AUBN filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. 
FINANCIAL STATEMENTS 
AND SUPPLEMENTARY 
DATA 
 
 Index 
 
 Page 
 
 Report of Independent Registered Public Accounting Firm 
 
(PCAOB ID: 
 149 
 ) 
 
66 
 Consolidated Balance Sheets 
 
68 
 Consolidated Statements of Earnings 
 
69 
 Consolidated Statements of Comprehensive Income 
 
70 
 Consolidated Statements of Stockholders’ Equity 
 
71 
 Consolidated Statements of Cash Flows 
 
72 
 Notes to Consolidated Financial Statements 
 
 73 
 
 Table of Contents 
 66 
 Report of Independent Registered Public Accounting Firm 
 
 To the Stockholders 
and Board of Directors of 

 Auburn National Bancorporation, Inc. and Subsidiaries 

 Opinion on the Financial Statements 
 We 
have audited 
the accompanying 
consolidated balance 
sheets of 
Auburn National 
Bancorporation, Inc. 
and Subsidiaries 
 (the 
“Company”) 
as 
of 
December 
31, 
2025 
and 
2024, 
the 
related 
consolidated 
statements 
of 
earnings, 
comprehensive 
 income, 
stockholders' 
equity 
and 
cash 
flows 
for 
the 
years then 
ended, 
and 
the 
related 
notes 
to 
the 
consolidated 
financial 
 statements (collectively, 
the “financial 
statements”). 
In our 
opinion, 
the financial 
statements present 
fairly, 
in all 
material 
 respects, the financial 
position of the 
Company as of 
December 31, 2025 
and 2024, and 
the results of 
its operations 
and its 
 cash 
flows 
for 
each 
of 
the 
two 
years 
in 
the 
period 
ended 
December 
31, 
2025, 
in 
conformity 
with 
accounting 
principles 
 generally accepted in the United States of America. 
 Basis for Opinion 
 These financial statements are 
the responsibility of the 
Company’s management. 
Our responsibility is to express 
an opinion 
 on 
the 
Company’s 
financial 
statements 
based 
on 
our 
audits. 
We 
are 
a 
public 
accounting 
firm 
registered 
with 
the 
Public 
 Company 
Accounting 
Oversight 
Board 
(United 
States) 
(PCAOB) 
and 
are 
required 
to 
be 
independent 
with 
respect 
to 
the 
 Company 
in 
accordance 
with 
U.S. 
federal 
securities 
laws 
and 
the 
applicable 
rules 
and 
regulations 
of 
the 
Securities 
and 
 Exchange Commission and the PCAOB. 
 We 
conducted 
our 
audits 
in 
accordance 
with 
the 
standards 
of 
the 
PCAOB. 
Those 
standards 
require 
that 
we 
plan 
and 
 perform the 
audit to 
obtain reasonable 
assurance about 
whether the 
financial statements 
are free 
of material 
misstatement, 
 whether 
due 
to 
error 
or 
fraud. 
The 
Company 
is 
not 
required 
to 
have, 
nor 
were 
we 
engaged 
to 
perform, 
an 
audit 
of 
its 
 internal control over financial reporting. As part of 
our audits, we are required to obtain an understanding of internal 
control 
 over 
financial 
reporting 
but 
not 
for 
the 
purpose 
of 
expressing 
an 
opinion 
on 
the 
effectiveness 
of 
the 
Company’s 
internal 
 control over financial reporting. Accordingly, 
we express no such opinion. 
 Our audits included 
performing procedures to 
assess the risks of 
material misstatement of 
the financial statements, 
whether 
 due to error or 
fraud, and performing 
procedures that respond 
to those risks. Such 
procedures included examining, 
on a test 
 basis, evidence 
regarding 
the amounts 
and disclosures 
in the 
financial statements. 
Our audits 
also included 
evaluating 
the 
 accounting principles used 
and significant estimates made 
by management, as well 
as evaluating the overall 
presentation of 
 the financial statements. We 
believe that our audits provide a reasonable basis for our opinion.
 Critical Audit Matters
 The critical audit 
matters communicated 
below are matters 
arising from 
the current period 
audit of the 
financial statements 
 that 
were 
communicated 
or 
required 
to 
be 
communicated 
to 
the 
audit 
committee 
and 
that: 
(1) 
relate 
to 
accounts 
or 
 disclosures that 
are material 
to the 
financial statements 
and (2) 
involved our 
especially challenging, 
subjective or 
complex 
 judgments. The 
communication of 
critical audit 
matters does 
not alter 
in any 
way our 
opinion on 
the financial 
statements, 
 taken 
as a 
whole, 
and 
we 
are not, 
by communicating 
the critical 
audit 
matters below, 
providing 
separate 
opinions 
on the 
 critical audit matters or on the accounts or disclosures to which they 
relate.

 Table of Contents 
 67 
 Allowance for Credit Losses
 As described in Note 4 to the Company’s 
consolidated financial statements, the Company has a gross 
loan portfolio of $565 
 million and 
related allowance 
for credit 
losses of 
$7.2 million 
as of 
December 31, 
2025. As 
described by 
the Company 
in 
 Note 1, the allowance 
for credit losses is estimated 
by management using 
relevant available information, 
from both internal 
 and external 
sources, relating 
to past 
events, current 
conditions, and 
reasonable and 
supportable forecasts. 
The Company’s 
 credit loss assumptions 
are estimated using a discounted 
cash flow ("DCF") model 
for each loan segment, 
except consumer 
 loans. 
The 
weighted 
average 
remaining 
life 
method 
is 
used 
to 
estimate 
credit 
loss 
assumptions 
for 
consumer 
loans. 
The 
 DCF 
model 
calculates 
an 
expected 
life-of-loan 
loss 
percentage 
by 
considering 
the 
forecasted 
probability 
that 
a 
borrower 
 will default 
(the “PD”), 
adjusted for 
relevant forecasted 
macroeconomic factors, 
and loss 
given default 
(“LGD”), which 
is 
 the 
estimate 
of 
the 
amount 
of 
net 
loss 
in 
the 
event 
of 
default. 
This 
model 
utilizes 
historical 
correlations 
between 
default 
 experience 
and 
certain 
macroeconomic 
factors 
as 
determined 
through 
a 
statistical 
regression 
analysis. 
Projections 
of 
 macroeconomic 
factors 
are 
obtained 
from 
an independent 
third 
party 
and 
are utilized 
to predict 
quarterly 
rates 
of default 
 based on the statistical PD models. 
The weighted average remaining life 
method uses an annual charge 
-off rate over several 
 vintages to 
estimate credit 
losses. Additionally, 
the allowance 
for credit 
losses calculation 
includes subjective 
adjustments 
 for qualitative risk factors that are believed likely to cause estimated credit losses to differ 
from historical experience. 
 We 
identified the 
Company’s 
estimate of 
the allowance 
for credit 
losses (“ACL”) 
as a 
critical audit 
matter. 
The principal 
 considerations for our determination 
of the allowance for credit 
losses as a critical audit 
matter related to the high 
degree of 
 subjectivity 
in 
the 
Company’s 
judgments 
in 
determining 
the 
macroeconomic 
data 
in 
the 
reasonable 
and 
supportable 
 forecasts, as 
well as 
the qualitative 
factors. Auditing 
these complex 
judgments and 
assumptions by 
the Company 
involves 
 especially challenging 
auditor judgment 
due to 
the nature 
and extent 
of audit 
evidence and 
effort required 
to address 
these 
 matters, including the extent of specialized skill or knowledge needed. 
 The primary procedures we performed to address this critical audit matter included 
the following: 

 ●
 We 
obtained 
an 
understanding 
of 
the 
Company’s 
process 
for 
establishing 
the 
ACL, 
including 
the 
selection 
and 
 application of forecasts and the basis 
for development and related adjustments 
of the qualitative factor components 
 of the ACL. 
 ●
 We 
evaluated 
the 
reasonableness 
of 
management’s 
application 
of 
qualitative 
factor 
adjustments 
to 
the 
ACL, 
 including 
the 
comparison 
of 
factors 
considered 
by 
management 
to 
third 
party 
or 
internal 
sources 
as 
well 
as 
 evaluated the appropriateness and level of the qualitative factor adjustments. 
 ●
 We 
assessed the overall 
trends in credit 
quality, 
including adjustments for 
the qualitative factors 
by comparing the 
 overall allowance for credit losses to those recorded by the Company’s 
peer institutions. 
 ●
 We 
evaluated 
subsequent 
events 
and 
transactions 
and 
considered 
whether 
they 
corroborated 
or 
contradicted 
the 
 Company’s conclusion.  
 
/s/ 
 Elliott Davis, LLC 
 We have served 
as the Company's auditor since 2015. 
 Greenville, South Carolina 
 M
 arch 17, 2026 

 Table of Contents 
 68 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Consolidated Balance Sheets 
 December 31 
 (Dollars in thousands, except share data) 
 2025 
 2024 
 Assets: 
 Cash and due from banks 
 $ 
 22,335 
 $ 
 15,142 
 Federal funds sold 
 21,322 
 37,200 
 Interest-bearing bank deposits 
 104,175 
 41,012 
 Cash and cash equivalents 
 147,832 
 93,354 
 Securities available-for-sale 

 233,259 
 243,012 
 Loans held for sale 
 172 
 — 
 Loans, net of unearned income 
 565,354 
 564,017 
 Allowance for credit losses 
 ( 7,176 )
 ( 6,871 )
 Loans, net 
 558,178 
 557,146 
 Premises and equipment, net 
 45,600 
 45,931 
 Bank-owned life insurance 
 17,927 
 17,513 
 Other assets 
 15,829 
 20,368 
 Total assets 
 $ 
 1,018,797 
 $ 
 977,324 
 Liabilities: 
 Deposits: 
 Noninterest-bearing 

 $ 
 268,026 
 $ 
 260,874 
 Interest-bearing 
 654,900 
 634,950 
 Total deposits 
 922,926 
 895,824 
 Accrued expenses and other liabilities 
 3,818 
 3,208 
 Total liabilities 
 926,744 
 899,032 
 Stockholders' equity: 
 Preferred stock of $
 0.01 
 
par value; authorized 
 200,000 
 
shares; 
 issued shares - none 
 — 
 — 
 Common stock of $
 0.01 
 
par value; authorized 
 8,500,000 
 
shares; 
 issued 
 3,957,135 
 
shares 
 39 
 39 
 Additional paid-in capital 
 3,864 
 3,802 
 Retained earnings 
 119,241 
 115,759 
 Accumulated other comprehensive loss, net 
 ( 19,390 )
 ( 29,607 )
 Less treasury stock, at cost - 
 463,436 
 
shares at both 
 December 31, 2025 and 2024 
 ( 11,701 )
 ( 11,701 )
 Total stockholders’ 
equity 
 92,053 
 78,292 
 Total liabilities and stockholders’ 
equity 
 $ 
 1,018,797 
 $ 
 977,324 
 S
 ee accompanying notes to consolidated financial statements 

 Table of Contents 
 69 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Consolidated Statements of Earnings 
 Year ended December 31 
 (Dollars in thousands, except share and per share data) 
 2025 
 2024 
 Interest income: 
 Loans, including fees 
 $ 
 30,840 
 $ 
 29,735 
 Securities: 
 Taxable 
 4,949 
 5,430 
 Tax-exempt 
 273 
 294 
 Federal funds sold and interest-bearing bank deposits 
 4,706 
 3,273 
 Total interest income 
 40,768 
 38,732 
 Interest expense: 
 Deposits 
 11,092 
 11,604 
 Short-term borrowings 
 2 
 3 
 Total interest expense 
 11,094 
 11,607 
 Net interest income 
 29,674 
 27,125 
 Provision for credit losses 
 631 
 36 
 Net interest income after provision for credit 
losses 
 29,043 
 27,089 
 Noninterest income: 
 Service charges on deposit accounts 
 619 
 614 
 Mortgage lending 
 474 
 608 
 Bank-owned life insurance 
 414 
 403 
 Other 
 1,612 
 1,849 
 Total noninterest income 
 3,119 
 3,474 
 Noninterest expense: 
 Salaries and benefits 
 13,154 
 12,534 
 Net occupancy and equipment 
 2,353 
 2,508 
 Professional fees 
 1,276 
 1,188 
 FDIC and other regulatory assessments 
 569 
 564 
 Other 
 5,599 
 5,372 
 Total noninterest expense 
 22,951 
 22,166 
 Earnings before income taxes 
 9,211 
 8,397 
 Income tax expense 
 1,956 
 2,000 
 Net earnings 
 $ 
 7,255 
 $ 
 6,397 
 Net earnings per share: 
 Basic and diluted 
 $ 
 2.08 
 $ 
 1.83 
 Weighted average shares 
outstanding: 
 Basic 
 3,493,699 
 3,493,690 
 Diluted 
 3,495,036 
 3,493,690 
 S
 ee accompanying notes to consolidated financial statements 

 Table of Contents 
 70 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Consolidated Statements of Comprehensive Income 
 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Net earnings 
 $ 
 7,255 
 $ 
 6,397 
 Other comprehensive income (loss), net of tax: 
 Unrealized net holding gain (loss) on securities, net of 

 tax expense of $
 3,427 
 
and tax benefit of $
 195 
 
for the years 
 ended December 31, 2025 and 2024, respectively 
 10,217 
 ( 578 )
 Other comprehensive income (loss) 

 10,217 
 ( 578 )
 Comprehensive income 
 $ 
 17,472 
 $ 
 5,819 
 S
 ee accompanying notes to consolidated financial statements 

 Table of Contents 
 71 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Consolidated Statements of Stockholders’ Equity 
 Accumulated 
 Common 
 Additional 
 other 
 Shares 
 Common 
 paid-in 
 Retained 

 comprehensive 
 Treasury 
 
 (Dollars in thousands, except share data) 
 Outstanding 
 Stock 
 capital 
 earnings 
 (loss) income 
 stock 
 Total 
 Balance, December 31, 2023 
 3,493,614 
 $ 
 39 
 3,801 
 113,398 
 ( 29,029 )
 ( 11,702 )
 $ 
 76,507 
 Cumulative effect of change in 

 accounting standard 
 — 
 — 
 — 
 ( 263 )
 — 
 — 
 ( 263 )
 Net earnings 
 — 
 — 
 — 
 6,397 
 — 
 — 
 6,397 
 Other comprehensive loss 
 — 
 — 
 — 
 — 
 ( 578 )
 — 
 ( 578 )
 Cash dividends paid ($
 1.08 
 
per share) 
 — 
 — 
 — 
 ( 3,773 )
 — 
 — 
 ( 3,773 )
 Sale of treasury stock 
 85 
 — 
 1 
 — 
 — 
 1 
 2 
 Balance, December 31, 2024 
 3,493,699 
 $ 
 39 
 $ 
 3,802 
 $ 
 115,759 
 $ 
 ( 29,607 )
 $ 
 ( 11,701 )
 $ 
 78,292 
 Net earnings 
 — 
 — 
 — 
 7,255 
 — 
 — 
 7,255 
 Other comprehensive income 
 — 
 — 
 — 
 — 
 10,217 
 — 
 10,217 
 Cash dividends paid ($
 1.08 
 
per share) 
 — 
 — 
 — 
 ( 3,773 )
 — 
 — 
 ( 3,773 )
 Stock-based compensation 
 — 
 — 
 62 
 — 
 — 
 — 
 62 
 Balance, December 31, 2025 
 3,493,699 
 $ 
 39 
 $ 
 3,864 
 $ 
 119,241 
 $ 
 ( 19,390 )
 $ 
 ( 11,701 )
 $ 
 92,053 
 S
 ee accompanying notes to consolidated financial statements 

 Table of Contents 
 72 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Consolidated Statements of Cash Flows 
 Year ended December 31 
 (In thousands) 
 2025 
 2024 
 Cash flows from operating activities: 
 Net earnings 
 $ 
 7,255 
 $ 
 6,397 
 Adjustments to reconcile net earnings to net cash provided by 
 operating activities: 
 Provision for credit losses 
 631 
 36 
 Depreciation and amortization 
 2,113 
 1,933 
 Premium amortization and discount accretion, net 
 1,377 
 1,505 
 Deferred tax (benefit) expense 
 ( 129 )
 438 
 Net gain on sale of loans held for sale 
 ( 154 )
 ( 261 )
 Loans originated for sale 
 ( 7,074 )
 ( 10,439 )
 Proceeds from sale of loans 
 7,005 
 10,622 
 Increase in cash surrender value of bank owned life insurance 
 ( 414 )
 ( 403 )
 Stock-based compensation 
 62 
 — 
 Net decrease (increase) in other assets 
 995 
 ( 1,168 )
 Net increase in accrued expenses and other liabilities 
 682 
 2,149 
 Net cash provided by operating activities 
 $ 
 12,349 
 $ 
 10,809 
 Cash flows from investing activities: 
 Proceeds from maturities, paydowns and calls of securities available-for 
-sale 
 22,020 
 25,620 
 Increase in loans, net 
 ( 1,735 )
 ( 6,709 )
 Net purchases of premises and equipment 
 ( 1,485 )
 ( 2,089 )
 Decrease in FHLB stock 
 — 
 32 
 Net cash provided by investing activities 
 $ 
 18,800 
 $ 
 16,854 
 Cash flows from financing activities: 
 Net increase (decrease) in noninterest-bearing deposits 
 7,152 
 ( 9,849 )
 Net increase in interest-bearing deposits 
 19,950 
 9,430 
 Net decrease in federal funds purchased and securities sold 

 under agreements to repurchase 
 — 
 ( 1,486 )
 Dividends paid 
 ( 3,773 )
 ( 3,773 )
 Net cash provided by (used in) financing activities 
 $ 
 23,329 
 $ 
 ( 5,678 )
 Net change in cash and cash equivalents 
 $ 
 54,478 
 $ 
 21,985 
 Cash and cash equivalents at beginning of period 
 93,354 
 71,369 
 Cash and cash equivalents at end of period 
 $ 
 147,832 
 $ 
 93,354 
 Supplemental disclosures of cash flow information: 
 Cash paid during the period for: 
 Interest 
 $ 
 11,155 
 $ 
 11,520 
 Income taxes 
 676 
 1,244 
 S
 ee accompanying notes to consolidated financial statements 

 Table of Contents 
 73 
 AUBURN NATIONAL 
BANCORPORATION, 
INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES

 Nature of Business 
 Auburn National Bancorporation, Inc. (the “Company”) is a bank holding company 
whose primary business is conducted 
 by its wholly-owned subsidiary, 
AuburnBank (the “Bank”). AuburnBank is a commercial bank located in 
Auburn, 
 Alabama. The Bank provides a full range of banking services in its primary 
market area, Lee County, 
which includes the 
 Auburn-Opelika Metropolitan Statistical Area.

 Basis of Presentation 
 The consolidated financial statements include the accounts 
of the Company and its wholly-owned subsidiaries, which are 
 managed as a single business segment. Significant intercompany transactions 
and accounts are eliminated in consolidation.

 Revenue Recognition 

 The Company’s sources of 
income that fall within the scope of Accounting Standards Codification (“ASC”) 606, 
 Revenue 
 from Contracts with Customers,
 
include service charges on deposits, interchange fees and 
gains, and losses on sales of 
 other real estate, all of which are presented as components of noninterest income. 
The following is a summary of the 
 revenue streams that fall within the scope of ASC 606: 

 Service charges on deposits and ATM 
and interchange fees – Fees from these services are either transaction-based, for 
 which the performance obligations are satisfied when the individual transaction 
is processed, or set periodic service 
 charges, for which the performance obligations are satisfied 
over the period the service is provided. Transaction-based 
fees 
 are recognized at the time the transaction is processed, and periodic service 
charges are recognized over the service period. 
 Gains on sales of other real estate
 
– 
 A gain on sale should be recognized when a contract for sale exists and control of the 
 asset has been transferred to the buyer. 
ASC 606 lists several criteria required to conclude that a contract for sale exists, 
 including a determination that the institution will collect substantially all of 
the consideration to which it is entitled. In 
 addition to the loan-to-value, the analysis is based on various other factors, including the credit quality 
of the borrower, the 
 structure of the loan, and any other factors that may affect 
collectability.

 Use of Estimates 
 The preparation of financial statements in conformity with U.S. generally 
accepted accounting principles requires 
 management to make estimates and assumptions that affect 
the reported amounts of assets and liabilities and the disclosure 
 of contingent assets and liabilities as of the balance sheet date and the reported 
amounts of income and expense during the 
 reporting period. Actual results could differ from those estimates. Material 
estimates that are particularly susceptible to 
 significant change in the near term include the determination of 
the allowance for credit losses, fair value measurements, 
 valuation of other real estate owned, and valuation of deferred tax assets.

 Reclassifications 

 Certain amounts reported in the prior period have been reclassified to conform 
to the current-period presentation. These 
 reclassifications had no impact on the Company’s 
previously reported net earnings or total stockholders’ equity.

 Subsequent Events 

 The Company has evaluated the effects of events or transactions 
through the date of this filing that have occurred 
 subsequent to December 31, 2025. The Company does not believe there 
are any material subsequent events that would 
 require further recognition or disclosure.

 Table of Contents 
 74 
 
 Accounting Standards Adopted in 2025 
 Accounting Standards Update (“ASU”) 2023-09, 
 Income Taxes 
(Topic 
740): Improvements to Income Tax 
Disclosures.
 
The 
 amendments in this Update enhance the transparency and decision usefulness of 
income tax disclosures. 
For public 
 business entities, the new standard was effective for annual periods 
beginning after December 15, 2024. 
The Company has 
 adopted ASU 2023-09. 
 Issued not yet effective accounting standards
 The following ASUs have been issued by the Financial Accounting Standards 
Board (“FASB”) but are 
not yet effective. 

 ASU 2025-01, 
 Income Statement Reporting Comprehensive Income 
- Expense Disaggregation Disclosures 
(Subtopic 220-
 40): Clarifying the Effective Date,
 
clarifies the effective date of ASU 2024-03, 
 Income Statement Reporting Comprehensive 
 Income - Expense Disaggregation Disclosures 
(Subtopic 220-40): Disaggregation of 
Income Statement Expenses
 
to 
 stipulate that ASU 2024-03 is effective for public business entities for 
annual reporting periods beginning after December 
 15, 2026 and interim reporting periods beginning after December 15, 
2027, with early adoption permitted. ASU 2025-01 
 will be effective for the Company beginning January 1, 2027 
for the Company’s annual consolidated 
financial statements 
 on Form 10-K and January 1, 2028 for the Company’s 
quarterly consolidated financial statements on Form 10-Q 
and is not 
 expected to have a significant impact on the Company’s 
consolidated financial statements. 
 ASU 2025-06, 
 Intangibles - Goodwill and Other - Internal-Use Software 
(Subtopic 350-40),
 
removes all references to 
 prescriptive and sequential software development stages and clarifies that the 
threshold for when an entity is required to 
 start capitalizing software costs is when (1) management has authorized 
and committed to funding the software project and 
 (2) it is probable that the project will be completed and the software will be used to perform 
the function intended. ASU 
 2025-06 will be effective for the Company beginning 
January 1, 2028, with early adoption permitted, and is not expected to 
 have a significant impact on the Company’s 
consolidated financial statements. 
 ASC 2025-11, 
 Interim Reporting (Topic 
270): Narrow-Scope Improvements, 
 is intended to provide clarity about the current 
 interim reporting requirements, provides a list of the interim disclosures required 
by all other Codification topics and 
 establishes a disclosure principle that requires entities to disclose events since the 
end of the last annual reporting period 
 that have a material impact on the entity. 
ASC 2025-11 will be effective 
for the Company beginning January 1, 2028, with 
 early adoption permitted, and is not expected to have a significant impact on the Company’s 
consolidated financial 
 statements.

 Cash Equivalents 
 Cash equivalents include cash on hand, cash items in process of collection, 
amounts due from banks, including interest 
 bearing deposits with other banks, and federal funds sold.

 Securities 
 Securities are classified based on management’s 
intention at the date of purchase. At December 31, 2025, all of the 
 Company’s securities were classified 
as available-for-sale. Securities available-for-sale are used as part of the Company’s 
 interest rate risk and liquidity management strategy, 
and they may be sold in response to changes in interest rates, changes 
 in prepayment risks or other factors. All securities classified as available-for-sale are recorded 
at fair value with any 
 unrealized gains and losses reported in accumulated other comprehensive income 
(loss), net of the deferred income tax 
 effects. Interest and dividends on securities, including 
the amortization of premiums and accretion of discounts are 
 recognized in interest income using the effective interest method. 
Premiums are amortized to the earliest call date while 
 discounts are accreted over the estimated life of the security. 
Realized gains and losses from the sale of securities are 
 determined using the specific identification method. 

 Table of Contents 
 75 
 
 For any securities classified as available-for-sale that are in an unrealized loss position 
at the balance sheet date, the 
 Company assesses whether or not it intends to sell the security, 
or more likely than not will be required to sell the security, 
 before recovery of its amortized cost basis. If either of these criteria are met, the security's 
amortized cost basis is written 
 down to fair value through net income. If neither criterion is met, the Company 
evaluates whether any portion of the decline 
 in fair value is the result of credit deterioration. Such evaluations consider the 
extent to which the amortized cost of the 
 security exceeds its fair value, changes in credit ratings and any other known 
adverse conditions related to the specific 
 security. If the evaluation 
indicates that a credit loss exists, an allowance for credit losses is recorded for 
the amount by 
 which the amortized cost basis of the security exceeds the present value 
of cash flows expected to be collected, limited by 
 the amount by which the amortized cost exceeds fair value. Any impairment not 
recognized in the allowance for credit 
 losses is recognized in other comprehensive income. 
The Company has elected to exclude accrued interest receivable on 
 investment securities from the estimate of credit losses. 
Accrued interest receivable is written off through interest income 
 when deemed uncollectible. 
Accrued interest receivable totaled $0.8 million and $0.9 million at December 
31, 2025 and 
 2024, respectively.

 Loans held for sale 
 The Company originates residential mortgage loans for sale. 
Such loans are carried at the lower of cost or estimated fair 
 value in the aggregate. 
Loan sales are recognized when the transaction closes, the proceeds are collected, 
and ownership is 
 transferred. 
Continuing involvement, through the sales agreement, consists of the 
right to service the loan for a fee for the 
 life of the loan, if applicable. 
Gains on the sale of loans held for sale are recorded net of related costs, such as 
 commissions, and reflected as a component of mortgage lending income 
in the consolidated statements of earnings. 
 The Bank makes various representations and warranties to the purchaser of 
the residential mortgage loans they originated 
 and sells, primarily to Fannie Mae. 
Every loan closed by the Bank’s mortgage 
center is run through Fannie Mae or other 
 purchasing government sponsored enterprise (“GSE”) automated 
underwriting system. 
Any exceptions noted during this 
 process are remedied prior to sale. 
These representations and warranties also apply to underwriting the real 
estate appraisal 
 opinion of value for the collateral securing these loans. 
Failure by the Company to comply with the underwriting and/or 
 appraisal standards could result in the Company being required to 
repurchase the mortgage loan or to reimburse the investor 
 for losses incurred (make whole requests) if the Company cannot cure such 
failure within the specified period following 
 discovery.

 Loans 
 Loans that management has the intent and ability to hold for the foreseeable 
future or until maturity or payoff are reported 
 at amortized cost. Amortized cost is the principal balance outstanding, 
net of purchase premiums and discounts and 
 deferred fees and costs. Accrued interest receivable related to loans 
is recorded in other assets on the consolidated balance 
 sheets. Interest income is accrued on the unpaid principal balance. Loan origination 
fees, net of certain direct origination 
 costs, are deferred and recognized in interest income using methods that approximate 
a level yield without anticipating 
 prepayments. 
 The Company discontinues the accrual of interest income when (1) there 
is a significant deterioration in the financial 
 condition of the borrower and full repayment of principal and interest is not 
expected or (2) the principal or interest is more 
 than 90 days past due, unless the loan is both well-secured and in the process 
of collection. 
 All accrued but unpaid interest is reversed against interest income when 
a loan is placed on nonaccrual status. Interest 
 received on such loans is accounted for using the cost-recovery method, 
until the loan qualifies for return to accrual. 
Loans 
 are returned to accrual status when all the principal and interest amounts contractually 
due are brought current, there is a 
 sustained period of repayment performance, and future payments are 
reasonably assured. Otherwise, under the cost 
 recovery method, interest income is not recognized until the loan 
balance is reduced to zero. 
 Allowance for Credit Losses – Loans 
 The allowance for credit losses is a valuation account that is deducted from 
the loans' amortized cost basis to present the net 
 amount expected to be collected on the loans. 
Loans are charged off against the allowance when management 
confirms the 
 loan balance is uncollectible. Expected recoveries do not exceed the aggregate 
of amounts previously charged-off and 
 expected to be charged-off. 
The Company has elected to exclude accrued interest receivable on loans from the estimate of 
 credit losses. 
Accrued interest receivable is written off through interest 
income when deemed uncollectible. 
Accrued 
 interest receivable totaled $2.0 million at both December 31, 2025 
and 2024. 

 Table of Contents 
 76 
 
 The allowance for credit losses represents management’s 
estimate of lifetime credit losses inherent in loans as of the 
 balance sheet date. The allowance for credit losses is estimated by management 
using relevant available information, from 
 both internal and external sources, relating to past events, current conditions, 
and reasonable and supportable forecasts. 

 The Company’s loan loss estimation 
process includes procedures to appropriately consider the unique characteristics of 
its 
 respective loan segments (commercial and industrial, construction and land development, 
commercial real estate, 
 residential real estate, and consumer loans). 
These segments are further disaggregated into loan classes, the level at which 
 credit quality is monitored. 
See Note 4, Loans and Allowance for Credit Losses, for additional information 
about our loan 
 portfolio. 
 Credit loss assumptions are estimated using a discounted cash flow ("DCF") model 
for each loan segment, except consumer 
 loans. 
The weighted average remaining life method is used to estimate credit loss assumptions 
for consumer loans. 

 The DCF model calculates an expected life-of-loan loss percentage by considering 
the forecasted probability that a 
 borrower will default (the “PD”), adjusted for relevant forecasted macroeconomic 
factors, and loss given default (“LGD”), 
 which is the estimate of the amount of net loss in the event of default. 
This model utilizes historical correlations between 
 default experience and certain macroeconomic factors as determined 
through a statistical regression analysis. 
The 
 forecasted Alabama unemployment rate is considered in the model for commercial 
and industrial, construction and land 
 development, commercial real estate, and residential real estate loans. 
In addition, forecasted changes in the Alabama 
 home price index is considered in the model for construction and land development 
and residential real estate loans. 

 Forecasted changes in the national commercial real estate (“CRE”) price index 
is considered in the model for commercial 
 real estate and multifamily loans; and forecasted changes in the Alabama 
gross state product is considered in the model for 
 multifamily loans. 
Projections of these macroeconomic factors, obtained from an independent third party, 
are utilized to 
 predict quarterly rates of default based on the statistical PD models. 

 Expected credit losses are estimated over the contractual term of the 
loan, adjusted for expected prepayments and principal 
 payments (“curtailments”) when appropriate. Management's determination 
of the contract term excludes expected 
 extensions, renewals, and modifications, unless the extension or renewal 
option is included in the contract at the reporting 
 date and is not unconditionally cancellable by the Company. 
To the extent the lives of the loans 
in the portfolio extend 
 beyond the period for which a reasonable and supportable forecast can be 
made (which is 4 quarters for the Company), the 
 Company reverts, on a straight-line basis back to the historical rates over 
an 8-quarter reversion period. 
 During the first quarter of 2025, as part of the Company’s 
ongoing model monitoring procedures, the annual loss driver 
 analysis and prepayment, curtailment and funding studies were performed. 
The analysis and studies resulted in changes for 
 all DCF models, which were incorporated in the calculation. 
The Company performs a refresh of the inputs in the 
 calculation on an annual basis. 
 The weighted average remaining life method was deemed most appropriate 
for the consumer loan segment because 
 consumer loans contain many different payment 
structures, payment streams and collateral. 
The weighted average 
 remaining life method uses an annual charge-off rate 
over several vintages to estimate credit losses. 
The average annual 
 charge-off rate is applied to the contractual 
term adjusted for prepayments. 
 Additionally, the 
allowance for credit losses calculation includes subjective adjustments for qualitative 
risk factors that are 
 believed likely to cause estimated credit losses to differ from 
historical experience. These qualitative adjustments may 
 increase reserve levels and include adjustments for lending management 
experience and risk tolerance, loan review and 
 audit results, asset quality and portfolio trends, loan portfolio growth, 
industry concentrations, trends in underlying 
 collateral, external factors and economic conditions not already captured. 
 Loans secured by real estate with balances equal to or greater than $500 thousand and 
loans not secured by real estate with 
 balances equal to or greater than $250 thousand that do not share risk 
characteristics are evaluated on an individual basis. 
 When management determines that foreclosure is probable and 
the borrower is experiencing financial difficulty, 
the 
 expected credit losses are based on the estimated fair value of collateral held 
at the reporting date, adjusted for selling costs 
 as appropriate. 
For loans evaluated on an individual basis that are not collateral dependent, the allowance 
is measured 
 using the present value of expected future cash flows, discounted at the loan’s 
effective interest rate. 
Expected cash flows 
 are developed using probability of default 
and loss given default assumptions specific to the borrower. 

 Table of Contents 
 77 
 
 Allowance for Credit Losses – Unfunded Commitments 
 Financial instruments include off-balance sheet credit 
instruments, such as commitments to make loans and commercial 
 letters of credit issued to meet customer financing needs. The Company’s 
exposure to credit loss in the event of 
 nonperformance by the other party to the financial instrument for off 
-balance sheet loan commitments is represented by the 
 contractual amount of those instruments. Such financial instruments are 
recorded when they are funded. 
 The Company records an allowance for credit losses on off 
-balance sheet credit exposures, unless the commitments to 
 extend credit are unconditionally cancelable, through a charge 
to provision for credit losses in the Company’s 
consolidated 
 statements of earnings. The allowance for credit losses on off-balance 
sheet credit exposures is estimated by loan segment 
 at each balance sheet date under the current expected credit loss model using 
the same methodologies as portfolio loans, 
 taking into consideration the likelihood that funding will occur as well as any third-party 
guarantees. The allowance for 
 unfunded commitments is included in other liabilities on the Company’s 
consolidated balance sheets.

 Premises and Equipment 
 Land is carried at cost. Land improvements, buildings and improvements, 
and furniture, fixtures, and equipment are carried 
 at cost, less accumulated depreciation computed on a straight-line method 
over the estimated useful lives of the assets or the 
 expected terms of the leases, if shorter. 
Expected terms include lease option periods to the extent that the exercise of such 
 options is reasonably assured.

 Nonmarketable equity investments 
 Nonmarketable equity investments include equity securities that are not 
publicly traded and securities acquired for various 
 purposes. The Bank is required to maintain certain minimum levels of equity investments 
in (i) Federal Reserve Bank of 
 Atlanta based on the Bank’s capital stock 
and surplus, and the (ii) Federal Home Bank of Atlanta (“FHLB – Atlanta”) 
 based on various factors including, the Bank’s 
total assets, its borrowings and outstanding letters of credit from the 
FHLB -
 Atlanta and its “acquired member asset” sales to FHLB - Atlanta. 
These nonmarketable equity securities are accounted for 
 at cost which equals par or redemption value. These securities do not have 
a readily determinable fair value as their 
 ownership is restricted and there is no market for these securities. These securities can only 
be redeemed or sold at their par 
 value by the respective issuer bank or, in 
the case of FHLB – Atlanta stock upon FHLB – Atlanta approved sale to another 
 member of FHLB – Atlanta and law applicable to the member. 
The Company records these nonmarketable equity securities 
 as a component of other assets, which are periodically evaluated for impairment. 
Management considers these 
 nonmarketable equity securities to be long-term investments. Accordingly, 
when evaluating these securities for impairment, 
 management considers the ultimate recoverability of the par value rather 
than by recognizing temporary declines in value.

 Transfers of Financial Assets 
 Transfers of an entire financial asset (i.e. loan sales), a group 
of entire financial assets, or a participating interest in an entire 
 financial asset (i.e. loan participations sold) are accounted for as sales when control 
over the assets have been surrendered. 
 Control over transferred assets is deemed to be surrendered when (1) 
the assets have been isolated from the Company, 
 (2) the transferee obtains the right (free of conditions that constrain it from 
taking that right) to pledge or exchange the 
 transferred assets, and (3) the Company does not maintain effective 
control over the transferred assets through an 
 agreement to repurchase them before their maturity.

 Mortgage Servicing Rights 
 The Company recognizes as assets the rights to service mortgage loans which it originates 
and sells to others, principally 
 Fannie Mae. 
These servicing rights are called “MSRs”. 
The Company determines the fair value of MSRs on sold loans at 
 the date the loan is transferred. 
An estimate of the Company’s MSRs is determined 
using assumptions that market 
 participants would use in estimating future net servicing income, including 
estimates of prepayment speeds, discount rate, 
 default rates, cost to service, escrow account earnings, contractual servicing 
fee income, ancillary income, and late fees. 

 Table of Contents 
 78 
 
 Subsequent to the date of sale of the residential mortgage loans, the Company has 
elected to measure its MSRs on such sold 
 mortgage loans under the amortization method. 
Under the amortization method, MSRs are amortized in proportion to, and 
 over the period of, estimated net servicing income. 
The amortization of MSRs is analyzed monthly and is adjusted to 
 reflect changes in prepayment speeds, as well as other factors. 
MSRs are evaluated for impairment based on the fair value 
 of those assets. 
Impairment is determined by stratifying MSRs into groupings based 
on predominant risk characteristics, 
 such as interest rate and loan type. 
If, by individual stratum, the carrying amount of the MSRs exceeds fair value, a 
 valuation allowance is established through a charge to 
earnings. 
The valuation allowance is adjusted as the fair value 
 changes. 
MSRs are included in the other assets category in the accompanying consolidated balance 
sheets at the lower of 
 cost or fair value. 
See Note 14 “Fair Value”

 Derivatives as Part of Designated Accounting Hedges 

 The Company applies hedge accounting to certain derivative instruments 
used for risk management purposes, primarily 
 interest rate risk. To 
qualify for hedge accounting, a derivative instrument must be highly effective 
at reducing the risk 
 associated with the hedged exposure, and the hedging relationship must be formally 
documented at its inception. The 
 Company uses regression analysis to assess the effectiveness of each hedging 
relationship, unless the hedge qualifies for 
 other methods of assessing effectiveness (e.g., shortcut or 
critical terms match), both at inception and throughout the life of 
 the hedge transaction. 
 The Company has a derivative instrument designated as part of a fair value 
accounting hedge. This derivative consists of a 
 pay-fixed, receive-floating interest rate swap, and was entered into 
to hedge changes in the fair value of a fixed-rate loan for 
 interest rate risk resulting from changes in a benchmark interest rate. In a qualifying 
fair value hedge, the Company records 
 periodic changes in the fair value of the derivative instrument in current period 
earnings. Simultaneously, 
periodic changes 
 in the fair value of the hedged risk are also recorded in current period 
earnings. Together, 
these periodic changes in the fair 
 value of the derivative instrument and the fair value of the hedged risk are included 
in the same line item of the 
 consolidated statements of earning associated with the hedged item, 
and offset each other. Interest accruals 
on both the 
 derivative instrument and the hedged item are also recorded in the same line item, 
which effectively converts the designated 
 fixed-rate asset to a floating-rate asset. The Company structures interest rate 
swaps associated with fair value hedges to 
 match the critical terms of the hedged items, thereby maximizing the economic 
and accounting effectiveness of the hedging 
 relationships, resulting in the expectation that the hedging relationship will be highly 
effective. If a fair value hedging 
 relationship ceases to qualify for hedge accounting, hedge accounting is discontinued 
and future changes in the fair value of 
 the derivative instrument are recognized in current period earnings, until the 
derivative is settled with the counterparty. 
In 
 addition, all remaining basis adjustments resulting from periodic changes 
in the fair value of the hedged risk, previously 
 recorded as a component of the carrying amount of the hedged item, are 
amortized or accreted into interest income using 
 the interest method over the remaining life of the hedged item.

 Income Taxes 

 Deferred tax assets and liabilities are the expected future tax amounts 
for the temporary differences between carrying 
 amounts and tax bases of assets and liabilities, computed using enacted tax 
rates. A valuation allowance, if needed, reduces 
 deferred tax assets to the amount expected to be realized. 
The net deferred tax asset is reflected as a component of other 
 assets in the accompanying consolidated balance sheets. 
 Income tax expense or benefit for the year is allocated among continuing operations 
and other comprehensive income 
 (loss), as applicable. The amount allocated to continuing operations is the income 
tax effect of the pretax income or loss 
 from continuing operations that occurred during the year, 
plus or minus income tax effects of (1) changes in certain 
 circumstances that cause a change in judgment about the realization of deferred 
tax assets in future years, (2) changes in 
 income tax laws or rates, and (3) changes in income tax status, subject to certain 
exceptions. 
The amount allocated to other 
 comprehensive income (loss) is related solely to changes in the valuation allowance 
on items that are normally accounted 
 for in other comprehensive income (loss) such as unrealized gains or 
losses on available-for-sale securities. 
 In accordance with ASC 740, 
 Income Taxes
 , a tax position is recognized as a benefit only if it is “more likely than not” that 
 the tax position would be sustained in a tax examination, with a tax examination being 
presumed to occur. The amount 
 recognized is the largest amount of tax benefit that is greater than 
50% likely of being realized on examination. For tax 
 positions not meeting the “more likely than not” test, no tax benefit is recorded. 
It is the Company’s policy to recognize 
 interest and penalties related to income tax matters in income tax expense. The 
Company and its wholly-owned subsidiaries 
 file consolidated Federal and State of Alabama income tax returns.

 Table of Contents 
 79 
 
 Fair Value 
Measurements 

 ASC 820, 
 Fair Value 
Measurements, 
 which defines fair value, establishes a framework for measuring fair value 
in U.S. 
 generally accepted accounting principles and expands disclosures about 
fair value measurements. ASC 820 applies only to 
 fair-value measurements that are already required 
or permitted by other accounting standards. 
The definition of fair value 
 focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a 
liability in an orderly 
 transaction between market participants at the measurement date, 
not the entry price, i.e., the price that would be paid to 
 acquire the asset or received to assume the liability at the measurement date. 
The statement emphasizes that fair value is a 
 market-based measurement; not an entity-specific measurement. 
Therefore, the fair value measurement should be 
 determined based on the assumptions that market participants would 
use in pricing the asset or liability. 
For more 
 information related to fair value measurements, please refer to Note 14, Fair 
Value.

 NOTE 2: BASIC AND DILUTED NET EARNINGS PER SHARE
 Basic net earnings per share is computed by dividing net earnings by 
the weighted average common shares outstanding for 
 the year. 
Diluted net earnings per share reflects the potential dilution that could occur upon exercise 
of securities or other 
 rights for, or convertible into, shares of the 
Company’s common stock. 
During 2025, the Company granted 3,030 restricted 
 stock units (“RSUs”), which represent potential common shares. 
These RSUs are included in the computation of diluted 
 net earnings per share using the treasury stock method. 
No such securities were outstanding during the year ended 
 December 31, 2024. 

 The basic and diluted net earnings per share computations for the respective 
years are presented below.

 Year ended December 31 
 (Dollars in thousands, except share and per share data) 
 2025 
 2024 
 Basic: 
 Net earnings 
 $ 
 7,255 
 $ 
 6,397 
 Weighted average 
common shares outstanding 
 3,493,699 
 3,493,690 
 Basic net earnings per share 
 $ 
 2.08 
 $ 
 1.83 
 Diluted: 
 Net earnings 
 $ 
 7,255 
 $ 
 6,397 
 Weighted average 
common shares outstanding 
 3,493,699 
 3,493,690 
 Dilutive effect of restricted stock units 
 1,337 
 — 
 Weighted average 
common shares outstanding, diluted 
 3,495,036 
 3,493,690 
 Diluted net earnings per share 
 $ 
 2.08 
 $ 
 1.83 

 Table of Contents 
 80 
 NOTE 3: SECURITIES 
 At December 31, 2025 and 2024, respectively, 
all securities within the scope of ASC 320, 
 Investments – Debt and Equity 
 Securities 
 were classified as available-for-sale. 
The fair value and amortized cost for securities available-for-sale by 
 contractual maturity at December 31, 2025 and 2024, respectively, 
are presented below.

 1 year 
 1 to 5 
 5 to 10 
 After 10 
 Fair 
 Gross Unrealized 

 Amortized 
 (Dollars in thousands) 
 or less 
 years 
 years 
 years 
 Value 
 Gains 
 Losses 
 Cost 
 December 31, 2025 
 Agency obligations (a) 
 $ 
 — 
 35,580 
 18,204 
 — 
 53,784 
 — 
 4,727 
 $ 
 58,511 
 Agency MBS (a) 
 — 
 20,112 
 16,171 
 125,644 
 161,927 
 — 
 19,063 
 180,990 
 State and political subdivisions 
 — 
 1,590 
 9,160 
 6,798 
 17,548 
 1 
 2,103 
 19,650 
 Total available-for-sale 
 $ 
 — 
 57,282 
 43,535 
 132,442 
 233,259 
 1 
 25,893 
 $ 
 259,151 
 December 31, 2024 
 Agency obligations (a) 
 $ 
 — 
 26,655 
 25,756 
 — 
 52,411 
 — 
 7,734 
 $ 
 60,145 
 Agency MBS (a) 
 10 
 19,863 
 14,904 
 138,899 
 173,676 
 — 
 28,901 
 202,577 
 State and political subdivisions 
 — 
 966 
 8,244 
 7,715 
 16,925 
 — 
 2,901 
 19,826 
 Total available-for-sale 
 $ 
 10 
 47,484 
 48,904 
 146,614 
 243,012 
 — 
 39,536 
 $ 
 282,548 
 (a) Includes securities issued by U.S. government agencies or government 
sponsored entities. 
Expected lives of 
 these securities may differ from contractual maturities because (i) 
issuers may have the right to call or repay such securities 
 obligations with or without prepayment penalties and (ii) loans included in Agency 
MBS generally have the right to prepay 
 such loans in whole or in part at any time.

 Securities with aggregate fair values of $
 209.4 
 
million and $
 222.3 
 
million at December 31, 2025 and 2024, respectively, 
 were pledged to secure public deposits, securities sold under agreements 
to repurchase, FHLB advances, and for other 
 purposes required or permitted by law. 

 Included in other assets on the accompanying consolidated balance sheets are nonmarketable 
equity investments. 
The 
 carrying amounts of nonmarketable equity investments were $
 1.4 
 
million at both December 31, 2025 and 2024, 
 respectively. 
Nonmarketable equity investments include FHLB-Atlanta stock, Federal 
Reserve Bank stock, and stock in a 
 privately held financial institution.

 Fair Value 
and Gross Unrealized Losses 
 The fair values and gross unrealized losses on securities at December 
31, 2025 and 2024, respectively, 
segregated by those 
 securities that have been in an unrealized loss position for less than 12 months and 
12 months or more are presented below.

 Less than 12 Months 
 12 Months or Longer 
 Total 
 Fair 
 Unrealized 
 Fair 
 Unrealized 
 Fair 
 Unrealized 
 (Dollars in thousands) 
 Value 
 Losses 
 Value 
 Losses 
 Value 
 Losses 
 December 31, 2025: 
 Agency obligations 

 $ 
 — 
 — 
 53,784 
 4,727 
 53,784 
 $ 
 4,727 
 Agency MBS 
 — 
 — 
 161,840 
 19,063 
 161,840 
 19,063 
 State and political subdivisions 
 — 
 — 
 14,827 
 2,103 
 14,827 
 2,103 
 Total 

 $ 
 — 
 — 
 230,451 
 25,893 
 230,451 
 $ 
 25,893 

 December 31, 2024: 
 Agency obligations 

 $ 
 — 
 — 
 52,411 
 7,734 
 52,411 
 $ 
 7,734 
 Agency MBS 
 7 
 — 
 173,669 
 28,901 
 173,676 
 28,901 
 State and political subdivisions 
 1,798 
 17 
 14,776 
 2,884 
 16,574 
 2,901 
 Total 

 $ 
 1,805 
 17 
 240,856 
 39,519 
 242,661 
 $ 
 39,536 

 Table of Contents 
 81 
 For the 
securities in 
the previous 
table, the 
Company assesses 
whether or 
not it 
intends to 
sell the 
security, 
or more 
likely 
 than not 
will be 
required to 
sell the 
security, 
before recovery 
of its 
amortized cost 
basis. 
Unrealized losses 
have not 
been 
 recognized into income 
as the decline 
in fair value 
is largely due 
to changes in 
interest rates and 
not credit quality. 
For the 
 securities 
in 
the 
previous 
table, 
as 
of 
December 
31, 
2025, 
management 
does 
not intend 
to 
sell 
and 
it 
is 
likely 
that 
 management will not be required to sell the securities prior to their anticipated recovery. 

 Agency Obligations 
 
 Investments 
in 
agency 
obligations 
are 
guaranteed 
of 
full 
and 
timely 
payments 
by 
the 
issuing 
agency. 
Based 
on 
 management's 
analysis 
and 
judgement, 
there 
were 
no 
credit 
losses attributable 
to 
the 
Company’s 
investments 
in 
 agency obligations at December 31, 2025. 

 Agency MBS
 Investments in 
agency MBS 
are issued 
by Ginnie 
Mae, Fannie 
Mae, and 
Freddie Mac. 
Each of 
these agencies 
provide a 
 guarantee of full and 
timely payments of principal 
and interest by the issuing 
agency. 
Based on management's analysis 
and 
 judgement, there were no credit losses attributable to the Company’s 
investments in agency MBS at December 31, 2025. 
 
 State and Political Subdivisions
 
 Investments 
in 
state 
and 
political 
subdivisions 
are 
securities 
issued 
by 
various municipalities 
in 
the 
United 
States. 
The 
 majority 
of 
the 
portfolio was 
rated 
AA 
or 
higher, 
with 
no 
securities 
rated 
below 
investment 
grade 
at 
December 
31, 
 2025. 
Based 
on 
management's 
analysis 
and 
judgement, 
there 
were 
no 
credit 
losses 
attributable 
to 
the 
Company’s 
 investments in state and political subdivisions at December 31, 2025.

 Realized Gains and Losses 
 The Company had no realized gains or losses on sale of securities during the years 
ended December 31, 2025 and 2024, 
 respectively.

 NOTE 4: LOANS AND ALLOWANCE 
FOR CREDIT LOSSES

 December 31 
 (In thousands) 
 2025 
 2024 
 Commercial and industrial 
 $ 
 58,400 
 $ 
 63,274 
 Construction and land development 
 56,436 
 82,493 
 Commercial real estate: 
 Owner occupied 
 59,568 
 55,346 
 Hotel/motel 
 47,870 
 35,210 
 Multifamily 
 51,516 
 43,556 
 Other 
 166,567 
 155,880 
 Total commercial 
real estate 
 325,521 
 289,992 
 Residential real estate: 
 Consumer mortgage 
 59,781 
 60,399 
 Investment property 
 56,773 
 58,228 
 Total residential real 
estate 
 116,554 
 118,627 
 Consumer installment 
 8,421 
 9,631 
 Total loans, net of unearned 
income before basis adjustment 
 565,332 
 564,017 
 Basis adjustment associated with fair value hedge (1) 
 22 
 — 
 Total loans, net of unearned 
income 
 565,354 
 564,017 
 (1) Represent the basis adjustment associated with application of hedge accounting 
on certain loans. The basis adjustment 
 
will be allocated to the amortized cost of associated loans within the portfolio if 
the hedge accounting is discontinued. 
 
Refer to
 
Note 12 Derivative Instruments
 
for additional information.

 Table of Contents 
 82 
 Loans secured by real estate were approximately 
 88.2 
 % of the total loan portfolio at December 31, 2025. 
At December 31, 
 2025, the Company’s geographic 
loan distribution was concentrated primarily in Lee County, 
Alabama and surrounding 
 areas. 
 The loan portfolio segment is defined as the level at which an entity develops 
and documents a systematic method for 
 determining its allowance for credit losses. As part of the Company’s 
quarterly assessment of the allowance, the loan 
 portfolio is disaggregated into the following portfolio segments: 
commercial and industrial, construction and land 
 development, commercial real estate, residential real estate and consumer installment. 
Where appropriate, the Company’s 
 loan portfolio segments are further disaggregated into classes. A class is generally 
determined based on the initial 
 measurement attribute, risk characteristics of the loan, and an entity’s 
method for monitoring and determining credit risk. 
 The following describe the risk characteristics relevant to each of the portfolio 
segments and classes. 
 Commercial and industrial (“C&I”) — 
 includes loans to finance business operations, equipment purchases, or 
other needs 
 for small and medium-sized commercial customers. Also 
included in this category are loans to finance agricultural 
 production. 
Generally, the primary source of repayment 
is the cash flow from business operations and activities of the 
 borrower. 
 Construction and land development (“C&D”) — 
 includes both loans and credit lines for the purpose of purchasing, 
 carrying and developing land into commercial developments or residential 
subdivisions. Also included are loans and lines 
 for construction of residential, multi-family and commercial buildings. 
Generally, the primary source 
of repayment is 
 dependent upon the sale or refinancing of the real estate collateral. 
 Commercial real estate 
(“CRE”) — 
 includes loans disaggregated in these classes: 
 
Owner occupied
 
– includes loans secured by business facilities to finance business operations, equipment 
and 
 
owner-occupied facilities primarily for small and medium-sized 
commercial customers. 
Generally, 
the primary source 
 
of loan repayment are the cash flows from the business operations and activities of the borrower, 
who owns the 
 
property.
 
Hotel/motel 
 – includes loans for hotels and motels. 
Generally, the primary source 
of repayment is dependent upon 
 
income generated from the real estate collateral. 
The underwriting of these loans takes into consideration the 

occupancy and rental rates, as well as the financial health of the borrower. 
 
Multifamily
 
– primarily includes loans to finance income-producing multifamily 
properties. Loans in this class include 
 
loans for 5 or more unit residential property and apartments leased to residents. Generally, 
the primary source of 
 
repayment is dependent upon income generated from the real estate collateral. The underwriting 
of these loans takes 
 
into consideration the occupancy and rental rates, as well as the financial health of the borrower. 
 
Other
 
– primarily includes loans to finance income-producing commercial 
properties. Loans in this class include loans 
 
for neighborhood retail centers, 
medical and professional offices, single retail stores, industrial 
buildings, and 
 
warehouses leased generally to local businesses and residents. Generally, 
the primary source of repayment is dependent 
 
upon income generated from the real estate collateral. The underwriting of these 
loans takes into consideration the 
 
occupancy and rental rates as well as the financial health of the borrower. 

 Residential real estate (“RRE”) — 
 includes loans disaggregated into two classes: 
 
Consumer mortgage
 
– primarily includes 
first or second lien mortgages and home equity lines to consumers that are 
 
secured by a primary residence or second home. These loans are underwritten in accordance 
with the Bank’s general 
 
loan policies and procedures which require, among other things, proper documentation 
of each borrower’s financial 
 
condition, satisfactory credit history and property value. 
 
Investment property
 
– primarily includes loans to finance income-producing 1-4 family residential 
properties. 
 
Generally, the primary source of repayment 
is dependent upon income generated from leasing the property securing the 
 
loan. The underwriting of these loans takes into consideration the rental rates as well as 
the financial health of the 
 
borrower. 

 Table of Contents 
 83 
 
 Consumer installment — 
 includes loans to individuals both secured by personal property and unsecured. 
Loans include 
 personal lines of credit, automobile loans, and other retail loans. 
These loans are underwritten in accordance with the 
 Bank’s general loan policies and procedures 
which require, among other things, proper documentation of each borrower’s 
 financial condition, satisfactory credit history, 
and if applicable, property value. 
 The following is a summary of current, accruing past due and nonaccrual loans by portfolio 
class as of December 31, 2025 
 and 2024.

 Accruing 
 Accruing 
 Total 
 30-89 Days 
 Greater than 
 Accruing 
 Non- 
 Total 

 (In thousands) 
 Current 
 Past Due 
 90 days 
 Loans 
 Accrual 
 Loans 
 December 31, 2025: 
 Commercial and industrial 
 $ 
 58,394 
 6 
 — 
 58,400 
 — 
 $ 
 58,400 
 Construction and land development 
 56,395 
 41 
 — 
 56,436 
 — 
 56,436 
 Commercial real estate: 
 Owner occupied 
 59,085 
 105 
 — 
 59,190 
 378 
 59,568 
 Hotel/motel 
 47,870 
 — 
 — 
 47,870 
 — 
 47,870 
 Multifamily 
 51,516 
 — 
 — 
 51,516 
 — 
 51,516 
 Other 
 166,567 
 — 
 — 
 166,567 
 — 
 166,567 
 Total commercial 
real estate 
 325,038 
 105 
 — 
 325,143 
 378 
 325,521 
 Residential real estate: 
 Consumer mortgage 
 58,993 
 720 
 — 
 59,713 
 68 
 59,781 
 Investment property 
 56,737 
 — 
 — 
 56,737 
 36 
 56,773 
 Total residential real 
estate 
 115,730 
 720 
 — 
 116,450 
 104 
 116,554 
 Consumer installment 
 8,348 
 73 
 — 
 8,421 
 — 
 8,421 
 Total 
 $ 
 563,905 
 945 
 — 
 564,850 
 482 
 $ 
 565,332 

 December 31, 2024: 
 Commercial and industrial 
 $ 
 63,163 
 12 
 — 
 63,175 
 99 
 $ 
 63,274 
 Construction and land development 
 82,089 
 — 
 — 
 82,089 
 404 
 82,493 
 Commercial real estate: 
 Owner occupied 
 55,346 
 — 
 — 
 55,346 
 — 
 55,346 
 Hotel/motel 
 35,210 
 — 
 — 
 35,210 
 — 
 35,210 
 Multifamily 
 43,556 
 — 
 — 
 43,556 
 — 
 43,556 
 Other 
 155,880 
 — 
 — 
 155,880 
 — 
 155,880 
 Total commercial 
real estate 
 289,992 
 — 
 — 
 289,992 
 — 
 289,992 
 Residential real estate: 
 Consumer mortgage 
 59,677 
 722 
 — 
 60,399 
 — 
 60,399 
 Investment property 
 58,179 
 49 
 — 
 58,228 
 — 
 58,228 
 Total residential real 
estate 
 117,856 
 771 
 — 
 118,627 
 — 
 118,627 
 Consumer installment 
 9,579 
 52 
 — 
 9,631 
 — 
 9,631 
 Total 
 $ 
 562,679 
 835 
 — 
 563,514 
 503 
 $ 
 564,017 

 Table of Contents 
 84 
 Credit Quality Indicators 
 The credit quality of the loan portfolio is summarized no less frequently than 
quarterly using categories similar to the 
 standard asset classification system used by the federal banking agencies. 
These categories are utilized to develop the 
 associated allowance for credit losses using historical losses adjusted for 
qualitative and environmental factors and are 
 defined as follows: 

 ●
 Pass – loans which are well protected by the current net worth and paying 
capacity of the obligor (or guarantors, if 
 any) or by the fair value, less cost to acquire and sell, of any underlying collateral. 

 ●
 Special Mention – loans with potential weakness that may, 
if not reversed or corrected, weaken the credit or 
 inadequately protect the Company’s 
position at some future date. These loans are not adversely classified and do 
 not expose an institution to sufficient risk to warrant an 
adverse classification. 
 ●
 Substandard Accruing – loans that exhibit a well-defined weakness which 
presently jeopardizes debt repayment, 
 even though they are currently performing. These loans are characterized 
by the distinct possibility that the 
 Company may incur a loss in the future if these weaknesses are not corrected. 
 Nonaccrual – includes loans where management has determined that full payment 
of principal and interest is not expected. 
 The following tables present credit quality indicators for the loan portfolio 
segments and classes by year of origination as of 
 December 31, 2025 and 2024.

 Table of Contents 
 85 
 
 (Dollars in thousands) 
 2025 
 2024 
 2023 
 2022 
 2021 
 Prior to 
 2021 
 Revolving 
 Loans 
 Total 

 Loans 
 December 31, 2025: 

 Commercial and industrial 
 Pass 
 $ 
 9,403 
 5,035 
 5,126 
 7,055 
 10,379 
 17,219 
 3,950 
 $ 
 58,167 
 Special mention 
 74 
 4 
 7 
 — 
 — 
 — 
 — 
 85 
 Substandard 
 — 
 — 
 7 
 139 
 2 
 — 
 — 
 148 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total commercial and industrial 
 9,477 
 5,039 
 5,140 
 7,194 
 10,381 
 17,219 
 3,950 
 58,400 
 Current period gross charge-offs 
 40 
 — 
 99 
 3 
 — 
 — 
 — 
 142 
 Construction and land development 
 Pass 
 31,315 
 14,175 
 7,321 
 2,080 
 69 
 711 
 765 
 $ 
 56,436 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total construction and land development 
 31,315 
 14,175 
 7,321 
 2,080 
 69 
 711 
 765 
 56,436 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Commercial real estate: 
 Owner occupied 
 Pass 
 9,755 
 1,312 
 11,889 
 6,235 
 13,830 
 11,618 
 2,682 
 $ 
 57,321 
 Special mention 
 620 
 — 
 — 
 — 
 — 
 — 
 750 
 1,370 
 Substandard 
 — 
 499 
 — 
 — 
 — 
 — 
 — 
 499 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 378 
 — 
 378 
 Total owner occupied 
 10,375 
 1,811 
 11,889 
 6,235 
 13,830 
 11,996 
 3,432 
 59,568 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 296 
 — 
 296 
 Hotel/motel 
 Pass 
 5,012 
 14,161 
 6,143 
 8,976 
 2,948 
 10,630 
 — 
 $ 
 47,870 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total hotel/motel 
 5,012 
 14,161 
 6,143 
 8,976 
 2,948 
 10,630 
 — 
 47,870 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 

 Table of Contents 
 86 
 
 (Dollars in thousands) 
 2025 
 2024 
 2023 
 2022 
 2021 
 Prior to 
 2021 
 Revolving 
 Loans 
 Total 

 Loans 
 December 31, 2025: 

 Multi-family 
 Pass 
 1,254 
 3,615 
 12,550 
 20,560 
 1,726 
 8,652 
 142 
 48,499 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 3,017 
 — 
 3,017 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total multi-family 
 1,254 
 3,615 
 12,550 
 20,560 
 1,726 
 11,669 
 142 
 51,516 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Other 
 Pass 
 25,027 
 41,004 
 12,501 
 28,033 
 17,244 
 24,310 
 17,589 
 165,708 
 Special mention 
 — 
 364 
 — 
 — 
 495 
 — 
 — 
 859 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total other 
 25,027 
 41,368 
 12,501 
 28,033 
 17,739 
 24,310 
 17,589 
 166,567 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Residential real estate: 
 Consumer mortgage 
 Pass 
 6,413 
 4,344 
 16,249 
 16,527 
 2,263 
 10,977 
 1,692 
 58,465 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 184 
 65 
 249 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 754 
 245 
 999 
 Nonaccrual 
 — 
 — 
 68 
 — 
 — 
 — 
 — 
 68 
 Total consumer mortgage 
 6,413 
 4,344 
 16,317 
 16,527 
 2,263 
 11,915 
 2,002 
 59,781 
 Current period gross charge-offs 
 — 
 — 
 4 
 — 
 — 
 1 
 — 
 5 
 Investment property 
 Pass 
 9,332 
 8,045 
 10,016 
 9,849 
 6,790 
 10,375 
 1,999 
 56,406 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 236 
 — 
 — 
 91 
 4 
 — 
 — 
 331 
 Nonaccrual 
 — 
 — 
 36 
 — 
 — 
 — 
 — 
 36 
 Total investment property 
 9,568 
 8,045 
 10,052 
 9,940 
 6,794 
 10,375 
 1,999 
 56,773 
 Current period gross charge-offs 
 — 
 — 
 2 
 — 
 — 
 — 
 — 
 2 
 Consumer installment 
 Pass 
 4,121 
 1,981 
 972 
 780 
 137 
 81 
 304 
 8,376 
 Special mention 
 — 
 7 
 2 
 — 
 — 
 — 
 — 
 9 
 Substandard 
 8 
 7 
 21 
 — 
 — 
 — 
 — 
 36 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total consumer installment 
 4,129 
 1,995 
 995 
 780 
 137 
 81 
 304 
 8,421 
 Current period gross charge-offs 
 42 
 45 
 9 
 — 
 — 
 — 
 — 
 96 
 Total loans 
 Pass 
 101,632 
 93,672 
 82,767 
 100,095 
 55,386 
 94,573 
 29,123 
 557,248 
 Special mention 
 694 
 375 
 9 
 — 
 495 
 184 
 815 
 2,572 
 Substandard 
 244 
 506 
 28 
 230 
 6 
 3,771 
 245 
 5,030 
 Nonaccrual 
 — 
 — 
 104 
 — 
 — 
 378 
 — 
 482 
 Total loans 
 $ 
 102,570 
 94,553 
 82,908 
 100,325 
 55,887 
 98,906 
 30,183 
 $ 
 565,332 
 Total current period gross charge-offs 
 $ 
 82 
 45 
 114 
 4 
 — 
 296 
 — 
 541 

 Table of Contents 
 87 
 
 Year of Origination 
 2024 
 2023 
 2022 
 2021 
 2020 
 Prior to 
 2020 
 Revolving 
 Loans 
 Total 

 Loans 
 (Dollars in thousands) 
 December 31, 2024: 

 Commercial and industrial 
 Pass 
 $ 
 11,290 
 7,265 
 8,488 
 9,677 
 4,659 
 16,989 
 4,425 
 62,793 
 Special mention 
 49 
 74 
 — 
 — 
 — 
 — 
 — 
 123 
 Substandard 
 50 
 21 
 181 
 7 
 — 
 — 
 — 
 259 
 Nonaccrual 
 — 
 99 
 — 
 — 
 — 
 — 
 — 
 99 
 Total commercial and industrial 
 11,389 
 7,459 
 8,669 
 9,684 
 4,659 
 16,989 
 4,425 
 63,274 
 Current period gross charge-offs 
 — 
 — 
 9 
 — 
 — 
 — 
 — 
 9 
 Construction and land development 
 Pass 
 31,144 
 29,520 
 16,504 
 1,794 
 1,434 
 104 
 1,589 
 82,089 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 404 
 — 
 — 
 — 
 — 
 — 
 — 
 404 
 Total construction and land development 
 31,548 
 29,520 
 16,504 
 1,794 
 1,434 
 104 
 1,589 
 82,493 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Commercial real estate: 
 Owner occupied 
 Pass 
 1,921 
 11,206 
 6,776 
 17,114 
 3,396 
 12,030 
 1,552 
 53,995 
 Special mention 
 — 
 249 
 — 
 — 
 591 
 — 
 — 
 840 
 Substandard 
 511 
 — 
 — 
 — 
 — 
 — 
 — 
 511 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total owner occupied 
 2,432 
 11,455 
 6,776 
 17,114 
 3,987 
 12,030 
 1,552 
 55,346 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Hotel/motel 
 Pass 
 480 
 6,480 
 5,303 
 3,079 
 1,299 
 14,437 
 4,132 
 35,210 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total hotel/motel 
 480 
 6,480 
 5,303 
 3,079 
 1,299 
 14,437 
 4,132 
 35,210 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 

 Table of Contents 
 88 
 
 Year of Origination 
 2024 
 2023 
 2022 
 2021 
 2020 
 Prior to 
 2020 
 Revolving 
 Loans 
 Total 

 Loans 
 (Dollars in thousands) 
 December 31, 2024: 

 Multi-family 
 Pass 
 3,739 
 6,041 
 17,037 
 1,863 
 3,493 
 6,400 
 4,983 
 43,556 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total multi-family 
 3,739 
 6,041 
 17,037 
 1,863 
 3,493 
 6,400 
 4,983 
 43,556 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Other 
 Pass 
 43,753 
 21,085 
 32,521 
 21,249 
 16,743 
 16,289 
 4,120 
 155,760 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 — 
 — 
 — 
 — 
 120 
 — 
 — 
 120 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total other 
 43,753 
 21,085 
 32,521 
 21,249 
 16,863 
 16,289 
 4,120 
 155,880 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Residential real estate: 
 Consumer mortgage 
 Pass 
 5,885 
 18,389 
 18,434 
 2,466 
 2,565 
 10,590 
 808 
 59,137 
 Special mention 
 243 
 — 
 — 
 — 
 2 
 486 
 — 
 731 
 Substandard 
 — 
 — 
 — 
 — 
 — 
 531 
 — 
 531 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total consumer mortgage 
 6,128 
 18,389 
 18,434 
 2,466 
 2,567 
 11,607 
 808 
 60,399 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 61 
 — 
 61 
 Investment property 
 Pass 
 10,339 
 10,824 
 10,651 
 8,305 
 11,435 
 4,794 
 1,317 
 57,665 
 Special mention 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Substandard 
 278 
 40 
 93 
 9 
 143 
 — 
 — 
 563 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total investment property 
 10,617 
 10,864 
 10,744 
 8,314 
 11,578 
 4,794 
 1,317 
 58,228 
 Current period gross charge-offs 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Consumer installment 
 Pass 
 5,015 
 2,057 
 1,911 
 296 
 90 
 113 
 67 
 9,549 
 Special mention 
 — 
 9 
 — 
 9 
 — 
 — 
 — 
 18 
 Substandard 
 39 
 15 
 10 
 — 
 — 
 — 
 — 
 64 
 Nonaccrual 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 Total consumer installment 
 5,054 
 2,081 
 1,921 
 305 
 90 
 113 
 67 
 9,631 
 Current period gross charge-offs 
 25 
 42 
 42 
 1 
 — 
 4 
 — 
 114 
 Total loans 
 Pass 
 113,566 
 112,867 
 117,625 
 65,843 
 45,114 
 81,746 
 22,993 
 559,754 
 Special mention 
 292 
 332 
 — 
 9 
 593 
 486 
 — 
 1,712 
 Substandard 
 878 
 76 
 284 
 16 
 263 
 531 
 — 
 2,048 
 Nonaccrual 
 404 
 99 
 — 
 — 
 — 
 — 
 — 
 503 
 Total loans 
 $ 
 115,140 
 113,374 
 117,909 
 65,868 
 45,970 
 82,763 
 22,993 
 564,017 
 Total current period gross charge-offs 
 $ 
 25 
 42 
 51 
 1 
 — 
 65 
 — 
 184 

 Table of Contents 
 89 
 Allowance for Credit Losses 
 The allowance for credit losses is estimated under the Current Expected 
Credit Losses (“CECL”) methodology set forth in 
 FASB ASC 326, 
 Financial Instruments – Credit Losses. 

 Under the CECL methodology, 
the allowance for credit losses is 
 measured on a collective basis for pools of loans with similar risk characteristics, 
and for loans that do not share similar risk 
 characteristics with the collectively evaluated pools, evaluations are 
performed on an individual basis.

 The composition of the provision for credit losses for the respective periods 
is presented below.

 Year ended December 31, 
 (Dollars in thousands) 
 2025 
 2024 
 Provision for credit losses: 
 Loans 
 $ 
 703 
 $ 
 (6) 
 Reserve for unfunded commitments 
 ( 72 )
 42 
 Total provision for credit 
losses 
 $ 
 631 
 $ 
 36 

 The following table details the changes in the allowance for credit losses by portfolio 
segment for the years ended 
 December 31, 2025 and 2024.

 (in thousands) 
 Commercial 
 and industrial 
 Construction 
 and land 
 Development 
 Commercial 
 Real Estate 
 Residential 
 Real Estate 
 Consumer 
 Installment 
 Total 
 Balance, December 31, 2023 
 $ 
 1,288 
 960 
 3,921 
 546 
 148 
 $ 
 6,863 
 Charge-offs 
 ( 9 )
 — 
 — 
 ( 61 )
 ( 114 )
 ( 184 )
 Recoveries 
 144 
 — 
 — 
 9 
 45 
 198 
 Net recoveries (charge-offs) 
 135 
 — 
 — 
 ( 52 )
 ( 69 )
 14 
 Provision for credit losses 
 ( 179 )
 99 
 ( 79 )
 94 
 59 
 ( 6 )
 Balance, December 31, 2024 
 $ 
 1,244 
 1,059 
 3,842 
 588 
 138 
 $ 
 6,871 
 Charge-offs 
 ( 142 )
 — 
 ( 296 )
 ( 7 )
 ( 96 )
 ( 541 )
 Recoveries 
 30 
 — 
 — 
 84 
 29 
 143 
 Net (charge-offs) recoveries 
 ( 112 )
 — 
 ( 296 )
 77 
 ( 67 )
 ( 398 )
 Provision for credit losses 
 ( 3 )
 245 
 231 
 172 
 58 
 703 
 Balance, December 31, 2025 
 $ 
 1,129 
 1,304 
 3,777 
 837 
 129 
 $ 
 7,176 

 Table of Contents 
 90 
 The Company did not recognize any interest income on nonaccrual loans during 
2025 and 2024. 
 The Company designates individually evaluated loans on nonaccrual status as collateral 
-dependent loans, as well as other 
 loans that management of the Company designates as having higher risk. 
Collateral-dependent loans are loans for which 
 the repayment is expected to be provided substantially through the operation 
or sale of the collateral and the borrower is 
 experiencing financial difficulty. 
These loans do not share common risk characteristics and are not included within the 
 collectively evaluated loans for determining the allowance for credit 
losses. 
Under CECL, for collateral-dependent loans, 
 the Company has adopted the practical expedient to measure the allowance 
for credit losses based on the fair value of 
 collateral. 
The allowance for credit losses is calculated on an individual loan basis based 
on the shortfall between the fair 
 value of the loan’s collateral, which 
is adjusted for liquidation costs/discounts, and amortized costs. 
If the fair value of the 
 collateral exceeds the amortized cost, no allowance is required. 
 The following table presents the amortized cost basis of collateral dependent loans, 
which are individually evaluated to 
 determine expected credit losses for the years ended December 31, 2025 and 2024:

 (Dollars in thousands) 
 Real Estate 
 Business Assets 
 Total Loans 
 December 31, 2025: 
 Commercial real estate 
 $ 
 378 
 — 
 $ 
 378 
 Total 

 $ 
 378 
 — 
 $ 
 378 
 December 31, 2024: 
 Commercial and industrial 
 $ 
 — 
 99 
 $ 
 99 
 Construction and land development 
 404 
 — 
 404 
 Total 

 $ 
 404 
 99 
 $ 
 503 

 At December 31, 2025, the Company had one additional individually 
evaluated commercial real estate loan in the amount 
 of $
 3.0 
 
million that was not considered collateral dependent and was accruing in accordance with 
its contractual terms. 

 This loan had a calculated allowance of $
 0.5 
 
million at December 31, 2025. 
The allowance for this loan was measured 
 using the present value of expected future cash flows, discounted at the loan’s 
effective interest rate. 
Expected cash flows 
 were developed using probability of default and loss given default assumptions 
specific to the borrower. 
 The gross interest income which would have been recorded under the original terms 
of those nonaccrual loans had they 
 been accruing interest, amounted to approximately $
 15 
 
thousand and $
 14 
 
thousand for the years ended December 31, 2025 
 and 2024, respectively. 
 The following table summarizes the Company’s 
nonaccrual loans by major categories as of December 31, 2025 and 2024.

 Nonaccrual loans 
 Nonaccrual loans 
 Total 
 (Dollars in thousands) 
 with no Allowance 
 with an Allowance 
 Nonaccrual Loans 
 December 31, 2025 
 Commercial real estate 
 378 
 — 
 378 
 Residential real estate 
 — 
 104 
 104 
 Total 

 $ 
 378 
 104 
 $ 
 482 
 December 31, 2024 
 Commercial and industrial 
 — 
 99 
 99 
 Construction and land development 
 404 
 — 
 404 
 Total 

 $ 
 404 
 99 
 $ 
 503

 The Company had no modifications to loans made to borrowers experiencing 
financial difficulty at December 31, 2025 and 
 2024.

 Table of Contents 
 91 
 NOTE 5: PREMISES AND EQUIPMENT 
 Premises and equipment at December 31, 2025 and 2024 is presented 
below.

 December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Land and improvements 
 $ 
 12,800 
 12,800 
 Buildings and improvements 
 38,035 
 36,978 
 Furniture, fixtures, and equipment 
 4,613 
 4,335 
 Construction in progress 
 184 
 38 
 Total premises and 
equipment 
 55,632 
 54,151 
 Less: 
accumulated depreciation 
 ( 10,032 )
 ( 8,220 )
 Premises and equipment, net 
 $ 
 45,600 
 45,931 

 Depreciation expense was approximately $
 1.8 
 
million and $
 1.7 
 
million for the years ended December 31, 2025 and 2024, 
 respectively, and is a component 
of net occupancy and equipment expense in the consolidated statements of earnings.

 NOTE 6: LEASES 
 The Company leases excess retail and office space 
in its headquarters building to third-party tenants under noncancelable 
 operating lease agreements. These leases generally include fixed rental 
payments with scheduled escalation provisions over 
 the respective lease terms. 

 The Company accounts for these arrangements as operating leases in accordance 
with Accounting Standards Codification 
 (“ASC”) Topic 842, 
 Leases
 . Lease income is recognized on a straight-line basis over the terms of the 
leases when 
 collectability is probable. Differences between contractual 
rental payments and lease income recognized are recorded as 
 deferred rent within other assets or other liabilities in the consolidated balance 
sheets. 
 Tenant leases also require 
reimbursement of the tenants’ allocated portion of operating expenses associated with the 
 building, including utilities, maintenance, property taxes, insurance 
and other common area costs. These reimbursements 
 represent variable lease payments and are recognized as income when received 
. 
 Certain tenant leases include the right to use parking spaces within the Company’s 
parking deck located on the same 
 property as the headquarters building. These parking arrangements are considered 
part of the overall lease arrangement and 
 are included in the lease consideration. 
 Lease income is recorded as a reduction of net occupancy and equipment 
expense in the consolidated statements of 
 earnings. For the years ended December 31, 2025 and 2024, total lease income 
was $
 1.4 
 
million and $
 1.0 
 
million, 
 respectively. 
 Future minimum lease payments to be received under noncancelable operating 
leases as of December 31, 2025 were as 
 follows:

 (Dollars in thousands) 
 Minimum lease 
 payments to be 
 rceived 
 2026 
 $ 
 931 
 2027 
 953 
 2028 
 975 
 2029 
 976 
 2030 
 934 
 Thereafter 
 1,937 
 Total minimum 
lease payments to be received 
 $ 
 6,706 

 Table of Contents 
 92 
 NOTE 7: MORTGAGE SERVICING 
RIGHTS, NET 

 MSRs are recognized 
based on the 
fair value of 
the servicing rights 
on the date 
the corresponding mortgage 
loans are sold. 

 An 
estimate 
of 
the 
Company’s 
MSRs 
is 
determined 
using 
assumptions 
that 
market 
participants 
would 
use 
in 
estimating 
 future net servicing 
income, including estimates 
of prepayment speeds, 
discount rates, 
default rates, cost 
to service, escrow 
 account earnings, 
contractual servicing 
fee income, 
ancillary income, 
and late 
fees. 
Subsequent to 
the date 
of transfer, 
the 
 Company 
has 
elected 
to 
measure 
its 
MSRs 
under 
the 
amortization 
method. 
Under 
the 
amortization 
method, 
MSRs 
are 
 amortized in proportion 
to, and over 
the period of, 
estimated net servicing 
income. Servicing 
fee income is 
recorded net of 
 related amortization expense and recognized in earnings as part of mortgage 
lending income. 

 The Company has recorded MSRs related to loans sold without recourse 
to Fannie Mae. 
The Company generally sells 
 conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae. 
MSRs are included in other assets on the 
 accompanying consolidated balance sheets. 
 The Company evaluates MSRs for impairment on a quarterly basis. 
Impairment is determined by stratifying MSRs into 
 groupings based on predominant risk characteristics, such as interest rate and 
loan type. 
If, by individual stratum, the 
 carrying amount of the MSRs exceeds fair value, a valuation allowance is established. 
The valuation allowance is adjusted 
 as the fair value changes. 
Changes in the valuation allowance are recognized in earnings as a component 
of mortgage 
 lending income. 
 The following table details the changes in amortized MSRs and the related valuation 
allowance for the years ended 
 December 31, 2025 and 2024.

 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Beginning balance 
 $ 
 892 
 992 
 Additions, net 
 51 
 79 
 Amortization expense 
 ( 172 )
 ( 179 )
 Ending balance 
 $ 
 771 
 892 
 Valuation 
allowance included in MSRs, net: 
 Beginning of period 
 $ 
 — 
 — 
 End of period 
 — 
 — 
 Fair value of amortized MSRs: 
 Beginning of period 
 $ 
 2,204 
 2,382 
 End of period 
 2,034 
 2,204

 Data and assumptions used in the fair value calculation related to MSRs at December 
31, 2025 and 2024, respectively, 
are 
 presented below.

 December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Unpaid principal balance 
 $ 
 190,713 
 205,915 
 Weighted average 
prepayment speed (CPR) 
 8.2 
 % 
 7.3 
 Discount rate (annual percentage) 
 9.5 
 % 
 10.0 
 Weighted average 
coupon interest rate 
 3.7 
 % 
 3.6 
 Weighted average 
remaining maturity (months) 
 237 
 242 
 Weighted average 
servicing fee (basis points) 
 25.0 
 25.0 

 Table of Contents 
 93 
 At December 31, 2025, the weighted average amortization period 
for MSRs was 
 6.8 
 
years. 
Estimated amortization expense 
 for each of the next five years is presented below.

 (Dollars in thousands) 
 December 31, 2025 
 2026 
 $ 
 106 
 2027 
 92 
 2028 
 80 
 2029 
 70 
 2030 
 61 

 NOTE 8: 
DEPOSITS 
 At December 31, 2025, the scheduled maturities of certificates of deposit 
and other time deposits are presented below.

 (Dollars in thousands) 
 December 31, 2025 
 2026 
 $ 
 164,263 
 2027 
 7,493 
 2028 
 2,233 
 2029 
 672 
 2030 
 2,140 
 Thereafter 
 — 
 Total certificates of 
deposit and other time deposits 

 $ 
 176,801 

 Additionally, at December 
31, 2025 and 2024, approximately $
 79.3 
 
million and $
 87.7 
 
million, respectively, of certificates 
 of deposit and other time deposits were issued in denominations greater 
than $250 thousand. 
 At December 31, 2025 and 2024, the amount of deposit accounts in overdraft 
status that were reclassified to loans on the 
 accompanying consolidated balance sheets was not material.

 NOTE 9: 
INCOME TAXES 
 For the years ended December 31, 2025 and 2024 the components of 
income tax expense from continuing operations are 
 presented below.

 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Current income tax expense 
 Federal 
 $ 
 1,676 
 991 
 State 
 409 
 571 
 Total current 
income tax expense 
 2,085 
 1,562 
 Deferred income tax (benefit) expense: 

 Federal 
 ( 102 )
 473 
 State 
 ( 27 )
 ( 35 )
 Total deferred income 
tax (benefit) expense 
 ( 129 )
 438 
 Total income 
tax expense 
 $ 
 1,956 
 2,000 

 Cash paid for income taxes, net of refunds, consists of the following:

 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Federal 
 $ 
 346 
 725 
 State - Alabama 
 330 
 519 
 Total 
 676 
 1,244 

 Table of Contents 
 94 
 Total income 
tax expense differs from the amounts computed by applying the statutory 
federal income tax rate of 21% to 
 earnings before income taxes. 
A reconciliation of the differences for the years ended 
December 31, 2025 and 2024, is 
 presented below.

 2025 
 2024 
 Percent of 
 Percent of 
 pre-tax 
 pre-tax 
 (Dollars in thousands) 
 Amount 
 earnings 
 Amount 
 earnings 
 Earnings before income taxes 
 $ 
 9,211 
 8,397 
 Income taxes at U.S. federal statutory rate 
 1,935 
 21.0 
 % 
 1,763 
 21.0 
 % 
 State income taxes, net of federal tax effect (1) 
 299 
 3.2 
 388 
 4.6 
 Tax credits: 
 New Markets Tax Credit 
(2) 
 ( 58 )
 ( 0.6 )
 ( 58 )
 ( 0.7 )
 Nontaxable or nondeductible items: 
 Tax-exempt interest 
 ( 203 )
 ( 2.2 )
 ( 290 )
 ( 3.5 )
 Bank-owned life insurance 
 ( 87 )
 ( 0.9 )
 ( 85 )
 ( 1.0 )
 Return-to-provision adjustment 
 — 
 — 
 263 
 3.1 
 Other 
 70 
 0.7 
 19 
 0.3 
 Total income 
tax expense 
 $ 
 1,956 
 21.2 
 % 
 2,000 
 23.8 
 % 
 (1) State taxes in Alabama made up the majority (greater than 50 percent) of 
the tax effect in this category. 
 (2) Tax credit investments 
includes tax credits and the amortization of and projected tax losses from tax 
credit investments.

 At December 31, 2025 and 2024, the Company had a net deferred tax 
asset of $6.9 million and $10.2 million, respectively, 
 included in other assets on the consolidated balance sheet. 
The tax effects of temporary differences that give rise to 
 significant portions of the deferred tax assets and deferred tax liabilities at December 
31, 2025 and 2024 are presented 
 below.

 December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Deferred tax assets: 
 Allowance for credit losses 
 $ 
 1,802 
 1,726 
 Unrealized loss on securities 
 6,502 
 9,929 
 Accrued bonus 

 270 
 207 
 Right of use liability 
 39 
 58 
 Other 
 78 
 99 
 Total deferred tax 
assets 
 8,691 
 12,019 
 Deferred tax liabilities: 
 Premises and equipment 
 1,180 
 1,212 
 Originated mortgage servicing rights 
 194 
 224 
 Right of use asset 
 39 
 58 
 Other 
 384 
 333 
 Total deferred tax 
liabilities 
 1,797 
 1,827 
 Net deferred tax asset 
 $ 
 6,894 
 10,192 

 Table of Contents 
 95 
 A valuation allowance is recognized for a deferred tax asset if, based on the weight of 
available evidence, it is more-likely-
 than-not that some portion of the entire deferred tax asset will not be realized. 
The ultimate realization of deferred tax 
 assets is dependent upon the generation of future taxable income during 
the periods in which those temporary differences 
 become deductible. 
Management considers the scheduled reversal of deferred tax liabilities, projected 
future taxable 
 income and tax planning strategies in making this assessment. Based upon 
the level of historical taxable income and 
 projection for future taxable income over the periods which the temporary 
differences resulting in the remaining deferred 
 tax assets are deductible, management believes it is more-likely-than-not 
that the Company will realize the benefits of these 
 deductible differences at December 31, 2025. 
The amount of the deferred tax assets considered realizable, however, 
could 
 be reduced in the near term if estimates of future taxable income are reduced. 
 The change in the net deferred tax asset for the years ended December 31, 2025 
and 2024, is presented

below. 
 
 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Net deferred tax asset (liability): 
 Balance, beginning of year 
 $ 
 10,192 
 10,252 
 Cumulative effect of change in accounting standard 
 — 
 183 
 Deferred tax expense (benefit) related to continuing operations 
 129 
 ( 438 )
 Stockholders' equity, 
for accumulated other comprehensive (income) loss 
 ( 3,427 )
 195 
 Balance, end of year 
 $ 
 6,894 
 10,192 

 ASC 740, 
 Income Taxes,
 
defines the threshold for recognizing the benefits of tax return positions in the financial 
statements 
 as “more-likely-than-not” to be sustained by the taxing authority. 
This section also provides guidance on the de-
 recognition, measurement, and classification of income tax uncertainties 
in interim periods. 
As of December 31, 2025, the 
 Company had no unrecognized tax benefits related to federal or state income tax matters. 
The Company does not anticipate 
 any material increase or decrease in unrecognized tax benefits during 
2026 relative to any tax positions taken prior to 
 December 31, 2025. 
As of December 31, 2025, the Company has accrued no interest and no penalties related to uncertain 
 tax positions. 
It is the Company’s policy to recognize 
interest and penalties related to income tax matters in income tax 
 expense. 

 The Company and its subsidiaries file consolidated U.S. federal and 
State of Alabama income tax returns. 
The Company is 
 currently open to audit under the statute of limitations by the Internal Revenue Service 
and the State of Alabama for the 
 years ended December 31, 2022 through 2025.

 NOTE 10: 
EMPLOYEE BENEFIT PLAN 
 The Company sponsors a qualified defined contribution retirement plan, 
the Auburn National Bancorporation, Inc. 401(k) 
 Plan (the "Plan"). 
Eligible employees may contribute up to 100% of eligible compensation, subject to 
statutory limits upon 
 completion of 2 months of service. 
Furthermore, the Company allows employer Safe Harbor contributions. 
Participants are 
 immediately vested in employer Safe Harbor contributions. The 
Company's matching contributions on behalf of 
 participants were equal to $1.00 for each $1.00 contributed by participants, 
up to 3% of each participant's 
eligible 
 compensation, and $0.50 for every $1.00 contributed by participants, above 
3% up to 5% of each participant's 
eligible 
 compensation, for a maximum matching contribution of 4% of the participants' eligible 
compensation. Company matching 
 contributions to the Plan were approximately $
 0.3 
 
million for the years ended December 31, 2025 and 2024, respectively, 
 and are included in salaries and benefits expense.

 NOTE 11: 
STOCK-BASED COMPENSATI 
ON 
 The Company maintains an equity incentive plan (the “Plan”) pursuant to 
which restricted stock units (“RSUs”) may be 
 granted to executive officers and key employees. Each 
RSU represents the right to receive one share of the Company’s 
 common stock upon vesting. RSUs do not represent an ownership interest 
in the Company’s common 
stock and do not 
 provide voting rights prior to vesting. Awards 
are evidenced by individual award agreements and are subject to the terms of 
 the Plan. 
 On July 24, 2025, the Company granted 
 3,030 
 
RSUs with a grant-date fair value of $
 28.34 
 
per unit, based on the closing 
 market price of the Company’s common 
stock on Nasdaq on the date of grant, for aggregate grant-date fair value of $
 86 
 thousand. The RSUs vest in full on March 10, 2026 (the “Vesting 
Date”), subject to continued employment through the 
 V
 esting Date. 

 Table of Contents 
 96 
 
 The award agreement provides for dividend equivalents. Dividend equivalents 
are additional RSUs credited upon the 
 payment of cash dividends on the Company’s 
common stock. The number of RSUs issued as dividend equivalents is 
 determined based on the number of RSUs held on the dividend payment 
date multiplied by the cash dividend per share, 
 divided by the closing price of the Company’s 
common stock on the dividend payment date. RSUs issued as dividend 
 equivalents vest on the same terms and conditions as the underlying RSUs. 
The incremental compensation cost associated 
 with such dividend equivalents was not material to the Company’s 
consolidated financial statements. 
 The vesting of RSUs, including any dividend equivalents, may be 
accelerated upon certain events, including death or 
 disability (100% vesting), retirement (pro rata vesting), termination without 
cause (pro rata vesting), or a change in control 
 in which the awards are not assumed by the surviving entity. 
Except as provided in the award agreement, unvested RSUs 
 are forfeited upon termination of employment. In the event of termination 
for cause, the Compensation Committee may 
 require the return of shares or other amounts received in respect of RSUs that vested 
during the period constituting cause. 
 RSUs are nontransferable and are subject to the Company’s 
insider trading policy and other restrictive covenants contained 
 in the applicable 
award agreement. 
 Compensation cost for RSUs is recognized on a straight-line basis over the 
requisite service period. The Company accounts 
 for forfeitures as they occur. There 
were no forfeitures related to these RSUs during the year ended December 31, 2025. 
 For the year ended December 31, 2025, the Company recognized $
 62 
 
thousand of stock-based compensation expense 
 related to these RSUs. Such expense is included in salaries and benefits expense 
in the Consolidated Statements of 
 Earnings, with a corresponding increase to additional paid-in capital. 
 As of December 31, 2025, unrecognized compensation cost related to these RSUs totaled $
 24 
 
thousand, which is expected 
 to be recognized through the vesting date of March 10, 2026.

 NOTE 12: DERIVATIVE 
INSTRUMENTS 

 From time to time, the Company may enter into interest rate swaps to facilitate customer transactions 
and manage the 
 Company’s exposure to interest rate risk associated 
with changes in the Secured Overnight Financing Rate (“SOFR”). 
The 
 Company does not enter into derivative instruments for speculative or 
trading purposes. 
 In December 2025, the Company entered into a pay-fixed, receive-variable 
interest rate swap with a notional amount of 
 approximately $10.0 million. The swap was designated as a fair value hedge 
of changes in the fair value of a specified loan 
 attributable to changes in the benchmark interest rate (SOFR). 
 Under the terms of the swap, the Company pays a fixed rate of interest and receives 
a variable rate based on SOFR. The 
 hedge was designated as a fair value hedge under ASC 815, 
 Derivatives and Hedging
 , and qualified for the shortcut 
 method. Accordingly, 
the Company assumes no hedge ineffectiveness, and changes in the fair 
value of the derivative are 
 recognized in earnings in the same income statement line item as the changes 
in the fair value of the hedged loan 
 attributable to the hedged risk. 
 The following table presents the fair value of derivative instruments designated 
as hedging instruments as of December 31, 
 2025:

 Balance Sheet 
 Fair Value 
 Fair Value 
 (Dollars in thousands) 
 Location 
 Asset 
 Liability 
 December 31, 2025: 
 Interest rate swap (fair value hedge) 
 Other Liabilities 
 $ 
 — 
 $ 
 22 
 Total interest rate swap 
agreements 
 $ 
 — 
 $ 
 22

 Accrued interest receivable related to the interest rate swap of $
 0.1 
 
million is included in Other Assets as of December 31, 
 2025. 
 The Company had no derivative instruments not designated as hedging 
instruments at December 31, 2025. 

 Table of Contents 
 97 
 
 The following table presents the effect of fair value hedge accounting 
on the Consolidated Statements of Earnings for the 
 year ended December 31, 2025:

 Amount of Gain 
 Amount of Gain 
 (Loss) Recognized 
 Location of Gain 
 (Loss) Recognized 
 in Income on Hedged 
 (Loss) Recognized 
 in Income on Hedged 
 Item Attributable 
 (Dollars in thousands) 
 in Income 
 Item 
 to Hedged Risk 
 Year 
ended December 31, 2025: 
 Interest rate swap (fair value hedge) 
 Interest Income (Loans) 
 $ 
 ( 22 )
 $ 
 22 
 Total interest rate swap 
agreements 
 $ 
 (22) 
 $ 
 22

 The carrying amount of the loan designated as the hedged item in the fair value hedge 
is included in Loans, net of unearned 
 income on the Consolidated Balance Sheet and includes a cumulative basis adjustment 
for changes in fair value attributable 
 to the hedged risk. 
As of December 31, 2025, the carrying amount of the hedged loan was $
 10.0 
 
million, which included a 
 cumulative fair value hedge basis adjustment of $22 thousand. 
 Because the hedge qualified for the shortcut method, the hedge relationship 
was assumed to be perfectly effective, and 
 therefore no hedge ineffectiveness was recognized 
during the year ended December 31, 2025. 
 The Company is exposed to credit risk in the event of nonperformance by 
the counterparty to the interest rate swap. The 
 Company manages this risk by transacting with a counterparty that meets established 
credit standards. The Company does 
 not anticipate nonperformance by the counterparty. 
 The derivative is subject to a master netting arrangement; however, 
the Company does not offset derivative assets and 
 liabilities on the Consolidated Balance Sheets.

 NOTE 13: 
COMMITMENTS AND CONTINGENT LIABILITIES 
 Credit-Related Financial Instruments 
 The Company is party to credit-related financial instruments with off 
-balance sheet risk in the normal course of business to 
 meet the financing needs of its customers. 
These financial instruments include commitments to extend credit and standby 
 letters of credit. 
Such commitments involve, to varying degrees, elements of credit and interest rate risk in 
excess of the 
 amount recognized in the consolidated balance sheets.
 The Company’s exposure to 
credit loss is represented by the contractual amount of these commitments. 
The Company 
 follows the same credit policies in making commitments as it does for on-balance 
sheet instruments. 
 At December 31, 2025 and 2024, the following financial instruments were 
outstanding whose contract amount represents 
 credit risk.

 December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Commitments to extend credit 
 $ 
 48,061 
 $ 
 84,667 
 Standby letters of credit 
 1,001 
 738 

 Table of Contents 
 98 
 Commitments to extend credit are agreements to lend to a customer provided 
there is no violation of any condition 
 established in the commitment agreement and provided the 
commitments are not otherwise cancelable by the Bank. 

 Commitments generally have fixed expiration dates or other termination 
clauses and may require payment of a fee. 
The 
 commitments for lines of credit may expire without being drawn upon. 
Therefore, total commitment amounts do not 
 necessarily represent future cash requirements. 
The amount of collateral obtained, if it is deemed necessary by the 
 Company, is based on 
management’s credit evaluation of the customer. 
The Company records an allowance for credit 
 losses on off-balance sheet exposures, unless the commitments to 
extend credit are unconditionally cancelable, through a 
 charge to provision for credit losses in the Company’s 
Consolidated Statement of Earnings. 
The allowance for credit losses 
 related to unfunded commitments was $
 0.3 
 
million at both December 31, 2025 and 2024, respectively, 
and is included in 
 other liabilities on the Company’s 
Consolidated Balance Sheet. 

 See “Note 1: Summary of Significant Accounting Policies – 
 Allowance for credit losses – Unfunded commitments.”
 Standby letters of credit are conditional commitments issued by the 
Company to guarantee the performance of a customer 
 to a third party. 
The credit risk involved in issuing letters of credit is essentially the same as that involved 
in extending loan 
 facilities to customers. 
The Company holds various assets as collateral, including accounts receivable, 
inventory, 
 equipment, marketable securities, and property to support those commitments 
for which collateral is deemed necessary. 

 The Company has a recorded a liability for the estimated fair value of these 
standby letters of credit in the amount of $
 12 
 thousand and $
 13 
 
thousand at December 31, 2025 and 2024, respectively. 
 Contingent Liabilities 
 The Company and the Bank are involved in various legal proceedings, arising 
in connection with their business. 
In the 
 opinion of management, based upon consultation with legal counsel, the 
ultimate resolution of these proceedings will not 
 have a material adverse effect upon the consolidated financial 
condition or results of operations of the Company and the 
 Bank.

 NOTE 14: FAIR VALUE 

 Fair Value 
Hierarchy
 “Fair value” is defined by ASC 820, 
 Fair Value 
Measurements and Disclosures
 , as the price that would be received to sell 
 an asset or paid to transfer a liability in an orderly transaction occurring in the principal 
market (or most advantageous 
 market in the absence of a principal market) for an asset or liability at the measurement 
date. 
GAAP establishes a fair 
 value hierarchy for valuation inputs that gives the highest priority to 
quoted prices in active markets for identical assets or 
 liabilities and the lowest priority to unobservable inputs. 
The fair value hierarchy is as follows: 
 Level 1—inputs to the valuation methodology are quoted prices, unadjusted, 
for identical assets or liabilities in active 
 markets. 

 Level 2—inputs to the valuation methodology include quoted prices for similar 
assets and liabilities in active markets, 
 quoted prices for identical or similar assets or liabilities in markets that are not 
active, or inputs that are observable for the 
 asset or liability, either directly 
or indirectly. 

 Level 3—inputs to the valuation methodology are unobservable and reflect 
the Company’s own assumptions about 
the 
 inputs market participants would use in pricing the asset or liability. 

 Level changes in fair value measurements
 
 Transfers between levels of the fair value hierarchy 
are generally recognized at the end of the reporting period. 
The 
 Company monitors the valuation techniques utilized for each category 
of financial assets and liabilities to ascertain when 
 transfers between levels have been affected. 
The nature of the Company’s financial 
assets and liabilities generally is such 
 that transfers in and out of any level are expected to be infrequent. For the years ended 
December 31, 2025 and 2024, there 
 were no transfers between levels and no changes in valuation techniques for 
the Company’s financial assets and liabilities. 

 Table of Contents 
 99 
 
 Assets and liabilities measured at fair value on a recurring 
basis 
 Securities available-for-sale 
 Fair values of securities available for sale were primarily measured 
using Level 2 inputs. 
For these securities, the Company 
 obtains pricing from third party pricing services. 
These third-party pricing services consider observable data that may 
 include broker/dealer quotes, market spreads, cash flows, market consensus 
prepayment speeds, benchmark yields, reported 
 trades for similar securities, credit information and the securities’ terms and conditions. 
On a quarterly basis, management 
 reviews the pricing received from the third-party pricing services for 
reasonableness given current market conditions. 
As 
 part of its review, management 
may obtain non-binding third party broker quotes to validate the fair value measurements. 

 In addition, management will periodically submit pricing provided by 
the third-party pricing services to another 
 independent valuation firm on a sample basis. 
This independent valuation firm will compare the price provided by 
the 
 third-party pricing service with its own price and will review the significant assumptions 
and valuation methodologies used 
 with management.

 Interest Rate Swaps 
 The fair values of the Company’s interest 
rate swaps are estimated using a discounted cash flow model. 
The model 
 considers the present value of expected future cash flows under the 
terms of the swap and incorporates observable market 
 data such as: relevant interest rate swap curves, benchmark yield curves 
(e.g.: SOFR-based or other market-based curves), 
 and forward interest rate expectations over the contractual term of the instruments. 
Because the significant inputs used in 
 valuing the interest rate swaps are observable in active markets, the Company 
classifies these instruments with Level 2 of 
 the fair value hierarchy. 
 The following table presents the balances of the assets and liabilities measured at fair 
value on a recurring basis as of 
 December 31, 2025 and 2024, respectively, 
by caption, on the accompanying consolidated balance sheets by ASC 820 
 valuation hierarchy (as described above). 
 
 Quoted Prices in 
 Significant 
 Active Markets 
 Other 
 Significant 
 for 
 Observable 
 Unobservable 
 Identical Assets 
 Inputs 
 Inputs 
 (Dollars in thousands) 
 Amount 
 (Level 1) 
 (Level 2) 
 (Level 3) 
 December 31, 2025: 
 Securities available-for-sale: 
 Agency obligations 

 $ 
 53,784 
 — 
 53,784 
 — 
 Agency MBS 
 161,927 
 — 
 161,927 
 — 
 State and political subdivisions 
 17,548 
 — 
 17,548 
 — 
 Total securities available 
-for-sale 
 233,259 
 — 
 233,259 
 — 
 Total 
assets at fair value 
 $ 
 233,259 
 — 
 233,259 
 — 
 Other liabilities - interest rate swaps 
 22 
 — 
 22 
 — 
 Total 
liabilities at fair value 
 $ 
 22 
 — 
 22 
 — 
 December 31, 2024: 
 Securities available-for-sale: 
 Agency obligations 

 $ 
 52,411 
 — 
 52,411 
 — 
 Agency MBS 
 173,676 
 — 
 173,676 
 — 
 State and political subdivisions 
 16,925 
 — 
 16,925 
 — 
 Total securities available 
-for-sale 
 243,012 
 — 
 243,012 
 — 
 Total 
assets at fair value 
 $ 
 243,012 
 — 
 243,012 
 — 

 Table of Contents 
 100 
 Assets and liabilities measured at fair value on a nonrecurring 
basis 
 Collateral Dependent Loans 
 Collateral dependent loans are measured at the fair value of the collateral securing 
loan less estimated selling costs. 
The 
 fair value of real estate collateral is determined based on real estate appraisals which 
are generally based on recent sales of 
 comparable properties which are then adjusted for property specific factors. 
Non-real estate collateral is valued based on 
 various sources, including third party asset valuations and internally determined 
values based on cost adjusted for 
 depreciation and other judgmentally determined discount factors. 
Collateral dependent loans are classified within Level 3 
 of the hierarchy due to the unobservable inputs used in determining their 
fair value such as collateral 
values and the 
 borrower’s underlying financial condition. 
 Mortgage servicing rights, net 
 Mortgage servicing rights, net, included in other assets on the accompanying consolidated 
balance sheets, are carried at the 
 lower of cost or estimated fair value. 
MSRs do not trade in an active market with readily observable prices. 
To determine 
 the fair value of MSRs, the Company engages an independent third 
party. 
The independent third party’s valuation 
model 
 calculates the present value of estimated future net servicing income using assumptions 
that market participants would use 
 in estimating future net servicing income, including estimates of prepayment 
speeds, discount rate, default rates, cost to 
 service, escrow account earnings, contractual servicing fee income, 
ancillary income, and late fees. 
Periodically, the 
 Company will review broker surveys and other market research to validate 
significant assumptions used in the model. 
The 
 significant unobservable inputs include prepayment speeds or the constant prepayment 
rate (“CPR”) and the weighted 
 average discount rate. 
Because the valuation of MSRs requires the use of significant unobservable inputs, all of the 
 Company’s MSRs are classified 
within Level 3 of the valuation hierarchy. 

 Table of Contents 
 101 
 
 The following table presents the balances of the assets and liabilities measured 
at fair value on a nonrecurring basis as of 
 December 31, 2025 and 2024, respectively, 
by caption, on the accompanying consolidated balance sheets and by ASC 820 
 valuation hierarchy (as described above):

 Quoted Prices in 
 Active Markets 
 Other 
 Significant 
 for 
 Observable 
 Unobservable 
 Identical Assets 
 Inputs 
 Inputs 
 (Dollars in thousands) 
 Amount 
 (Level 1) 
 (Level 2) 
 (Level 3) 
 December 31, 2025: 
 Loans, net 
 (1)
 $ 
 378 
 — 
 — 
 378 
 Other assets 
 (2)
 771 
 — 
 — 
 771 
 Total assets at fair value 
 $ 
 1,149 
 — 
 — 
 1,149 
 December 31, 2024: 
 Loans, net 
 (1)
 $ 
 503 
 — 
 — 
 503 
 Other assets 
 (2)
 892 
 — 
 — 
 892 
 Total assets at fair value 
 $ 
 1,395 
 — 
 — 
 1,395 
 (1)
 Loans considered collateral dependent under ASC 326, 
 Financial Instruments - Credit Losses.
 (2)
 Represents MSRs, net carried at lower of cost or estimated fair value.

 Quantitative Disclosures for Level 3 Fair Value 
Measurements 
 At December 31, 2025 and 2024, the Company had no Level 3 assets measured at fair value on 
a recurring basis. 
For Level 
 3 assets measured at fair value on a non-recurring basis as of December 31, 2025 
and 2024, the significant unobservable 
 inputs used in the fair value measurements are presented below.

 Weighted 
 Carrying 
 Significant 
 Average 
 (Dollars in thousands) 
 Amount 
 Valuation Technique 
 
Unobservable Input 
 Range 
 of Input 
 December 31, 2025: 
 Collateral dependent loans 
 $ 
 378 
 Appraisal 
 Appraisal discounts 
 10.0 
 - 
 10.0 
 % 
 10.0 
 % 
 Mortgage servicing rights, net 
 771 
 Discounted cash flow 
 Prepayment speed or CPR 
 6.8 
 - 
 8.4 
 % 
 8.2 
 % 
 
 Discount rate 
 9.5 
 - 
 11.5 
 % 
 9.5 
 % 
 December 31, 2024: 
 Collateral dependent loans 
 $ 
 503 
 Appraisal 
 Appraisal discounts 
 10.0 
 - 
 10.0 
 % 
 10.0 
 % 
 Mortgage servicing rights, net 
 892 
 Discounted cash flow 
 Prepayment speed or CPR 
 6.7 
 - 
 11.2 
 % 
 7.3 
 % 
 
 Discount rate 
 10.0 
 - 
 12.0 
 % 
 10.0 
 %

 Fair Value 
of Financial Instruments
 ASC 825, 
 Financial Instruments
 , requires disclosure of fair value information about financial instruments, 
whether or not 
 recognized on the face of the balance sheet, for which it is practicable to estimate 
that value. The assumptions used in the 
 estimation of the fair value of the Company’s 
financial instruments are explained below. 
Where quoted market prices are 
 not available, fair values are based on estimates using discounted cash flow 
analyses. Discounted cash flows can be 
 significantly affected by the assumptions used, including 
the discount rate and estimates of future cash flows. The 
 following fair value estimates cannot be substantiated by comparison 
to independent markets and should not be considered 
 representative of the liquidation value of the Company’s 
financial instruments, but rather are good faith estimates of the fair 
 value of financial instruments held by the Company. 
ASC 825 excludes certain financial instruments and all nonfinancial 
 instruments from its disclosure requirements. 

 Table of Contents 
 102 
 
 The following methods and assumptions were used by the Company in estimating 
the fair value of its financial instruments: 

 Loans, net 
 Fair values for loans were calculated using discounted cash flows. The discount 
rates reflected current rates at which similar 
 loans would be made for the same remaining maturities. 
Expected future cash flows were projected based on contractual 
 cash flows, adjusted for estimated prepayments. 
The fair value of loans was measured using an exit price notion. 
 Loans held for sale 
 Loans held for sale are recorded at the lower of cost or fair value. 
Fair values are determined using quoted secondary 
 market prices for similar loans. 
 
 Time Deposits 
 Fair values for time deposits were estimated using discounted cash flows. 
The discount rates were based on rates currently 
 offered for deposits with similar remaining maturities. 
 The carrying value, related estimated fair value, and placement in the fair value hierarchy 
of the Company’s financial 
 instruments at December 31, 2025 and 2024 are presented below. 
This table excludes financial instruments for which the 
 carrying amount approximates fair value. 
Financial assets for which fair value approximates carrying value included 
cash 
 and cash equivalents. 
Financial liabilities for which fair value approximates carrying value included 
noninterest-bearing 
 demand deposits, interest-bearing demand deposits, and savings deposits. 
Fair value approximates carrying value in these 
 financial liabilities due to these products having no stated maturity. 
Additionally, financial liabilities for which 
fair value 
 approximates carrying value included overnight borrowings such 
as federal funds purchased and securities sold under 
 agreements to repurchase. 
 The following table summarizes our fair value estimates:

 Fair Value Hierarchy 
 Carrying 

 Estimated 
 Level 1 
 Level 2 
 Level 3 
 (Dollars in thousands) 
 amount 
 fair value 
 inputs 
 inputs 
 Inputs 
 December 31, 2025: 
 Financial Assets: 
 Loans, net (1) 
 $ 
 558,178 
 $ 
 542,382 
 $ 
 — 
 $ 
 — 
 $ 
 542,382 
 Loans held for sale 
 172 
 179 
 — 
 179 
 — 
 Financial Liabilities: 
 Time Deposits 
 $ 
 176,801 
 $ 
 176,137 
 $ 
 — 
 $ 
 176,137 
 $ 
 — 
 December 31, 2024: 
 Financial Assets: 
 Loans, net (1) 
 $ 
 557,146 
 $ 
 532,344 
 $ 
 — 
 $ 
 — 
 $ 
 532,344 
 Financial Liabilities: 
 Time Deposits 
 $ 
 191,247 
 $ 
 190,363 
 $ 
 — 
 $ 
 190,363 
 $ 
 — 
 (1) Represents loans, net and the allowance for credit losses. 
The fair value of loans was measured using an 
exit price notion.

 Table of Contents 
 103 
 NOTE 15: RELATED PARTY 
TRANSACTIONS 
 The Bank has made, and expects in the future to continue to make in the ordinary 
course of business, loans to directors and 
 executive officers of the Company, 
the Bank, and their immediate families and affiliates. 
These persons, corporations, and 
 firms have had transactions in the ordinary course of business with the Company 
and Bank, including borrowings, all of 
 which management believes were on substantially the same terms, including 
interest rates and collateral, as those prevailing 
 at the time of comparable transactions with unaffiliated persons and 
did not involve more than the normal risk of 
 collectability or present other unfavorable features. 
A summary of such outstanding loans is presented below:

 (Dollars in thousands) 
 2025 
 2024 
 Beginning balance 
 $ 
 1,761 
 1,897 
 New loans/advances 
 — 
 442 
 Repayments 
 ( 149 )
 ( 578 )
 Changes in directors and executive officers 
 ( 303 )
 — 
 End balance 
 $ 
 1,309 
 1,761 

 During 2025 and 2024, certain executive officers 
, 
directors and principal shareholders of the Company and the Bank, 
 including companies and related parties with which they are affiliated, 
were deposit customers of the bank. 
Total deposits 
 for these persons at December 31, 2025 and 2024 amounted to $
 7.4 
 
million and $
 9.9 
 
million, respectively.

 NOTE 16: REGULATORY 
RESTRICTIONS AND CAPITAL 
RATIOS 
 The Federal Reserve’s Small Bank 
Holding Company Policy Statement (the “Small BHC Policy”) covers 
qualifying bank 
 and thrift holding companies with up to $3 billion of consolidated assets. 
The Federal Reserve treats the Company as a 
 small banking holding company under the Small BHC Policy. 
As a result, the Company’s capital adequacy 
is evaluated on 
 a bank only basis. 
 
 The Bank remains subject to regulatory capital requirements of the Alabama 
Banking Department and the Federal Reserve. 
 Failure to meet minimum capital requirements can initiate certain mandatory 
- and possibly additional discretionary - 
 actions by regulators that, if undertaken, could have a direct material effect 
on the Company’s financial statements. 
Under 
 capital adequacy guidelines and the regulatory framework for prompt corrective 
action, the Bank must meet specific capital 
 guidelines that involve quantitative measures of their assets, liabilities and certain 
off-balance sheet items as calculated 
 under regulatory accounting and capital rules practices. The capital amounts 
and classification are also subject to qualitative 
 judgments by the regulators about components, risk weightings, necessary 
capital to support risks and other factors. 

 Notwithstanding the minimum capital requirements, Federal Reserve Regulation 
Q states that a Federal Reserve-regulated 
 institution must maintain capital commensurate with the level and nature of all risks to 
which such institution is exposed. 
 Federal Reserve Regulation Q limits “distributions” and discretionary 
bonus payments from eligible retained income” by 
 sate member banks, such as the Bank, unless its capital conservation buffer 
of common equity Tier 1 capital (“CET1”) 
 exceeds 2.5%. “Distributions” include dividends declared or paid on common 
stock, and stock repurchases, redemptions or 
 repurchases of Tier 2 capital instruments (unless 
replaced by a capital instrument in the same quarter). “Eligible retained 
 income” for the Bank and other Federal Reserve regulated institutions is the greater 
of: 
 (A) The Board-regulated institution's net income, calculated in accordance 
with the instructions to the institution’s 
FR Y–
 9C or Call Report, for the four calendar quarters preceding the current calendar 
quarter, net of any distributions and 
 associated tax effects not already reflected in net income; and 

 (B) The average of the Board-regulated institution’s 
net income, calculated in accordance with the instructions to the 
 institutions’ FR Y–9C or Call Report, as applicable, for the four calendar 
quarters preceding the current calendar quarter. 

 The Bank’s Call Report is used for 
its calculation of “eligible retained income”. 
 As of December 31, 2025, the Bank is “well capitalized” under the regulatory framework 
for prompt corrective action. To 
 be categorized as “well capitalized,” the Bank must maintain minimum common 
equity Tier 1, total risk-based, Tier 
1 risk-
 based, and Tier 1 leverage ratios as set forth in the 
following table. Management has not received any notification from the 
 Bank's regulators that changes the Bank’s 
regulatory capital status. 

 Table of Contents 
 104 
 
 The actual capital amounts and ratios for the Bank and the aforementioned 
minimums as of December 31, 2025 and 2024 
 are presented below.

 Minimum for capital 
 Minimum to be 

 Actual 
 adequacy purposes 
 well capitalized 
 (Dollars in thousands) 
 Amount 
 Ratio 
 Amount 
 Ratio 
 Amount 
 Ratio 
 At December 31, 2025: 
 Tier 1 Leverage Capital 
 $ 
 110,150 
 10.71 
 % 
 $ 
 41,145 
 4.00 
 % 
 $ 
 51,432 
 5.00 
 % 
 CET1 Risk-Based Capital 
 110,150 
 16.06 
 30,872 
 4.50 
 44,593 
 6.50 
 Tier 1 Risk-Based Capital 
 110,150 
 16.06 
 41,163 
 6.00 
 54,884 
 8.00 
 Total Risk-Based Capital 
 117,582 
 17.14 
 54,884 
 8.00 
 68,605 
 10.00 
 At December 31, 2024: 
 Tier 1 Leverage Capital 
 $ 
 106,288 
 10.49 
 % 
 $ 
 40,543 
 4.00 
 % 
 $ 
 50,679 
 5.00 
 % 
 CET1 Risk-Based Capital 
 106,288 
 14.80 
 32,307 
 4.50 
 46,665 
 6.50 
 Tier 1 Risk-Based Capital 
 106,288 
 14.80 
 43,075 
 6.00 
 57,434 
 8.00 
 Total Risk-Based Capital 
 113,487 
 15.81 
 57,434 
 8.00 
 71,792 
 10.00 

 Dividends paid by the Bank are a principal source of funds available to the Company 
for payment of dividends to its 
 stockholders and for other needs which are restricted by Alabama and Federal law and 
regulations as described above. 
 Capital adequacy and liquidity considerations could further limit the availability 
of dividends from the Bank. At December 
 31, 2025, the Bank could have declared additional dividends of approximately 
$6.5 million without prior approval of 
 regulatory authorities. 
As a result of this limitation, approximately $
 84.3 
 
million of the Company’s investment 
in the Bank 
 was restricted from transfer in the form of dividends.

 NOTE 17: AUBURN NATIONAL 
BANCORPORATION 
(PARENT COMPANY) 
 The Parent Company’s condensed 
balance sheets and related condensed statements of earnings and 
cash flows are as 
 follows.

 CONDENSED BALANCE SHEETS 
 December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Assets: 
 Cash and due from banks 
 $ 
 728 
 1,001 
 Investment in bank subsidiary 
 90,760 
 76,852 
 Other assets 
 602 
 532 
 Total assets 
 $ 
 92,090 
 78,385 
 Liabilities: 
 Accrued expenses and other liabilities 
 $ 
 37 
 93 
 Total liabilities 
 37 
 93 
 Stockholders' equity 
 92,053 
 78,292 
 Total liabilities and stockholders' 
equity 
 $ 
 92,090 
 78,385 

 Table of Contents 
 105 
 
 CONDENSED STATEMENTS 
OF EARNINGS 
 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Income: 
 Dividends from bank subsidiary 
 $ 
 3,773 
 3,773 
 Noninterest income 
 — 
 1 
 Total income 
 3,773 
 3,774 
 Expense: 
 Noninterest expense 
 265 
 258 
 Total expense 
 265 
 258 
 Earnings before income tax expense and equity 
 in undistributed earnings of bank subsidiary 
 3,508 
 3,516 
 Income tax benefit 
 ( 56 )
 ( 46 )
 Earnings before equity in undistributed earnings 
 of bank subsidiary 
 3,564 
 3,562 
 Equity in undistributed earnings of bank subsidiary 
 3,691 
 2,835 
 Net earnings 
 $ 
 7,255 
 6,397 

 CONDENSED STATEMENTS 
OF CASH FLOWS 
 Year ended December 31 
 (Dollars in thousands) 
 2025 
 2024 
 Cash flows from operating activities: 
 Net earnings 
 $ 
 7,255 
 6,397 
 Adjustments to reconcile net earnings to net cash 
 provided by operating activities: 
 Net increase in other assets 
 ( 8 )
 ( 9 )
 Net decrease in other liabilities 
 ( 56 )
 ( 56 )
 Equity in undistributed earnings of bank subsidiary 
 ( 3,691 )
 ( 2,835 )
 Net cash provided by operating activities 
 3,500 
 3,497 
 Cash flows from financing activities: 
 Dividends paid 
 ( 3,773 )
 ( 3,773 )
 Net cash used in financing activities 
 ( 3,773 )
 ( 3,773 )
 Net change in cash and cash equivalents 
 ( 273 )
 ( 276 )
 Cash and cash equivalents at beginning of period 
 1,001 
 1,277 
 Cash and cash equivalents at end of period 
 $ 
 728 
 1,001 

 Supplemental Disclosure of Noncash Investing Activities 
 During the year ended December 31, 2025, the Parent Company 
recorded $62 thousand of stock-based compensation 
 related to restricted stock units granted to employees of the Bank. 
The transaction was recorded as an increase in additional 
 paid-in capital with a corresponding intercompany receivable and 
represents a noncash capital contribution to the Bank.

 Table of Contents 
 106 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 
ON ACCOUNTING AND 
 FINANCIAL DISCLOSURE 
 Not applicable.
AUBURN NATIONAL BANCORPORATION, INC 10-K

Item 8. Financial Statements and Supplementary Data
