What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-13 compared with 2025-03-14 · 407 added, 320 removed, 1688 unchanged (30% of the section changed)

6 unchanged sentences

$ 25,179 $ 21,351

Interest-bearing deposits at other financial institutions

Federal funds sold

7 unchanged sentences

Restricted securities, at amortized cost

30,623 24,356

Loans, net of allowance for credit losses of $ 19,308 and $ 19,450 , respectively

2 unchanged sentences

13,530 13,287

Property held for sale, at fair value

Other real estate owned, net

Accrued interest and other receivables

14,518 11,311

Computer software, net of amortization

Bank owned life insurance

15 unchanged sentences

1,899,184 1,907,794

Federal funds purchased

Subordinated debt, net

11 unchanged sentences

Common stock, $ 4.00 par value, 15,000,000 shares authorized;

issued and outstanding 7,603,765 shares (including 237,717 nonvested shares) for December 31, 2024 and 7,527,415 shares (including 228,300 nonvested shares) for December 31, 2023

issued and outstanding 7,496,571 shares (including 244,964 non-vested shares) for December 31, 2025 and 7,603,765 shares (including 237,717 non-vested shares) for December 31, 2024

29,008 29,466

22 unchanged sentences

985 912 1,185

Interest on interest-bearing deposits at other financial institutions

Interest on federal funds sold

6 unchanged sentences

Interest on savings and NOW deposits

1,469 754 546

Interest on money market deposits

12 unchanged sentences

( 118 ) 7,485 1,943

Recovery of Credit Losses - Off-Balance Sheet Credit Exposure

Provision For Credit Losses - Off-Balance Sheet Credit Exposure

48 ( 722 ) ( 301 )

Net interest income after provision for (recovery of) credit losses

Net Interest Income After Provision For Credit Losses

69,615 55,811 75,100

4 unchanged sentences

1,245 1,189 1,069

Loan swap fee income

Net gain (loss) on securities called or matured

Net loss on sale of loans

Gain on retirement of subordinated debt

Net loss on securities called or matured

Gain on equity securities

Other fee income

19 unchanged sentences

Administrative expenses

Other real estate expenses, net

Computer software intangible impairment

23 unchanged sentences

Other comprehensive income (loss), net of tax expense (benefit):

Unrealized gains (losses) on available for sale securities arising during the period (net of tax expense (benefit), ($ 44 ), $ 309 and ($ 2.6 million), respectively)

Unrealized gains (losses) on available-for-sale securities arising during the period (net of tax expense (benefit), $ 580 , ($ 44 ), and $ 309 , respectively)

1,943 ( 233 ) 1,062

11 unchanged sentences

$ 27,263 $ 28,736 $ 63,999 $ 86,830 $ ( 8,546 ) $ 198,282

Cumulative change in accounting principle (Note 1)

— — — ( 1,699 ) — $ ( 1,699 )

Vesting of restricted stock

9 unchanged sentences

— — — 26,585 — 26,585

Other comprehensive loss

Other comprehensive income

— — — — 1,068 1,068

14 unchanged sentences

— — — ( 9,980 ) — ( 9,980 )

Other comprehensive gain

Other comprehensive loss

— — — — ( 233 ) ( 233 )

1 unchanged sentence

$ 27,263 $ 29,466 $ 67,823 $ 91,150 $ ( 7,711 ) $ 207,991

Cumulative change in accounting principle (Note 1)

( 217 ) ( 217 )

Vesting of restricted stock

8 unchanged sentences

— — — ( 3,050 ) — ( 3,050 )

Net income (loss)

— — — 15,613 — 15,613

Other comprehensive gain (loss)

Other comprehensive income

— — — — 1,943 1,943

7 unchanged sentences

$ 15,613 $ ( 9,980 ) $ 26,585

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization, and accretion, net

4 unchanged sentences

( 642 ) ( 4,528 ) ( 191 )

Loss on sale of other real estate owned

Loss on valuation of other real estate owned

Loss on loans held for sale

Gain on retirement of subordinated debt

Loss on New Market Tax Credit investment operations

1 unchanged sentence

( 53 ) ( 99 ) ( 129 )

Realized (Gain) loss on securities (AFS/HTM)

Realized loss on securities called or matured

Provision for credit losses, net

20 unchanged sentences

Activity in held-to-maturity securities:

( 1,519 ) ( 400 ) —

Maturities, called, refunded

8 unchanged sentences

( 40,539 ) ( 142,482 ) ( 128,025 )

Proceeds from sale of other real estate owned

Proceeds from sale of loans

7,683 29,578 —

Proceeds from sale of premises and equipment

Purchases of premises and equipment

Purchase of premises and equipment, including property held for sale

( 4,174 ) ( 909 ) ( 497 )

4 unchanged sentences

Cash Flows from Financing Activities

Net increase (decrease) in non-interest deposits

Net increase (decrease) in non-interest-bearing deposits

54,387 ( 40,299 ) ( 186,084 )

Net increase in interest bearing demand, savings, and time deposits

Net increase (decrease) in interest-bearing demand, savings, NOW, money market and time deposits

( 62,997 ) 261,966 359,322

Net increase (decrease) in Federal Home Loan Bank advances

Net decrease in Federal Home Loan Bank advances

— — ( 100,000 )

1 unchanged sentence

— ( 15,000 ) 15,000

Net increase in subordinated debt

Net decrease in subordinated debt

( 3,227 ) — —

Repurchase of common stock

4 unchanged sentences

( 3,050 ) ( 3,046 ) ( 3,011 )

Net cash provided by financing activities

Net cash (used in) provided by financing activities

( 21,379 ) 200,733 83,028

8 unchanged sentences

$ 62,172 $ 70,893 $ 45,534

Cash paid during the period for income taxes

Cash paid during the period for income taxes, see Note 11

$ 168 $ 1,275 $ 7,280

Transfers from loans receivable to loans held for sale, at carrying value

Supplemental Noncash Disclosures

Transfers from loans to other real estate owned

$ 1,697 $ — $ —

4 unchanged sentences

AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

Notes to Consolidated Financial Statements

Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements

10 unchanged sentences

On April 18, 2019, the Company completed the registration of its common stock with the Securities Exchange Commission through its filing of a General Form for Registration of Securities on Form 10 (“Form 10” ), pursuant to Section 12 (b) of the Securities Exchange Act of 1934.

The Company was considered to be an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” and as defined in Section 2 (a) of the Securities Act of 1933, as amended, or the “Securities Act,” through the quarter ended September 30, 2024.

The Company is no longer considered an emerging growth company and will be an accelerated filer effective with this filing.

The Company is considered to be an accelerated filer under the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” and as defined in Section 2 (a) of the Securities Act of 1933, as amended, or the “Securities Act”.

We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of April 22, 2019.

6 unchanged sentences

MainStreet Community Capital's primary business objective will be to apply for and receive New Market Tax Credit ("NMTC") allocations that are awarded and distributed annually.

On October 25, 2021, MainStreet Bancshares, Inc.

formally introduced Avenu, a division of MainStreet Bank.

Avenu provides an embedded Banking as a Service (BaaS) solution that connects our partners (fintechs, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SaaS) solution.

Our SaaS software program was deployed in October 2024.

Refer to Note 8 for additional information around the computer software intangible asset.

The Avenu division is classified within our Financial Technology reportable segment outlined in Note 26.

Additional information can be found in our investor presentations filed quarterly.

MainStreet Bank is headquartered in Fairfax, Virginia where it also operates a branch.

8 unchanged sentences

All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and cash equivalents – For the purpose of presentation in the Consolidated Statements of Cash Flows, the Bank has defined cash and cash equivalents as those amounts included in the statement of financial condition captions “Cash and due from banks” and “Federal funds sold.”

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.

Actual results could differ from the estimates.

Reclassifications - Certain items in the prior year financial statements were reclassified to conform to the current presentation.

Reclassifications had no effect on prior year net income or shareholders’ equity.

Investment securities – The Bank’s investment debt securities are classified as either held-to-maturity, available-for-sale, or trading.

5 unchanged sentences

Gains and losses arising from the sale of debt securities available-for-sale are recognized based on the specific identification method on a trade-date basis and included in results of operations.

Debt securities held-to-maturity includes securities purchased with the ability and positive intent to hold to maturity.

Debt securities held-to-maturity (HTM) includes securities purchased with the ability and positive intent to hold to maturity.

Debt securities are stated at historical cost adjusted for amortization of premiums and accretion of discount, and net of any allowance for credit losses.

Purchase premiums and discounts are amortized using the interest method over the term or first call date of each security.

Allowance for Credit Losses - Held-to-Maturity Securities - The Company measures expected credit losses on held-to-maturity (HTM) securities on an individual basis.

Allowance for Credit Losses - Held-to-Maturity Securities - The Company evaluates the credit risk of its securities on at least a quarterly basis.

Accrued interest receivable on these securities are excluded from the estimate of credit losses.

For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis.

The primary indicators of credit quality for the Company’s HTM portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others.

The Company's HTM securities ACL was immaterial at December 31, 2024.

The Company's HTM securities ACL was immaterial at December 31, 2025 and December 31, 2024 .

Allowance for Credit Losses - Available-for-Sale Securities - For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis.

5 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Restricted Equity Securities - Restricted equity securities consist of the Federal Reserve Bank and Federal Home Loan Bank of Atlanta (“FHLB”) stock in the amount of $ 5.3 million and $ 1.4 million respectively, as of December 31, 2024 , compared to $ 5.2 million and $ 1.3 million, respectively, as of December 31, 2023 .

Restricted equity securities also consiste d of $ 126,800 in C ommunity Bankers Bank stock at December 31, 2024 and December 31, 2023 .

Restricted Securities - Restricted securities consist of the Federal Reserve Bank and Federal Home Loan Bank of Atlanta (“FHLB”) stock in the amount of $ 5.2 million and $ 1.6 million respectively, as of December 31, 2025 , compared to $ 5.2 million and $ 1.5 million, respectively, as of December 31, 2024 .

Restricted equity securities also consiste d of $ 250,800 in C ommunity Bankers Bank and Atlantic Community Bankers Bank stock, collectively, at December 31, 2025 and December 31, 2024 .

This restricted stock is recorded at cost because its ownership is restricted and it lacks a market for resale.

1 unchanged sentence

The FHLB requires the Bank to maintain stock, at a minimum, in an amount equal to 4.5 % of outstanding borrowings and 0.20 % of total assets.

When evaluating restricted stock for impairment, its value is based on ultimate recoverability of the par value rather than by recognizing temporary declines in value.

When evaluating restricted stock for imp airment, its value is based on ultimate recoverability of the par value rather than by recognizing temporary declines in value.

The Bank does not consider these investments to be impaired at December 31, 2025 or December 31, 2024 and no previous impairment has been recognized as of December 31, 2025 .

Restricted equities include $ 7.6 million in Low-Income Housing Tax Credits (“LIHTC”) and $ 9.4 million of New Market Tax Credits ("NMTC") that are both carried at amortized cost through the proportional amortization method.

Restricted equities also include $ 6.7 million of nonmarketable securities as of December 31, 2024 that do not qualify for equity method accounting.

As of December 31, 2023 restricted equities include $ 8.2 million in LIHTC, $ 3.1 million in NMTC, and $ 6.4 million of nonmarketable securities that do not qualify for equity method accounting.

These investments are recorded at cost because the ownership is restricted and lacks a market for resale.

Other Investments and Income Tax Credits - T he Company periodically invests in New Market Tax Credit (NMTC) opportunities, related primarily to certain community development projects.

The Company receives tax credits related to these investments, for which the Company typically acts as a limited partner and therefore does not exert control over the operating or financial policies of the partnerships.

These tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level.

On January 1, 2024, the Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method.

At December 31, 2025 and December 31, 2024 , the balance of the investments in new market tax credits was $ 10.7 million and $ 9.4 million and the balance of the investments in Low-Income Housing Tax Credits (“LIHTC”) was $ 7.0 million and $ 7.6 million.

These balances, as well as the nonmarketable securities that do not qualify for equity method accounting in the amount of $ 7.3 million as of December 31, 2025 and $ 6.7 million as of December 31, 2024 , are reflected in the other assets line on the consolidated statements of financial condition.

These nonmarketable securities are recorded at cost because the ownership is restricted and lacks a market for resale.

D uring the years ended December 31, 2025 and December 31, 2024 , the Company recognized amortization expense for the NM TC investments of $ 2.3 million and $ 1.2 million, and $ 0.6 million and $ 0.6 million for the LIH TC investments, respectively, which was included within the income tax expense line item on the Consolidated Statements of Income (Loss) and the depreciation, amortization, and accretion, net line item on the Consolidated Statements of Cash Flows.

Loans - The Bank makes commercial and consumer loans to customers.

5 unchanged sentences

All loans which are 30 or more days past due at the end of the month are reported to the Board of Directors.

Commercial loans are generally placed on nonaccrual status when the collection of principal or interest is 90 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower.

Consumer loans are generally placed on nonaccrual status when the collection of principal or interest is 120 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower.

Commercial loans are generally placed on non-accrual status when the collection of principal or interest is 90 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower.

Consumer loans are generally placed on non-accrual status when the collection of principal or interest is 120 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower.

Loans greater than 90 days past due may remain on accrual status if management determines it has adequate collateral to cover the principal and interest.

For those loans that are carried on nonaccrual status, payments are first applied to principal outstanding.

For those loans that are carried on non-accrual status, payments are first applied to principal outstanding.

A loan may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

5 unchanged sentences

These policies are applied consistently across our loan portfolio.

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 differing risk.

The Company designates individually evaluated loans on non-accrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having differing 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.

28 unchanged sentences

7,773 7,159 614

Construction and Land Development

Construction & Land Development

3,366 3,347 19

7 unchanged sentences

$ 16,319 $ 14,114 $ 2,205

The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company believes the collection of interest is doubtful.

The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on non-accrual status, which is generally when the instrument is 90 days past due, or earlier if the Company believes the collection of interest is doubtful.

The Company has concluded that this policy results in the timely reversal of uncollectible interest.

50 unchanged sentences

Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets and improvements are capitalized.

Interest income on loans – Interest on loans is accrued and credited to income on daily balances of the principal amount outstanding.

The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due.

Upon such discontinuance, all unpaid accrued interest is reversed.

Generally, the Bank will return a loan to accrual status when all delinquent interest and principal becomes current and remains current for six consecutive months under the terms of the loan agreement or the loan is well-secured or in process of collection.

Upon returning to accrual status, interest payments applied to the principal balance of a loan while in nonaccrual status are recognized as a yield adjustment over the remaining life.

Loan origination and commitment fees and certain related direct costs - Loan origination and commitment fees charged by the Bank and certain direct loan origination costs are deferred and the net amount is amortized as a yield adjustment.

The Bank amortizes these net amounts over the life of the related loans or, in the case of demand loans, over the estimated life.

Net fees related to standby letters of credit are recognized over the commitment period.

Premises and equipment – Land is carried at cost.

2 unchanged sentences

Construction in progress includes assets which will be reclassified and depreciated once placed into service.

Property held for sale - Property held for sale is initially recorded at fair value less cost to sell at the date of acquisition and is not depreciated.

Refer to Note 8 and Note 20 of the Notes to Consolidated Financial Statements for information regarding the property held for sale and how the fair value was determined.

Computer software development - The Company capitalizes new product development costs incurred for software to be sold from the point at which technological feasibility has been established through the point at which the product is ready for general availability.

2 unchanged sentences

All of this amortization expense is included within components of operating income.

During the three months ended December 31, 2024, Management performed the annual impairment assessment and determined that a triggering event had occurred.

The resulting calculations indicated that the fair value did not exceed the carrying amount of the Company's computer software intangible which resulted in a determination that the intangible had become fully impaired.

The impairment charge of $ 19.7 million reduced fully the carrying value of the Company's intangible asset of $ 19.1 million and the related prepaid asset of $ 631,000 , consisting of the enhanced value of cloud development expenses.

Derivative Financial Instruments – The Bank recognizes derivative financial instruments at fair value as either an other asset or other liability in the consolidated statement of financial condition.

The Bank’s derivative financial instruments include interest rate swaps with certain qualifying commercial loan customers and dealer counterparties.

Because the interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, adjustments to reflect unrealized gains and losses resulting from changes in fair value of these instruments are reported as non-interest income or non-interest expense, as applicable.

The Bank’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 19.

Interest income on loans – Interest on loans is accrued and credited to income on daily balances of the principal amount outstanding.

The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due.

Upon such discontinuance, all unpaid accrued interest is reversed.

Upon returning to accrual status, interest payments applied to the principal balance of a loan while in non-accrual status are recognized as a yield adjustment over the remaining life.

The Bank amortizes these net amounts over the life of the related loans or, in the case of demand loans, over the estimated life.

Net fees related to standby letters of credit are recognized over the commitment period.

Revenue Recognition - Most revenue associated with the Company’s financial instruments, including interest income and gains/losses on investment securities, derivatives and sales of financial instruments are outside the scope of ASC Topic 606.

The Company’s services that fall within the scope of ASC Topic 606 are presented within non-interest income and are recognized as revenue.

A description of the primary revenue streams accounted for under ASC Topic 606 follows:

Deposit Account Service Charges.

The Company earns fees from its deposit customers for overdraft and account maintenance services.

Overdraft fees are recognized when the overdraft occurs.

Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the company satisfies the performance obligation.

Other Service Charges and Fees.

The Company earns fees from its customers for transaction-based services.

Such services include safe deposit box, ATM, stop payment, wire transfer, mortgage origination and interest rate swap fees.

In each case, these service charges and fees are recognized in income at the time or within the same period that the Company’s performance obligation is satisfied.

Interchange Income.

The Company earns interchange fees from debit and credit cardholder transactions conducted through various payment networks.

Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services.

Advertising and marketing expense – Advertising and marketing costs are expensed as incurred.

Income taxes – The Bank uses an asset and liability approach in financial accounting and reporting for income taxes.

10 unchanged sentences

Interest and penalties associated with unrecognized tax benefits, if any, would be classified as additional income taxes in the statement of income.

Earnings per common share – Earnings per c

ommon share has been determined under the provisions of FASB ASC 260, “Earnings Per Share” and has been computed based on the weighted average common shares outstanding during the year ended December 31, ( 7,652,504 for

, 7,606,391 for

, and 7,522,913 for 2023 ).

Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.

The only potential dilutive stock of the Bank as defined in FASB ASC

260 would be stock options granted to various directors, officers, and employees of the Bank.

no such options outstanding during the years ended

December 31, 2025 ,

Restricted stock is included in the computation of basic earnings per share as the holder is entitled to full benefits of a stockholder during the vesting period and is thus considered a participating security.

Comprehensive income – Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.

6 unchanged sentences

No stock options were granted during 2025 and 2024 .

Earnings per common share – Earnings per c ommon share has been determined under the provisions of FASB ASC 260, “Earnings Per Share” and has been computed based on the weighted average common shares outstanding during the year ended December 31, ( 7,606,391 for 2024 , 7,522,913 for 2023 , and 7,529,382 for 2022 ).

The only potential dilutive stock of the Bank as defined in FASB ASC 260 would be stock options granted to various directors, officers, and employees of the Bank.

There were no such options outstanding during the years ended December 31, 2024 , 2023, or 2022.

Off-balance sheet instruments – In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit.

5 unchanged sentences

The allowance for unfunded commitments is identified separately on the Company’s consolidated statement of financial condition.

Advertising and marketing expense – Advertising and marketing costs are expensed as incurred.

Actual results could differ from the estimates.

The Company’s critical accounting policies relate to ( 1 ) the allowance for credit losses, ( 2 ) fair value of financial instruments, and ( 3 ) derivative financial instruments.

These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements.

Critical accounting policies - The Company’s critical accounting policy relates to the allowance for credit losses.

This critical accounting policy requires the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements.

Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions and judgments.

4 unchanged sentences

Changes in assumptions or in market conditions could significantly affect the estimates.

The Bank’s derivative financial instruments include interest rate swaps with certain qualifying commercial loan customers and dealer counterparties.

Because the interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, adjustments to reflect unrealized gains and losses resulting from changes in fair value of these instruments are reported as noninterest income or noninterest expense, as applicable.

The Bank’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 19.

Transfers of financial assets – Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.

Control over transferred assets is deemed to be surrendered when ( 1 ) the assets have been isolated from the Bank – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, ( 2 ) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and ( 3 ) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

The Company’s services that fall within the scope of ASC Topic 606 are presented within noninterest income and are recognized as revenue.

A description of the primary revenue streams accounted for under ASC Topic 606 follows:

Deposit Account Service Charges.

The Company earns fees from its deposit customers for overdraft and account maintenance services.

Overdraft fees are recognized when the overdraft occurs.

Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the company satisfies the performance obligation.

Other Service Charges and Fees.

The Company earns fees from its customers for transaction-based services.

Such services include safe deposit box, ATM, stop payment, wire transfer, mortgage origination and interest rate swap fees.

In each case, these service charges and fees are recognized in income at the time or within the same period that the Company’s performance obligation is satisfied.

Interchange Income.

The Company earns interchange fees from debit and credit cardholder transactions conducted through various payment networks.

Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services.

Recently Adopted Accounting Developments

On March 29, 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 02, “Investments—Equity Method and Joint Ventures (Topic 323 ):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” These amendments allow entities to account for qualifying tax equity investments using the proportional amortization method regardless of the program giving rise to the related income tax credits, as opposed to only being allowed to apply this method to qualifying tax equity investments in low-income housing tax credit structures as was the case under previous guidance.

ASU 2023 - 02 was effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

On January 1, 2024, the Company adopted ASU 2023 - 02 using the modified retrospective approach.

The Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method.

The cumulative change in accounting principle was approximately $ 217,000 .

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 07, “Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures." The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosure about significant segment expenses.

This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), an amount for other segment items by reportable segment and a description of its composition, all annual disclosures about a reportable segment profit or loss and assets currently required by FASB ASU Topic 280 in interim periods, and the title and position of the CODM and how the CODM uses the reportable measures.

Additionally, this ASU requires that at least one of the reportable segment profit and loss measures should be the measure that is most consistent with the measurement principals used in an entity's consolidated financial statements.

Lastly, this ASU requires public business entities with a single reportable segment to provide all disclosures required by these amendments in this ASU and all existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retroactively.

On December 31, 2024, the Company adopted ASU 2023 - 07.

Refer to Note 26 for updated disclosures due to the adoption of ASU 2023 - 07.

Impact of Recently Issued Accounting Pronouncements

In July 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 03, “Presentation of Financial Statements (Topic 205 ), Income Statement—Reporting Comprehensive Income (Topic 220 ), Distinguishing Liabilities from Equity (Topic 480 ), Equity (Topic 505 ), and Compensation—Stock Compensation (Topic 718 )”.

This ASU amends the FASB Accounting Standards Codification for SEC paragraphs pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S- X:

Income or Loss Applicable to Common Stock.

ASU 2023 - 03 is effective upon addition to the FASB Codification.

The Company does not expect the adoption of ASU 2023 - 03 to have a material impact on its consolidated financial statements.

In October 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain U.S.

Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification.

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

The Company does not expect the adoption of ASU 2023 - 06 to have a material impact on its consolidated financial statements.

In March 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024 - 02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”.

This ASU contains amendments to the Codification that remove references to various Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

In other instances, the references were used in prior Statements to provide guidance in certain topical areas.

ASU 2024 - 02 was effective for the Company on January 1, 2025 and there was no material impact to the consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 09, “Income Taxes (Topic 740 ):

3 unchanged sentences

This ASU is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis;

however, retrospective application is permitted.

The Company does not expect the adoption of ASU 2023 - 09 to have a material impact on its consolidated financial statements.

In March 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024 - 01, “Compensation – Stock Compensation (Topic 718 ):

Scope Application of Profits Interest and Similar Awards”.

This ASU provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718.

This ASU is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods.

Early adoption is permitted.

If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period.

Transition can be done either retrospectively or prospectively.

The Company does not expect the adoption of ASU 2024 - 01 to have a material impact on its consolidated financial statements.

In March 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024 - 02, “Codification Improvements – Amendments to Remove References to the Concepts Statements”.

This ASU contains amendments to the Codification that remove references to various Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

In other instances, the references were used in prior Statements to provide guidance in certain topical areas.

This ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied prospectively to all new transactions recognized on or after the date that the entity first applies the amendments or retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied.

If an entity adopts the amendments retrospectively, it should adjust the opening balance of retained earnings as of the beginning of the earliest comparative period presented.

The Company does not expect the adoption of ASU 2024 - 02 to have a material impact on its consolidated financial statements.

ASU 2023 - 09 was effective for the Company for the annual period beginning January 1, 2025.

Refer to Note 11 for updated disclosures due to the adoption of ASU 2023 - 09.

Impact of Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024 - 03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

7 unchanged sentences

The Company does not expect the adoption of ASU 2024 - 03 to have a material impact on its consolidated financial statements.

In November 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025 - 08, “Financial Instruments—Credit Losses (Topic 326 ):

Purchased Loans.” The amendments in this ASU expand the population of acquired financial assets accounted for using the gross-up approach.

Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met.

This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets.

This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual reporting periods.

Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance.

If an entity adopts this ASU in an interim reporting period, it should apply it as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

The Company does not expect the adoption of ASU 2025 - 08 to have a material impact on its consolidated financial statements.

Restrictions on Cash

32 unchanged sentences

$ 13,798 $ 32 $ ( 76 ) $ 13,754

Subordinated Debt

$ 13,798 $ 32 $ ( 76 ) $ 13,754

$ 16,078 $ 1 $ ( 214 ) $ 15,865

Investment securities available-for-sale was comprised of the following:

8 unchanged sentences

8,971 — ( 1,064 ) 7,907

Preferred Stock

Municipal Securities

16 unchanged sentences

For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis.

The Company estimates expected credit losses on HTM debt securities on an individual basis using security-level credit ratings.

The Company’s HTM securities ACL was immaterial at December 31, 2024 .

The majority of the Company’s HTM securities with credit risk are obligations of states and political subdivisions.

For HTM securities that are not rated, the Company evaluates the capital levels of the bond issuers on a quarterly basis.

The Company’s HTM securities ACL was immaterial at December 31, 2025 and December 31, 2024 .

The following table presents the amortized cost of HTM securities as of December 31, 2025 and December 31, 2024 by security type and credit rating according to Moody's and Standard and Poor's:

6 unchanged sentences

$ 13,798 $ — $ 13,798

Not Rated - Non Agency

$ 13,798 $ — $ 13,798

$ 13,578 $ 2,500 $ 16,078

December 31, 2024

4 unchanged sentences

$ 13,578 $ 2,500 $ 16,078

At December 31, 2024 , the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments.

The Company had no securities held-to-maturity classified as nonaccrual for the year ended December 31, 2024 , 2023, or 2022.

At December 31, 2025 and December 31, 2024 , the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments.

The Company had no securities held-to-maturity classified as non-accrual for the year ended December 31, 2025 , 2024 , or 2023 .

The scheduled maturities of securities available-for-sale and held-to-maturity at December 31, 2025 were as follows:

14 unchanged sentences

$ 65,445 $ 57,954 $ 13,798 $ 13,754

Securities with a f air value of $ 394,000 and $ 16.1 million at December 31, 2024 and December 31, 2023 , respectively, were pledged as collateral to secure public funds, loans swaps, and funding through the bank term funding program.

The Company has not drawn upon or utilized the bank term funding program.

Securities with a f air value of $ 0.4 million and $ 0.4 million at December 31, 2025 and December 31, 2024 , respectively, were pledged as collateral to secure public funds.

As of December 31, 2025 and December 31, 2024 , there were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity.

42 unchanged sentences

These unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, causing bond prices to decline, and are not attributable to credit deterioration.

At December 31, 2024 , th ere were five tax-exempt municipal securities with a fair value of $ 2.7 million and one subordinated debt security with a fair value of $ 215,000 in an unrealized loss position of less than 12 months.

At December 31, 2024 , there were six U.S.

government agencies with fair values totaling approximately $ 614,000 , twenty-two collateralized mortgage backed securities with a fair value totaling $ 17.1 million, nineteen subordinated debt securities with fair values of $ 7.2 million, eleven taxable municipal securities with a fair value of $ 8.2 million, and twenty-eight tax-exempt municipal securities with a fair value of $ 16.6 million that were in an unrealized loss position of more than 12 months.

At December 31, 2025 , there were four subordinated debt securities with a fair value of $ 1.9 million in an unrealized loss position of less than 12 months.

At December 31, 2025 , there were five U.S.

government agencies with fair values totaling approximately $ 0.6 million, twenty-one collateralized mortgage backed securities with a fair value totaling $ 15.8 million, nineteen subordinated debt securities with fair values of $ 7.3 million, ten taxable municipal securities with a fair value of $ 7.7 million, and twenty-four tax-exempt municipal securities with a fair value of $ 14.8 million that were in an unrealized loss position of more than 12 months.

There were no securities sold during 2025 , 2024 , or 2023 .

All municipal securities originally purchased as available-for-sale were transferred to held-to-maturity during 2013.

The unrealized loss on the securities transferred to held-to-maturity is being amortized over the expected life of the securities.

The unamortized, unrealized loss, before tax, at December 31, 2024 and December 31, 2023 was $ 0 , respectively.

For held-to-maturity securities, an allowance for credit losses is required to absorb estimated lifetime credit losses.

1 unchanged sentence

The evaluation of credit risk includes consideration of the credit ratings of the issuers, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads.

The Company periodically invests in New Market Tax Credit (NMTC) opportunities, related primarily to certain community development projects.

T he Company periodically invests in New Market Tax Credit (NMTC) opportunities, related primarily to certain community development projects.

The Company receives tax credits related to these investments, for which the Company typically acts as a limited partner and therefore does

not exert control over the operating or financial policies of the partnerships.

These tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level.

At December 31, 2024 and 2023, the balance of the investments in new market tax credits was $ 9.4 million and $ 3.1 million.

These balances are reflected in the restricted securities at amortized cost line on the consolidated statements of financial condition.

During the years ended December 31, 2024, 2023, and 2022, the Company recognized amortization expense of $ 911,000 , $ 0 , and $ 0 , respectively, which was included within the income tax expense (benefit) line item on the consolidated statements of income (loss) and the depreciation, amortization, and accretion, net line item on the consolidated statements of cash flows.

January 1, 2024, the Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method.

December 31, 2025 and

December 31, 2024 , the balance of the investments in new market tax credits was

$ 10.7 million and

$ 9.4 million and the balance of the investments in Low-Income Housing Tax Credits (“LIHTC”) was

$ 7.0 million and

$ 7.6 million.

These balances, as well as the nonmarketable

securities that do not qualify for equity method accounting in the amount of $ 7.3 million as of December 31, 2025 and $ 6.7 million as of

December 31, 2024

, are reflected in the other assets line on the consolidated statements of financial condition.

These nonmarketable securities are recorded at cost because the ownership is restricted and lacks a market for resale.

D uring the years ended

December 31, 2025 and

December 31, 2024 , the Company recognized amortization expense for the NM

TC investments of

million for the LIH TC investments, respectively, which was included within the income tax expense line item on the Consolidated Statements of Income (Loss) and the depreciation, amortization, and accretion, net line item on the Consolidated Statements of Cash Flows.

Loans Receivable

12 unchanged sentences

566,393 525,792

Construction and Land Development

Construction & Land Development

300,666 393,385

10 unchanged sentences

$ 1,841,833 $ 1,810,556

The unsecured consumer loans above in clude $ 343,000 and $ 271,000 of overdrafts reclassified as loans as of December 31, 2024 and December 31, 2023 , respectively.

There were nonaccrual loans of $ 21.7 million and $ 1.0 million as of December 31, 2024 and December 31, 2023 , respectively.

The unsecured consumer loans above in clude $ 0.2 million and $ 0.3 million of overdrafts reclassified as loans as of December 31, 2025 and December 31, 2024 , respectively.

There were non-accrual loans of $ 31.5 million and $ 21.7 million as of December 31, 2025 and December 31, 2024 , respectively.

The following tables present the segments of the loan portfolio summarized by aging categories as of December 31, 2025 and December 31, 2024 :

1 unchanged sentence

(Dollars in thousands)

30-59 Days Past Due

60-89 Days Past Due

Greater than 90 Days Past Due and Still Accruing

Greater than 90

Days Past Due and Still Accruing

Current Loans

Total Loans Receivable

Residential Real Estate:

47 unchanged sentences

For the twelve months ended December 31, 2025

(Dollars in thousands)

Residential Commercial Construction Commercial Consumer Total

Beginning Balance

8 unchanged sentences

For the twelve months ended December 31, 2024

Beginning Balance, prior to adoption of ASC 326

$ 2,146 $ 7,159 $ 3,347 $ 1,418 $ 44 $ 14,114

Impact of adopting ASC 326

(Dollars in thousands)

Residential Commercial Construction Commercial Consumer Total

Beginning Balance

$ 2,594 $ 8,888 $ 3,575 $ 1,435 $ 14 $ 16,506

7 unchanged sentences

For the twelve months ended December 31, 2023

Beginning Balance

(Dollars in thousands)

Residential Commercial Construction Commercial Consumer Total

Beginning Balance, prior to adoption of ASC 326

$ 2,146 $ 7,159 $ 3,347 $ 1,418 $ 44 $ 14,114

Impact of adopting ASC 326

59 614 19 172 31 895

Provision (recovery)

— — — ( 462 ) ( 6 ) ( 468 )

Ending Balance

7 — — — 15 22

Individually evaluated for Impairment

Provision (recovery)

382 1,115 209 307 ( 70 ) 1,943

Collectively evaluated for Impairment

Ending Balance

$ 2,594 $ 8,888 $ 3,575 $ 1,435 $ 14 $ 16,506

2 unchanged sentences

The reserve is an estimate based upon factors and trends identified by management at the time the financial statements are prepared.

The following table is a summary of the Company’s nonaccrual loans by major categories for the periods indicated.

The following table is a summary of the Company’s non-accrual loans by major categories for the periods indicated.

December 31, 2025

(Dollars in thousands)

Nonaccrual Loans with No Allowance

Nonaccrual Loans with an Allowance

Total Nonaccrual Loans

Non-accrual Loans with No Allowance

Non-accrual Loans with an Allowance

Total Non-accrual Loans

Residential Real Estate:

3 unchanged sentences

Non-Owner Occupied

11,160 — 11,160

Construction and Land Development

Construction & Land Development

25,467 — 25,467

1 unchanged sentence

$ 31,482 $ — $ 31,482

$ 21,650 $ — $ 21,650

December 31, 2024

(Dollars in thousands)

Nonaccrual Loans with No Allowance

Nonaccrual Loans with an Allowance

Total Nonaccrual Loans

Non-accrual Loans with No Allowance

Non-accrual Loans with an Allowance

Total Non-accrual Loans

Residential Real Estate:

1 unchanged sentence

$ 1,162 $ — $ 1,162

Commercial Real Estate:

Non-Owner Occupied

11,160 — 11,160

Construction & Land Development

4,235 — 4,235

Commercial & Industrial

5,093 — 5,093

The Company recogni zed $ 2.8 million and $ 57,792 of i nterest income on nonaccrual loans during the year ended December 31, 2024 and 2023.

$ 21,650 $ — $ 21,650

The Company recogni zed $ 2.0 million and $ 2.8 million of i nterest income on non-accrual loans during the year ended December 31, 2025 and 2024 .

Subsequent to December 31, 2025, $ 28.7 million of loans were placed on non-accrual.

These loans are well collateralized and no losses are expected at this time, therefore no additional allowance for credit losses is required.

The following table represents the accrued interest receivables written off by reversing interest income during the year ended December 31, 2025 and 2024 :

12 unchanged sentences

The following provides more detail about the types of collateral that secure collateral-dependent loans:

• Residential real estate mortgage loans, including equity lines of credit, are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

Commercial real estate loans can be secured by either owner-occupied commercial real estate or non-owner-occupied investment commercial real estate.

1 unchanged sentence

Non-owner-occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate where our borrower is the lessor.

Residential real estate mortgage loans, including equity lines of credit, are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

Home equity lines of credit are generally secured by second mortgages on residential real estate property.

Construction and land development loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-user commercial properties.

• Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable, and other commercial property.

Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property.

Some consumer loans are unsecured and have no underlying collateral.

• Construction and land development loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-user commercial properties.

The following table details the amortized cost of collateral dependent loans:

8 unchanged sentences

Non-Owner Occupied

31,531 11,488

Construction & Land Development

34,085 28,374

Commercial & Industrial

20 unchanged sentences

$ 3,429 1.6 % Extended term on interest only payments for six months.

Deferred loan payment for three months.

49,042 21.8 % Interest rate reduction and interest only for 12 months;

Interest rate reduction.

Construction and Land Development

31,153 7.9 % Interest rate reduction and extended term on interest only payments for two years.

Extended amortization term for five years.

Extended term on interest only payments for six months.

Construction & Land Development

6,934 2.3 % Interest rate reduction and extended term for three years.

Commercial Real Estate:

Non-Owner Occupied

60,710 10.7 % Interest rate decrease and interest only for 12 months;

interest only for 24 months.

Commercial – Non-Real Estate:

Commercial & Industrial

3,998 4.8 % Extended term on interest only payments for seven months

3,012 2.8 % Interest rate decrease;

extended term for eight months.

December 31, 2024

3 unchanged sentences

Financial Effect

Commercial Real Estate:

Non-owner occupied

Residential Real Estate:

Single Family

$ 3,813 1.9 % Extended term on interest only payments for six months.

Deferred loan payment for three months.

9,570 4.1 % Interest rate reduction.

Construction & Land Development

31,153 7.9 % Interest rate reduction and extended term on interest only payments for two years.

Extended amortization term for five years.

Extended term on interest only payments for six months.

Commercial – Non-Real Estate:

Commercial & Industrial

315 0.4 % Extended term for three months.

3,998 3.9 % Extended term on interest only payments for seven months.

The Company monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default.

The loans that were modified in the twelve -month periods ended December 31, 2024 and December 31, 2023 are current on contractual payments, except for one loan for $ 364,000 as of December 31, 2024 and one loan for $ 315,000 as of December 31, 2023, that are both on nonaccrual and are individually evaluated, respectively.

Of the loans modified in the twelve -month period ended December 31, 2025 , one loan for $ 0.4 million was over 30 days past due as of December 31, 2025 and two loans for $ 5.0 million were in payment default as of December 31, 2025 .

Of the loans modified in the twelve -month period ended December 31, 2024 , one loan for $ 0.4 million was over 30 days past due and was in payment default as of December 31, 2024 .

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:

4 unchanged sentences

Loans classified as Watch are included in the Pass totals in the following tables.

Loans classified as Criticized (Special Mention) have potential weaknesses that deserve management’s close attention.

Loans classified as Criticized have potential weaknesses that deserve management’s close attention.

If uncorrected, the potential weaknesses may result in deterioration of prospects for repayment.

Loans classified as Classified (Substandard) have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

Loans classified as Classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.

Loans classified as a Loss are considered uncollectible and are charged to the allowance for loan losses.

Loans classified Doubtful have all the weaknesses inherent in Classified loans with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.

Loans classified as a Loss are considered uncollectible and are charged to the allowance for credit losses.

Loans not classified are rated Pass.

30 unchanged sentences

— — 4,500 — — — — — 4,500

— — — — — — 235 — 235

Total Commercial Real Estate - Owner Occupied

52 unchanged sentences

500 — 393 1,596 3,436 — — — 5,925

200 — — 3,507 1,338 — 440 — 5,485

Total Residential Real Estate - Single Family

4 unchanged sentences

$ 12,163 $ 5,314 $ 69,629 $ 24,693 $ 38,226 $ 23,199 $ 390 $ — $ 173,614

— 26,250 — 11,703 606 19,514 — — 58,073

— — — 3,197 — — — — 3,197

Total Residential Real Estate - Multifamily

26 unchanged sentences

— — — — — — 1,138 — 1,138

— — 1,950 — — — 26,424 — 28,374

Total Construction & Land Development

5 unchanged sentences

319 — — 3,712 — 1,600 3,249 — 8,880

— — — — 536 353 88 — 977

Total Commercial & Industrial

23 unchanged sentences

The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans, and are discussed in Note 1.

The allowance for credit losses for unfunded loan commitments of $ 287,000 and $ 1 million at December 31, 2024 and December 31, 2023, is separately classified on the balance sheet within Other Liabilities.

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the year ended December 31, 2024 and 2023.

The decline in the balance of the allowance for credit losses for unfunded loan commitments during the year ended December 31, 2024, was due to the decline in the balance of unfunded commitments.

The allowance for credit losses for unfunded loan commitments of $ 0.3 million and $ 0.3 million at December 31, 2025 and 2024 , is separately classified on the balance sheet.

The following table presents the balance and acti vity in the allowance for credit losses for unfunded loan commitments for the year ended December 31, 2025 and 2024 .

The increase in the balance of the allowance for credit losses for unfunded loan commitments during the year ended December 31, 2025 , was due to the increase in the balance of unfunded commitments.

Total Allowance for Credit Losses on Off-Balance Sheet Credit Exposure

1 unchanged sentence

Beginning Balance

Adjustment to allowance for off-balance sheet credit losses upon adoption of ASU 2016-13

Recovery of off-balance sheet credit losses, net

$ 287 $ 1,009

Provision for (recovery of) off-balance sheet credit losses, net

Ending Balance

$ 287 $ 1,009

Related Party Transactions

5 unchanged sentences

Beginning Balance

New loans and advances

Effect of changes in composition of related parties

( 41 ) ( 255 )

15 unchanged sentences

Depreciation and amortization charged to ope rations were $ 1.1 million, $ 1.5 million, and $ 1.3 million duri ng the years ended December 31, 2025 , December 31, 2024 , and December 31, 2023 , respectively.

Intangible Assets

The carrying amount of computer software developed was $ 0 and $ 14.7 million at December 31, 2024 and December 31, 2023 , respectively.

The following table presents the changes in the carrying amount of computer software developed during the years ended December 31, 2024 and 2023 .

(Dollars in thousands)

Gross Intangible Asset

Accumulated Amortization Impairment

Net Intangible Asset

December 31, 2024:

Computer software

$ 19,537 $ ( 447 ) $ ( 19,090 ) $ —

December 31, 2023:

Computer software

$ 14,657 $ — $ — $ 14,657

The Company was still in the development stage of computer software where costs were capitalized as of September 30, 2024 .

Capitalization ceases when the software is substantially complete and ready for its intended use.

The asset was deemed ready for its intended use and deployed to customers in October 2024 .

The intangible asset should be amortized on a straight-line basis over the estimated useful life of the asset, which was expected to be ten years.

As of December 31, 2024, the Company had recorded $ 447,000 of amortization on its intangible computer software.

There was no amortization recorded for the years ended December 31, 2023 and 2022.

During the three months ended December 31, 2024, management performed the annual impairment assessment and determined that a triggering event had occurred.

Property Held for Sale

During the three months ended June 30, 2025, the Company acquired a building complex fo r possible future bank premises.

The complex consists of three buildings and the associated land, and are part of the Core Banking segment.

Two buildings were designated as held for sale upon acquisition and are in the property held for sale line item on the Consolidated Statements of Financial Condition as of December 31, 2025.

The sales of the two buildings are currently expected to close before June 30, 2026.

The carrying amount of the two buildings designated as held for sale was $ 2.8 million as of December 31, 2025.

Time deposits in denominations of $250,000 or more totaled approx imately $ 416.8 million and $ 457.4 m illion at December 31, 2025 and 2024 , respectively.

32 unchanged sentences

The Bank Franchise Tax expense is reported in non-interest expense and the tax’s calculation is unrelated to taxable income.

The provision for income taxes consists of the following components:

The provision for income taxes from continuing operations for the year ended December 31, 2025 consists of the following components in accordance with ASU 2023 - 09:

Year Ended December 31,

(Dollars in thousands)

Total current tax provision

Total deferred tax benefit

Total tax provision from continuing operations (1)

( 1 ) The Company does not have pretax income from continuing foreign operations or foreign tax expense.

Income taxes paid, net of refunds received by jurisdiction consisted of the following:

Year Ended December 31,

(Dollars in thousands)

District of Columbia

Total cash paid during the period for income taxes

The provision for income taxes for the years ended December 31, 2024 and 2023 consists of the following components before the adoption of ASU 2023 - 09:

(Dollars in thousands)

Current expense

2 unchanged sentences

( 4,528 ) ( 191 )

Total tax provision (benefit)

$ ( 3,924 ) $ 6,239

Income tax expense for the years ended December 31, 2024 , 2023 , and 2022 differed from the federal statutory rate applied to income before income taxes for the following reasons:

Income tax expense for the year ended December 31, 2025 differed from the federal statutory rate applied to income before income taxes for the following reasons in accordance with ASU 2023 - 09:

Year Ended December 31,

Pretax Income

(Dollars in thousands)

Federal Statutory Tax Rate

4,009 21.00 %

State and Local Income Taxes, Net of Federal Income Tax Effect (1)

( 2,671 ) ( 13.99 )%

Low income housing

( 579 ) ( 3.03 )%

( 157 ) ( 0.82 )%

Nontaxable or Nondeductible Items

( 261 ) ( 1.37 )%

Tax-exempt interest

( 125 ) ( 0.65 )%

Proportional amortization expense

2,940 15.40 %

Other Adjustments

Restricted stock adjustments

Tax losses from partnership investments

( 234 ) ( 1.23 )%

3,478 18.22 %

( 1 ) State taxes in Washington D.C.

made up the majority (greater than 50% ) of the tax effect in this category.

Income tax expense for the years ended December 31, 2024 and 2023 differed from the federal statutory rate applied to income before income taxes for the following reasons before the adoption of ASU 2023 - 09:

Year ended December 31,

(Dollars in thousands)

Computed “expected” income tax expense

5 unchanged sentences

Low Income Housing Investment amortization

1,700 386 130

State Income Taxes

( 279 ) 649 637

Restricted Stock Adjustment

4 unchanged sentences

$ ( 3,924 ) $ 6,239

$ ( 3,924 ) $ 6,239 $ 6,714

The tax effects of temporary differences result in deferred tax assets and liabilities as presented below:

9 unchanged sentences

Internally developed software costs

General business tax credits carryforward

Gross deferred tax assets

3 unchanged sentences

Right-of-use asset

Internally developed software costs

Gross deferred tax liabilities

28 unchanged sentences

Standby letters of credit

Commitments to extend credit and standby letters of credit all include exposure to some credit loss in the event of nonperformance of the customer.

Commitments to extend credit and standby letters of credit all include exposure to some credit loss in the event of non-performance of the customer.

The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the statements of financial condition.

Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk to the Bank.

Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do not generally present a ny significant liquidity risk to the Bank.

The Bank has not incurred any losses on commitments in 2025 , 2024 , or 2023 .

During 2020, the Bank made a commitment of $ 5.0 million to the Housing Equity Fund of Virginia XXIV, L.L.C.

This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by December 31, 2025.

This commitment will be funded through capital calls from the fund.

As of December 31, 2025 , approximately $ 4.7 million has been deployed, with a remaining unfunded balance of approximately $ 0.3 million.

During 2020, the Bank made a commitment of $ 2.0 million to the Washington Housing Initiative Impact Pool, LLC.

This commitment will be funded through capital calls from the fund.

As of December 31, 2024 , approximately $ 1.5 million has been deployed, with a remaining unfunded balance of approximately $ 500,000 .

As of December 31, 2025 , approximately $ 1.9 million has been deployed, with a remaining unfunded balance of approximately $ 0.1 million.

During 2022, the Bank made a commitment of $ 2.0 million to the VCDC Equity Fund 26, LLC.

This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by December 31, 2028.

As of December 31, 2025 , approximately $ 1.2 million has been deployed, with a remaining unfunded balance of approximately $ 0.8 million.

During 2023, the Bank made a commitment of $ 2.0 million to the VCDC Equity Fund 27, LLC.

This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by December 31, 2029.

As of December 31, 2025 , approximately $ 0.5 million has been deployed, with a remaining unfunded balance of approximately $ 1.5 million.

From time to time, we are a party to various litigation matters incidental to our ordinary conduct of our business.

32 unchanged sentences

Lease liabilities

Lessor Arrangements - The Company is the lessor for five operating leases.

One lease is extended on a month-to-month basis while four of these leases have arrangements for over twelve months with an option to extend the lease terms.

Lessor Ar rangements - The Company is the lessor for ten operating leases.

One lease is extended on a month-to-month basis while the remainder of these leases have arrangements for longer terms, some with an option to extend the lease terms.

The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The Company's leases generally do not contain non-lease components.

Total rent income on these operating leases is approximate ly $ 10,000 per month.

The Company's leases do not contain non-lease components.

Total rent income on these operating leases is approximately $ 29,000 per month.

Significant Concentrations of Credit Risk

50 unchanged sentences

The Bank matches dollar for dollar up to 5 % of eligible compensation up to the employee contribution of 5 % of eligible compensation.

The total amount the Bank matched during 2024 , 2023 , and 2022 was $ 1.1 million, $ 901,513 , and $ 616,721 , respectively.

The total amount the Bank matched during 2025 , 2024 , and 2023 was $ 1.0 million, $ 1.1 million, and $ 0.9 million, resp ectively.

Stock Based Compensation Plan

ASC Topic 718, Compensation – Stock Compensation, requires the Company to recognize expense related to the fair value of share-based compensation awards in net income.

Total compensation expense for restricted stock recorded for the years ended December 31, 2024 , December 31, 2023 , and December 31, 2022 w ere $ 2.8 million, $ 2.5 million, and $ 2.5 million, re spectively.

Total compensation expense for restricted stock recorded for the years ended December 31, 2025 , 2024 , and 2023 w ere $ 2.6 million, $ 2.8 million, and $ 2.5 million, respec tively.

On July 17, 2019, the Board of Directors of the Company adopted, and the Company’s shareholders subsequently approved, the MainStreet Bank 2019 Equity Incentive Plan (the “2019 Plan”), to provide officers, other selected employees and directors of the Company with additional incentives to promote the growth and performance of the Company.

2 unchanged sentences

As a result of the stockholders’ approval of the 2019 Plan, no additional awards have been or will be made under the Company’s 2016 Plan, although all awards that were outstanding under the 2016 Plan as of July 17, 2019 remained outstanding in accordance with their terms.

A summary of the status of the Bank’s nonvested restricted stock shares as of December 31, 2024 and changes during the year ended December 31, 2024 is presented below:

Nonvested Restricted Stock Shares

A summary of the status of the Bank’s non-vested restricted stock shares as of December 31, 2025 and changes during the year ended December 31, 2025 is presented below:

Non-vested Restricted Stock Shares

Weighted Average Grant Date Fair Value

Nonvested at January 1, 2024

Non-vested at January 1, 2025

237,717 $ 23.62

2 unchanged sentences

( 6,068 ) 21.44

Nonvested at December 31, 2024

Non-vested at December 31, 2025

244,964 $ 20.21

As of December 31, 2024 , ther e was $ 3.0 million of total unrecognized compensation cost related to nonvested restricted stock awards.

As of December 31, 2025 , ther e was $ 2.5 million of total unrecognized compensation cost related to non-vested restricted stock awards.

The cost is expected to be recognized over approximately five years.

7 unchanged sentences

These back-to-back interest rate loan swaps qualify as financial derivatives with fair values reported in other assets and other liabilities in the consolidated financial statements.

Changes in fair value are recorded in other noninterest expense and net to zero because of the identical amounts and terms of the interest rate loan swaps.

Changes in fair value are recorded in other non-interest expense and net to zero because of the identical amounts and terms of the interest rate loan swaps.

The following tables summarize key elements of the Banks’s derivative instruments as of December 31, 2025 and December 31, 2024 .

18 unchanged sentences

The Company is able to recognize fee income upon execution of the interest rate swap contract.

Interest rate swap fee income for the twelve months ended December 31, 2024 , 2023 , and 2022 was $ 0 , $ 0 , and $ 619,000 , respectively.

Interest rate swap fee income for the twelve months ended December 31, 2025 , 2024 , and 2023 was $ 0 , respectively.

Fair Value Presentation

23 unchanged sentences

In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.

As of December 31, 2024 and December 31, 2023 , the Bank’s entire portfolio of available for sale securities are considered to be Level 2 securities, with the exception of one subordinated debt security and one preferred stock security, which are considered to be level 3 securities.

As of December 31, 2025 and December 31, 2024 , the Bank’s entire portfolio of available-for-sale securities are considered to be Level 2 securities, with the exception of two subordinated debt securities and one preferred stock security, which are considered to be level 3 securities.

Derivative asset (liability) – interest rate swaps on loans

29 unchanged sentences

— 7,657 250 7,907

Preferred Stock

Municipal Securities

13 unchanged sentences

December 31, 2024 fair value

Change in fair value (1)

Purchase of security

December 31, 2025 fair value

( 1 ) The change in fair value from December 31, 2024 to December 31, 2025 is due to accretion of the underlying security given that it was purchased at a discount.

The change in fair value is not due to fluctuating market conditions.

Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP.

1 unchanged sentence

The following describes the valuation techniques used by the Bank to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements:

Individually evaluated

Individually evaluated loans

Loans are individually evaluated when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected when due.

8 unchanged sentences

Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income.

The Bank did not have any individually evaluated loans measured at fair value as of December 31, 2025 and December 31, 2024 .

Other real estate owned

Other real estate owned (“OREO”) is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Bank.

Other real estate owned is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Bank.

If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level 3.

2 unchanged sentences

Subsequent fair value adjustments are recorded in the period incurred and included in other non-interest expense on the Consolidated Statements of Income.

The Bank did not have any other real estate owned assets or individually evaluated loans measured at fair value as of December 31, 2024 and December 31, 2023 .

Refer to the table below for OREO measured at fair value as of December 31, 2025 .

The Bank did not have any OREO measured at fair value as of December 31, 2024 .

Property held for sale

This real estate property is carried in the property held for sale line item on the Consolidated Statements of Financial Condition as of December 31, 2025 at fair value based upon the transactional price if available, or the appraised value of the property.

Refer to Note 8 for additional information on the property held for sale.

Refer to the table below for property held for sale measured at fair value as of December 31, 2025 .

The Bank did not have any property held for sale measured at fair value as of December 31, 2024 .

December 31, 2025

(Dollars in thousands)

Property held for sale

$ — $ — $ 2,806 $ 2,806

Other real estate owned

— — 1,697 1,697

$ — $ — $ 4,503 $ 4,503

Fair Value Measurements at December 31, 2025

(Dollars in thousands)

Valuation Technique

Unobservable Inputs

Property held for sale

$ 2,806 Transaction price

Estimated selling costs

Other Real Estate Owned

1,697 Appraisals

Discount to reflect current market conditions and estimated selling costs

Fair Value of Financial Instruments

11 unchanged sentences

$ 162,756 $ 162,756 $ 162,756 $ — $ —

Restricted equity securities

30,623 30,623 — 30,623 —

Available-for-sale

2 unchanged sentences

13,798 13,754 — 13,754 —

Restricted securities

7,005 7,005 — 7,005 —

1,841,833 1,829,264 — — 1,829,264

Derivative asset – interest rate swap on loans

18 unchanged sentences

$ 207,708 $ 207,708 $ 207,708 $ — $ —

Restricted equity securities

24,356 24,356 — 24,356 —

Available-for-sale

2 unchanged sentences

16,078 15,865 — 15,865 —

Restricted securities

6,873 6,873 — 6,873 —

1,810,556 1,806,846 — — 1,806,846

Derivative asset – interest rate swap on loans

7 unchanged sentences

73,039 67,239 — 67,239 —

Federal funds purchased

15,000 14,968 — — 14,968

Derivative liability – interest rate swaps on loans

14 unchanged sentences

Other Real Estate Owned

At December 31, 2024 and 2023 , the Company did not have other real estate owned.

Expenses applicable to other real estate owned during the years ended December 31, 2024 , 2023 , and 2022 include the following:

At December 31, 2025 and 2024 , the other real estate owned was $ 1.7 million and $ 0 .

OREO is comprised of one residential property located in Washington, D.C.

Changes in the balance of OREO are as follows:

(Dollars in thousands)

Net loss on sales of real estate

Loss on valuation, net

Operating expenses (income), net of rental income

Balance, beginning of year

Transfers between loans and other real estate owned

Balance, end of year

There were no expenses applicable to other real estate owned for the years ended December 31, 2025 , 2024 , and 2023 .

As of December 31, 2025 , there was one residential real estate loan for $ 0.5 million in the process of foreclosure.

As of December 31, 2024 , there were no real estate loans in the process of foreclosure.

16 unchanged sentences

The new common stock repurchase program replaced the Company’s previous repurchase plan which was authorized on October 22, 2020.

The Company repurchased approximately $ 732,000 , $ 43,000 , and $ 6.9 million of common stock during the years ended December 31, 2024 , 2023, and 2022, respectively.

The Company repurchased approximately $ 445,000 , $ 732,000 , and $ 43,000 of common stock during the years ended December 31, 2025, 2024, and 2023, under this plan.

At the Annual Meeting of shareholders held on May 15, 2024, the Company's common shareholders approved a proposal to increase the number of shares of authorized common stock from 650,000 to 1,150,000 shares.

On October 16, 2025, the Board of Directors of the Company authorized a common stock repurchase program to repurchase up to $ 10.0 million of the Company’s outstanding common stock at the discretion of management.

The new stock repurchase program replaces the Company’s previous program which was authorized on May 18, 2022.

During the year ended December 31, 2025, the Company repurchased $ 3.9 million of common stock, under this plan.

Subordinated Notes

5 unchanged sentences

Interest will be paid quarterly, in arrears, on April 15, July 15, October 15 and January 15 throughout the floating interest rate period or earlier redemption date.

$ 3 million of these subordinated notes were called in 2025.

On March 1, 2022, the Company completed the issuance of $ 43.8 million in aggregate principal amount of fixed-to-floating rate subordinated notes in a private placement transaction to various accredited investors.

4 unchanged sentences

Interest will be paid quarterly, in arrears, on March 15, June 15, September 15 and December 15 throughout the floating interest rate period or earlier redemption date.

$ 0.5 million of these subordinated notes were called in 2025.

Condensed Parent Company Financial Statements

8 unchanged sentences

$ 3,067 $ 5,356

Restricted securities, at cost

Investment in subsidiary

13 unchanged sentences

$ 5,206 $ 5,203 $ 5,166

Gain on retirement of subordinated debt

Gain on equity securities

5,582 5,203 5,166

Subordinated debt interest expense

28 unchanged sentences

865 1,308 397

Gain on retirement of subordinated debt

Decrease (increase) in other assets

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of restricted equities

Purchase of restricted equity securities

( 74 ) ( 3,504 ) ( 1,944 )

Investment in bank subsidiary

Sale of equity securities to bank subsidiary

Investment from bank subsidiary

1,030 4,000 —

8 unchanged sentences

( 3,050 ) ( 3,046 ) ( 3,011 )

Net increase in subordinated debt

Net decrease in subordinated debt

( 3,227 ) — —

Net cash provided by (used in) financing activities

7 unchanged sentences

Segment Information

The Company’s reportable segments are determined by the CFO and the President of Avenu, who are the designated chief operating decision makers, based upon information provided about the Company’s products and services offered, primarily distinguished between core banking and financial technology operations.

They are also distinguished by the level of information provided to the chief operating decision makers, who use such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar.

The chief operating decision makers evaluate the financial performance of the Company’s business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company’s segments and in the determination of allocating resources.

The chief operating decision makers use revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees.

The Company’s reportable segments are determined by the CFO, who is the designated chief operating decision maker, based upon information provided about the Company’s products and services offered.

They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar.

The reportable segments during

2025 were corporate banking and financial technology.

December 31, 2025 , the financial technology segment has been shut down given the Company's decision to pivot away from operating certain BaaS services.

The expenses for the year ended

December 31, 2025 for the financial technology segment are elevated due activities related to shutting down the segment, such as canceling contracts and accelerating the remaining expense.

The core banking segment will be the sole segment from this point on.

The chief operating decision maker evaluates the financial performance of the Company’s business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company’s segments and in the determination of allocating resources.

The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees.

Segment pretax profit or loss is used to assess the performance of the core banking segment by monitoring the margin between interest income and interest expense.

Financial technology segment pretax profit or loss is used to assess the performance of the financial technology segment by monitoring the service charge income received on customer transactions.

Loans and investments provide the revenues in the core banking segment, and service charges provide the revenues in the financial technology segment.

Financial technology segment pretax profit or loss was used to assess the performance of the financial technology segment by monitoring the service charge income received on customer transactions.

Loans and investments provide the revenues in the core banking segment, and service charges provided the revenues in the financial technology segment.

Interest expense, provisions for credit losses, and salaries and employee benefits provide the significant expenses in the core banking segment.

Salaries and employee benefits and outside services provide the significant expenses in the financial technology segment.

Additionally, the intangible impairment is a significant expense in the financial technology segment for

Salaries and employee benefits and outside services provided the significant expenses in the financial technology segment.

All operations are domestic.

Accounting policies for segments are the same as those described in Note 1.

Segment performance is evaluated using income before income taxes.

Indirect expenses are allocated on revenue.

Transactions among segments are made at fair value.

Information reported internally for performance assessment by the chief operating decision makers follows, inclusive of reconciliations of significant segment totals to the financial statements:

Information reported internally for performance assessment by the chief operating decision maker is as follows, inclusive of reconciliations of significant segment totals to the financial statements:

For the Year ended December 31, 2025

Dollars in thousands

Financial Technology

7 unchanged sentences

1,843 — 1,843

Total consolidated income

$ 134,279 $ 1,336 $ 135,615

8 unchanged sentences

Provision for credit losses

( 70 ) — ( 70 )

Salaries and employee benefits

29,020 2,567 31,587

Furniture and equipment expenses

2,755 1,085 3,840

Advertising and marketing

1,720 331 2,051

Outside services

Computer software intangible impairment

1,559 2,217 3,776

Other operating expenses

12,913 384 13,297

Total non-interest expense

12 unchanged sentences

( 70 ) — ( 70 )

Computer software intangible impairment

— 19,721 19,721

Segment assets

5 unchanged sentences

Additionally, board expenses, shareholder expenses, settlement costs, workout expenses, and fees for brokered deposits, makeup the other operating expense line item on the Consolidated Statements of Income.

Other operating expenses for the financial technology segment are administrative expenses, armored car services, and computer software amortization.

The core banking segment reported segment profit before income taxes of $ 9.5 million for the year ended December 31, 2024, compared to $ 32.9 million for the year ended December 31, 2023.

The decrease in core banking segment profit or loss was primarily related to:

higher interest expense due primarily to higher rates on deposits and higher balances of interest bearing deposits, specifically money market and time deposits;

higher provision for credit losses due primarily to loan growth, charge offs taken in 2024, as well as increasing qualitative factors within our model assumptions for increased levels of past dues and potential weaknesses in underlying collateral for certain asset classes;

higher other operating expenses due primarily to increases in meals and entertainment, board and shareholder expenses, settlement and workout costs, DDA losses, and brokered deposits fees.

The financial technology segment reported segment loss before income taxes of $ 23.4 million for the year ended December 31, 2024, compared to segment loss of $ 71,000 for the year ended December 31, 2023.

The increase in financial technology segment loss was primarily related to:

impairment of the computer software intangible asset.

The impairment charge of $ 19.7 million reduced fully the carrying value of the Company's intangible asset of $ 19.1 million and the related prepaid asset of $ 621,000 , consisting of the enhanced value of cloud development expenses;

higher salaries and employee benefits as well as outside services, primarily due to the development of the Avenu SaaS software program;

lower transfer pricing income for 2024 due primarily to lower deposit balances in the financial technology segment in 2024 compared to 2023.

Other operating expenses for the financial technology segment were administrative expenses and armored car services.

The core banking segment reported segment profit before income taxes of $ 24.4 million for the year ended December 31, 2025 , compared to segment profit of $ 9.5 million for the year ended December 31, 2024 .

The increase in core banking segment profit was primarily related to:

Less interest expense on deposit accounts related to interest rate decreases in the year ended December 31, 2025.

Less provision for credit losses on loans recorded in the year ended December 31, 2025 compared to the year ended December 31, 2024, due to lower charge offs in 2025 compared to 2024.

The financial technology segment reported segment loss before income taxes of $ 5.3 million for the year ended December 31, 2025 , compared to segment loss of $ 23.4 million for the year ended December 31, 2024 .

The decrease in financial technology segment loss was primarily related to:

No computer software intangible asset impairment recorded in the year ended December 31, 2025 compared to the year ended December 31, 2024.

For the Year ended December 31, 2024

Dollars in thousands

Financial Technology

7 unchanged sentences

1,256 — 1,256

Total consolidated income

$ 135,601 $ 2,266 $ 137,867

8 unchanged sentences

Provision for credit losses

6,763 — 6,763

Salaries and employee benefits

28,207 2,268 30,475

Furniture and equipment expenses

2,944 692 3,636

Advertising and marketing

2,058 141 2,199

Outside Services

1,753 1,874 3,627

Computer software intangible impairment

— 19,721 19,721

Other operating expenses

12,473 836 13,309

Total non-interest expense

54,198 25,532 79,730

Segment profit (loss)

10 unchanged sentences

6,763 — 6,763

Computer software intangible impairment

— 19,721 19,721

Segment assets

4 unchanged sentences

Other operating expenses for the core banking segment are occupancy expenses, franchise taxes, FDIC insurance, data processing expenses, administrative expenses and other operating expenses, which can all be seen on the Consolidated Statements of Income.

Additionally, board expenses, shareholder expenses, and settlement costs, makeup the other operating expense line item on the Consolidated Statements of Income.

Other operating expenses for the financial technology segment are administrative expenses and armored car services.

The core banking segment reported segment profit before income taxes of $ 32.9 million for the year ended December 31, 2023, compared to $ 33.8 million for the year ended December 31, 2022.

The core banking segment reported segment profit before inco me taxes of $ 9.5 million for the year ended December 31, 2024 , compared to $ 32.9 million for th e year ended December 31, 2023 .

The decrease in core banking segment profit was primarily related to:

lower provision for credit losses in 2023 due primarily to less loan growth in 2023 compared to 2022.

Loan originations for the years ended December 31, 2023 and December 31, 2022 were $ 447.6 million and $ 599.9 million.

The financial technology segment reported segment loss before income taxes of $ 71,000 for the year ended December 31, 2023, compared to segment loss of $ 439,000 for the year ended December 31, 2022.

The decrease in financial technology segment loss was primarily related to:

higher transfer pricing income for 2023 due primarily to the increasing federal funds rate in 2023;

higher interest expense due primarily to higher rates on deposits and higher balances of interest-bearing deposits, specifically money market and time deposits;

• higher provision for credit losses due primarily to loan growth, charge offs taken in 2024, as well as increasing qualitative factors within our model assumptions for increased levels of past dues and potential weaknesses in underlying collateral for certain asset classes;

• higher other operating expenses due primarily to increases in meals and entertainment, board and shareholder expenses, settlement and workout costs, DDA losses, and brokered deposits fees.

The financial technology segment reported segment loss before income taxes of $ 23.4 million for the year ended December 31, 2024 , compared to segment loss of $ 0.1 million for the year ended December 31, 2023 .

The increase in financial technology segment loss was primarily related to:

impairment of the computer software intangible asset.

higher salaries and employee benefits as well as outside services, primarily due to the development of the Avenu SaaS software program;

• lower transfer pricing income for 2024 due primarily to lower deposit balances in the financial technology segment in 2024 compared to 2023.

For the Year ended December 31, 2023

Dollars in thousands

Financial Technology

7 unchanged sentences

1,191 — 1,191

Total consolidated income

$ 124,531 $ 3,230 $ 127,761

8 unchanged sentences

Provision for loan losses

1,642 — 1,642

Salaries and employee benefits

26,688 1,579 28,267

Furniture and equipment expenses

2,431 356 2,787

Advertising and marketing

2,208 135 2,343

Outside services

1,206 838 2,044

Other operating expenses

9,800 375 10,175

Total non-interest expense

43,975 3,283 47,258

Segment profit (loss)

16 unchanged sentences

Additionally, board expenses, shareholder expenses, armored car services, and ATM expenses, makeup the other operating expense line item on the Consolidated Statements of Income.

Additionally, board expenses, shareholder expenses, and settlement costs, makeup the other operating expense line item on the Consolidated Statements of Income.

Other operating expenses for the financial technology segment are administrative expenses and armored car services.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data