FVCBankcorp, Inc.

Previous wording

The following presents management’s discussion and analysis of our consolidated financial condition at March 31, 2026 and December 31, 2025 and the results of our operations for the three months ended March 31, 2026 and 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto appearing elsewhere in this report and the audited consolidated financial statements and the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations.

Current wording

The following presents management’s discussion and analysis of our consolidated financial condition at June 30, 2026 and December 31, 2025 and the results of our operations for the three and six months ended June 30, 2026 and 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto appearing elsewhere in this report and the audited consolidated financial statements and the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations.

Previous wording

This Form 10-Q, as well as other periodic reports filed with the U.S. Securities and Exchange Commission (the "SEC"), and written or oral communications made from time to time by or on behalf of FVCBankcorp, Inc. and our subsidiary (the “Company”), may contain statements relating to future events or our future results that are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements.

Current wording

This Form 10-Q, as well as other periodic reports filed with the U.S. Securities and Exchange Commission (the "SEC"), and written or oral communications made from time to time by or on behalf of FVCBankcorp, Inc. and our subsidiary (the “Company”), may contain statements relating to future events or our future results that are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phrases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements.

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 our minority membership interest in Atlantic Coast Mortgage ("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 Atlantic Coast Mortgage, LLC ("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

The determination of the appropriate level of the ACL on loans inherently involves a high degree of subjectivity and requires us to make significant judgments concerning credit risks and trends using quantitative and qualitative information, as well as reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and significant changes. Changes in conditions, including unforeseen events, changes in asset-specific risk characteristics, and other economic factors, both within and outside our control, may indicate the need for an increase or decrease in the ACL on loans. While we make every effort to utilize the best information available in making our assessment of the ACL estimate, the estimation process is inherently challenging as potential changes in any one factor or input may occur at different rates and/or impact pools of loans in different ways. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others. Our methodology utilized in the estimation of the ACL, which is performed at least quarterly, is designed to be dynamic and responsive to changes in our loan portfolio credit quality, composition, and forecasted economic conditions. The review of the reasonableness and appropriateness of the ACL is reviewed by the ACL Committee for approval as of the valuation date. Additionally, information is provided to the Board of Directors on a quarterly basis along with our consolidated financial statements.

Current wording

The determination of the appropriate level of the ACL on loans inherently involves a high degree of subjectivity and requires us to make significant judgments concerning credit risks and trends using quantitative and qualitative information, as well as reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and significant changes. Changes in conditions, including unforeseen events, changes in asset-specific risk characteristics, and other economic factors, both within and outside our control, may indicate the need for an increase or decrease in the ACL on loans. While we make every effort to utilize the best information available in making our assessment of the ACL estimate, the estimation process is inherently challenging as potential changes in any one factor or input may occur at different rates and/or impact pools of loans in different ways. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others. Our methodology utilized in the estimation of the ACL, which is performed at least quarterly, is designed to be dynamic and responsive to changes in our loan portfolio credit quality, composition, and forecasted economic conditions. The reasonableness and appropriateness of the ACL is reviewed by the ACL Committee for approval as of the valuation date. Additionally, information is provided to the Board of Directors on a quarterly basis along with our consolidated financial statements.

Previous wording

Results of Operations— Three Months Ended March 31, 2026 and 2025

Current wording

Results of Operations— Three and Six Months Ended June 30, 2026 and 2025

Previous wording

We recorded net income of $6.4 million, or $0.35 diluted earnings per share, for the three months ended March 31, 2026, compared to net income of $5.2 million, or $0.28 diluted earnings per share, for the three months ended March 31, 2025, an increase of $1.2 million, or 24%.

Current wording

We recorded net income of $8.2 million, or $0.45 diluted earnings per share, for the three months ended June 30, 2026, compared to net income of $5.7 million, or $0.31 diluted earnings per share, for the three months ended June 30, 2025, an increase of $2.6 million, or 45%.

Previous wording

Net interest income increased $2.4 million, or 16%, to $17.4 million for the three months ended March 31, 2026, compared to $15.1 million for the same period of 2025. Provision for credit losses totaled $168 thousand for the three months ended March 31, 2026 compared to $200 thousand for the three months ended March 31, 2025.

Current wording

Net interest income increased $3.4 million, or 22%, to $19.1 million for the three months ended June 30, 2026, compared to $15.8 million for the same period of 2025. Provision for credit losses totaled $241 thousand for the three months ended June 30, 2026 compared to $105 thousand for the three months ended June 30, 2025.

Previous wording

The annualized return on average assets for the three months ended March 31, 2026 and 2025 was 1.17% and 0.94%, respectively. The annualized return on average equity for the three months ended March 31, 2026 and 2025 was 10.04% and 8.61%, respectively.

Current wording

The annualized return on average assets for the three months ended June 30, 2026 and 2025 was 1.48% and 1.02%, respectively. The annualized return on average equity for the three months ended June 30, 2026 and 2025 was 12.50% and 9.39%, respectively.

Previous wording

Core operating earnings (non-GAAP) for the three months ended March 31, 2026 and 2025 were $6.6 million and $5.2 million, respectively, an increase of $1.4 million, or 27%. Diluted core operating earnings per share (non-GAAP) for the three months ended March 31, 2026 and 2025 were $0.36 and $0.28, respectively.

Current wording

Diluted core operating earnings per share (non-GAAP) for the three months ended June 30, 2026 and 2025 were $0.42 and $0.30, respectively. For the six months ended June 30, 2026 and 2025, diluted core operating earnings per share were $0.78 and $0.58, respectively.

Previous wording

The following table presents average balance information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended March 31, 2026 and 2025.

Current wording

The following table presents average balance information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended June 30, 2026 and 2025. Average balance presented are based on daily average for each of the periods presented.

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 quarters presented. Net loan fees and late charges included in interest income on loans totaled $331 thousand and $670 thousandfor the quarters ended March 31, 2026 and 2025, 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 quarters presented. Net loan fees and late charges included in interest income on loans totaled $1.6 million and $501 thousandfor the quarters ended June 30, 2026 and 2025, respectively.

Previous wording

Net interest income totaled $17.4 million for the three months ended March 31, 2026 compared to $15.1 million for the three months ended March 31, 2025, an increase of $2.4 million, or 16%. The increase in net interest income is primarily due to an increase in loan interest income from both increased yields on and the level of average loans receivable.

Current wording

Net interest income totaled $19.1 million for the three months ended June 30, 2026 compared to $15.8 million for the three months ended June 30, 2025, an increase of $3.4 million, or 22%. The increase in net interest income for the second quarter of 2026 compared to the year ago quarter was primarily due to an increase in interest income from both increased yields on and level of average loans receivable. Additionally, we recorded $1.0 million in loan fees related to the prepayment of a commercial real estate loan during the second quarter of 2026. Interest expense decreased compared to the year ago quarter as deposits continue to reprice to lower interest rates.

Previous wording

Average loans receivable increased $65.0 million to $1.93 billion for the three months ended March 31, 2026, compared to $1.87 billion for the three months ended March 31, 2025. The yield on average loans increased 19 basis points to 5.88% for the three months ended March 31, 2026, compared to 5.69% for the three months ended March 31, 2025. The increase in our average loan yields was primarily a result of new loan originations and loans repricing to current market interest rates and the increase in the volume of commercial and industrial loans. 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 2026 and 2025.

Current wording

Average loans receivable increased $59.5 million to $1.92 billion for the three months ended June 30, 2026, compared to $1.86 billion for the three months ended June 30, 2025. The yield on average loans increased 33 basis points to 6.13% for the three months ended June 30, 2026, compared to 5.80% for the three months ended June 30, 2025. Included in loan interest income are net loan fees related to the net accretion of origination fees and collection of prepayment penalties. For the three months ended June 30, 2026, net loan fees included in interest income increased $1.1 million to $1.6 million compared to $501 thousand for the three months ended June 30, 2025, primarily due to the aforementioned early prepayment of a commercial real estate loan during the second quarter of 2026. When excluding this early prepayment fee, the yield on loans for the second quarter of 2026 was 5.93%, an increase of 13 basis points when compared to the year ago quarter ended June 30, 2025, as average loan yields continue to increase through new loan originations and loans repricing to current market interest rates. 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 2026 and 2025.

Previous wording

Average interest-earning deposits at other financial institutions, consisting primarily of excess cash reserves maintained at the Federal Reserve, decreased $35.6 million to $52.2 million for the quarter ended March 31, 2026, compared to $87.8 million for the quarter ended March 31, 2025. The decrease in our excess cash reserves is primarily due to an increase in loan originations, as average loans receivable increased $65.0 million year-over-year. The yield on average interest-earning deposits at other financial institutions decreased 70 basis points to 3.69% for the quarter ended March 31, 2026 compared to 4.39% for the same period of 2025, primarily as a result of the Federal Open Market Committee's decision to decrease its targeted federal funds rate 75 basis points during the course of 2025.

Current wording

Average interest-bearing deposits at other financial institutions, consisting primarily of excess cash reserves, decreased $50.3 million to $72.7 million for the quarter ended June 30, 2026, compared to $123.0 million for the quarter ended June 30, 2025. The decrease in our excess cash reserves is primarily due to an increase in loan originations, as average loans receivable increased $59.5 million year-over-year. The yield on average interest-bearing deposits at other financial institutions decreased 78 basis points to 3.67% for the quarter ended June 30, 2026 compared to 4.45% for the same period of 2025, primarily as a result of the Federal Open Market Committee's decision to decrease its targeted federal funds rate 75 basis points during the course of 2025.

Previous wording

Interest expense decreased $1.1 million to $12.4 million for the three months ended March 31, 2026, compared to $13.5 million for the three months ended March 31, 2025. The cost of interest-bearing liabilities decreased 27 basis points to 3.19% for the three months ended March 31, 2026 compared to 3.46% for the three months ended March 31, 2025. The decrease in the average rate was the primary driver of the decrease in interest expense for the first quarter of 2026 compared to the same period of 2025.

Current wording

Total average interest-bearing liabilities was $1.56 billion and $1.60 billion for the three months ended June 30, 2026 and 2025, respectively. Our cost of interest-bearing liabilities decreased 35 basis points to 3.07% for the three months ended June 30, 2026, compared to 3.42% for the same period of 2025. Interest expense decreased $1.7 million to $11.9 million for the three months ended June 30, 2026, compared to $13.7 million for the three months ended June 30, 2025. The decrease in the average rate was the primary driver of the decrease in interest expense for the second quarter of 2026 compared to the same period of 2025, a result of the aforementioned decrease in the targeted federal funds rate during 2025.

Previous wording

Total average interest-bearing deposits increased $32.0 million to $1.55 billion for the three months ended March 31, 2026 compared to $1.51 billion for the three months ended March 31, 2025. Interest expense on deposits decreased $1.1 million to $11.7 million for the three months ended March 31, 2026 compared to $12.8 million for the three months ended March 31, 2025, primarily as a result of the decrease in interest rates on interest-bearing deposits for the three months ended March 31, 2026. The cost of interest-bearing deposits decreased 36 basis points to 3.07% for the three months ended March 31, 2026 compared to 3.43% for the same period of 2025. Average noninterest-bearing deposits increased $827 thousand to $355.5 million for the three months ended March 31, 2026, compared to $354.6 million for the three months ended March 31, 2025. Average wholesale deposits decreased $11.1 million to $238.8 million for the three months ended March 31, 2026 compared to $249.9 million for the three months ended March 31, 2025. Cost of deposits (which includes noninterest-bearing deposits) was 2.50% for the three months ended March 31, 2026 compared to 2.78% for the same three month period of 2025, a decrease of 28 basis points, or 10%.

Current wording

Total average interest-bearing deposits decreased $12.3 million to $1.52 billion for the three months ended June 30, 2026 compared to $1.53 billion for the three months ended June 30, 2025. Interest expense on deposits decreased $1.6 million to $11.4 million for the three months ended June 30, 2026 compared to $13.0 million for the three months ended June 30, 2025, primarily as a result of the decrease in interest rates on interest-bearing deposits. The cost of interest-bearing deposits decreased 40 basis points to 2.99% for the three months ended June 30, 2026 compared to 3.39% for the same period of 2025. Average noninterest-bearing deposits increased $17.7 million to $379.3 million for the three months ended June 30, 2026, compared to $361.6 million for the three months ended June 30, 2025. Average wholesale deposits decreased $48.3 million to $199.3 million for the three months ended June 30, 2026 compared to $247.6 million for the three months ended June 30, 2025. Cost of deposits (which includes noninterest-bearing deposits) was 2.40% for the three months ended June 30, 2026 compared to 2.74% for the same three month period of 2025, a decrease of 34 basis points, or 12%.

Previous wording

Average other borrowed funds decreased $34.8 million to $15.2 million for the quarter ended March 31, 2026, compared to $50.0 million for the quarter ended March 31, 2025. Interest expense on other borrowed funds decreased $320 thousand, or 68%, for the quarter ended March 31, 2026 to $148 thousand compared to $468 thousand for the same period of 2025. The cost of other borrowed funds increased 13 basis points to 3.93% for the three months ended March 31, 2026 compared to 3.80% for the three months ended March 31, 2025.

Current wording

Average other borrowed funds decreased $40.3 million to $9.7 million for the quarter ended June 30, 2026, compared to $50.0 million for the quarter ended June 30, 2025. Interest expense on other borrowed funds decreased $372 thousand, or 79%, to $96 thousand for the quarter ended June 30, 2026, compared to $468 thousand for the same period of 2025. The cost of other borrowed funds increased 21 basis points to 3.96% for the three months ended June 30, 2026 compared to 3.75% for the three months ended June 30, 2025.

Previous wording

Average interest-earning assets for the three months ended March 31, 2026 increased $14.0 million to $2.17 billion compared to $2.15 billion for the three months ended March 31, 2025. This increase was primarily related to an increase in loans receivable, which increased $65.0 million, or 3%, offset by a decrease in interest-bearing deposits at other financial institutions of $35.6 million, or 41%. Total interest income increased $1.3 million, or 4%, to $29.8 million for the three months ended March 31, 2026 compared to $28.6 million for the three months ended March 31, 2025. The increase in our average volume of interest earning assets was the main driver to the increase in our interest income, contributing $901 thousand of the increase for the three months ended March 31, 2026 compared to the year ago quarter, in addition to the average rate which increased interest income by $363 thousand.

Current wording

Average interest-earning assets for each of the six month periods ended June 30, 2026 and 2025 was $2.17 billion. The yield on interest-earning assets increased 29 basis points to 5.61% for the six months ended June 30, 2026, compared to 5.32% for the same period of 2025. Total interest income increased $2.9 million, or 5%, to $60.9 million for the six months ended June 30, 2026 compared to $58.0 million for the six months ended June 30, 2025. The increase in average volume was the main driver of the increase to our interest income, contributing $2.8 million of the increase for the six months ended June 30, 2026, compared to the same six month period of 2025, along with an increase in the average rate which increased interest income by $1.5 million.

Previous wording

Average long-term debt, net of issuance costs, includes our subordinated debt issued in October 2020 until it was redeemed on January 15, 2026 and our unsecured senior notes since their issuance on February 11, 2026. Upon redemption of our subordinated debt on January, 15, 2026, we recognized $244 thousand in unamortized issuance costs associated with that debt issuance, which increased interest expense to $566 thousand for the three months ended March 31, 2026. Excluding these debt issuance costs, interest expense would have been $322 thousand, an increase of $77 thousand from the year ago quarter ended March 31, 2025, which was primarily due to the subordinated debt reverting from a fixed rate of 4.77% to a floating rate paying 3-month Secured Overnight Funding Rate ("SOFR") plus 471 basis points, or 8.59%, in October 2025. In addition, excluding the recognition of the unamortized debt issuance costs, the cost of long-term debt for the quarter ended March 31, 2026 was 8.05%, an increase of 273 basis points from 5.32% for the quarter ended March 31, 2025. The unsecured senior notes pay a fixed rate of 6.75%, a decrease of 184 basis points from 8.59% on the floating rate subordinated debt.

Current wording

As mentioned earlier in this discussion, average long-term debt, net of issuance costs, included our subordinated debt issued in October 2020 until it was redeemed on January 15, 2026 and our unsecured senior notes since their issuance on February 11, 2026. For the six months ended June 30, 2025, our subordinated debt paid a fixed rate of 4.77%. The unsecured senior notes pay a fixed rate of 6.75%. Upon redemption of our subordinated debt on January, 15, 2026, we recognized $244 thousand in unamortized issuance costs associated with that debt issuance, which contributed to the increase in interest expense to $1.0 million for the six months ended June 30, 2026. Excluding these debt issuance costs, interest expense would have been $798 thousand, an increase of $308 thousand from the six months ended June 30, 2025. In addition, excluding the recognition of the unamortized debt issuance costs, the cost of long-term debt for the six months ended June 30, 2026 was 7.90%, an increase of 261 basis points from 5.29% for the six months ended June 30, 2025.

Previous wording

We recorded a provision for credit losses of $168 thousand for the three months ended March 31, 2026 and $200 thousand for the three months ended March 31, 2025. The allowance for credit losses was $19.1 million and $18.9 million at March 31, 2026 and December 31, 2025, respectively. Our allowance for credit losses as a percent of total loans, net of deferred fees and costs, was 1.00% and 0.97%for March 31, 2026 and December 31, 2025, respectively. The increase in the allowance for credit losses percentage at March 31, 2026 as compared to December 31, 2025 was due to an increase in our individually evaluated reserves and a slight increase in qualitative factors.

Current wording

We recorded a provision for credit losses of $241 thousand and $409 thousandfor the three and six months ended June 30, 2026, respectively, compared to provision for credit losses of $105 thousand and $305 thousand for the three and six months ended June 30, 2025, respectively. The allowance for credit losseswas $19.2 million and $18.9 million at June 30, 2026 and December 31, 2025, respectively. Our allowance for credit losses as a percent of total loans, net of deferred fees and costs, was 1.01% and 0.97% for June 30, 2026 and December 31, 2025, respectively.

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 changes in economic conditions, such as inflation and recessionary conditions, changes in market interest rates, and changes in government policy. Nonperforming loans, net of fees, at March 31, 2026 totaled $12.2 million, or 0.52% of total assets, compared to $10.7 million, or 0.47% of total assets at December 31, 2025. We had no other real estate owned at March 31, 2026 and December 31, 2025. We recorded net charge-offs of $3 thousand and net recoveries of $139 thousand for the quarters ended March 31, 2026 and 2025, 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 changes in economic conditions, such as inflation and recessionary conditions, changes in market interest rates, and changes in government policy. Nonperforming loans, net of fees, at June 30, 2026 totaled $11.4 million, or 0.48% of total assets, compared to $10.7 million, or 0.47% of total assets at December 31, 2025. We had no other real estate owned at June 30, 2026 and December 31, 2025.

Previous wording

The following table provides detail for noninterest incomefor the three months ended March 31, 2026 and 2025.

Current wording

The following table provides detail for noninterest incomefor the three and six months ended June 30, 2026 and 2025.

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 bank-owned life insurance ("BOLI") policies, and other fee income, and continues to supplement our operating results. For the three months ended March 31, 2026 and 2025, we recorded noninterest income of $883 thousand and $671 thousand, respectively, an increase of $212 thousand, or 32%.

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 bank-owned life insurance ("BOLI") policies, and other fee income, and continues to supplement our operating results.

Previous wording

The following table reflects the components of noninterest expense for the three months ended March 31, 2026 and 2025.

Current wording

The following table reflects the components of noninterest expense for the three and six months ended June 30, 2026 and 2025.

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 $9.9 million and $9.1 million for the three months ended March 31, 2026 and 2025, respectively, an increase of $739 thousand, or 8%.

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 $10.6 million and $9.4 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $1.2 million, or 12%.

Previous wording

Salaries and benefits expense increased $659 thousand to $5.4 million for the three months ended March 31, 2026 compared to $4.8 million for the same period in 2025. The increase in salaries and benefits expense when compared to the year ago quarter ended March 31, 2025 was primarily due to the filling of open positions that were vacant during 2025, along with an increase in payroll taxes and other incentive accruals during the first quarter of 2026. Internet banking and software expense increased $59 thousand for the three months ended March 31, 2026 to $884 thousand, compared to $825 thousand for the same period in 2025, primarily as we continue to enhance our customer digital solutions.

Current wording

Compared to the year ago quarter, salaries and benefits expense increased $892 thousand, or 18%, for the three months ended June 30, 2026. The increases in salaries and benefits expense when compared to the year ago quarter was primarily a result of the addition of lending and business development personnel, the filling of vacant positions, along with an increase in other incentive accruals and equity compensation vesting during the second quarter of 2026. Full-time equivalent employees have increased from 118 at June 30, 2025, and 122 at December 31, 2025, to 135 at June 30, 2026. Internet banking and software expense increased $20 thousand to $884 thousand for the second quarter of 2026 compared to $864 thousand for the year ago quarter ended June 30, 2025. Data processing and network administration expense increased $146 thousand to $696 thousand for the quarter ended June 30, 2026 when compared to the year ago quarter, primarily as a result of an increase in customer banking transactions processed by our core processor. We continue to remain focused on operating efficiencies and diligently identifying opportunities to reduce expenses.

Previous wording

We recorded a provision for income tax expense of $1.9 million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate for the three months ended March 31, 2026 and 2025 was 22.6% and 19.2%, respectively. In 2026, the Company recorded fewer tax benefits associated with the exercise or vesting of share based compensation.

Current wording

We recorded a provision for income tax expense of $2.2 million and $1.6 million for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025 was 21.5% and 21.7%, respectively.

Previous wording

At March 31, 2026, total assets were $2.34 billion, an increase of $43.2 million, from $2.29 billion at December 31, 2025. Total loans, net of fees, decreased $18.0 million, or 1%, to $1.92 billion at March 31, 2026 from $1.94 billion at December 31, 2025. Investment securitieswere $150.6 million at March 31, 2026, a decrease of $2.8 million, from $153.4 million at December 31, 2025. Total deposits increased $30.5 million, or 2%, to $2.03 billion at March 31, 2026, from $2.00 billion at December 31, 2025. From time to time, we may utilize funding sources such as federal funds purchased and Federal Home Loan Bank ("FHLB") advances as an additional funding source for the Bank. We had no federal funds purchased at March 31, 2026 or December 31, 2025. The Bank had no FHLB advances outstanding at March 31, 2026 or December 31, 2025. Long-term debt, net of issuance costs, totaled $24.5 million and$18.8 million at March 31, 2026 and December 31, 2025, respectively.

Current wording

At June 30, 2026, total assets were $2.37 billion, an increase of $74.9 million, from $2.29 billion at December 31, 2025. Total loans, net of fees, decreased $41.9 million, or 2%, to $1.90 billion at June 30, 2026 from $1.94 billion at December 31, 2025. Investment securities were $147.2 million at June 30, 2026, a decrease of $6.2 million, from $153.4 million at December 31, 2025. Total deposits increased $54.5 million, or 3%, to $2.05 billion at June 30, 2026, from $2.00 billion at December 31, 2025. 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 June 30, 2026 or December 31, 2025. The Bank had no FHLB advances outstanding at June 30, 2026 or December 31, 2025. Long-term debt, net of issuance costs, totaled $24.5 million and $18.8 million at June 30, 2026 and December 31, 2025, respectively.

Previous wording

Loans receivable, net of deferred fees, were $1.92 billion at March 31, 2026 and $1.94 billion at December 31, 2025, a decrease of $18.0 million, or 1%.

Current wording

Loans receivable, net of deferred fees, were $1.90 billion at June 30, 2026 and $1.94 billion at December 31, 2025, a decrease of $41.9 million, or 2%.

Previous wording

Commercial real estate loans totaled $1.00 billion and $1.03 billion at March 31, 2026 and 2025, respectively, and were approximately 52% and 53% of the total loans receivable at such dates, respectively. Owner-occupied commercial real estate loans were $241.8 million at March 31, 2026 compared to $266.3 million at December 31, 2025. Nonowner-occupied commercial real estate loans were $759.8 million at March 31, 2026 compared to$766.3 million at December 31, 2025. Commercial construction loans totaled $157.3 million at March 31, 2026, compared to $153.0 million at December 31, 2025 and comprised 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 306% of our total risk-based capital at March 31, 2026. 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 $962.3 million and $1.03 billion at June 30, 2026 and December 31, 2025, respectively, and were approximately 51% and 53% of the total loans receivable at such dates, respectively. Owner-occupied commercial real estate loans were $218.8 million at June 30, 2026 compared to $266.3 million at December 31, 2025. Nonowner-occupied commercial real estate loans were $743.5 million at June 30, 2026 compared to$766.3 million at December 31, 2025. Commercial construction loans totaled $139.3 million at June 30, 2026, compared to $153.0 million at December 31, 2025 and comprised 7% 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 311% of our total risk-based capital at June 30, 2026. 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 $19.0 million to $472.4 million at March 31, 2026, an increase of 4%, from $453.4 million at December 31, 2025. The increase in commercial and industrial loans was a result of a continued increase in loan originations during 2026 in addition to an increase in the our warehouse lending facility which totaled $34.1 million at March 31, 2025 compared to $30.0 million at December 31, 2025. Consumer residential loans decreased $6.8 million to $290.2 million at March 31, 2026, from $297.0 million at December 31, 2025. The decrease in residential loans was primarily a result of principal repayments during 2026.

Current wording

Commercial and industrial loans increased $59.2 million to $512.6 million at June 30, 2026, an increase of 13%, from $453.4 million at December 31, 2025. The increase in commercial and industrial loans was a result of a continued increase in loan originations during 2026 in addition to an increase in the warehouse lending facility which totaled $67.0 million at June 30, 2026 compared to $30.0 million at December 31, 2025. Consumer residential loans decreased $14.0 million to $283.0 million at June 30, 2026, from $297.0 million at December 31, 2025. The decrease in residential loans was primarily a result of principal repayments during 2026.

Previous wording

Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest andstill accruing, were$12.2 million and$10.7 million at March 31, 2026 and December 31, 2025, respectively, an increase of $1.5 million, or 14%. The increase in nonperforming loans at March 31, 2026 is primarily due to an increase in loans past due over 90 days at March 31, 2026, which increased $746 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. We individually evaluate each of our criticized loans, 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 $1.6 million and $1.1 million at March 31, 2026 and December 31, 2025, respectively. Our ratio of nonperforming loans to total assets was 0.52% and 0.47% at March 31, 2026 and December 31, 2025, respectively. We had no other real estate owned at March 31, 2026 and December 31, 2025. Loan modifications for borrowers who were experiencing financial difficulty at March 31, 2026 totaled $147 thousand compared to none at December 31, 2025.

Current wording

Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest andstill accruing, were$11.4 million and $10.7 million at June 30, 2026 and December 31, 2025, respectively, an increase of $642 thousand, or 6%. The increase in nonperforming loans at June 30, 2026 is due to one consumer real estate loan being placed on nonaccrual during the second quarter of 2026. 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. We individually evaluate each of our criticized loans, 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 $1.4 million and $1.1 million at June 30, 2026 and December 31, 2025, respectively. Our ratio of nonperforming loans to total assets was 0.48% and 0.47% at June 30, 2026 and December 31, 2025, respectively. We had no other real estate owned at June 30, 2026 and December 31, 2025. Loan modifications for borrowers who were experiencing financial difficulty for the six months ended June 30, 2026 totaled $8.9 million compared to none for the comparable six month period of 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, and is performed on an ongoing basis as new information is obtained. At March 31, 2026, we had $47.3 million in loans identified as special mention, an increase of $893 thousand from December 31, 2025. 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, 2025 was a result of two loans downgraded to special mention totaling $1.4 million while one loan totaling $534 thousand, which was previously rated as special mention was upgraded during 2026. Six of the special mention loans are commercial real estate loans, with collateral in retail, mixed-use and multifamily, five of which are located in Washington, D.C. Of the loans located in Washington, D.C., four of the five loans have executed listing agreements and are currently either listed for sale or are in the process thereof. The Company expects that the sale of some of these properties will close prior to the end of the third quarter of 2026. These loans are well-secured with updated valuations and are not individually impaired. We believe there will be satisfactory resolution to each of these loans.

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 June 30, 2026, we had $47.1 million in loans identified as special mention, a decrease of $562 thousand from December 31, 2025. 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 decrease from December 31, 2025 was a result of one loan totaling $534 thousand, which was previously rated as special mention, being upgraded during 2026. Five of our special mention loans are commercial real estate loans, with collateral in retail, mixed-use and multifamily, four of which are located in Washington, D.C. Of the loans located in Washington, D.C., each has executed listing agreements and are currently either listed for sale or are in the process thereof. These loans are well-secured with updated valuations and are not individually impaired. We believe there will be satisfactory resolution to each of these loans.

Previous wording

At March 31, 2026, we had $10.9 million in loans identified as substandard, an increase of $760 thousand from December 31, 2025. The increase in substandard loans was a result of the addition of one consumer mortgage loan that is in the process of foreclosure. 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 March 31, 2026, reserves for individually assessed loans totaled $1.6 million and were allocated within the allowance for credit losses to supplement any shortfall of collateral.

Current wording

At June 30, 2026, we had $10.9 million in loans identified as substandard, an increase of $719 thousand from December 31, 2025. The increase in substandard loans was a result of the consumer real estate loan placed on nonaccrual during the second quarter of 2026. 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 June 30, 2026, reserves for individually assessed loans totaled $1.4 million and were allocated within the allowance for credit losses to supplement any shortfall of collateral.

Previous wording

The following table provides additional information on our asset quality for the dates presented.

Current wording

For the three months ended June 30, 2026 and 2025, we recorded net recoveries of $2 thousand and net charge-offs of $517 thousand, respectively. We recorded net charge-offs of $1 thousand and $379 thousand for the six months ended June 30, 2026 and 2025, respectively. The following table provides additional information on our asset quality for the dates presented.

Previous wording

The concentration of commercial real estate loans to total risk-based capital was 306% and construction

Current wording

The concentration of commercial real estate loans to total risk-based capital was 311% and construction loans to total risk-based capital was 45%, at June 30, 2026.

Previous wording

We closely and proactively monitor the effects of recent market activity. As mentioned above, our commercial real estate loan portfolio totaled $1.00 billion, or 52% of total loans, at March 31, 2026 and $1.04 billion, or 56% of total loans, at December 31, 2025. 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 $160.9 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% of total loans, located in Washington, D.C. Loans secured by retail properties totaled $212.0 million, or 11% of total loans, at March 31, 2026, with $9.1 million, or less than 1% of total loans, located in Washington, D.C. Loans secured by multi-family commercial properties totaled $178.7 million, or 9% of total loans, at March 31, 2026, with $81.3 million, or 4% of total loans, located in Washington, D.C. (a decrease from $98.7 million at December 31, 2025).

Current wording

We closely and proactively monitor the effects of recent market activity. As mentioned above, our commercial real estate loan portfolio totaled $962.3 million, or 51% of total loans, at June 30, 2026 and $1.03 billion, or 53% of total loans, at December 31, 2025. 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 $131.3 million, or 7% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with only $982 thousand, or 0.05% of total loans, located in Washington, D.C. Loans secured by retail properties totaled $207.6 million, or 11% of total loans, at June 30, 2026, with $9.0 million, or 0.47% of total loans, located in Washington, D.C. Loans secured by multi-family commercial properties totaled $180.7 million, or 10% of total loans, at June 30, 2026, with $79.9 million, or 4% of total loans, located in Washington, D.C. (a decrease from $98.7 million at December 31, 2025).

Previous wording

The loans shown in the above table exhibit strong credit quality, with one nonaccrual loan at March 31, 2026 totaling $10.1 million, which has a specific reserve of $1.6 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.

Current wording

The loans shown in the above table exhibit strong credit quality, with one nonaccrual loan at June 30, 2026 totaling $10.1 million, which has a specific reserve of $1.4 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

See “Critical Accounting Policies” above for more information on our allowance for credit losses methodology.

Current wording

See “Critical Accounting Estimates” above for more information on our allowance for credit losses methodology.

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 each of March 31, 2026 and December 31, 2025 totaled $265 thousand, 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 $150.4 million at March 31, 2026, a decrease of $2.8 million, or 2%, from $153.2 million at December 31, 2025, primarily due to principal repayments of $3.0 million, offset by an increase in the market value of the investment securities portfolio totaling $165 thousand at March 31, 2026.

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 June 30, 2026 and December 31, 2025 totaled $265 thousand, 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 $146.9 million at June 30, 2026, a decrease of $6.2 million, or 4%, from $153.2 million at December 31, 2025, primarily due to principal repayments of $6.1 million, as well as a decrease in the market value of the investment securities portfolio totaling $22 thousand at June 30, 2026.