NEW PEOPLES BANKSHARES INC 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission file number: 000-33411 NEW PEOPLES BANKSHARES, INC. (Exact name of registrant as specified in its charter) Virginia (State or other jurisdiction of incorporation or organization) 31-1804543 (I.R.S. Employer Identification No.) 67 Commerce Drive , Honaker , Virginia (Address of principal executive offices) 24260 (Zip Code) (276) 873-7000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☑ Smaller reporting company ☑ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ The number of shares outstanding of the registrant’s common stock was 23,555,517 as of May 11, 2026. NEW PEOPLES BANKSHARES, INC. INDEX Page PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets – March 31, 2026 (Unaudited) and December 31, 2025 3 Consolidated Statements of Income – Three months ended March 31, 2026 and 2025 (Unaudited) 4 Consolidated Statements of Comprehensive Income – Three months ended March 31, 2026 and 2025 (Unaudited) 5 Consolidated Statements of Changes in Shareholders’ Equity – Three months ended March 31, 2026 and 2025 (Unaudited) 6 Consolidated Statements of Cash Flows – Three months ended March 31, 2026 and 2025 (Unaudited) 7 Notes to Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3. Quantitative and Qualitative Disclosures about Market Risk 31 Item 4. Controls and Procedures 31 PART II OTHER INFORMATION Item 1. Legal Proceedings 32 Item 1A. Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 3. Defaults upon Senior Securities 33 Item 4. Mine Safety Disclosures 33 Item 5. Other Information 33 Item 6. Exhibits 33 SIGNATURES 34 Part I Financial Information Item 1 Financial Statements NEW PEOPLES BANKSHARES, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2026 AND DECEMBER 31, 2025 (IN THOUSANDS EXCEPT PER SHARE AND SHARE DATA) (UNAUDITED) March 31, December 31, 2026 2025 ASSETS Cash and due from banks $ 16,540 $ 13,849 Interest-bearing deposits with banks 76,197 63,109 Federal funds sold 156 252 Total cash and cash equivalents 92,893 77,210 Investment securities available-for-sale, at fair value 96,860 96,433 Restricted stock, at cost 2,636 2,598 Loans receivable 723,305 709,587 Allowance for credit losses ( 8,116 ) ( 8,107 ) Net loans 715,189 701,480 Bank premises and equipment, net 16,124 16,400 Other real estate owned 184 89 Accrued interest receivable 3,910 3,451 Deferred taxes, net 4,066 3,895 Right-of-use assets – operating leases 2,879 2,998 Other assets 4,828 5,146 Total assets $ 939,569 $ 909,700 LIABILITIES Deposits: Noninterest bearing $ 242,598 $ 220,829 Interest-bearing 585,056 577,437 Total deposits 827,654 798,266 Borrowed funds 18,986 18,986 Lease liabilities – operating leases 2,879 2,998 Accrued interest payable 1,316 1,507 Accrued expenses and other liabilities 5,617 5,088 Total liabilities 856,452 826,845 SHAREHOLDERS’ EQUITY Common stock - $ 2.00 par value; 50,000,000 shares authorized; 23,555,517 and 23,567,013 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 47,111 47,134 Additional paid-in-capital 14,360 14,378 Retained earnings 30,152 29,210 Accumulated other comprehensive loss ( 8,506 ) ( 7,867 ) Total shareholders’ equity 83,117 82,855 Total liabilities and shareholders’ equity $ 939,569 $ 909,700 The accompanying notes are an integral part of these consolidated financial statements. 3 NEW PEOPLES BANKSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) For the Three Months Ended March 31, INTEREST AND DIVIDEND INCOME 2026 2025 Loans including fees $ 11,215 $ 9,912 Federal funds sold 4 2 Interest-earning deposits with banks 638 692 Investments 698 702 Dividends on equity securities (restricted) 42 43 Total interest and dividend income 12,597 11,351 INTEREST EXPENSE Deposits 3,534 3,449 Borrowed funds 246 292 Total interest expense 3,780 3,741 NET INTEREST INCOME 8,817 7,610 PROVISION FOR CREDIT LOSSES 240 259 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 8,577 7,351 NONINTEREST INCOME Service charges and fees 837 877 Card processing and interchange 986 865 Financial services fees 419 318 Other noninterest income 388 353 Total noninterest income 2,630 2,413 NONINTEREST EXPENSES Salaries and employee benefits 3,884 3,798 Occupancy and equipment expense 891 984 Data processing and telecommunications 639 634 Other operating expenses 1,819 1,856 Total noninterest expenses 7,233 7,272 INCOME BEFORE INCOME TAXES 3,974 2,492 INCOME TAX EXPENSE 912 584 NET INCOME $ 3,062 $ 1,908 Earnings per share Basic and diluted $ 0.13 $ 0.08 Average Weighted Shares of Common Stock Basic and diluted 23,563,034 23,626,617 The accompanying notes are an integral part of these consolidated financial statements. 4 NEW PEOPLES BANKSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (IN THOUSANDS) (UNAUDITED) For the Three Months Ended March 31, 2026 2025 NET INCOME $ 3,062 $ 1,908 Other comprehensive income (loss): Investment securities activity Unrealized gains (losses) arising during the period ( 808 ) 2,380 Related tax (expense) benefit 169 ( 500 ) TOTAL OTHER COMPREHENSIVE INCOME (LOSS) ( 639 ) 1,880 TOTAL COMPREHENSIVE INCOME $ 2,423 $ 3,788 The accompanying notes are an integral part of these consolidated financial statements. 5 NEW PEOPLES BANKSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED) Shares of Common Stock Common Stock Additional Paid-in- Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, December 31, 2024 23,637 $ 47,273 $ 14,451 $ 21,001 $ ( 11,984 ) $ 70,741 Net income — — — 1,908 — 1,908 Other comprehensive income, net of tax — — — — 1,880 1,880 Cash dividend declared ($0.08 per share) — — — ( 1,889 ) — ( 1,889 ) Repurchase of common stock ( 23 ) ( 45 ) ( 23 ) — — ( 68 ) Balance, March 31, 2025 23,614 $ 47,228 $ 14,428 $ 21,020 $ ( 10,104 ) $ 72,572 Balance, December 31, 2025 23,567 $ 47,134 $ 14,378 $ 29,210 $ ( 7,867 ) $ 82,855 Net income — — — 3,062 — 3,062 Other comprehensive loss, net of tax — — — — ( 639 ) ( 639 ) Cash dividend declared ($0.09 per share) — — — ( 2,120 ) — ( 2,120 ) Repurchase of common stock ( 11 ) ( 23 ) ( 18 ) — — ( 41 ) Balance, March 31, 2026 23,556 $ 47,111 $ 14,360 $ 30,152 $ ( 8,506 ) $ 83,117 The accompanying notes are an integral part of these consolidated financial statements. 6 NEW PEOPLES BANKSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (IN THOUSANDS) (UNAUDITED) 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,062 $ 1,908 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 309 374 Provision for credit losses 240 259 Gain on sale of mortgage loans — ( 9 ) Gain on sale or disposal of premises and equipment — ( 2 ) Loans originated for sale ( 112 ) ( 380 ) Proceeds from sales of loans originated for sale 112 389 Net amortization/accretion of bond premiums/discounts 16 15 Deferred tax benefit ( 2 ) ( 1 ) Net change in: Accrued interest receivable ( 459 ) ( 189 ) Other assets 407 ( 365 ) Accrued interest payable ( 191 ) ( 94 ) Accrued expenses and other liabilities 421 125 Net cash provided by operating activities 3,803 2,030 CASH FLOWS FROM INVESTING ACTIVITIES Net increase in loans ( 14,055 ) ( 13,214 ) Purchase of securities available-for-sale ( 4,186 ) ( 2,939 ) Proceeds from repayments and maturities of securities available-for-sale 2,935 2,663 Net purchase of equity securities (restricted) ( 38 ) ( 20 ) Payments for the purchase of premises and equipment ( 3 ) ( 268 ) Proceeds from sale of premises and equipment — 2 Proceeds from sale of other real estate owned — 30 Proceeds from bank owned life insurance benefit — 5,417 Net cash used in investing activities ( 15,347 ) ( 8,329 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt — ( 3,000 ) Net change in noninterest bearing deposits 21,769 9,156 Net change in interest-bearing deposits 7,619 17,712 Dividends paid ( 2,120 ) ( 1,889 ) Repurchase of common stock ( 41 ) ( 68 ) Net cash provided by financing activities 27,227 24,911 Net increase in cash and cash equivalents 15,683 15,612 Cash and cash equivalents, beginning of the period 77,210 67,668 Cash and cash equivalents, end of the period $ 92,893 $ 83,280 Supplemental disclosure of cash paid during the period for: Interest $ 3,971 $ 3,835 Taxes — — Supplemental disclosure of non-cash transactions: Change in unrealized losses on securities available-for-sale ( 808 ) 2,380 Transfer of loans to other real estate owned 95 164 The accompanying notes are an integral part of these consolidated financial statements. 7 NEW PEOPLES BANKSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 NATURE OF OPERATIONS Nature of Operations – New Peoples Bankshares, Inc. (New Peoples or the Company) is a financial holding company whose principal activity is the ownership and management of a community bank, New Peoples Bank, Inc. (the Bank). New Peoples and the Bank are organized and incorporated under the laws of the Commonwealth of Virginia. As a state-chartered member bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (the Federal Reserve). The Bank provides general banking services to individuals, small and medium size businesses and the professional community of southwest Virginia, southern West Virginia, western North Carolina and northeastern Tennessee. These services include commercial and consumer loans along with traditional deposit products such as checking and savings accounts. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements conform to U. S. generally accepted accounting principles (GAAP) and to general industry practices. In the opinion 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, 2026 and December 31, 2025, and the results of operations for the three-month periods ended March 31, 2026 and 2025. 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, 2025. 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 financial statements include New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc. (hereinafter, collectively referred to as the Company, we, us or our). All significant intercompany balances and transactions have been eliminated. In accordance with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust I and 2 are not included in the consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The determination of the adequacy of the allowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income or shareholders’ equity. The Company’s significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in the Company’s Annual report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2025. NOTE 3 EARNINGS PER SHARE Basic earnings per share computations are based on the weighted average number of shares outstanding during each period. Diluted earnings per share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the three-month periods ended March 31, 2026 and 2025, 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 (Dollars in thousands, except per share data) For the three months ended March 31, 2026 2025 Net income $ 3,062 $ 1,908 Weighted average shares outstanding 23,563,034 23,626,617 Weighted average dilutive shares outstanding 23,563,034 23,626,617 Basic and diluted earnings per share $ 0.13 $ 0.08 8 NOTE 4 CAPITAL Capital Requirements and Ratios Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. To qualify as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3.0 billion or less. The primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain consolidated regulatory capital ratios; instead, regulatory capital ratios only apply at the subsidiary bank level. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (BASEL III rules) became fully phased in on January 1, 2019. Under the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer required is 2.50%. At March 31, 2026, the Bank had a capital conservation buffer of 8.38%. Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital. Management believes as of March 31, 2026, the Bank met all capital adequacy requirements to which it was subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2026, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. The Bank’s actual capital amounts and ratios are presented in the following table as of March 31, 2026 and December 31, 2025, respectively. Schedule of bank’s actual capital amounts and ratios presented Actual Minimum Capital Requirement Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio March 31, 2026: Total capital to risk weighted assets $ 111,325 16.38 % $ 54,372 8.00 % $ 67,965 10.00 % Tier 1 capital to risk weighted assets 102,828 15.13 % 40,779 6.00 % 54,372 8.00 % Tier 1 capital to average assets 102,828 11.00 % 37,394 4.00 % 46,743 5.00 % Common equity Tier 1 capital to risk weighted assets 102,828 15.13 % 30,584 4.50 % 44,177 6.50 % December 31, 2025: Total capital to risk weighted assets $ 110,354 16.51 % $ 53,467 8.00 % 66,834 10.00 % Tier 1 capital to risk weighted assets 101,997 15.26 % 40,100 6.00 % 53,467 8.00 % Tier 1 capital to average assets 101,997 10.93 % 37,344 4.00 % 46,680 5.00 % Common equity Tier 1 capital to risk weighted assets 101,997 15.26 % 30,075 4.50 % 43,442 6.50 % 9 NOTE 5 INVESTMENT SECURITIES The amortized cost and estimated fair value of available-for-sale (“AFS”) securities as of March 31, 2026 and December 31, 2025 are as follows: Schedule of securities amortized cost and estimated fair value Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value March 31, 2026 U.S. Treasuries $ 6,583 $ 2 $ 146 $ 6,439 U.S. Government agencies 8,713 32 400 8,345 Municipal securities 24,206 1 4,409 19,798 Corporate bonds 2,500 1 124 2,377 Mortgage-backed securities 50,528 53 5,121 45,460 Collateralized mortgage obligations guaranteed 15,097 29 685 14,441 Total securities available-for-sale $ 107,627 $ 118 $ 10,885 $ 96,860 December 31, 2025 U.S. Treasuries $ 5,597 $ 16 $ 153 $ 5,460 U.S. Government agencies 9,482 49 372 9,159 Municipal securities 24,217 4 4,224 19,997 Corporate bonds 2,500 6 127 2,379 Mortgage-backed securities 50,742 134 4,797 46,079 Collateralized mortgage obligations guaranteed 13,854 70 565 13,359 Total securities available-for-sale $ 106,392 $ 279 $ 10,238 $ 96,433 The following table 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 March 31, 2026 and December 31, 2025. Schedule of fair value and gross unrealized losses on investment securities Less than 12 Months 12 Months or More Total (Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses March 31, 2026 U.S. Treasuries $ — $ — $ 4,442 $ 146 $ 4,442 $ 146 U.S. Government agencies 1,714 13 4,199 387 5,913 400 Municipal securities 1,620 122 17,851 4,287 19,471 4,409 Corporate bonds — — 1,876 124 1,876 124 Mortgage-backed securities 5,150 69 33,423 5,053 38,573 5,121 Collateralized mortgage obligations guaranteed 3,114 33 4,030 651 7,144 685 Total $ 11,598 $ 237 $ 65,821 $ 10,648 $ 77,419 $ 10,885 December 31, 2025 U.S. Treasuries $ — $ — $ 4,444 $ 153 $ 4,444 $ 153 U.S. Government agencies 814 1 4,469 371 5,283 372 Municipal securities 946 110 18,036 4,114 18,982 4,224 Corporate bonds — — 1,873 127 1,873 127 Mortgage-backed securities 744 5 37,156 4,792 37,900 4,797 Collateralized mortgage obligations guaranteed 3,076 5 3,699 560 6,775 565 Total $ 5,580 $ 121 $ 69,677 $ 10,117 $ 75,257 $ 10,238 As of March 31, 2026, the available-for-sale portfolio included 172 investments for which the fair market value was less than amortized cost. As of December 31, 2025, the available-for-sale portfolio included 165 investments for which the fair market value was less than amortized cost. 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 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 are past due as to 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.” 10 Investment securities with a carrying value of $ 31.8 million and $ 32.5 million as of March 31, 2026 and December 31, 2025, 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, 2026 and 2025. The amortized cost and fair value of investment securities as of March 31, 2026, by contractual maturity, are shown in the following schedule. Expected maturities will differ from contractual maturities because borrowers 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 Weighted (Dollars in thousands) Amortized Fair Average Securities Available-for-Sale Cost Value Yield Due in one year or less $ 4,946 $ 4,888 1.62 % Due after one year through five years 11,142 10,831 3.29 % Due after five years through ten years 25,390 23,968 3.19 % Due after ten years 66,149 57,173 2.48 % Total $ 107,627 $ 96,860 2.69 % 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. The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank. These equity securities are restricted from trading and are recorded at a cost of $ 2.6 million as of March 31, 2026 and December 31, 2025. 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. NOTE 6 LOANS Loans receivable outstanding as of March 31, 2026, and December 31, 2025, are summarized as follows: Schedule of loans receivable outstanding (Dollars in thousands) March 31, 2026 December 31, 2025 Real estate secured: Commercial $ 255,596 $ 255,707 Construction and land development 50,383 42,826 Residential 1-4 family 254,383 252,624 Multifamily 49,715 45,964 Farmland 24,139 23,385 Total real estate loans 634,216 620,506 Commercial 52,641 53,175 Agriculture 5,075 4,384 Consumer installment and all other loans 31,373 31,522 Total loans $ 723,305 $ 709,587 Also included in total loans above are deferred loan fees of $ 2.2 million as of March 31, 2026 and December 31, 2025. Deferred loan costs were $ 1.9 million and $ 2.1 million, as of March 31, 2026 and December 31, 2025, 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 fee or costs is recognized at that time. 11 Loans receivable on nonaccrual status as of March 31, 2026, and December 31, 2025, are summarized as follows: Schedule of loans receivable nonaccrual status March 31, 2026 December 31, 2025 With No Allowance With an Allowance Total With No Allowance With an Allowance Total (Dollars in thousands) Real estate secured: Commercial $ 191 $ — $ 191 $ — $ 415 $ 415 Construction and land development — 20 20 — 23 23 Farmland — 15 15 — 16 16 Residential 1-4 family 715 1,393 2,108 960 1,323 2,283 Total real estate loans 906 1,428 2,334 960 1,777 2,737 Commercial — 84 84 — 25 25 Agriculture 630 — 630 446 305 751 Consumer installment loans and all other loans — 83 83 — 85 85 Total loans receivable on nonaccrual status $ 1,536 $ 1,595 $ 3,131 $ 1,406 $ 2,192 $ 3,598 Total interest income not recognized on nonaccrual loans for the three months ended March 31, 2026 and March 31, 2025, was $ 38,000 . 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 March 31, 2026 and December 31, 2025: Schedule of summary of impaired loans March 31, 2026 December 31, 2025 Unpaid Principal Balance Related Allowance Unpaid Principal Balance Related Allowance (Dollars in thousands) Real estate secured: Commercial $ 191 $ — $ 408 $ 108 Residential 1-4 family 1,200 39 998 39 Total real estate loans 1,391 39 1,406 147 Agriculture 630 — 752 54 Consumer installment loans and other loans — — — — Total $ 2,021 $ 39 $ 2,158 $ 201 12 The following table is an age analysis of past due loans receivable as of March 31, 2026, segregated by class: Schedule of analysis of past due loans receivable March 31, 2026 (Dollars in thousands) Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Current Loans Total Loans Real estate secured: Commercial $ — $ — $ 191 $ 191 $ 255,405 $ 255,596 Construction and land development — — — — 50,383 50,383 Residential 1-4 family 2,666 220 631 3,517 250,866 254,383 Multifamily — — — — 49,715 49,715 Farmland — — — — 24,139 24,139 Total real estate loans 2,666 220 822 3,708 630,508 634,216 Commercial 5 96 18 119 52,522 52,641 Agriculture — — 630 630 4,445 5,075 Consumer installment and all other loans 150 259 19 428 30,945 31,373 Total loans $ 2,821 $ 575 $ 1,489 $ 4,885 $ 718,420 $ 723,305 The following table is an age analysis of past due loans receivable as of December 31, 2025, segregated by class: December 31, 2025 (Dollars in thousands) Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Current Loans Total Loans Real estate secured: Commercial $ 468 $ — $ 423 $ 891 $ 254,816 $ 255,707 Construction and land development — — — — 42,826 42,826 Residential 1-4 family 2,140 1,631 828 4,599 248,025 252,624 Multifamily — — — — 45,964 45,964 Farmland — — — — 23,385 23,385 Total real estate loans 2,608 1,631 1,251 5,490 615,016 620,506 Commercial 203 26 — 229 52,946 53,175 Agriculture 110 — 802 912 3,472 4,384 Consumer installment and all other loans 272 26 307 605 30,917 31,522 Total loans $ 3,193 $ 1,683 $ 2,360 $ 7,236 $ 702,351 $ 709,587 The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings: Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors. 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. 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. Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. 13 The following table presents the credit risk grade of loans by origination year as of March 31, 2026: Schedule of credit risk grade of loans As of March 31, 2026 (Dollars in thousands) 2026 2025 2024 2023 2022 Prior Revolving Total Commercial Real Estate Pass $ 4,478 $ 29,336 $ 20,754 $ 41,633 $ 43,057 $ 104,469 $ 11,678 $ 255,405 Substandard — — — — — 191 — 191 Total commercial real estate $ 4,478 $ 29,336 $ 20,754 $ 41,633 $ 43,057 $ 104,660 $ 11,678 $ 255,596 Current period gross charge-offs — — — — — $ ( 103 ) — $ ( 103 ) Construction and Land Development Pass $ 2,270 $ 15,508 $ 23,633 $ 1,969 $ 2,078 $ 3,784 $ 1,121 $ 50,363 Substandard — — 20 — — — — 20 Total construction and land development $ 2,270 $ 15,508 $ 23,653 $ 1,969 $ 2,078 $ 3,784 $ 1,121 $ 50,383 Current period gross charge-offs — — — — — — — — Residential 1-4 Family Pass $ 9,652 $ 33,278 $ 18,159 $ 20,532 $ 23,281 $ 107,420 $ 39,055 $ 251,377 Special Mention — — — — — 468 — 468 Substandard 443 — 104 189 194 1,608 — 2,538 Total residential 1-4 family $ 10,095 $ 33,278 $ 18,263 $ 20,721 $ 23,475 $ 109,496 $ 39,055 $ 254,383 Current period gross charge-offs — — — — — — — — Multifamily Pass $ 4,432 $ 18,058 $ 1,036 $ 2,504 $ 9,170 $ 13,560 $ 955 $ 49,715 Total Multifamily $ 4,432 $ 18,058 $ 1,036 $ 2,504 $ 9,170 $ 13,560 $ 955 $ 49,715 Current period gross charge-offs — — — — — — — — Farmland Pass $ 73 $ 7,003 $ 2,497 $ 1,119 $ 1,770 $ 8,103 $ 3,444 $ 24,009 Special Mention — — — — — 115 — 115 Substandard — — — — — 15 — 15 Total farmland $ 73 $ 7,003 $ 2,497 $ 1,119 $ 1,770 $ 8,233 $ 3,444 $ 24,139 Current period gross charge-offs — — — — — — — — Commercial Pass $ 6,140 $ 12,560 $ 9,600 $ 6,404 $ 1,995 $ 3,939 $ 11,865 $ 52,503 Special Mention — — — — — 2 — 2 Substandard — 56 3 18 — 41 18 136 Total commercial $ 6,140 $ 12,616 $ 9,603 $ 6,422 $ 1,995 $ 3,982 $ 11,883 $ 52,641 Current period gross charge-offs — $ ( 38 ) — — — — — $ ( 38 ) Agriculture Pass $ 50 $ 680 $ 654 $ 124 $ 160 $ 58 $ 2,612 $ 4,338 Special Mention — — — 29 — — — 29 Substandard — 442 188 — — 78 — 708 Total agriculture $ 50 $ 1,122 $ 842 $ 153 $ 160 $ 136 $ 2,612 $ 5,075 Current period gross charge-offs — — $ ( 117 ) — — — — $ ( 117 ) Consumer Installment Loans Pass $ 3,005 $ 14,054 $ 6,771 $ 3,022 $ 989 $ 1,968 $ 1,471 $ 31,280 Substandard — 32 47 13 1 — — 93 Total consumer installment loans $ 3,005 $ 14,086 $ 6,818 $ 3,035 $ 990 $ 1,968 $ 1,471 $ 31,373 Current period gross charge-offs — $ ( 6 ) $ ( 9 ) $ ( 9 ) — $ ( 56 ) — $ ( 80 ) Total $ 30,543 $ 131,007 $ 83,466 $ 77,556 $ 82,695 $ 245,819 $ 72,219 $ 723,305 Total current period gross charge-offs — $ ( 44 ) $ ( 126 ) $ ( 9 ) — $ ( 159 ) — $ ( 338 ) 14 The following table presents the credit risk grade of loans by origination year as of December 31, 2025: As of December 31, 2025 (Dollars in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total Commercial real estate Pass $ 33,892 $ 22,565 $ 43,005 $ 44,828 $ 42,021 $ 69,031 $ 358 $ 255,700 Substandard — — — — — 7 — 7 Total commercial real estate $ 33,892 $ 22,565 $ 43,005 $ 44,828 $ 42,021 $ 69,038 $ 358 $ 255,707 Current period gross charge-offs $ — $ — $ — $ ( 1 ) $ — $ — $ — $ ( 1 ) Construction and land development Pass $ 12,676 $ 21,666 $ 2,448 $ 2,113 $ 2,122 $ 1,778 $ 0 $ 42,803 Substandard — 23 — — — — — 23 Total construction and land development $ 12,676 $ 21,689 $ 2,448 $ 2,113 $ 2,122 $ 1,778 $ 0 $ 42,826 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential 1-4 family Pass $ 35,441 $ 18,703 $ 24,178 $ 24,318 $ 35,543 $ 76,674 $ 34,842 $ 249,699 SpecialMention — — — — — 476 — 476 Substandard — 104 197 50 — 2,020 78 2,449 Total residential 1-4 family $ 35,441 $ 18,807 $ 24,375 $ 24,368 $ 35,543 $ 79,170 $ 34,920 $ 252,624 Current period gross charge-offs $ — $ — $ ( 138 ) $ — $ — $ ( 1 ) $ — $ ( 139 ) Multifamily Pass $ 17,668 $ 1,464 $ 3,197 $ 9,874 $ 6,444 $ 7,317 $ — $ 45,964 Total multifamily $ 17,668 $ 1,464 $ 3,197 $ 9,874 $ 6,444 $ 7,317 $ — $ 45,964 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Farmland Pass $ 9,005 $ 2,610 $ 1,142 $ 1,830 $ 2,641 $ 6,020 $ — $ 23,248 SpecialMention — — — — — 121 — 121 Substandard — — — — — 16 — 16 Total farmland $ 9,005 $ 2,610 $ 1,142 $ 1,830 $ 2,641 $ 6,157 $ — $ 23,385 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Pass $ 14,653 $ 10,852 $ 8,745 $ 2,628 $ 1,284 $ 3,106 $ 11,880 $ 53,148 SpecialMention — — — — — 2 — 2 Substandard — — — — — — 25 25 Total commercial $ 14,653 $ 10,852 $ 8,745 $ 2,628 $ 1,284 $ 3,108 $ 11,905 $ 53,175 Current period gross charge-offs $ — $ ( 59 ) $ — $ — $ ( 23 ) $ ( 15 ) $ — $ ( 97 ) Agriculture Pass $ 1,437 $ 683 $ 162 $ 176 $ 104 $ 98 $ 942 $ 3,602 SpecialMention — — — — — — 31 31 Substandard — — — — — — — — Doubtful — 305 — — — — 446 751 Total agriculture $ 1,437 $ 988 $ 162 $ 176 $ 104 $ 98 $ 1,419 $ 4,384 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 50 ) $ ( 50 ) Consumer and all other Pass $ 16,111 $ 7,607 $ 3,599 $ 1,311 $ 845 $ 1,617 $ 372 $ 31,462 Substandard 18 30 10 2 — 0 — 60 Total consumer and all other $ 16,129 $ 7,637 $ 3,609 $ 1,313 $ 845 $ 1,617 $ 372 $ 31,522 Current period gross charge-offs $ ( 14 ) $ ( 47 ) $ ( 25 ) $ ( 5 ) $ ( 5 ) $ ( 280 ) $ — $ ( 376 ) Total $ 140,901 $ 86,612 $ 86,683 $ 87,130 $ 91,004 $ 168,283 $ 48,974 $ 709,587 Total current period gross charge-offs $ ( 14 ) $ ( 106 ) $ ( 163 ) $ ( 6 ) $ ( 28 ) $ ( 296 ) $ ( 50 ) $ ( 663 ) 15 NOTE 7 ALLOWANCE FOR CREDIT LOSSES FOR LOANS (“ACLL”) In determining the amount of our allowance for credit losses, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses and we may experience significant increases to our provision. The following table presents a disaggregated analysis of activity in the allowance for credit losses for loans as of March 31, 2026 and December 31, 2025: Schedule of allowance for credit losses for loans Real estate secured Construction Consumer and Land Residential and All (Dollars are in thousands) Commercial Development 1-4 family Multifamily Farmland Commercial Agriculture Other Total Three months ended March 31, 2026 Beginning balance $ 2,856 $ 411 $ 2,799 $ 559 $ 166 $ 602 $ 82 $ 632 $ 8,107 Charge-offs ( 103 ) — — — — ( 38 ) ( 117 ) ( 80 ) ( 338 ) Recoveries — — 36 3 9 — — 48 96 Provision for credit losses 19 77 ( 1 ) 26 4 82 72 ( 28 ) 251 Ending balance $ 2,772 $ 488 $ 2,834 $ 588 $ 179 $ 646 $ 37 $ 572 $ 8,116 Real estate secured Construction Consumer and Land Residential and All (Dollars are in thousands) Commercial Development 1-4 family Multifamily Farmland Commercial Agriculture Other Total Year ended December 31, 2025 Beginning balance $ 2,565 $ 322 $ 2,923 $ 382 $ 149 $ 751 $ 36 $ 556 $ 7,684 Charge-offs ( 1 ) — ( 139 ) — — ( 97 ) ( 50 ) ( 376 ) ( 663 ) Recoveries — 54 60 12 3 8 — 207 347 Provision for credit losses 292 35 ( 45 ) 165 14 ( 60 ) 93 245 739 Ending balance $ 2,856 $ 411 $ 2,799 $ 559 $ 166 $ 602 $ 82 $ 632 $ 8,107 Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. NOTE 8 MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, against the allowance for credit losses, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. On February 15, 2025, severe flash flooding occurred in Tazewell and Buchanan, Counties Virgina. On September 27, 2024, Hurricane Helene passed through western North Carolina, southwest Virginia and northeast Tennessee, causing flood and wind damage in its path. To assist borrowers impacted by these natural disasters, we offered short-term payment deferrals of 3 to 6 months. As of March 31, 2026, 43 loans totaling $ 6.3 million are participating in the deferral program. One loan totaling $ 13,000 was in default, and another loan totaling $ 178,000 was extended beyond the terms of the short-term deferral program. As of December 31, 2025, 48 loans totaling $ 6.6 million were participating in the deferral program. One of these loans, a residential mortgage loan totaling $ 178,000 , received an additional 3-month deferral, due to the extent of damage to the property. There were no loans modified to borrowers experiencing financial difficulties in the three-month period ended March 31, 2026, other than those impacted by the natural disasters. 16 NOTE 9 CREDIT ALLOWANCE FOR UNFUNDED COMMITMENTS The Company maintains a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. The allowance for credit losses for off-balance-sheet credit exposures is adjusted through a provision for credit losses in the income statement. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives, utilizing the same models and approaches for the Company’s other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time, and those commitments are excluded from the credit loss estimate. As of March 31, 2026 and December 31, 2025, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $ 460,000 and $ 471,000 , respectively. During the three months ended March 31, 2026, a negative provision of $ 11,000 was included in the Provision for Credit Losses. NOTE 10 OTHER REAL ESTATE OWNED The following table summarizes the activity in other real estate owned for the three months ended March 31, 2026, and the year ended December 31, 2025: Schedule of activity in other real estate owned (Dollars in thousands) March 31, 2026 December 31, 2025 Balance, beginning of period $ 89 $ 87 Additions 95 46 Proceeds from sales — ( 50 ) Net gains from sales — 6 Balance, end of period $ 184 $ 89 As of March 31, 2026 one loan secured by residential real estate, totaling $95,000 was in the process of foreclosure. NOTE 11 FAIR VALUES The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the FASB) ASC, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market and in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market and in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. 17 Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reported date. Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are valued using other financial instruments, the parameters of which can be directly observed. Level 3: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy are as follows: Investment Securities Available-for-sale - Investment securities AFS are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices. The Company’s AFS securities, totaling $96.9 million and $96.4 million as of March 31, 2026 and December 31, 2025, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs from an independent pricing service. Collateral Dependent Loans with an ACL - In accordance with ASC 326, we may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice. Other Real Estate Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other real estate owned. These assets are carried at the lower of their carrying value or fair value. Fair value is based upon observable market prices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs. When observable market prices are not available, management determines the fair value of the foreclosed asset using independent third-party appraisals, evaluated to determine whether or not the property is further impaired below the appraised value, and adjusts for estimated costs of disposition. The Company records foreclosed assets as nonrecurring Level 3. 18 Assets and liabilities measured at fair value are as follows as of March 31, 2026 and December 31, 2025: Schedule of summary of assets and liabilities measured at fair value March 31, 2026 (Dollars in thousands) Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (On a recurring basis) Available-for-sale investments U.S. Treasuries $ — $ 6,439 $ — U.S. Government agencies — 8,345 — Municipal securities — 19,798 — Corporate bonds — 2,377 — Mortgage-backed securities — 45,460 — Collateralized mortgage obligations -guaranteed — 14,441 — (On a non-recurring basis) Other real estate owned — — 184 Total $ — $ 96,860 $ 184 December 31, 2025 (Dollars in thousands) Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (On a recurring basis) Available-for-sale investments U.S. Treasuries $ — $ 5,460 — U.S. Government agencies — 9,159 $ — Municipal securities — 19,997 — Corporate bonds — 2,379 — Mortgage-backed securities — 46,079 — Collateralized mortgage obligations - guaranteed — 13,359 — (On a non-recurring basis) Other real estate owned — — 89 Collateral dependent loans with ACL: — — Agriculture — — 251 Commercial Real Estate — — 300 Total $ — $ 96,433 $ 640 Not included in the tables above as of March 31, 2026 and December 31, 2025 is a residential 1-4 family mortgage loan totaling approximately $ 39,000 that has a specific allowance for credit loss allocation of 100% due to the destruction of the collateral. 19 For Level 3 assets measured at fair value on a recurring or non-recurring basis as of March 31, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows: Schedule of significant unobservable inputs In level 3 assets (Dollars in thousands) Fair Value at March 31, 2026 Fair Value at December 31, 2025 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Collateral dependent loans with ACL: Agriculture $ — $ 251 Appraised Value Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell 0 – 18 % Commercial Real Estate — 300 Appraised Value Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell 0 – 18 % Consumer and all other — — Appraised Value/Other estimates from Independent Sources Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell 0 – 18 % Other Real Estate Owned $ 184 $ 89 Appraised Value/Comparable Sales/Other Estimates from Independent Sources Discounts to reflect current market conditions and estimated costs to sell 0 – 18 % Fair Value of Financial Instruments Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash for another financial instrument. The following summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial instruments presented below. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different. 20 The carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair value on a recurring basis as of March 31, 2026, and December 31, 2025, are as follows: Schedule of estimated fair value of financial instruments Fair Value Measurements (Dollars in thousands) Carrying Amount Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) March 31, 2026 Financial instruments – assets Net loans $ 715,189 $ 713,767 $ — $ — $ 713,767 Financial instruments – liabilities Time deposits 289,926 289,782 — 289,782 — Borrowed funds 18,986 17,170 — 17,170 — December 31, 2025 Financial instruments – assets Net loans $ 701,480 $ 697,105 $ — $ — $ 697,105 Financial instruments – liabilities Time deposits 294,216 294,244 — 294,244 — Borrowed funds 18,986 17,132 — 17,132 — Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions can significantly affect the estimates. Estimated fair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports, and an estimation methodology suitable for each category of financial instruments. The Company’s fair value estimates, methods and assumptions are set forth below for the Company’s other financial instruments. The carrying values of cash and due from banks, federal funds sold, deposits with no stated maturities, and accrued interest approximates fair value and are excluded from the table above. The methods utilized to measure the fair value of financial instruments represent an approximation of exit price; however, an actual exit price may differ. NOTE 12 LEASING ACTIVITIES As of March 31, 2026, the Bank leases four branch offices, one administrative office, one loan production office and sublets a lot adjacent to another branch office. The lease agreements have maturity dates ranging from 2028 to December 2041. It is assumed that there are currently no circumstances in which the leases would be terminated prior to expiration. The weighted average remaining life of the lease terms as of March 31, 2026 was 6.07 years. The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded to the lease term for each transaction. This methodology is expected to be used for any other subsequent lease agreements. The weighted average discount rate for the leases as of March 31, 2026 was 3.35 %. For the three months ended March 31, 2026 and 2025, operating lease expenses were $ 147,000 and $ 142,000 , respectively. 21 The Company’s other operating leases were evaluated and determined to be immaterial to the financial statements. As of March 31, 2026, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands): Schedule of future minimum rental commitments under the non-cancellable operating leases 2026 $ 432 2027 598 2028 603 2029 492 2030 492 Thereafter 712 Total lease payments 3,329 Less: imputed interest ( 450 ) Total $ 2,879 NOTE 13 BORROWED FUNDS Borrowed funds totaled $ 18,986,000 as of March 31, 2026 and December 31, 2025. For additional information on borrowed funds, refer to Note 19 in Item 8 of Form 10-K for the year ended December 31, 2025. NOTE 14 REVENUE FROM CONTRACTS WITH CUSTOMERS All our revenue from contracts with customers as defined in ASC 606 is recognized within noninterest income. Refer to Note 25 in our Annual Report on Form 10-K for the year ended December 31, 2025 for a description of how each revenue stream is accounted for under ASC 606. The following table presents noninterest income by revenue stream for the three months ended March 31, 2026 and 2025: Schedule of revenue from contracts with customers For the three months ended March 31, (Dollars in thousands) 2026 2025 Service charges and fees $ 837 $ 877 Card processing and interchange income 986 865 Financial services fees 419 318 Other noninterest income 388 353 Total noninterest income $ 2,630 $ 2,413 NOTE 15 NONINTEREST EXPENSES Other operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented: Schedule of noninterest expenses For the three months ended March 31, (Dollars in thousands) 2026 2025 Other operating expenses $ 913 $ 879 ATM network expense 377 428 Legal, accounting, and professional fees 213 237 FDIC insurance premiums 103 98 Loan related expenses 76 79 Advertising 63 67 Consulting fees 39 42 Printing and supplies 31 25 Other real estate owned expenses, net 4 1 Total other operating expenses $ 1,819 $ 1,856 22 NOTE 16 RECENT ACCOUNTING DEVELOPMENTS The following is a summary of recent authoritative announcements: In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. 23 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Caution About Forward-Looking Statements We make forward-looking statements in this quarterly report on Form 10-Q that are subject to risks and uncertainties. These forward-looking statements include statements regarding expectations, intentions, projections and beliefs concerning our profitability, liquidity, and allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and financial and other goals. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that may cause actual results to differ from projections include: ● the success or failure of our efforts to implement our business plan; ● any required increase in our regulatory capital ratios; ● satisfying other regulatory requirements that may arise from examinations, changes in the law and other similar factors; ● deterioration of asset quality; ● changes in the level of our nonperforming assets and charge-offs; ● fluctuations of real estate values in our markets; ● our ability to attract and retain talent; ● demographical changes in our markets which negatively impact the local economy; ● the uncertain outcome of current or future legislation or regulations or policies of state and federal regulators; ● the successful management of interest rate risk; ● the successful management of liquidity; ● changes in general economic and business conditions in our market area and the United States in general; ● credit risks inherent in making loans such as changes in a borrower’s ability to repay and our management of such risks; ● competition with other banks and financial institutions, and companies outside of the banking industry, including online lenders and those companies that have substantially greater access to capital and other resources; ● customer acceptance of new products and services we have offered or may offer; ● deposit flows and competition for deposits; ● the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve, inflation, interest rate, market and monetary fluctuations; ● the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues and other catastrophic events; ● geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism, international hostilities, military conflicts or actions taken by the U.S. or other governments in response thereto, which could impact business and economic conditions in the U.S. and abroad; ● the continued effective operation of our information technology systems and third-party service providers, including the stabilization and ongoing performance of our core processing platform following the system conversion completed during the fourth quarter of 2025; ● the effects of cyber incidents or other failures, disruptions, or breaches of our operational or security systems, or those of our third-party vendors or other service providers, including as a result of cyber threats or attacks; ● our ability to successfully manage cybersecurity, including generative artificial intelligence risks; ● our ability to assist in managing third party fraud against customer accounts including but not limited to check, credit and debit card, and electronic funds transfer fraud; ● our reliance on third-party vendors and correspondent banks; ● changes in generally accepted accounting principles; ● changes in governmental regulations, tax rates and similar matters; and, ● other risks, which may be described, from time to time, in our filings with the SEC. 24 Because of these uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Critical Accounting Policies For discussion of our significant accounting policies, see our Annual Report on Form 10-K for the year ended December 31, 2025, and Note 2 Summary of Significant Accounting Policies, in Item 1 of this Form 10-Q. Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. Our most critical accounting policies relate to our allowance for credit losses. The allowance for credit losses reflects the estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our borrowers were to deteriorate, resulting in an impairment of their ability to make payments, our estimates would be updated, and additional provisions could be required. For further discussion of the estimates used in determining the allowance for credit losses, we refer you to the section on “Asset Quality” in this discussion. Overview and Highlights Net income for the three months ended March 31, 2026 was $3.1 million, an increase of $1.2 million, or 60.48%, from the same period in 2025. Net interest income increased 15.86%, or $1.2 million, from $7.6 million for the quarter ended March 31, 2025 to $8.8 million for the quarter ended March 31, 2026. The loan portfolio was the primary driver of both increases as the yield rose 25 basis points (”bps”) while the average balance increased $57.8 million compared to the first quarter of 2025. The balance sheet grew to $939.6 million in total assets as of March 31, 2026, from $909.7 million as of December 31, 2025. Gross loans increased $13.7 million to $723.3 million as of March 31, 2026. Additionally, interest-bearing deposits with banks increased $13.1 million to $76.2 million as of March 31, 2026. During the first three months of 2026 total deposits increased $29.4 million or 3.68% to $827.7 million. A dividend of $0.09 per share was paid to shareholders during the first quarter of 2026, a 12.5% increase over the dividend paid in 2025. During the first quarter of 2026, we extended a previously announced stock repurchase program, to continue through March 31, 2027. Since the inception of the program through March 31, 2026, the Company has repurchased 366,569 shares at an average price of $2.57 per share. Comparison of the Three Months ended March 31, 2026 and 2025 Quarter-to-date highlights include: ● Returns on average assets and equity of 1.34% and 14.69% for the first quarter of 2026, compared to 0.90% and 10.78% for the first quarter of 2025, respectively; ● Net interest margin was 3.99% for the first quarter of 2026 compared to 3.69% for the first quarter of 2025; ● Net interest income was $8.8 million for the first quarter of 2026, an increase of $1.2 million, or 15.86%, compared to the first quarter of 2025; ● Noninterest income was $2.6 million, an increase of $217,000, or 8.99%, during the first quarter of 2026 compared to the first quarter of 2025; and ● Noninterest expense was $7.2 million, a decrease of $39,000, or 0.54%, for the first quarter of 2026 compared to the first quarter of 2025. During the first quarter of 2026, interest income increased $1.2 million to $12.6 million due to the combination of an increase of 18 bps in the yield on earning assets to 5.69% and a $61.5 million increase in the average balance of earning assets when compared to the first quarter of 2025. The loan portfolio was the primary driver of both increases as the yield rose 25 bps to 6.35% while the average balance increased $57.8 million compared to the first quarter of 2025. Also contributing to the improvement in net interest income was lower funding costs. While the average balance of interest-bearing liabilities increased $44.2 million, the costs decreased 18 bps to 2.55%, and total interest expense only increased by $39,000 to $3.8 million during the first quarter of 2026 as compared to the first quarter of 2025. The reduction in the cost of interest-bearing liabilities is primarily due to maturing time deposits repricing in a lower interest-rate environment and declines in both the cost and balance of borrowed funds. The decrease in the average balance of borrowed funds was due to a $3 million principal payment on a borrowing from the Federal Home Loan Bank of Atlanta during the fourth quarter of 2025 combined with principal payments made on a trust preferred security in January 2025. In addition, the variable rate paid on the trust preferred securities decreased as overnight and short-term borrowing rates declined during the last half of 2025. The net interest margin improved 30 bps to 3.99% for the quarter ending March 31, 2026, compared to 3.69% for the same period in 2025, due to the increase in the yield on earning assets and the decline in the cost of funds. The net interest spread, which is the difference between the yield on interest-earning assets and the costs of interest-bearing liabilities, widened by 36 bps to 3.14% for the first quarter of 2026 from 2.78% for the comparable period of 2025. 25 The following table shows the rates paid on earning assets and interest-bearing liabilities for the periods indicated: Net Interest Margin Analysis Average Balances, Income and Expense, and Yields and Rates Three Months Ended March 31 , 2026 2025 Average Income/ Yields/ Average Income/ Yields/ (Dollars are in thousands) Balance Expense Rates Balance Expense Rates ASSETS Loans (1) (2) $ 716,807 11,215 6.35 % $ 659,022 $ 9,912 6.10 % Federal funds sold 491 4 3.58 % 139 2 4.40 % Interest bearing deposits in other banks 71,064 638 3.64 % 64,406 692 4.36 % Securities (2) 108,027 740 2.74 % 111,306 745 2.68 % Total earning assets 896,389 12,597 5.69 % 834,873 11,351 5.51 % Less: Allowance for credit losses (8,175 ) (7,788 ) Non-earning assets 37,278 37,411 Total assets $ 925,492 $ 864,496 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing demand deposits $ 74,258 112 0.61 % $ 72,394 $ 137 0.77 % Savings and money market deposits 216,113 941 1.77 % 186,941 779 1.69 % Time deposits 290,916 2,481 3.46 % 274,564 2,533 3.74 % Total interest-bearing deposits 581,287 3,534 2.47 % 533,899 3,449 2.62 % Other borrowings 7,000 61 3.51 % 10,000 88 3.51 % Trust preferred securities 11,986 185 6.18 % 12,186 204 6.69 % Total borrowed funds 18,986 246 5.19 % 22,186 292 5.26 % Total interest-bearing liabilities 600,273 3,780 2.55 % 556,085 3,741 2.73 % Non-interest-bearing deposits 230,875 227,045 Other liabilities 9,803 9,580 Total liabilities 840,951 792,710 Shareholders’ equity 84,541 71,786 Total liabilities and shareholders’ equity $ 925,492 $ 864,496 Net interest income $ 8,817 $ 7,610 Net interest margin 3.99 % 3.69 % Net interest spread 3.14 % 2.78 % (1) Nonaccrual loans and loans held for sale have been included in average loan balances. (2) Tax exempt income is not significant and has been treated as fully taxable. 26 Net interest income is affected by changes in both average interest rates and average volumes (balances) of interest-earning assets and interest-bearing liabilities. The following table sets forth the amounts of the total changes in interest income and interest expense which can be attributed to rates and volume for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Volume and Rate Analysis Increase (decrease) Three Months Ended March 31, 2026 (Dollars in thousands) Volume Effect Rate Effect Change in Interest Income/ Expense Interest income: Loans $ 888 $ 415 $ 1,303 Federal funds sold 2 — 2 Interest bearing deposits in other banks 67 (121 ) (54 ) Taxable investment securities (22 ) 17 (5 ) Total earning assets 935 311 1,246 Interest expense: Interest-bearing demand deposits 4 (29 ) (25 ) Savings and money market deposits 124 38 162 Time deposits 145 (197 ) (52 ) Other borrowings (27 ) — (27 ) Trust preferred securities (3 ) (16 ) (19 ) Total interest-bearing liabilities 243 (204 ) 39 Change in net interest income $ 692 $ 515 $ 1,207 The provision for credit losses charged to the income statement for the quarter ended March 31, 2026 was $240,000 compared to $259,000 for the three months ended March 31, 2025. The provision expense for the first quarter of 2026 is mainly attributable to growth in the loan portfolio and a modest adjustment to certain qualitative factors in the calculation of the allowance for loan losses to reflect geopolitical uncertainty related to the conflict in the Middle East. The provision for credit losses during the first quarter of 2025 is attributable to loan growth and the impact of valuation allowances for two specifically assessed borrower relationships. A recovery of credit losses on unfunded commitments of $11,000 was recognized for the first quarter of 2026 due to a $2.1 million reduction in commitments on construction loans. The provision for credit losses on unfunded commitments for the first quarter of 2025 was $92,000, reflecting an $11.6 million, or 31.84%, increase in unfunded commitments on construction loans. For a discussion of the factors affecting the allowance for credit losses, including provision expense, refer to Note 7, Allowance for Credit Losses for Loans, in Item 1 of this Form 10-Q. Noninterest income, totaling $2.6 million for the first quarter of 2026, increased $217,000 compared to the quarter ended March 31, 2025. The improvement was driven by a $101,000 increase in income from financial and investment services and a $121,000 increase in income from card processing. Noninterest expense was $7.2 million for the quarter ended March 31, 2026, which was a $39,000 decrease compared to the first quarter of 2025. Occupancy costs decreased $93,000 due to costs incurred in “refreshing” a branch office in the first quarter of 2025 and a decrease in costs for snow and ice removal to keep our branch locations open and safe during the winter storms in 2026 compared to 2025. Other categories experiencing reductions include professional and consulting fees, card processing costs, and the expense for the debit card rewards program which was discontinued in the fourth quarter of 2025. The reductions in expenses were partially offset by an $85,000 increase in salaries and benefits attributable to annual merit increases and an uptick in losses due to fraudulent activity. The efficiency ratio, which is defined as noninterest expense divided by the sum of net interest income plus noninterest income, decreased to 63.17% during the first quarter of 2026 from 72.55% for the first quarter of 2025. We continue to assess our operational procedures and structure to improve efficiencies and contain costs. Income tax expense for the first quarter of 2026 totaled $912,000, an increase of $328,000, or 56.16%, from $584,000 recorded during the same period in 2025. The effective tax rate for the three months ended March 31, 2026, was 22.95%, compared to 23.43% for the same period in 2025. 27 Balance Sheet Total assets as of March 31, 2026, were $939.6 million, an increase of $29.9 million, or 3.28%, from $909.7 million as of December 31, 2025. Gross loans of $723.3 million as of March 31, 2026 reflected an increase of $13.7 million, or 1.93%, from $709.6 million as of December 31, 2025. Liquid assets in the form of cash and cash equivalents increased $15.7 million, or 20.31%, during the first quarter of 2026 mainly due to the seasonal increase in deposits. Investment securities increased $427,000 during the first quarter of 2026 due to purchases of $4.2 million offset by maturities, calls, payments and amortization of $2.9 million and an $808,000 increase in the unrealized loss on securities available-for-sale. Deposits totaled $827.7 million as of March 31, 2026, compared to $798.3 million as of December 31, 2025. The increase of $29.4 million, or 3.68%, was due to continued efforts to attract money market account relationships combined with seasonal and cyclical funds inflows. As a result, money market and savings accounts increased $14.8 million, and noninterest-bearing demand and interest-bearing demand deposits combined for an increase of $18.9 million during the first quarter of 2026. Over this same period, time deposits decreased $5.0 million largely due to the maturity of a public funds deposit with no other deposit relationship, for which the Bank did not aggressively bid. As of March 31, 2026 and December 31, 2025, borrowed funds totaled $19.0 million. Capital During the quarter ended March 31, 2026, total shareholders’ equity increased $262,000 to $83.1 million due to net income of $3.1 million which was offset by dividends paid to shareholders of $2.1 million, the repurchase of common stock totaling $41,000, and an increase in the unrealized loss on securities available for sale, net of the tax effects, of $639,000. Consequently, book value per share increased to $3.53 as of March 31, 2026 compared to $3.52 as of December 31, 2025. The Bank remains well-capitalized per regulatory guidance. As previously announced, the Board of Directors extended the repurchase of up to 500,000 shares of the Company’s common stock through March 31, 2027. During the first quarter of 2026, the Company repurchased 11,496 shares at an average price of $3.55 per share. Since the commencement of the repurchase plan in 2022, 366,569 shares have been repurchased at an average price of $2.57 per share. Asset Quality The allowance for credit losses on loans was $8.1 million, or 1.12% as a percentage of total loans, as of March 31, 2026, and $8.1 million, or 1.14%, as of December 31, 2025. The decrease in the allowance as a percentage of loans was primarily attributable to charging off the year-end specific reserves on two borrower relationships during the first quarter of 2026. One of these relationships had two pieces of collateral – the residential property was foreclosed and reclassified into other real estate owned during the quarter, and the commercial property was sold at auction and the sales proceeds were received subsequent to March 31, 2026. The charge-off on the other relationship was largely driven by the amount of time that it had been in its classified status. The $9,000 increase in the allowance for credit losses on loans was attributable to provision expense associated with a larger loan portfolio and a modest adjustment to a qualitative factor for geopolitical uncertainty related to the conflict in the Middle East partially offset by the charge-off of the specific reserves discussed above. The allowance for credit losses on unfunded commitments was $460,000 as of March 31, 2026, as compared to $471,000 as of December 31, 2025. The decrease in the allowance for credit losses on unfunded commitments was due to a decrease in loan commitments, specifically residential and commercial real estate construction loan commitments. Annualized net charge-offs as a percentage of average loans were 0.14% during the first 3 months of 2026 compared to 0.05% during the fourth quarter of 2025 and 0.01% during the first quarter of 2025. The increase was due to the charge-off of the specific reserves discussed above. Nonperforming assets, which include nonaccrual loans, accruing loans past due 90 days or more, and other real estate owned, totaled $3.3 million as of March 31, 2026, a decrease of $537,000, or 13.94%, since year-end 2025. Nonaccrual loans decreased $467,000 during the first three months of 2026 primarily due to the charge-off of the specific reserves on individually evaluated loans and a loan that was removed from nonaccrual status based on performance. Nonperforming assets as a percentage of total assets were 0.35% as of March 31, 2026 and 0.42% as of December 31, 2025. 28 Other real estate owned increased to $184,000 as of March 31, 2026 from $89,000 at December 31, 2025 due to the foreclosure on the residential property discussed above. Expenses associated with other real estate owned, including gains and losses on sales, were $3,000 and $1,000 for the three months ended March 31, 2026 and 2025, respectively. For detailed information on nonaccrual loans and other real estate owned as of March 31, 2026 and December 31, 2025, refer to Note 6 Loans and Note 10 Other Real Estate Owned in Item 1 of this Form 10-Q. Loans rated substandard or below totaled $3.7 million as of March 31, 2026, an increase of $1.1 million from $2.6 million as of December 31, 2025. Total past due loans decreased to $6.1 million as of March 31, 2026 from $7.2 million as of December 31, 2025. The allowance for credit losses is maintained at a level that management deems appropriate to absorb any potential future losses and known impairments within the loan portfolio, whether or not the losses are actually ever realized. Through our quarterly assessment, we continue to adjust the CECL model to best reflect the risks in the portfolio. However, future provisions may be deemed necessary. During the first three months of 2026, we maintained the adjustments to our qualitative factors initiated in 2024 and carried forward into 2025, to consider risk factors associated with commercial real estate and residential mortgage loans. In addition, we made a slight adjustment of 3 bps to consider the geopolitical uncertainty in the Middle East. Those changes, along with growth in the loan portfolio and the assessment of the historical and specific risks associated with the loan portfolio, resulted in a recovery of credit losses for credit losses of $240,000, which included a $251,000 provision for the loan portfolio; and a $11,000 negative provision for unfunded commitments due to a decrease in unfunded commitments, particularly construction loans. The following table summarizes components of the allowance for credit losses and related loans as of March 31, 2026 and December 31, 2025: Selected Credit Ratios March 31, December 31, (Dollars in thousands) 2026 2025 Allowance for credit losses - loans $ 8,116 $ 8,107 Total loans 723,305 709,587 Allowance for credit losses to total loans 1.12 % 1.14 % Nonaccrual loans $ 3,131 $ 3,598 Nonaccrual loans to total loans 0.43 % 0.51 % Ratio of allowance for credit losses loans to nonaccrual loans 2.59 X 2.25 X Charge-offs net of recoveries $ 242 $ 316 Average loans $ 716,807 $ 689,104 Net charge-offs to average loans1 0.14 % 0.05 % 1 - Annualized Deferred Tax Asset and Income Taxes Due to timing differences between the book and tax treatments of several income and expense items, a net deferred tax asset, excluding the deferred tax asset on the unrealized loss on securities available-for-sale of $2.3 million and $2.1 million, existed as of March 31, 2026 and December 31, 2025, respectively. Our income tax expense was computed at the federal corporate income tax rate of 21% of taxable income and a blended state tax rate of 1.95%. We have no significant nontaxable income or non-deductible expenses. Capital Resources The Company meets the eligibility criteria to be classified as a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding Company Policy Statement issued in February 2015 and is therefore not obligated to report consolidated regulatory capital. The Bank continues to be subject to various capital requirements administered by banking agencies. The Bank’s capital ratios along with the minimum regulatory thresholds to be considered well-capitalized are presented in Note 4 in Item 1 of this Form 10-Q. 29 As of March 31, 2026, the Bank remains well capitalized under the regulatory framework for prompt corrective action. The ratios mentioned above for the Bank comply with the Federal Reserve rules to align with the Basel III Capital requirements. Book value per common share was $3.53 and $3.52 as of March 31, 2026 and December 31, 2025, respectively. The increase in book value was due to net income of $3.1 million which was offset by dividends paid to shareholders of $2.1 million, the repurchase of common stock totaling $41,000, and an increase in the unrealized loss on securities available for sale, net of the tax effects, of $639,000. Other key performance indicators are as follows: Three months ended March 31, 2026 2025 Return on average assets1 1.34 % 0.90 % Return on average shareholders’ equity1 14.69 % 10.78 % Average equity to average assets 9.13 % 8.30 % 1 - Annualized Under current economic conditions, we believe it is prudent to continue to retain capital sufficient to support planned asset growth while being able to absorb potential losses that may occur if asset quality deteriorates, and based upon projections, we believe our current capital levels will be sufficient. During the first quarter of 2026, the Company paid a cash dividend of $0.09 per common share to our shareholders. Future payments of cash dividends will depend on a number of factors including but not limited to maintaining positive retained earnings, compliance with regulatory rules governing the payment of dividends, strategic plans, and sufficient capital at the Bank to allow payment of dividends to the Company. On April 28, 2022 the board of directors of the Company authorized the repurchase of up to 500,000 shares of the Company’s outstanding common stock. As previously reported, this plan was extended by the Board of Directors through March 31, 2027. The actual means and timing of any purchases, number of shares and prices or range of prices will be determined by the Company in its discretion and will depend on a number of factors, including the market price of the Company’s common stock, general market and economic conditions, and applicable legal and regulatory requirements. As of March 31, 2026, the Company has repurchased 366,569 shares at an average price of $2.57 per share since inception of the plan. During the quarter ended March 31, 2026, the Company repurchased 11,496 shares at an average price of $3.55 per share. There is no assurance that the Company will purchase any additional shares under this program. Liquidity We closely monitor our liquidity and our liquid assets in the form of cash, due from banks, federal funds sold and unpledged available-for-sale investments. Collectively, those balances were $158.0 million as of March 31, 2026, up from $141.0 million as of December 31, 2025. The increase is primarily due to deposit growth exceeding funding needs for loan growth. A surplus of short-term assets is maintained at levels management deems adequate to meet potential liquidity needs As of March 31, 2026, all of our investments are classified as available-for-sale, providing an additional source of liquidity in the amount of $65.1 million, which is net of the $31.8 million of securities pledged as collateral. Generally, the investment portfolio serves as a source of liquidity while yielding a higher return at the purchase date when compared to other short-term investment options, such as federal funds sold and overnight deposits with the Federal Reserve Bank of Richmond (the FRB). Due to the unrealized loss on securities available-for-sale, the sale of investments, other than shorter-term investments with minimal unrealized losses or more recently purchased investments, would not be a main source of liquidity at this time due to the immediate impact on regulatory capital; however, the majority of the portfolio is considered high credit quality investments and would be available to pledge against borrowed funds. Total investment securities increased $427,000 during the first quarter of 2026 from $96.4 million as of December 31, 2025 to $96.9 million as of March 31, 2026. The Bank also has additional borrowing capacity on lines for which investments and certain loans are currently pledged. Our loan to deposit ratio was 87.39% and 88.89% as of March 31, 2026 and December 31, 2025, respectively. 30 Available third-party sources of liquidity as of March 31, 2026 include the following: a line of credit with the FHLB, access to brokered certificates of deposit markets and the discount window at the Federal Reserve Bank. We also have the ability to borrow $30.0 million in unsecured federal funds through credit facilities extended by correspondent banks. We have used our line of credit with the FHLB to issue letters of credit totaling $14.0 million to the Treasury Board of Virginia for collateral on public funds. No draws on these letters of credit have been issued. The letters of credit are considered to be draws on our FHLB line of credit. In May 2023, we borrowed $10.0 million from the FHLB, through a fixed rate 5-year advance, to support loan fundings and other general liquidity needs and prepaid $3 million of the outstanding balance in the fourth quarter of 2025; and, in June 2025, we borrowed an additional $5.0 million which was repaid in July 2025. An additional $252.0 million was available as of March 31, 2026 on the $273.0 million line of credit. Full use of the FHLB borrowing capacity would require the Company to pledge additional assets. As of March 31, 2026 we held brokered time deposits of $8.0 million, unchanged from December 31, 2025. Internet accounts are limited to customers located in our primary market area and the surrounding geographical area. The average balance of and the rate paid on deposits is shown in the net interest margin analysis tables. Total reciprocal Certificate of Deposit Registry Services (“CDARS”) time deposits were $7.7 million and $7.0 million as of March 31, 2026 and December 31, 2025, respectively. Aside from the availability of CDARS time deposits, we also offer a similar deposit product for transaction account customers through Intrafi Cash Service (“ICS”). As of March 31, 2026 approximately $16.3 million were placed in this product as compared to $16.1 million at December 31, 2025. Both the CDARS and ICS offerings assist us in maintaining deposit relationships, while assuring the depositors’ funds retain federal deposit insurance coverage. Additional liquidity is available through the Federal Reserve Bank discount window for overnight funding needs. We may collateralize this line with investment securities and loans at our discretion; however, while we do not anticipate using this as a primary funding source, securities with an estimated market value of $24.9 million were pledged as of March 31, 2026. Time deposits of $250,000 or more were approximately 6.35% of total deposits at March 31, 2026 and 7.15% of total deposits at December 31, 2025. In January 2025, we made a voluntary principal payment of $3.0 million on an outstanding trust preferred security. We may consider making future principal payments based on our available liquidity and considering other funding opportunities that may be available. With the on-balance sheet liquidity and other external sources of funding, we believe the Bank has adequate liquidity and capital resources to meet our requirements and needs for the foreseeable future. However, liquidity can be further affected by a number of factors such as counterparty willingness or ability to extend credit, regulatory actions and customer preferences, some of which are beyond our control. Given continued economic uncertainty, the level of market interest rates, and potential impacts from proposed or enacted tariffs and other trade restrictions, along with ongoing geopolitical conflicts than can contribute to energy price volatility and broader financial market volatility, we continue monitoring our liquidity position, specifically cash on hand, and readily-available contingent funding sources, in order to meet customer demands. Additionally, our contingency funding plan is reviewed quarterly with our Asset Liability Committee. Off Balance Sheet Items and Contractual Obligations There have been no material changes during the three months ended March 31, 2026, to the off-balance sheet items and the contractual obligations disclosed in our 2025 Form 10-K. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable. Item 4. Controls and Procedures We have carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer (our CEO) and our Executive Vice President and Chief Financial Officer (our CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were operating effectively in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. 31 Changes in Internal Control Over Financial Reporting There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2026, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting. Part II Other Information Item 1. Legal Proceedings In the course of operations, we may become a party to legal proceedings in the normal course of business. At March 31, 2026, we do not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or any of its subsidiaries or to which the property of the Company or any of its subsidiaries is subject, in the opinion of management, will materially impact the financial condition or liquidity of the Company. Item 1A. Risk Factors Not Applicable. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds (a) Sales of Unregistered Securities – None (b) Use of Proceeds – Not Applicable (c) Issuer Purchases of Securities Stock Repurchase Program The Company has an approved one-year stock repurchase program that authorizes the repurchase of up to 500,000 of the Company’s common shares that was extended through March 31, 2027. Repurchases may be made through open market purchases or in privately negotiated transactions. Shares repurchased will be returned to the status of authorized and unissued shares of common stock. The actual means and timing of any purchases, number of shares and prices or range of prices will be determined by the Company. Shares of the Company’s common stock were repurchased during the three months ended March 31, 2026, as detailed below. Under the terms of the stock repurchase program, the Company has the remaining authority to repurchase up to 133,431 shares of common stock. Period Beginning on First Day of Month Ended Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs January 31, 2026 572 $ 3.37 572 144,355 February 28, 2026 3,910 $ 3.56 3,910 140,445 March 31, 2026 7,014 $ 3.56 7,014 133,431 Total 11,496 $ 3.55 11,496 32 Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not Applicable. Item 5. Other Information Trading Arrangements – During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933). Item 6. Exhibits The following exhibits are filed as part of this report or are incorporated by reference: No. Description 3.1 Amended Articles of Incorporation of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarterly period ended June 30, 2008 filed on August 11, 2008). 3.2 Bylaws of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.2 to Form 8-K filed on August 26, 2020). 4.1 Specimen Common Stock Certificate of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012). 4.2 Description of New Peoples Bankshares, Inc.’s Securities (incorporated by reference to Exhibit 4.2 to Form 10-K for the year ended December 31, 2024, filed on March 31, 2025). 10.1* Employment Agreement dated June 25, 2025 between New Peoples Bankshares, Inc., New Peoples Bank, Inc. and James W. Kiser (incorporated by reference to Form 8-K filed June 30, 2025) 31.1 Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act. 31.2 Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act. 32 Certification by Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following materials for the Company’s Form 10-Q for the quarterly period ended March 31, 2026, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements, tagged as blocks of text. * Denotes management contract 33 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEW PEOPLES BANKSHARES, INC. (Registrant) By: /s/ JAMES W. KISER James W. Kiser President and Chief Executive Officer Date: May 13, 2026 By: /s/ CHRISTOPHER G. SPEAKS Christopher G. Speaks Executive Vice President and Chief Financial Officer Date: May 13, 2026 34