What changed in this filing

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Item 1. Financial Statements

2025-11-17 compared with 2023-05-16 · 549 added, 767 removed, 388 unchanged (77% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE

MARCH 31, 2023

SEPTEMBER 30, 2025

AND DECEMBER 31, 2024

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

and due from banks

Interest-bearing

deposits with banks

cash and cash equivalents

securities available-for-sale

for credit losses

premises and equipment, net

real estate owned

interest receivable

owned life insurance

assets – operating leases

September 30,

Cash and due from banks

Interest-bearing deposits with banks

Federal funds sold

Total cash and cash equivalents

Investment securities available-for-sale, at fair value

Loans receivable

Allowance for credit losses

Bank premises and equipment, net

Other real estate owned

Accrued interest receivable

Deferred taxes, net

Insurance benefit receivable

Right-of-use assets – operating leases

Noninterest bearing

Interest-bearing

liabilities – operating leases

interest payable

expenses and other liabilities

SHAREHOLDERS’

Common stock - $ 2.00 par

Total deposits

Borrowed funds

Lease liabilities – operating leases

Accrued interest payable

Accrued expenses and other liabilities

Total liabilities

SHAREHBOLDERS’ EQUITY

Common stock - $ 2.00 par value;

50,000,000 shares authorized;

and 23,848,491 shares issued and outstanding at

March 31, 2023 and December 31, 2022, respectively

paid-in-capital

other comprehensive loss

shareholders’ equity

liabilities and shareholders’ equity

23,577,193 and

23,636,724 shares issued and outstanding at

September 30, 2025 and December 31, 2024, respectively

Additional paid-in-capital

Retained earnings

Accumulated other comprehensive loss

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes

2 unchanged sentences

STATEMENTS OF INCOME

FOR THE THREE MONTHS

ENDED MARCH 31, 2023 AND 2022

FOR THE THREE AND

NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

the Three Months Ended

AND DIVIDEND INCOME

including fees

Interest-earning

deposits with banks

on equity securities (restricted)

For the Three Months Ended September 30,

For the Nine Months Ended

September 30,

INTEREST AND DIVIDEND INCOME

Loans including fees

Federal funds sold

Interest-earning deposits with banks

Dividends on equity securities (restricted)

Total interest and dividend income

INTEREST EXPENSE

INTEREST INCOME

FOR CREDIT LOSSES

INTEREST INCOME AFTER

FOR CREDIT LOSSES

charges and fees

processing and interchange

and investment fees

on sale and disposal of premise and equipment

noninterest income

Borrowed funds

Total interest expense

NET INTEREST INCOME

PROVISION FOR CREDIT LOSSES

NET INTEREST INCOME AFTER PROVISION FOR

CREDIT LOSSES

NONINTEREST INCOME

and employee benefits

and equipment expense

processing and telecommunications

operating expenses

Service charges and fees

Card processing and interchange

Financial services fees

Net gain on sales of available for sale securities

Net gain on sale and disposal of premises and equipment

Other noninterest income

Total noninterest income

NONINTEREST EXPENSES

BEFORE INCOME TAXES

weighted shares of common stock

Salaries and employee benefits

Occupancy and equipment expense

Data processing and telecommunications

Other operating expenses

Total noninterest expenses

INCOME BEFORE INCOME TAXES

INCOME TAX EXPENSE

Earnings per share

Basic and diluted

Average Weighted Shares of Common Stock

Basic and diluted

The accompanying

2 unchanged sentences

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS

ENDED MARCH 31, 2023 AND 2022

the Three Months Ended

comprehensive income (loss):

securities activity

gains (losses) arising during the period

comprehensive income (loss) on investment securities

tax (expense) benefit

OTHER COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

OF COMPREHENSIVE INCOME

FOR THE THREE AND

NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Other comprehensive income:

Investment securities activity

Unrealized gains arising during the period

Reclassification adjustment for net gains included in net income

Other comprehensive gains on investment securities

Related tax expense

TOTAL OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

The accompanying notes

3 unchanged sentences

OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS

ENDED MARCH 31, 2023 AND 2022

FOR THE THREE AND

NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(IN THOUSANDS INCLUDING

of Common Stock

Paid-in- Capital

Comprehensive Income (Loss)

Shareholders’ Equity

Shares of Common Stock

Additional Paid-in- Capital

Accumulated Other

Comprehensive Loss

Total Shareholders’ Equity

Balance, June 30, 2024

Other comprehensive income, net of tax

Repurchase of common stock

Balance, September 30, 2024

Balance, December 31, 2023

comprehensive loss, net of tax

dividend declared ($0.05 per share)

March 31, 2022

Other comprehensive income, net of tax

Cash dividend declared ($0.07 per share)

Repurchase of common stock

Balance, September 30, 2024

Balance, June 30, 2025

Other comprehensive income, net of tax

Repurchase of common stock

Balance, September 30, 2025

Balance, December 31, 2024

Adoption of ASU 2016-13

comprehensive income, net of tax

Other comprehensive income, net of tax

Cash dividend declared ($0.08 per share)

Repurchase of common stock

dividend declared ($0.06 per share)

March 31, 2023

Balance, September 30, 2025

The accompanying notes

3 unchanged sentences

OF CASH FLOWS

FOR THE THREE MONTHS

ENDED MARCH 31, 2023 AND 2022

FLOWS FROM OPERATING ACTIVITIES

to reconcile net income to net cash provided by

FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2025 AND 2024

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by

operating activities:

for credit losses

on bank owned life insurance

on sale of mortgage loans

on sale or disposal of premises and equipment

on sale of other real estate owned

originated for sale

from sales of loans originated for sale

of carrying value of other real estate owned

Net amortization/accretion

of bond premiums/discounts

tax (benefit) expense

interest receivable

interest payable

expenses and other liabilities

cash provided by operating activities

FLOWS FROM INVESTING ACTIVITIES

of securities available-for-sale

from repayments and maturities of securities available-for-sale

Net redemption

(purchase) of equity securities (restricted)

for the purchase of premises and equipment

from sale of premises and equipment

from sales of other real estate owned

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES

in noninterest bearing deposits

in interest bearing deposits

of common stock

cash provided by financing activities

in cash and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

Disclosure of cash paid during the period for:

Disclosure of Non-cash Transactions:

made to finance sale of other real estate owned

in unrealized losses on securities available for sale, net

Depreciation and amortization

Provision for credit losses

Income on bank owned life insurance

Gain on sale of mortgage loans

Net gain on sale of securities available-for-sale

Gain on sale or disposal of premises and equipment

Gain on sale of other real estate owned

Loans originated for sale

Proceeds from sales of loans originated for sale

Net amortization/accretion of bond premiums/discounts

Deferred tax benefit

Net change in:

Accrued interest receivable

Accrued interest payable

Accrued expenses and other liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Net increase in loans

Purchase of securities available-for-sale

Proceeds from repayments and maturities of securities available-for-sale

Proceeds from sales of securities available-for-sale

Net purchase of equity securities (restricted)

Payments for the purchase of premises and equipment and software

Proceeds from sale of premises and equipment

Proceeds from sale of other real estate owned

Proceeds from bank owned life insurance benefit

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of long-term debt

Net change in noninterest bearing deposits

Net change in interest-bearing deposits

Dividends paid

Repurchase of common stock

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Supplemental disclosure of cash paid during the period for:

Supplemental disclosure of non-cash transactions:

Transfer of loans to other real estate owned

Change in unrealized losses on securities available-for-sale

The accompanying notes

23 unchanged sentences

of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals)

necessary to present fairly the Company’s financial position as of March 31, 2023 and December 31, 2022, and the results of operations

for the three months ended March 31, 2023 and 2022.

The Notes included herein should be read in conjunction with the notes to the consolidated

financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The results of

operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any

future period.

necessary to present fairly the Company’s financial position as of September 30, 2025 and December 31, 2024, and the results of

operations for the three- and nine-month periods ended September 30, 2025 and 2024.

The Notes included herein should be read in conjunction

with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2024.

The results of operations for interim periods are not necessarily indicative of the results of operations that may

be expected for a full year or any future period.

The consolidated

12 unchanged sentences

The determination of the adequacy

of the allowance for credit is based on estimates that are particularly susceptible to significant changes in the economic environment

of the allowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment

and market conditions.

2 unchanged sentences

None of these reclassifications are considered material

and have no impact on net income.

and have no impact on net income or shareholders’ equity.

The Company’s

3 unchanged sentences

31, 2024 except for the following:

Standards Adopted in 2023

On January 1, 2023,

the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current

expected credit loss (“CECL”) methodology.

CECL requires an estimate of credit losses for the remaining estimated life of

the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to

financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet

credit exposures such as unfunded commitments to extend credit.

Financial assets measured at amortized cost will be presented at the

net amount expected to be collected by using an allowance for credit losses.

In addition, CECL

made changes to the accounting for available-for-sale debt securities.

One such change is to require credit losses to be presented as

an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe

that it is more likely than not, they will be required to sell.

The Company adopted

ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial

assets measured at amortized cost and off-balance sheet credit exposures.

The transition adjustment of the adoption of CECL included

a decrease in the allowance for credit losses on loans of $80,000, which is presented as a reduction to net loans outstanding, and an

increase in the allowance for credit losses on unfunded loan commitments of $348,000, which is recorded within other liabilities.

Company recorded a net decrease to retained earnings of $212,000 as of January 1, 2023 for the cumulative effect of adopting CECL, which

reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded.

Results for reporting periods beginning

after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable

accounting standards (“Incurred Loss”).

The Company adopted

ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior

to January 1, 2023.

As of December 31, 2022, the Company did not have any other-than-temporarily impaired investment securities.

upon adoption of ASC 326, the Company determined that an allowance for credit losses on available for sale securities was not deemed

The following table

illustrates the impact on the allowance for credit losses from the adoption of ASC 326:

Schedule of allowance for credit losses on available for sale securities

As Reported Under ASC 326

31, 2022 Pre-ASC 326 Adoption

of ASC 326 Adoption

in thousands)

at amortized cost

for credit losses on loans:

and land development

real estate loans

and other loans

allowance for credit losses for loans

for credit losses for unfunded commitments

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 has concluded that this policy results in the timely reversal of uncollectible

Allowance for

Credit Losses – Available for Sale Securities

For available for

sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic

or market conditions warrant such evaluation.

If the Company has the intent to sell the security or it is more likely than not that the

Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.

If either of the

above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors.

making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost,

performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to

make scheduled interest or principal payments and adverse conditions specifically related to the security.

If the assessment indicates

that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security

and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost

Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive

Changes in the allowance

for credit loss are recorded as provision for (or reversal of) credit loss expense.

Losses are charged against the allowance for credit

loss when management believes an available for sale security is confirmed to be uncollectible or when either of the criteria regarding

intent or requirement to sell is met.

As of March 31, 2023, there was no allowance for credit loss related to the available for sale

Loans that management

has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost.

Amortized cost

is the principal balance outstanding, net of purchase premiums and discounts and deferred fees and costs.

Accrued interest receivable

related to loans totaled $1.9 million at March 31, 2023 and was reported in accrued interest receivable on the consolidated balance sheets.

Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination costs, are deferred

and recognized in interest income using methods that approximate a level yield without anticipating prepayments.

The accrual of interest

is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when

management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not

be collectible in the normal course of business.

Past due status is based on contractual terms of the loan.

A loan is considered to be

past due when a scheduled payment has not been received 30 days after the contractual due date.

All accrued interest

is reversed against interest income when a loan is placed on nonaccrual status.

Interest received on such loans is accounted for using

the cost-recovery method, until qualifying for return to accrual.

Under the cost-recovery method, interest income is not recognized until

the loan balance is reduced to zero.

Loans are returned to accrual status when all the principal and interest amounts contractually due

are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.

Allowance for

Credit Losses – Loans

The allowance for

credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected

on the loans.

Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Accrued interest receivable

is excluded from the estimate of credit losses.

The allowance for

credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date.

The allowance

for credit losses is estimated by management using relevant available information, from both internal and external sources, relating

to past events, current conditions, and reasonable and supportable forecasts.

The Company primarily

utilizes the cohort and the probability of default/loss given default methodologies for its reasonable and supportable forecasting of

current expected credit losses.

To further adjust the allowance for credit losses for expected losses not already included within the

quantitative component of the calculation, the Company may consider the following qualitative adjustment factors:

policies and procedures, national and local economic conditions, the experience and ability of management and staff;

the volume and severity

of past due, rated and nonaccrual assets, loan review system, collateral value, concentrations of credit, and legal or regulatory requirements

and competition.

The Company measures

expected credit losses for loans on a pooled basis when similar risk characteristics exist.

The Company has identified the following

portfolio segments and calculates the allowance for credit losses for each using a discounted cash flow methodology:

We make commercial loans to qualified businesses in our market area.

Our commercial

lending consists primarily of commercial and industrial loans to finance accounts receivable,

inventory, property, plant and equipment.

Commercial business loans generally have a higher

degree of risk than residential mortgage loans, but have commensurately higher yields.

mortgage loans are generally made on the basis of the borrower’s ability to make repayment

from employment and other income and are secured by real estate whose value tends to be easily

ascertainable.

In contrast, commercial business loans typically are made on the basis of

the borrower’s ability to make repayment from cash flow from its business and are secured

by business assets, such as commercial real estate, accounts receivable, equipment and inventory.

As a result, the availability of funds for the repayment of commercial business loans may

be substantially dependent on the success of the business itself.

Further, the collateral

for commercial business loans may depreciate over time and cannot be appraised with as much

precision as residential real estate.

To manage these risks, our underwriting guidelines

generally require us to secure commercial loans with both the assets of the borrowing business

and other additional collateral and guarantees that may be available.

In addition, we actively

monitor certain measures of the borrower, including advance rate, cash flow, collateral value

and other appropriate credit factors.

· Residential

Mortgage Loans.

Our residential mortgage loans consist of residential first and second mortgage

loans, residential construction loans, home equity lines of credit and term loans secured

by first and second mortgages on the residences of borrowers for home improvements, education

and other personal expenditures.

We make mortgage loans with a variety of terms, including

fixed and floating or variable rates and a variety of maturities.

Under our underwriting

guidelines, residential mortgage loans are generally made on the basis of the borrower’s

ability to make repayment from employment and other income and are secured by real estate

whose value tends to be easily ascertainable.

These loans are made consistent with our appraisal

policies and real estate lending policies, which detail maximum loan-to-value ratios and

· Construction

Construction lending entails significant additional risks compared to residential

mortgage lending.

Construction loans often involve larger loan balances concentrated with

single borrowers or groups of related borrowers.

Construction loans also involve additional

risks attributable to the fact that loan funds are advanced upon the security of property

under construction, which is of uncertain value prior to the completion of construction.

Thus, it is more difficult to evaluate the total loan funds required to complete a project

and related loan-to-value ratios accurately.

To minimize the risks associated with construction

lending, loan-to-value limitations for residential, multi-family and non-residential construction

loans are in place.

These are in addition to the usual credit analyses of borrowers.

feels that the loan-to-value ratios help to minimize the risk of loss and to compensate for

normal fluctuations in the real estate market.

Maturities for construction loans generally

range from 4 to 12 months for residential property and from 6 to 18 months for non-residential

and multi-family properties.

Our consumer loans consist primarily of installment loans to individuals for personal,

family and household purposes.

The specific types of consumer loans that we make include

home improvement loans, debt consolidation loans and general consumer lending.

Consumer loans

entail greater risk than residential mortgage loans, particularly in the case of consumer

loans that are unsecured, such as lines of credit, or secured by rapidly depreciating assets

such as automobiles.

In such cases, any repossessed collateral for a defaulted consumer loan

may not provide an adequate source of repayment of the outstanding loan balance due to the

greater likelihood of damage, loss or depreciation.

The remaining deficiency often does not

warrant further substantial collection efforts against the borrower.

In addition, consumer

loan collections are dependent on the borrower’s continuing financial stability, and

thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Furthermore, the application of various federal and state laws, including federal and state

bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

A borrower may also be able to assert against the Bank as an assignee any claims and defenses

that it has against the seller of the underlying collateral.

Loans that do not

share risk characteristics are evaluated on an individual basis.

The Company designates loan relationships of $250,000 or more that have

been determined to meet the regulatory definitions of “special mention” or “classified” (together known as “criticized”)

as individually evaluated.

The fair value of individually evaluated loans is measured using the fair value of collateral (“collateral

method”) or the DCF method.

collateral method is applied to individually evaluated loans for which foreclosure is probable.

The collateral method is also applied to individually evaluated loans when borrowers are

experiencing financial difficulty and repayment is expected to be provided substantially

through the operation or sale of the collateral (“collateral dependent”).

allowance for credit loss is measured based on the difference between the fair value of the

collateral and the amortized cost basis of the loan as of the measurement date.

When repayment

is expected to be from the operation of the collateral, the allowance for credit loss is

calculated as the amount by which the amortized cost basis of the loan exceeds the present

value of expected cash flows from the operation of the collateral.

When repayment is expected

to be from the sale of the collateral, the allowance for credit loss is calculated as the

amount by which the loan's amortized cost basis exceeds the fair value of the underlying

collateral less estimated cost to sell.

The allowance for credit loss may be zero if the

fair value of the collateral at the measurement date exceeds the amortized cost basis of

DCF method is applied to individually evaluated loans that do not meet the criteria for collateral

method measurement.

Cash flows are projected and discounted using the same method as for

collectively evaluated loans, and the Company considers default and prepayment assumptions.

Allowance for

Credit Losses – Unfunded Commitments

Financial instruments

include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer

financing needs.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument

for off-balance sheet loan commitments is represented by the contractual amount of those instruments.

Such financial instruments are

recorded when they are funded.

The Company records

an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable,

through a charge to provision for unfunded commitments, which is included in the provision for credit losses, in the Company’s

income statements.

The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance

sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the

likelihood that funding will occur as well as any third-party guarantees.

The allowance for unfunded commitments is included in other

liabilities on the Company’s consolidated balance sheets.

On January 1, 2023,

concurrent with its adoption of ASU No.

2016-13, the Company adopted ASU No.

2022-02, “Financial Instruments-Credit Losses (Topic

326), Troubled Debt Restructurings and Vintage Disclosures.” The amendments eliminate the accounting guidance for troubled debt

restructurings (“TDRs”) by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings

and restructurings made with borrowers experiencing financial difficulty.

Disclosures about periods prior to adoption will be presented

under GAAP applicable for that period.

Similar to its policy

under previous GAAP, the Company continues to identify modifications to loans and to determine whether the borrower is experiencing financial

If the Company determines that the borrower is experiencing financial difficulty, the loan's risk rating is evaluated to

determine whether it falls within the regulatory definition of “criticized” and requires individual evaluation.

Under previous

GAAP, modifications to loans when the borrower was experiencing financial difficulty were designated as TDR and were individually evaluated

for the duration of the loan.

Under CECL, if a previously modified loan with financial difficulty is subsequently upgraded to a pass

rating, it will no longer be individually evaluated.

Accounting Standards

Adopted in 2025 –

In December 2023,

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

Improvements to Income Tax Disclosures.”

The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information

for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax

income by the entity’s applicable statutory rate, on an annual basis.

Additionally, the amendments in this ASU require an entity

to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount

of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent

of total income taxes paid (net of refunds received).

Lastly, the amendments in this ASU require an entity to disclose income (or loss)

from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or

benefit) from continuing operations disaggregated by federal, state, and foreign.

ASU 2023-09 was effective for the Company on January

The adoption of this standard had no material impact on the consolidated financial statements.

NOTE 3 EARNINGS

3 unchanged sentences

the additional common shares that would have been outstanding if dilutive potential common shares had been issued.

For the three-month

period ended March 31, 2023 and 2022, there were no potential common shares.

Basic and diluted net income per common share calculations

For the three- and

nine-month periods ended September 30, 2025 and 2024, there were no potential common shares.

Basic and diluted net income per common

share calculations follow:

Schedule of basic and diluted net loss per common share calculations

in Thousands, Except

Share and Per Share Data)

the Three Months

Ended March 31,

average shares outstanding

average dilutive shares outstanding

and diluted earnings per share

(Dollars in thousands, except

per share data)

For the three months

ended September 30,

For the nine months

ended September 30,

Weighted average shares outstanding

Weighted average dilutive shares outstanding

Basic and diluted earnings per share

NOTE 4 CAPITAL

9 unchanged sentences

as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3.0 billion or less.

primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain consolidated

The primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain consolidated

regulatory capital ratios;

7 unchanged sentences

The capital conservation buffer required is 2.50%.

As of March 31, 2023, the Bank had a capital conservation buffer of

At September 30, 2025, the Bank had a capital conservation buffer

Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital.

believes as of March 31, 2023, the Bank met all capital adequacy requirements to which it was subject.

believes as of September 30, 2025, the Bank met all capital adequacy requirements to which it was subject.

Prompt corrective

6 unchanged sentences

and expansion, and capital restoration plans are required.

As of March 31, 2023, the most recent regulatory notifications categorized

At September 30, 2025, the most recent regulatory notifications categorized

the Bank as well capitalized under the regulatory framework for prompt corrective action.

1 unchanged sentence

notification that management believes have changed the institution's category.

2019, the U.S.

federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option

to phase-in over a three-year period the Day 1 adverse regulatory capital effects of the CECL accounting standard.

Additionally, in March

2020, the U.S.

Federal bank regulatory agencies issued an interim final rule that provides banking organizations an option to delay the

estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years.

rule was adopted and became effective in September 2020.

The Company implemented the CECL model commencing January 1, 2023, and elected

not to phase in the effect of CECL on regulatory capital.

actual capital amounts and ratios are presented in the following table as of March 31, 2023 and December 31, 2022, respectively.

Schedule of capital requirements

Capital Requirement

to Be Well Capitalized Under Prompt Corrective Action Provisions

are in thousands)

March 31, 2023:

capital to risk weighted assets

1 capital to risk weighted assets

1 capital to average assets

equity Tier 1 capital

risk weighted assets

capital to risk weighted assets

1 capital to risk weighted assets

1 capital to average assets

Equity Tier 1 capital

risk weighted assets

actual capital amounts and ratios are presented in the following table as of September 30, 2025 and December 31, 2024, respectively.

Schedule of bank’s

actual capital amounts and ratios presented

Minimum Capital Requirement

Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions

(Dollars in thousands)

September 30, 2025:

Total capital to risk weighted assets

Tier 1 capital to risk weighted assets

Tier 1 capital to average assets

Common equity Tier 1 capital

to risk weighted assets

December 31, 2024:

Total capital to risk weighted assets

Tier 1 capital to risk weighted assets

Tier 1 capital to average assets

Common equity Tier 1 capital

to risk weighted assets

NOTE 5 INVESTMENT

The amortized cost and estimated fair

value of securities (all available-for-sale) as of March 31, 2023 and December 31, 2022 are as follows:

value of available-for-sale (“AFS”) securities as of September 30, 2025 and December 31, 2024 are as follows:

Schedule of securities amortized cost and estimated fair value

are in thousands)

March 31, 2023

in thousands)

Government Agencies

backed securities

Mortgage-backed

securities available-for-sale

Government Agencies

backed securities

Mortgage-backed

securities available-for-sale

The following table

details unrealized losses and related fair values in the available-for-sale portfolio, for which no allowance for credit loss is recorded.

This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as

of March 31, 2023 and December 31, 2022.

details unrealized losses and related fair values in the AFS portfolio.

This information is aggregated by the length of time that individual

securities have been in a continuous unrealized loss position as of September 30, 2025 and December 31, 2024.

Schedule of fair value and gross unrealized losses on investment securities

than 12 Months

Less than 12 Months

12 Months or More

are in thousands)

(Dollars in thousands)

September 30, 2025

Government Agencies

backed securities

securities available for sale

Taxable municipals

Corporate bonds

Mortgage-backed securities

December 31, 2024

Government Agencies

backed securities

securities available for sale

As of March 31, 2023,

there were 218 securities in a loss position, of which 200 have been in a loss position for twelve months or more.

Management believes

that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and are not a result

of credit deterioration.

Management does not intend to sell, and it is not likely that the Bank will be required to sell any of the securities

referenced in the table above before recovery of their amortized cost.

None of the individual securities held are past due as to principal

or interest payments and a number of these securities held have explicit or implicit payment guarantees.

The remaining securities have

credit ratings at or above that necessary to be considered “bank qualified”.

Taxable municipals

Corporate bonds

Mortgage-backed securities

As of September 30,

2025, the available-for-sale portfolio included 165 investments for which the fair market value was less than amortized cost.

As of December

31, 2024, the available-for-sale portfolio included 195 investments for which the fair market value was less than amortized cost.

believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and are

not a result of credit deterioration.

Management does not plan to sell, and it is not likely that the Bank will be required to sell any

of the securities referenced in the table above before recovery of their amortized cost.

None of the individual securities have past

due principal or interest payments, and a number of these securities have explicit or implicit payment guarantees.

The remaining securities

have credit ratings at or above that necessary to be considered “bank qualified.”

Investment securities

with a carrying value of $ 37.9 million and $ 27.3 million as of March 31, 2023 and December 31, 2022, respectively, were pledged as collateral

to secure public deposits and for other purposes required or permitted by law.

with a carrying value of $ 35.8 million and $ 35.2 million as of September 30, 2025 and December 31, 2024, respectively, were pledged as

collateral to secure public deposits and for other purposes required or permitted by law.

There were no sales

of available for sale investment securities during the three months ended March 31, 2023 and 2022.

of investment securities available-for-sale during the three or nine months ended September 30, 2025.

During the three and nine months

ended September 30, 2024, investment securities available-for-sale with a carrying value of $ 2.2 million were sold, realizing a net gain

The amortized cost

and fair value of investment securities as of March 31, 2023, by contractual maturity, are shown in the following schedule.

maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without

call or prepayment penalties.

and fair value of investment securities as of September 30, 2025, by contractual maturity, are shown in the following schedule.

maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call

or prepayment penalties.

Schedule of amortized cost and fair value of investment securities contractual maturity

(Dollars are in thousands)

Securities Available-for-Sale

in thousands)

Available-for-Sale

in one year or less

one year through five years

five years through ten years

after one year through five years

after five years through ten years

after ten years

The Bank, as a member

bank of the Federal Reserve Bank of Richmond (Federal Reserve Bank) and the Federal Home Loan Bank of Atlanta (FHLB), is required to

hold stock in each.

bank of the Federal Reserve Bank of Richmond (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (FHLB), is

required to hold stock in each.

The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank.

These equity securities, which

are included in other assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost of $ 2.0 million

and $ 2.1 million at March 31, 2023 and December 31, 2022, respectively.

The stock has no quoted market value and no ready market exists.

These equity securities,

which are included in other assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost of $ 2.7

million and $ 2.7 million as of September 30, 2025 and December 31, 2024, respectively.

The stock has no quoted market value and no ready

market exists.

When evaluating these securities for impairment, their value is determined based on the ultimate recoverability of the

par value rather than by recognizing temporary declines in value.

Equity securities are viewed as long-term investments and management

believes the Company has the ability and the intent to hold these securities until their value is recovered.

Loans receivable

outstanding as of March 31, 2023, and December 31, 2022, are summarized as follows:

outstanding as of September 30, 2025 and December 31, 2024, are summarized as follows:

Schedule of loans receivable outstanding

are in thousands)

estate secured:

and land development

real estate loans

installment loans

September 30,

(Dollars in thousands)

Real estate secured:

Construction and land development

Residential 1-4 family

Total real estate loans

Consumer installment and all other loans

Also included in

total loans above are deferred loan fees of $ 1.6 million as of March 31, 2023 and December 31, 2022.

Deferred loan costs were $ 1.9 million,

as of March 31, 2023 and December 31, 2022.

Income from net deferred fees and costs is recognized over the lives of the respective loans

as a yield adjustment.

If loans repay prior to scheduled maturities, any unamortized fee or cost is recognized at that time.

total loans above are deferred loan fees of $ 2.2 million and $ 2.0 million as of September 30, 2025 and December 31, 2024, respectively.

Deferred loan costs were $ 2.1 million and $ 1.9 million, as of September 30, 2025 and December 31, 2024, respectively.

Income from net

deferred fees and costs is recognized over the lives of the respective loans as a yield adjustment.

If loans repay prior to scheduled

maturities any unamortized fees or costs are recognized at that time.

Loans receivable

on nonaccrual status as of March 31, 2023, and December 31, 2022, are summarized as follows:

Summary of loans receivable on nonaccrual status

are in thousands)

on nonaccrual status as of September 30, 2025 and December 31, 2024, are summarized as follows:

of loans receivable nonaccrual status

in thousands)

estate secured:

4 unchanged sentences

Total interest income

not recognized on nonaccrual loans for the three months ended March 31, 2023 and 2022, was $13,000 and $5,000, respectively.

Prior to the adoption

of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable

to collect all amounts due in accordance with the original contractual terms of the loan agreements.

Impaired loans include loans on

nonaccrual status and accruing troubled debt restructurings.

When determining if the Company would be unable to collect all principal

and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s

capacity to pay, which included such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient

to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value.

Company individually assessed for impairment all nonaccrual loans greater than $250,000 and all troubled debt restructurings, whether

or not currently classified as such.

The tables below include all loans deemed impaired, whether or not individually assessed for impairment.

If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the

present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was

expected solely from the collateral.

Interest payments on impaired loans were typically applied to principal unless collectability of

the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

The following table

presents loans individually evaluated for impairment by class of loans as of December 31, 2022:

Schedule of summary of impaired loans

of December 31, 2022

are in thousands)

not recognized (recognized) on nonaccrual loans for the three months ended September 30, 2025 and September 30, 2024 was $ 26,000 and

($ 18,000 ), respectively.

Interest recognized during the three months ended September 30, 2024, resulted, primarily, from the resolution

of a single loan secured by commercial real estate.

Total interest income not recognized on nonaccrual loans for the nine months ended

September 30, 2025 and September 30, 2024, was $ 88,000 and $ 51,000 , respectively.

The Company evaluates

loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods.

The following

table presents the unpaid principal balance of collateral dependent loans, which are individually evaluated to determine expected credit

losses, and the related ACL allocated to those loans as of September 30, 2025 and December 31, 2024:

of summary of impaired loans

Principal Balance

no related allowance recorded:

estate secured:

and land development

installment loans

an allowance recorded:

estate secured:

and land development

installment loans

Upon adoption of

ASU 2016-13 the Company began evaluating loans that do not share risk characteristics on an individual basis utilizing the collateral

or discounted cash flow methods as described in Note 2 Summary of Significant Accounting Policies.

The following table presents the amortized

cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated

to those loans as March 31, 2023:

of March 31, 2023

are in thousands)

Principal Balance

in thousands)

estate secured:

and land development

real estate secured

installment loans

The following table

is an age analysis of past due loans receivable as of March 31, 2023, segregated by class:

Summary age analysis of past due loans receivable

of March 31, 2023

are in thousands)

estate secured:

real estate loans

installment loans and other loans

The following table

is an age analysis of past due loans receivable as of September 30, 2025, segregated by class:

Schedule of analysis of past due loans receivable

September 30, 2025

(Dollars in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment and all other loans

The following

table is an age analysis of past due loans receivable as of December 31, 2024, segregated by class:

of December 31, 2022

are in thousands)

estate secured:

real estate loans

December 31, 2024

(Dollars in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment and all other loans

The Company categorizes

7 unchanged sentences

Special Mention

- Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations,

credit quality or financial strength.

Those loans constitute an undue and unwarranted credit risk but not to the point of justifying

a substandard classification.

- Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit

quality or financial strength.

Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard

classification.

The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.

Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect

the Company’s credit position at some future date.

mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s

credit position at some future date.

- A substandard loan is inadequately protected by the current sound net worth and paying capacity of the

7 unchanged sentences

on the basis of currently existing facts, conditions, and values highly questionable and improbable.

The following table presents the credit

risk grade of loans by origination year as of September 30, 2025:

Schedule of credit risk grade of loans

As of December 31, 2024

(Dollars are in thousands)

Commercial real estate

Special mention

Total commercial real estate