOLI were recorded in income tax expense. The net proceeds of the BOLI surrender were reinvested in our loan portoflio. Commercial bank operating earnings (non-GAAP), which exclude gains and the taxes associated with the BOLI surrender, were $22.0 million and$17.4 million, for the years ended December 31, 2025 and 2024, respectively. Diluted commercial bank operating earnings per share (non-GAAP) for the years ended December 31, 2025 and 2024 were $1.21 and $0.95, respectively.
Previous wording
Net interest income increased $1.2 million to $55.6 million for the year ended December 31, 2024, compared to $54.4 million for the year ended December 31, 2023. For the year ended December 31, 2024, we recorded a provision for credit losses of $6 thousand compared to $132 thousand for the year ended December 31, 2023. We reported noninterest income of $2.5 million for the year ended December 31, 2024, compared to a loss of $13.4 million for 2023, which was primarily driven by the losses recorded on the sale of available-for-sale securities totaling $15.6 million for the year ended December 31, 2023.
Current wording
Net interest income increased $8.2 million, or 15%, to $63.8 million for the year ended December 31, 2025, compared to $55.6 million for the year ended December 31, 2024. For the year ended December 31, 2025, we recorded a provision for credit losses of $1.6 million compared to $6 thousand for the year ended December 31, 2024, primarily due to the increase in total loans receivable for the year ended December 31, 2025. Noninterest income totaled $3.6 million for the year ended December 31, 2025, an increase of $1.1 million, or 44%, compared to $2.5 million for 2024, which was primarily driven by income received from our minority investment in ACM totaling $1.2 million for the year ended December 31, 2025.
Previous wording
The return on average assets for the years ended December 31, 2024 and 2023 was 0.69% and 0.17%, respectively. The return on average equity for the years ended December 31, 2024 and 2023 was 6.64% and 1.82%, respectively. The return on average assets for the years ended December 31, 2024 and 2023 based on commercial bank operating earnings (non-GAAP) was 0.80% and 0.72%, respectively. The return on average equity for the years ended December 31, 2024 and 2023 based on commercial bank operating earnings (non-GAAP) was 7.69% and 7.78%, respectively. See the above table for a reconciliation of GAAP net income to commercial bank operating earnings (non-GAAP).
Current wording
The return on average assets for the years ended December 31, 2025 and 2024 was 0.99% and 0.69%, respe ctively. The return on average equity for the years ended December 31, 2025 and 2024 was 8.99% and 6.64%, respectively.
Previous wording
(1)Nonaccrual loans are included in average balances and do not have a material effect on the average yield. Interest income on non-accruing loans was not material for the periods presented. Net loan fees and late charges included in interest income on loans totaled $1.9 million and$2.1 million for the year ended December 31, 2024 and 2023, respectively.
Current wording
(1)Nonaccrual loans are included in average balances and do not have a material effect on the average yield. Interest income on non-accruing loans was not material for the periods presented. Net loan fees and late charges included in interest income on loans totaled $2.3 million and $1.9 million for the year ended December 31, 2025 and 2024, respectively.
Previous wording
Our net interest margin for the years ended December 31, 2024 and 2023 was 2.62% and 2.49%, respectively. The increase in our net interest margin was primarily a result of the increased rate environment, which improved our yields on earning assets during 2024. The yield on interest-earning assets increased 46 basis points to 5.34% for the year ended December 31, 2024, compared to 4.88% for the same period of 2023, a result of the increased rate environment during 2024 and our balance sheet repositionings from 2023. Our cost of funds increased 44 basis points to 3.00% for the year ended December 31, 2024, from 2.56% for the year ended December 31, 2023, which was primarily attributable to the repricing of our interest-bearing deposits to higher interest rates during 2024. Cost of deposits (which includes noninterest-bearing deposits) was 2.92% for the year ended December 31, 2024 compared to 2.47% for the same period of 2023. Cost of other borrowed funds increased 60 basis points to 4.37% for the year ended December 31, 2024 compared to 3.77% for the year ended December 31, 2023.
Current wording
Our net interest margin for the years ended December 31, 2025 and 2024 was 2.92% and 2.62%, respectively, an increase of 30 basis points, or 11%. The increase in our net interest margin was primarily a result of a decrease in the cost of our interest-bearing liabilities, which decreased 29 basis points for the year ended December 31, 2025 when compared to the same period of 2024, as we reduced the cost of our deposits simultaneously with federal funds rate decisions. In addition, the yield on our interest-earning assets increased 9 basis points to 5.43% for the year ended December 31, 2025, compared to 5.34% for the same period of 2024. Our cost of funds decreased 22 basis points to 2.78% for the year ended December 31, 2025, from 3.00% for the year ended December 31, 2024, which was primarily attributable to the repricing of our interest-bearing deposits to lower interest rates during 2025. Cost of deposits (which includes noninterest-bearing deposits) decreased 19 basis points to 2.73% for the year ended December 31, 2025, compared to 2.92% for the same period of 2024.
Previous wording
Average interest-earning deposits at other financial institutions, consisting primarily of excess cash reserves maintained at the Federal Reserve, decreased $6.3 million to $44.4 million for the year ended December 31, 2024, compared to $50.7 million for the year ended December 31, 2023. The yield on average interest-earning deposits decreased 4 basis points to 5.17% for the year ended December 31, 2024, primarily as a result of the Federal Reserve's Federal Open Market Committee ("FOMC") decision to begin decreasing its targeted federal funds rate in September 2024.
Current wording
Average interest-earning assets increased $59.1 million, or 3%, to $2.18 billion at December 31, 2025 compared to $2.12 billion at December 31, 2024. This increase was primarily related to an increase in interest-bearing deposits held at other financial institutions, which consisted primarily of excess cash reserves maintained at the Federal Reserve. This increase in our average volume was the main driver to the increase in interest income, as average interest-bearing deposits held at other financial institutions increased $80.3 million for the year ended December 31, 2025 when compared to the same period of 2024. Interest income from deposits held at other financial institutions increased $3.1 million to $5.4 million for the year ended December 31, 2025 compared to $2.3 million for the year ended December 31, 2024. Average volume contributed $4.2 million in interest income, while the decrease in the average rate decreased interest income by $1.1 million. The yield on average interest-earning deposits decreased 85 basis points to 4.32% for the year ended December 31, 2025, primarily as a result of the Federal Reserve's Federal Open Market Committee ("FOMC") decision to decrease its targeted federal funds rate beginning September 2024.
Previous wording
Average loans receivable increased $21.2 million to $1.87 billion for the year ended December 31, 2024, compared to $1.85 billion for the year ended December 31, 2023. The yield on average loans increased 39 basis points to 5.71% for the year ended December 31, 2024. The increase in the average rate of loans receivable contributed $5.6 million to interest income while the increase in average loan volume contributed $2.7 million to interest income. Average balances of nonperforming loans, which consist of nonaccrual loans, are included in the net interest margin calculation and did not have a material impact on our net interest margin in 2024 and 2023.
Current wording
Average loans receivable slightly decreased $7.1 million to $1.86 billion for the year ended December 31, 2025, compared to $1.87 billion for the year ended December 31, 2024. The yield on average loans increased 14 basis points to 5.85% forthe year ended December 31, 2025. The increase in our average loan yields was primarily a result of originating new loans at higher interest rates and the increase in the volume of commercial and industrial loans. The average volume of loan originations contributed $2.6 million in interest income, while the decrease in the average rate reduced interest income by only $349 thousand. The average balances of nonperforming loans, which consist of nonaccrual loans, are included in the net interest margin calculation anddid not have a material impact on our net interest margin for 2025 and 2024.
Previous wording
Average investment securities decreased $79.0 million to $208.4 million for the year ended December 31, 2024, compared to $287.5 million for the year ended December 31, 2023. The decrease in average investment securities was primarily a result of repositioning the investment portfolio with the sale of $102.5 million in book value available-for-sale investment securities during 2023. The yield on average investment securities increased 14 basis points to 2.09% for the year ended December 31, 2024, primarily as a result of the sale of lower yielding securities in 2023 relative to the average yield of the securities portfolio.
Current wording
Average investment securi ties decreased $14.2 million to $194.2 million for the year ended December 31, 2025, compared to $208.4 million for the year ended December 31, 2024. The decrease in average investment securities was primarily a result of principal repayments that occurred during 2025. The yield on average investment securities increased 2 basis points to 2.11% for the year ended December 31, 2025.
Previous wording
Total average interest-bearing liabilities decreased $56.6 million to $1.55 billion at December 31, 2024 compared to $1.61 billion at December 31, 2023. Conversely, interest expense increased $5.5 million to $57.7 million for the year ended December 31, 2024 compared to $52.2 million for the year ended December 31, 2023. The increase in the average rate significantly impacted interest expense during 2024, as average volume decreased interest expense $3.2 million while average rate increases contributed $8.7 million in interest expense.
Current wording
Total average interest-bearing liabilities increased $45.0 million to $1.60 billion at December 31, 2025 compared to $1.55 billion at December 31, 2024. Conversely, interest expense decreased $3.1 million to $54.6 million for the year ended December 31, 2025 compared to $57.7 million for the year ended December 31, 2024. The average rate on interest-bearing liabilities decreased 29 basis points to 3.42% for the year ended December 31, 2025 compared to 3.71% for the year ended December 31, 2024. The decrease in the average rate significantly reduced interest expense by $4.1 million during 2025, as average volume increased interest expense by $1.1 million.
Previous wording
Total average interest-bearing deposits decreased $34.5 million to $1.45 billion at December 31, 2024 compared to $1.49 billion at December 31, 2023. Interest expense on deposits increased $5.9 million to $53.2 million for the year ended December 31, 2024 compared to $47.3 million for the year ended December 31, 2023, primarily a result of the increase in the cost of interest-bearing deposits, which increased 48 basis points to 3.66% for the year ended December 31, 2024, compared to 3.18% for the year ended December 31, 2023. Average noninterest-bearing deposits decreased $57.3 million, or 13%, to $368.6 million at December 31, 2024, compared to $425.9 million at December 31, 2023. Competition for deposits along with higher interest rates resulted in customers' movement of excess funds from noninterest-bearing into interest-bearing deposit products. Average interest checking deposits decreased $10.2 million to $571.4 million as of December 31, 2024 compared to $581.7 million as of December 31, 2023. Average savings and money market deposits increased $89.6 million to $344.3 million as of December 31, 2024 compared to $254.7 million as of December 31, 2023. Average time deposits decreased $74.0 million to $275.3 million as of December 31, 2024 compared to $349.3 million at December 31, 2023, as time deposits that were originated during 2023 with a weighted average rate of 4.81% matured during 2024. Average wholesale deposits decreased $39.8 million to $263.7 million as of December 31, 2024 compared to $303.5 million as of December 31, 2023.
Current wording
December 31, 2024. Competition for deposits along with high interest rates resulted in customers' movement of excess funds from noninterest-bearing into interest-bearing deposit products. Average interest checking deposits increased $111.6 million to $683.1 million for the year ended December 31, 2025 compared to $571.4 million for the year ended December 31, 2024. Average savings and money market deposits increased $3.2 million to $347.5 million for the year ended December 31, 2025 compared to $344.3 million for the year ended December 31, 2024. Average time deposits decreased $6.7 million to $268.6 million for the year ended December 31, 2025 compared to $275.3 million for the year ended December 31, 2024. Average wholesale deposits decreased $21.6 million to $242.1 million for the year ended December 31, 2025 compared to $263.7 million for the year ended December 31, 2024.
Previous wording
Average other borrowed funds decreased $22.2 million to $79.9 million for the year ended December 31, 2024, compared to $102.1 million for the year ended December 31, 2023. Interest expense on other borrowed funds decreased $352 thousand for the year ended December 31, 2024 to $3.5 million compared to $3.8 million for the same period of 2023.
Current wording
Average other borrowed funds decreased $40.7 million to $39.2 million for the year ended December 31, 2025, compared to $79.9 million for the year ended December 31, 2024. Interest expense on other borrowed funds decreased $2.0 million for the year ended December 31, 2025 to $1.5 million compared to $3.5 million for the same period of 2024. The cost of other borrowed funds decreased 62 basis points to 3.75% for the year ended December 31, 2025 compared to 4.37% for the year ended December 31, 2024.
Previous wording
We recorded provision for credit losses totaling $6 thousand and $132 thousand for the years ended December 31, 2024 and 2023, respectively. The allowance for credit losses was $18.1 million and $18.9 million at December 31, 2024 and 2023, respectively. Our allowance for credit losses on loans as a percent of total loans, net of deferred fees and costs, was 0.97% and 1.03% at December 31, 2024 and 2023, respectively.
Current wording
We recorded a provision for credit losses tota ling $1.6 million and $6 thousand for the years ended December 31, 2025 and 2024, respectively. The allowance for credit losses was $18.9 million and $18.1 million at December 31, 2025 and 2024, respectively. Our allowance for credit losses on loans as a percent of total loans, net of deferred fees and costs, was 0.97%at each of December 31, 2025 and 2024.
Previous wording
We lend to well-established and relationship-driven borrowers which has contributed to our track record of low historical credit losses. We continue to maintain our disciplined credit guidelines during the current rate environment. We proactively monitor the impact of interest rates on our adjustable loans as the industry navigates through this economic cycle of increased inflation and higher interest rates. Nonperforming loans at December 31, 2024 totaled $12.9 million, or 0.58% of total assets, compared to $1.8 million, or 0.08%, of total assets at December 31, 2023. We had no other real estate owned at December 31, 2024 and 2023, respectively. We recorded net charge-offs of $839 thousand and $375 thousand for the years ended December 31, 2024 and December 31, 2023, respectively.
Current wording
We lend to well-established and relationship-driven borrowers which has contributed to our track record of low historical credit losses. We continue to maintain our disciplined credit guidelines during the current rate environment. We proactively monitor the impact of interest rates on our adjustable loans as the industry navigates through this economic cycle of increased inflation and higher interest rates. Nonperforming loans at December 31, 2025 totaled $10.9 million, or 0.48% of total assets, compared to $12.9 million, or 0.58%, of total assets at December 31, 2024. We had no other real estate owned at December 31, 2025 and 2024, respectively. We recorded net charge-offs of $871 thousand and $840 thousand for the years ended December 31, 2025 and December 31, 2024, respectively.
Previous wording
Noninterest income includes service charges on deposits and loans, loan swap fee income, income from our membership interest in ACM and other investments, income from our BOLI policies, and other fee income, and continues to supplement our operating results. For the year ended December 31, 2024, we recorded noninterest income of $2.5 million compared to a loss of $13.4 million for same period of 2023.
Current wording
Noninterest income includes service charges on deposits and loans, loan swap fee income, income from our membership interest in ACM and other investments, income from our BOLI policies, and other fee income, and continues to supplement our operating results. For the year ended December 31, 2025, we recorded noninterest income of $3.6 million compared to a income of $2.5 million for same period of 2024.
Previous wording
Fee income from loans was $185 thousand for the year ended December 31, 2024, compared to $388 thousand for the same period of 2023, a result of decreased loan swap fee income. Service charges on deposits were $1.1 million for the year ended December 31, 2024, compared to $1.0 million for the same period of 2023, an increase of $98 thousand, or 10%. Income from BOLI decreased to $397 thousand for the year ended December 31, 2024 compared to $1.5 million for same period of 2023, the decrease being a result of surrendering our BOLI policies during the first quarter of 2024.
Current wording
Fee income from loans was $220 thousand for the year ended December 31, 2025, compared to $185 thousand for the same period of 2024. Service charges on deposits were $1.2 million for the year ended December 31, 2025, compared to $1.1 million for the same period of 2024, an increase of $122 thousand, or 11%. Income from BOLI decreased to $289 thousand forthe year ended December 31, 2025 compared to $397 thousand for same period of 2024, a direct result of the BOLI policies we surrendered during the first quarter of 2024.
Previous wording
Noninterest expense includes, among other things, salaries and benefits, occupancy and equipment costs, professional fees, data processing, insurance and miscellaneous expenses. Noninterest expense was $35.8 million and $36.7 million for the years ended December 31, 2024 and 2023, respectively.
Current wording
Noninterest expense includes, among other things, salaries and benefits, occupancy and equipment costs, professional fees, data processing, insurance and miscellaneous expenses. Noninterest expense was $37.6 million and $35.8 million for the years ended December 31, 2025 and 2024, respectively, an increase of $1.8 million, or less than 5%.
Previous wording
Salaries and benefits expense decreased $1.9 million to $18.8 million for the year ended December 31, 2024 compared to $20.6 million for the same period in 2023, which was primarily related to reduced staffing as a result of process improvements from technology investments. Occupancy expense decreased $330 thousand for the year ended December 31, 2024 compared to the same period of 2023, which was primarily related to the office space reduction initiatives that were completed during the fourth quarter of 2023. These decreases were partially offset by an increase in internet banking and software expense of $485 thousand to $3.0 million for the year ended December 31, 2024, compared to $2.5 million for the same period of 2023, a result of the implementation of enhanced customer software solutions during 2023. Lastly, loan related expenses increased $909 thousand during 2024 compared to the prior year, as we received a recovery of legal expenses in 2023 associated with a previous watchlist credit.
Current wording
Salaries and benefits expense increased $1.4 million to $20.1 million for the year ended December 31, 2025 compared to $18.8 million for the same period in 2024, which increase was due to the filling of open positions and market adjustments to existing positions along with an increase in the incentive compensation expense for 2025. Internet banking and software expense increased$461 thousand to $3.5 million for the year ended December 31, 2025, compared to $3.0 million for the same period of 2024, a result of the implementation of enhanced customer software solutions during 2025, which was offset by a decrease in data processing expenses totaling $483 thousand through negotiated contract renewals with certain service providers for the Bank completed in early 2025.
Previous wording
For the year ended December 31, 2024 and 2023, the provision for income taxes was $7.2 million and $410 thousand, respectively. The provision for income taxes for the year ended December 31, 2024 includes additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand related to the above mentioned surrender of our BOLI policies. Our effective tax rate, excluding the additional income taxes and penalties associated with our BOLI surrender, for December 31, 2024 was 22.0%. For the year ended December 31, 2023, our effective tax rate was 9.7%, which was reduced as a result of the losses recorded on the sale of investment securities available-for-sale during 2023.
Current wording
For the year ended December 31, 2025 and 2024, the provision for income taxes was $6.2 million and $7.2 million, respectively. The provision for income taxes for the year ended December 31, 2024 includes additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand related to the above mentioned surrender of our BOLI policies. Our effective tax rate for December 31, 2025 was 21.9%. Forthe year ended December 31, 2024, excluding the additional income taxes and penalties associated with our BOLI surrender, our effective tax rate was 22.0%.
Previous wording
At December 31, 2024, total assets were $2.20 billion, an increase of $8.4 million, from $2.19 billion at December 31, 2023. Investment securities were $156.7 million at December 31, 2024, a decrease of $15.1 million, from $171.9 million at December 31, 2023. Total deposits increased $25.3 million, or 1%, to $1.87 billion at December 31, 2024, from $1.85 billion at December 31, 2023. From time to time, we may utilize funding sources such as federal funds purchased and FHLB advances as an additional funding source for the Bank. We had no federal funds purchased at December 31, 2024 and December 31, 2023. The Bank had FHLB advances outstanding of $50.0 million and $85.0 million at December 31, 2024 and December 31, 2023, respectively. Subordinated debt, net of unamortized issuance costs, totaled $18.7 million and $19.6 million at December 31, 2024 and December 31, 2023, respectively.
Current wording
At December 31, 2025, total assets were $2.29 billion, an increase of $93.3 million, from $2.20 billion at December 31, 2024. Total loans, net of fees, increased $71.0 million, or 4%, to $1.94 billion at December 31, 2025 from $1.87 billion at December 31, 2024. Investment securities were $153.4 million at December 31, 2025, a decrease of $3.3 million, from $156.7 million at December 31, 2024. Total deposits increased $126.7 million, or 7%, to $2.00 billion at December 31, 2025, from $1.87 billion at December 31, 2024. From time to time, we may utilize funding sources such as federal funds purchased and FHLB advances as an additional funding source for the Bank. We had no federal funds purchased at December 31, 2025 and 2024. The Bank had no FHLB advances outstanding at December 31, 2025 compared to $50.0 million at December 31, 2024. Subordinated debt, net of unamortized issuance costs, totaled $18.8 million and$18.7 million at December 31, 2025 and 2024, respectively.
Previous wording
Loans receivable, net of deferred fees, were $1.87 billion at December 31, 2024 and $1.83 billion at December 31, 2023, an increase of $41.7 million, or 2%.
Current wording
Loans receivable, net of deferred fees, were $1.94 billion at December 31, 2025 and $1.87 billion at December 31, 2024, an increase of $71.0 million, or 4%.
Previous wording
Commercial real estate loans totaled $1.04 billion and $1.09 billion at December 31, 2024 and 2023, and were approximately 56% and 60% of the total loans receivable at such dates, respectively. Owner-occupied commercial real estate loans were $187.8 million at December 31, 2024 compared to $212.9 million at December 31, 2023. Nonowner-occupied commercial real estate loans were $850.1 million at December 31, 2024 compared to $878.7 million at December 31, 2023. Commercial construction loans totaled $162.4 million at December 31, 2024, compared to $148.0 million at December 31, 2023 and comprised of 9% and 8% of total loans receivable at such dates, respectively. Our regulatory commercial real estate concentration (which includes nonowner-occupied real estate and construction loans) was 371% of our total risk-based capital at December 31, 2024. Our commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of our portfolio in a disciplined manner. We have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring and administrative practices. Additional information on the stratification of these portfolio segments can be found below under "Asset Quality".
Current wording
Commercial real estate loans totaled $1.03 billionand $1.04 billion at December 31, 2025 and 2024, respectively, and were approximately 53% and 56% of the total loans receivable at such dates, respectively. Owner-occupied commercial real estate loans were $266.3 million at December 31, 2025 compared to $188.2 million at December 31, 2024. Nonowner-occupied commercial real estate loans were $766.3 million at December 31, 2025 compared to $850.1 million at December 31, 2024. Commercial construction loans totaled $153.0 million at December 31, 2025, compared to $162.4 million at December 31, 2024 and comprised of 8% and 9% of total loans receivable at such dates, respectively. Our regulatory commercial real estate concentration (which includes nonowner-occupied real estate and construction loans) was 313% of our total risk-based capital at December 31, 2025. Our commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of our portfolio in a disciplined manner. We have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring and administrative practices. Additional information on the stratification of these portfolio segments can be found below under "Asset Quality".
Previous wording
Commercial and industrial loans increased $116.8 million to $336.7 million at December 31, 2024, an increase of 53%, from $219.9 million at December 31, 2023. Consumer residential loans decreased $38.0 million to $325.3 million at December 31, 2024, from $363.3 million at December 31, 2023. The decrease in residential loans was primarily a result of principal repayments during 2024.
Current wording
$30.0 million at December 31, 2025 compared to $22.4 million at December 31, 2024. Consumer residential loans decreased $28.3 million to $297.0 million at December 31, 2025, from $325.3 million at December 31, 2024. The decrease in residential loans was primarily a result of principal repayments during 2025.
Previous wording
Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest and still accruing, were $12.9 million and $1.8 million at December 31, 2024 and 2023, respectively, an increase of $11.0 million. The increase in nonperforming loans at December 31, 2024 is primarily a result of one commercial real estate loan placed on nonaccrual during the fourth quarter of 2024, totaling $10.3 million. Loans that we have classified as nonperforming are a result of customer specific deterioration, mostly financial in nature, that are not a result of economic, industry, or environmental causes that we might see as a pattern for possible future losses within our loan portfolio. For each of our criticized assets, we individually evaluate each loan, generally through the performance of a collateral analysis to determine the amount of allowance required. As a result of the analysis completed, we had a reserve for individually assessed loans totaling $468 thousand and $676 thousand at December 31, 2024 and 2023, respectively. Our ratio of nonperforming loans to total assets was 0.58% and 0.08% at December 31, 2024 and 2023, respectively. We had no other real estate owned and there were no loan modifications for borrowers who were experiencing financial difficulty during the quarter ended December 31, 2024.
Current wording
Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principalor interest and still accruing, were $10.7 million and $12.9 million at December 31, 2025 and 2024, respectively, a decrease of $2.2 million. The decrease in nonperforming loans at December 31, 2025 is primarily a result of the payoff of three loans totaling $520 thousand, one loan upgraded to pass totaling $382 thousand, and a decrease in loans past due 90 days or more and still accruing totaling $861 thousand. Loans that we have classified as nonperforming are a result of customer specific deterioration, mostly financial in nature, that are not a result of economic, industry, or environmental causes that we might see as a pattern for possible future losses within our loan portfolio. For each of our criticized assets, we individually evaluate each loan, generally through the performance of a collateral analysis to determine the amount of allowance required. As a result of the analysis completed, we had a reserve for individually assessed loans totaling $1.1 million and $468 thousand at December 31, 2025 and 2024, respectively. Our ratio of nonperforming loans to total assets was 0.47% and 0.58% at December 31, 2025 and 2024, respectively. We had no other real estate owned and there were no loan modifications for borrowers who were experiencing financial difficulty during the year ended December 31, 2025.
Previous wording
We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. At December 31, 2024, we had $3.3 million in loans identified as special mention, a decrease of $3.0 million from December 31, 2023. Special mention rated loans have a potential weakness that deserves our close attention; however, the borrower continues to pay in accordance with their contractual terms, unless modified and disclosed. The decrease from December 31, 2023 was driven by several loans that were upgraded from special mention or paid off during 2024. Loans rated as special mention are generally considered to be well-secured, and are not individually evaluated.
Current wording
We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. At December 31, 2025, we had $47.7 million in loans identified as special mention, an increase of $44.4 million from December 31, 2024. Special mention rated loans have a potential weakness that deserves our close attention; however, the borrower continues to pay in accordance with their contractual terms, unless modified and disclosed. Loans rated as special mention are generally considered to be well-secured, and are not individually evaluated. The increase from December 31, 2024 was a result of five loans downgraded to special mention during 2025. Four of these loans are commercial real estate loans, with collateral in retail, mixed-use and multifamily, each located in Washington, D.C. Three of the four loans have executed listing agreements are currently either listed for sale or are in the process thereof. The Company expects that some of these properties will close prior to the end of the second quarter of 2026. These loans are well-secured with updated valuations as of December 31, 2025, and are not individually impaired. We believe there will be satisfactory resolution to each of these loans.
Previous wording
At December 31, 2024, we had $11.2 million in loans identified as substandard, a decrease of $11.2 million from December 31, 2023. Substandard rated loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. For each of these substandard loans, a liquidation analysis is completed. At December 31, 2024, reserves for individually assessed loans totaling $468 thousand were allocated within the allowance for credit losses to supplement any shortfall of collateral. At December 31, 2024, we downgraded a non-owner occupied commercial real estate loan to substandard and placed it on nonaccrual as a result of its past due status and recent poor payment history.
Current wording
At December 31, 2025, we had $10.2 million in loans identified as substandard, a decrease of $1.0 million from December 31, 2024. Substandard rated loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. For each of these substandard loans, an individual analysis is completed. At
Previous wording
We recorded net charge-offs of $840 thousand and $375 thousand for the years ended December 31, 2024, and 2023, respectively. Net charge-offs to average loans were 0.04% and 0.02% for the years ended December 31, 2024 and 2023, respectively. The increase in net charge-offs for the year ended December 31, 2024 is a result of two loan relationships that were individually evaluated and for which reserves had been established for the shortfall of the related collateral. Each loan relationship had specific circumstances that are not indicative of any systemic issues within the Company’s loan portfolio.
Current wording
We recorded net charge-offs of $871 thousand and$840 thousand for the years ended December 31, 2025 and 2024, respectively. Net charge-offs to average loans were 0.05% and 0.04% for the years ended December 31, 2025 and 2024, respectively. Net charge-offs for the year ended December 31, 2025 were primarily comprised of two unsecured small business loans. Each loan relationship had specific circumstances that are not indicative of any systemic issues within the Company’s loan portfolio.
Previous wording
We closely and proactively monitor the effects of recent market activity. As mentioned above, our commercial real estate loan portfolio totaled $1.04 billion, or 56% of total loans, at December 31, 2024 and $1.09 billion, or 60% of total loans, at December 31, 2023. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of the portfolio in a disciplined manner, and have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring, and administrative practices. Included in commercial real estate are loans secured by office properties totaling $123.8 million, or 7% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with only $2.3 million, or 0.12% of total loans, located in Washington, D.C. Loans secured by retail properties total $251.0 million, or 13% of total loans, at December 31, 2024. Loans secured by multi-family commercial properties totaled $162.8 million, or 9% of total loans, at December 31, 2024.
Current wording
We closely and proactively monitor the effects of recent market activity. As mentioned above, our commercial real estate loan portfolio totaled $1.03 billion, or 53% of total loans, at December 31, 2025 and $1.04 billion, or 56% of total loans, at December 31, 2024. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of the portfolio in a disciplined manner, and have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring, and administrative practices. Included in commercial real estate are loans secured by office properties tota ling $149.2 million, or 8% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with only $1.0 million, or 0.05% oftotal loans, located in Washington, D.C. Loans secured by retail properties totaled $215.5 million, or 11% of total loans, at December 31, 2025, with $8.9 million, or less than 0.46% of total loans, located in Washington, D.C. Loans secured by multi-family commercial properties totaled $179.5 million, or 9% of total loans, at December 31, 2025, with $98.7 million, or 5% of total loans, located in Washington, D.C.
Previous wording
The loans shown in the above table exhibit strong credit quality, with one classified delinqency at December 31, 2024 totaling $10.2 million, which has a specific reserve of $468 thousand. During our assessment of the allowance for credit losses on loans, we addressed the credit risks associated with these portfolio segments and believe that as a result of our conservative underwriting discipline at loan origination and our ongoing loan monitoring procedures, we have appropriately reserved for possible credit concerns in the event of a downturn in economic activity.
Current wording
The loans shown in the above table exhibit strong credit quality, with one classified delinquency at December 31, 2025 totaling $10.2 million. During our assessment of the allowance for credit losses on loans, we addressed the credit risks associated with these portfolio segments and believe that as a result of our conservative underwriting discipline at loan origination and our ongoing loan monitoring procedures, we have appropriately reserved for possible credit concerns in the event of a downturn in economic activity.
Previous wording
Our investment securities portfolio is used as a source of income and liquidity. The investment portfolio consists of investment securities available-for-sale and investment securities held-to-maturity. Investment securities available-for-sale are those securities that we intend to hold for an indefinite period of time, but not necessarily until maturity. These securities are carried at fair value and may be sold as part of an asset/liability strategy, liquidity management, or regulatory capital management. Investment securities held-to-maturity at December 31, 2024 and 2023 totaled $265 thousand and $264 thousand, respectively, and are those securities that we have the intent and ability to hold to maturity and are carried at amortized cost. The fair value of our investment securities available-for-sale was $156.5 million at December 31, 2024, a decrease of $15.1 million, or 9%, from $170.6 million at December 31, 2023, primarily due to principal repayments and maturities of $15.6 million offset by new purchases for $1.8 million, and a decrease in the market value of the investment securities portfolio totaling $1.3 million at December 31, 2024.
Current wording
Our investment securities portfolio is used as a source of income and liquidity. The investment portfolio consists of investment securities available-for-sale and investment securities held-to-maturity. Investment securities available-for-sale are those securities that we intend to hold for an indefinite period of time, but not necessarily until maturity. These securities are carried at fair value and may be sold as part of an asset/liability strategy, liquidity management, or regulatory capital management. Investment securities held-to-maturity at each of December 31, 2025 and 2024 totaled $265 thousand, and are those securities that we have the intent and ability to hold to maturity and are carriedat amortized cost. The fair value of our investment securities available-for-sale was $153.2 million at December 31, 2025, a decrease of $3.3 million, or 2%, from $156.5 million at December 31, 2024, primarily due to principal repayments, calls and maturities of $16.3 million, offset by new purchases of $2.9 million, and an increase in the market value of the investment securities portfolio totaling $10.2 million at December 31, 2025.
Previous wording
As of December 31, 2024 and 2023, the majority of the investment securities portfolio consisted of securities rated AAA by a leading rating agency. Investment securities which carry a AAA rating are judged to be of the best quality and carry the smallest degree of investment risk. All of our mortgage-backed securities are guaranteed by either the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association. The effective duration of the investment securities portfolio continues to be slightly over five years, which is within the industry average. Investment securities that were pledged to secure public deposits totaled $55.3 million and $7.2 million at December 31, 2024 and 2023, respectively. There were no investment securities that were pledged to secure FRB borrowings at December 31, 2024 and December 31, 2023, respectively.
Current wording
At December 31, 2025 and 2024, the majority of the investment securities portfolio consisted of securities rated AAA by a leading rating agency. Investment securities which carry a AAA rating are judged to be of the best quality and carry the smallest degree of investment risk. All of our mortgage-backed securities are guaranteed by either the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association. The effective duration of the investment securities portfolio is 5.25 years, which is within the industry average. Investment securities that were pledged to secure public deposits totaled $19.4 millionand $55.1 million at December 31, 2025 and 2024, respectively. There were no investment securities that were pledged to secure FRB borrowings at December 31, 2025 and December 31, 2024, respectively.
Previous wording
In accordance with ASC 326, we complete periodic assessments on at least a quarterly basis to determine if credit deterioration exists within our investment securities portfolio and if an allowance for credit losses would be required as of a valuation date. As a result of the assessment performed as of December 31, 2024, the investment securities with unrealized losses are a result of pricing changes due to recent rising interest rate conditions in the current market environment and not as a result of credit deterioration. Contractual cash flows for agency-backed portfolios are guaranteed and funded by the U.S. government. Municipal securities have third party protective elements and there are no negative indications that the contractual cash flows will not be received when due. We do not intend to sell nor do we believe we will be required to sell any of our investment securities portfolio prior to the recovery of the amortized cost as of the valuation date. As such, no impairment was recognized for our investment securities portfolio as of December 31, 2024.
Current wording
In accordance with ASC 326, we complete periodic assessments on at least a quarterly basis to determine if credit deterioration exists within our investment securities portfolio and if an allowance for credit losses would be required as of a valuation date. As a result of the assessment performed as of December 31, 2025, the investment securities with unrealized losses are a result of pricing changes due to recent rising interest rate conditions in the current market environment and not as a result of credit deterioration. Contractual cash flows for agency-backed portfolios are guaranteed and funded by the U.S. government. Municipal securities have third party protective elements and there are no negative indications that the contractual cash flows will not be received when due. We do not intend to sell nor do we believe we will be required to sell any of our investment securities portfolio prior to the recovery of the amortized cost as of the valuation date. As such, no allowance for credit losses was recognized for our investment securities portfolio as of December 31, 2025.
Previous wording
We hold restricted investments in equities of the FRB and FHLB. At December 31, 2024, we owned $4.1 million in FRB stock and $4.0 million in FHLB stock. At December 31, 2023, we owned $3.6 million in FRB stock and $5.8 million in FHLB stock.
Current wording
We hold restricted investments in equities of the FRB and FHLB. At December 31, 2025, we owned $3.6 million in FRB stock and $1.7 million in FHLB stock. At December 31, 2024, we owned $4.1 million in FRB stock and $4.0 million in FHLB stock.
Showing the first 40 of 54 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off.
Current report — wording carried from elsewhere
December 31, 2025, reserves for individually assessed loans totaled $1.1 million and were allocated within the allowance for credit losses to supplement any shortfall of collateral.
Current report — wording carried from elsewhere
At December 31, 2024, we downgraded a non-owner occupied commercial real estate loan to substandard and placed it on nonaccrual as a result of its past due status and recent poor payment history. During the assessment of our ACL for December 31, 2025, we received an updated valuation of the collateral associated with this loan, which caused its specific reserve to increase $646 thousand to $1.1 million from the prior year end.