# John Marshall Bancorp, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [John Marshall Bancorp, Inc.](/companies/jmsb.md) (CIK 1710482)
- Form: 10-Q
- Filed: 2025-05-13
- Accepted by EDGAR: May 13, 2025, 09:23 ET
- Period: 2025-03-31
- Accession: 0001558370-25-007505
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1710482/000155837025007505/jmsb-20250331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1710482/000155837025007505/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $1.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $4.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.34 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.34 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 14,241,072 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $7.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $342.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $46.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $169.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $2.27bn | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $2.02bn | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $80.8m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-03-31 | $253.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 57,785 characters.

The following discussion and analysis of the consolidated financial condition and results of operations of the Company and its subsidiary should be read in conjunction with the consolidated financial statements and related notes presented in Item 1, Financial Statements, of this Form 10-Q. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate results of operations or trends in operations for any future periods.

### Use of Non-GAAP Financial Measures

This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this report consist of tax-equivalent net interest income and tax-equivalent net interest margin.

These disclosures should not be viewed as a substitute for or more important than financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis.

### Cautionary Note on Forward-Looking Statements

In addition to historical information, this Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition and results of operations. Factors that could have a material adverse effect on the operations of the Company and the Bank include, but are not limited to, the following:

- the concentration of our business in the Washington, D.C. metropolitan area and the effect of changes in the economic, political and environmental conditions on this market, including reduction in spending by the U.S. Government;
- adequacy of our allowance for loan credit losses, allowance for unfunded commitments credit losses, and allowance for credit losses associated with our held-to-maturity and available-for-sale securities portfolios;
- deterioration of our asset quality;
- future performance of our loan portfolio with respect to recently originated loans;
- the level of prepayments on loans and mortgage-backed securities;
- liquidity, interest rate and operational risks associated with our business;
- changes in our financial condition or results of operations that reduce capital;
- our ability to maintain existing deposit relationships or attract new deposit relationships;
- changes in consumer spending, borrowing and savings habits;
- inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments;
- changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve;
- additional risks related to new lines of business, products, product enhancements or services;
- increased competition with other financial institutions and fintech companies;
- adverse changes in the securities markets;
- changes in the financial condition or future prospects of issuers of securities that we own;
- our ability to maintain an effective risk management framework;
- changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements;
- compliance with legislative or regulatory requirements;
- results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take similar actions;
- potential claims, damages, and fines related to litigation or government actions;
- the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting;
- geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad;
- the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business;
- public health events (such as the COVID-19 pandemic) and governmental and societal responses thereto;
- technological risks and developments, and cyber threats, attacks, or events;
- changes in accounting policies and practices;
- our ability to successfully capitalize on growth opportunities;
- our ability to retain key employees;
- deteriorating economic conditions, either nationally or in our market area, including higher unemployment and lower real estate values;
- implications of our status as a smaller reporting company and as an emerging growth company; and
- other factors discussed in Item 1A. Risk Factors in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 28, 2025.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary note.

### Overview

We are a bank holding company headquartered in Reston, Virginia primarily serving the Washington, D.C. metropolitan area. The material business operations of our organization are performed through the Bank. As a result, the discussion and analysis within this section primarily relate to activities conducted at the Bank.

As with most community banks, the Bank derives a significant portion of its income from interest received on loans and investments. The Bank’s primary source of funding is deposits, both interest-bearing and non-interest-bearing. To account for credit risk inherent in all loans, the Bank maintains an allowance for loan credit losses to absorb lifetime losses on existing loans. The Bank establishes and maintains this allowance by recording a provision for credit losses against earnings. In addition to net interest income, the Bank also generates income through service charges on deposits, insurance commission income, merchant services fee income, swap fee income and gain on sale of the guaranteed portion of SBA 7(a) loans. In order to maintain its operations, the Bank incurs various operating expenses which are further described within the “Results of Operations” later in this section.

As of March 31, 2025, the Company had total consolidated assets of $2.27 billion, total loans net of unearned income of $1.87 billion, total deposits of $1.92 billion and total shareholders’ equity of $253.0 million.

### Critical Accounting Policies and Estimates

The Company’s accounting and reporting policies conform to GAAP, as well as general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported.

Our most significant accounting policies are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to our audited financial statements for the year ended December 31, 2024, included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 28, 2025.

### Selected Financial Data

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of March 31, 2025 and March 31, 2024 and the selected income statement data for the three months ended March 31, 2025 and March 31, 2024 have been derived from our consolidated financial statements.

*(Dollars in thousands, except per share data)*

| ​ ​ Balance Sheet Data: | ​ ​ ​ | ​ ​ ​ ​ As of or for the Three Months Ended March 31, 2025 ​ ​ ​ | ​ ​ ​ ​ March 31, 2024 ​ ​ ​ | ​ ​ ​ |
| --- | --- | ---: | ---: | --- |
| Loans, net of unearned income | ​ | $1,870,472 ​ | $1,825,931 ​ | ​ |
| Allowance for loan credit losses | ​ | 18,826 ​ | 18,671 ​ | ​ |
| Total assets | ​ | 2,272,432 ​ | 2,251,837 ​ | ​ |
| Deposits | ​ | 1,922,175 ​ | 1,900,990 ​ | ​ |
| Shareholders’ equity | ​ | 252,958 ​ | 234,550 ​ | ​ |
| **Asset Quality Data:** | ​ | ​ | ​ | ​ |
| Net (charge-offs) recoveries to average total loans, net of unearned income | ​ | 0.00% | 0.00% | ​ |
| Allowance for loan credit losses to nonperforming loans | ​ | NM ​ | NM ​ | ​ |
| Allowance for loan credit losses to total gross loans net of unearned income | ​ | 1.01% | 1.02% | ​ |
| Non-performing assets to total assets | ​ | 0.00% | 0.00% | ​ |
| Non-performing loans to total loans | ​ | 0.00% | 0.00% | ​ |
| **Capital Ratios (Bank level):** | ​ | ​ | ​ | ​ |
| Equity-to-total assets ratio | ​ | 11.9% | 11.3% | ​ |
| Total risk-based capital ratio | ​ | 16.5% | 16.1% | ​ |
| Tier 1 risk-based capital ratio | ​ | 15.4% | 15.1% | ​ |
| Common equity tier 1 ratio | ​ | 15.4% | 15.1% | ​ |
| Leverage ratio | ​ | 12.6% | 11.8% | ​ |
| **Income Statement Data:** | ​ | ​ | ​ | ​ |
| Interest and dividend income | ​ | $27,305 ​ | $26,919 ​ | ​ |
| Interest expense | ​ | 13,208 ​ | 15,175 ​ | ​ |
| Net interest income | ​ | $14,097 ​ | $11,744 ​ | ​ |
| Provision for (recovery of) credit losses | ​ | 170 ​ | (776) ​ | ​ |
| Non-interest income | ​ | 505 ​ | 818 ​ | ​ |
| Non-interest expense | ​ | 8,248 ​ | 7,924 ​ | ​ |
| Income before taxes | ​ | $6,184 ​ | $5,414 ​ | ​ |
| Income tax expense | ​ | 1,374 ​ | 1,210 ​ | ​ |
| Net income | ​ | $4,810 ​ | $4,204 ​ | ​ |
| **Per Share Data and Shares Outstanding:** | ​ | ​ | ​ | ​ |
| Weighted average common shares (basic) | ​ | 14,223,004 ​ | 14,130,986 ​ | ​ |
| Weighted average common shares (diluted) | ​ | 14,241,072 ​ | 14,181,254 ​ | ​ |
| Common shares outstanding | ​ | 14,275,615 ​ | 14,209,606 ​ | ​ |
| Earnings per share, basic | ​ | $0.34 ​ | $0.30 ​ | ​ |
| Earnings per share, diluted | ​ | $0.34 ​ | $0.30 ​ | ​ |
| Book value per share | ​ | $17.72 ​ | $16.51 ​ | ​ |
| **Performance Ratios:** | ​ | ​ | ​ ​ | ​ |
| Return on average assets ("ROAA")(1) | ​ | 0.87% | 0.75% | ​ |
| Return on average equity ("ROAE")(2) | ​ | 7.76% | 7.23% | ​ |
| Net interest margin | ​ | 2.58% | 2.11% | ​ |
| Tax-equivalent net interest margin (Non-GAAP)(3) | ​ | ​ 2.58% | ​ 2.11% | ​ |
| Non-interest expense to average assets(4) | ​ | ​ 1.50% | ​ 1.41% | ​ |
| Efficiency ratio(5) | ​ | 56.5% | 63.1% | ​ |

NM – Not meaningful

(1) ROAA is calculated by dividing year-to-date net income annualized by year-to-date average assets.

(2) ROAE is calculated by dividing year-to-date net income annualized by year-to-date average equity.

(3) Tax-equivalent net interest margin for all periods presented is reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(4) Non-interest expense to average assets is calculated by dividing year-to-date annualized non-interest expense by year-to-date average assets.

(5) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.

### Results of Operations – Three Months Ended March 31, 2025 and March 31, 2024

### Overview

The Company reported net income of $4.8 million for the three months ended March 31, 2025, an increase of $0.6 million when compared to the three months ended March 31, 2024. Diluted earnings per share were $0.34 for the three months ended March 31, 2025, compared to diluted earnings per share of $0.30 for the three months ended March 31, 2024.

### Net Interest Income and Net Interest Margin

The following table presents the average balance for each principal balance sheet category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the three months ended March 31, 2025 and March 31, 2024.

### Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities

*John Marshall Bancorp, Inc.*

*Average Balance Sheets, Interest and Rates (unaudited)*

*(Dollar amounts in thousands)*

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ Assets: Securities: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2025 ​ ​ Average Balance ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Interest Income / Expense ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Average Rate ​ | ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2024 ​ ​ Average Balance ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Interest Income / Expense ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Rate ​ ​ |
| --- | --- | ---: | --- | --- | --- | ---: | ---: | --- | --- | --- | ---: |
| Taxable | ​ | $230,100 |  | $1,155 |  | 2.04% | $269,380 |  | $1,351 |  | 2.02% |
| Tax-exempt(1) | ​ | 1,379 |  | ​ 11 |  | 3.24% | 1,380 |  | ​ 11 |  | 3.21% |
| Total securities | ​ | $231,479 | ​ | $1,166 |  | 2.04% | $270,760 | ​ | $1,362 |  | 2.02% |
| Loans, net of unearned income(2): | ​ |  | ​ |  |  | ​ ​ | ​ | ​ |  |  | ​ ​ |
| Taxable | ​ | 1,851,627 | ​ | 24,679 |  | 5.41% | 1,813,528 | ​ | 23,458 |  | 5.20% |
| Tax-exempt(1) | ​ | 16,676 | ​ | 162 |  | 3.94% | 22,438 | ​ | 209 |  | 3.75% |
| Total loans, net of unearned income | ​ | $1,868,303 | ​ | $24,841 |  | 5.39% | $1,835,966 | ​ | $23,667 |  | 5.18% |
| Interest-bearing deposits in other banks | ​ | $120,948 | ​ | $1,334 |  | 4.47% | $140,894 | ​ | $1,936 |  | 5.53% |
| Total interest-earning assets | ​ | $2,220,730 | ​ | $27,341 |  | 4.99% | $2,247,620 | ​ | $26,965 |  | 4.83% |
| Total non-interest earning assets | ​ | 13,031 | ​ | ​ ​ |  | ​ | 16,924 | ​ | ​ ​ |  | ​ ​ |
| Total assets | ​ | $2,233,761 | ​ | ​ ​ |  | ​ | $2,264,544 | ​ | ​ ​ |  | ​ ​ |
| **Liabilities & Shareholders’ Equity:** | ​ |  | ​ |  |  | ​ | ​ | ​ |  |  | ​ ​ |
| Interest-bearing deposits | ​ |  | ​ |  |  | ​ | ​ | ​ |  |  | ​ ​ |
| NOW accounts | ​ | $357,206 | ​ | ​ 2,127 | ​ | 2.41% | $313,478 | ​ | $2,199 |  | 2.82% |
| Money market accounts | ​ | 339,248 | ​ | ​ 2,281 | ​ | 2.73% | 324,753 | ​ | 2,576 |  | 3.19% |
| Savings accounts | ​ | 43,062 | ​ | ​ 104 | ​ | 0.98% | 53,064 | ​ | 175 |  | 1.33% |
| Time deposits | ​ | 720,658 | ​ | ​ 7,788 | ​ | 4.38% | 808,845 | ​ | 8,981 |  | 4.47% |
| Total interest-bearing deposits | ​ | $1,460,174 | ​ | $12,300 | ​ | 3.42% | $1,500,140 | ​ | $13,931 |  | 3.73% |
| Federal funds purchased | ​ | ​ — | ​ | ​ — | ​ | N/M ​ | ​ 110 | ​ | ​ 2 | ​ | 7.31% |
| Subordinated debt | ​ | 24,799 | ​ | ​ 349 |  | 5.71% | 24,716 | ​ | 349 |  | 5.68% |
| Federal Reserve Bank borrowings | ​ | — | ​ | ​ — |  | N/M% | 75,231 | ​ | ​ 893 | ​ | 4.77% |
| Federal Home Loan Bank advances | ​ | ​ 56,001 | ​ | ​ 559 | ​ | 4.05% | ​ — | ​ | ​ — | ​ | NM% |
| Total interest-bearing liabilities | ​ | $1,540,974 | ​ | $13,208 |  | 3.48% | $1,600,197 | ​ | $15,175 |  | 3.81% |
| Demand deposits | ​ | 424,795 | ​ | ​ ​ |  | ​ | 414,033 | ​ | ​ ​ |  | ​ |
| Other liabilities | ​ | 16,433 | ​ | ​ ​ |  | ​ | 16,362 | ​ | ​ ​ |  | ​ |
| Total liabilities | ​ | $1,982,202 | ​ | ​ ​ |  | ​ | $2,030,592 | ​ | ​ ​ |  | ​ |
| Shareholders’ equity | ​ | $251,559 | ​ | ​ ​ |  | ​ | $233,952 | ​ | ​ ​ |  | ​ |
| Total liabilities and shareholders’ equity | ​ | $2,233,761 | ​ | ​ ​ |  | ​ | $2,264,544 | ​ | ​ ​ |  | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Tax-equivalent net interest income and spread (Non-GAAP)(1) | ​ | ​ ​ | ​ | $14,133 | ​ | 1.51% | ​ ​ | ​ | $11,790 | ​ | 1.02% |
| Less: tax-equivalent adjustment | ​ | ​ ​ | ​ | ​ 36 | ​ | ​ ​ | ​ ​ | ​ | ​ 46 | ​ | ​ ​ |
| Net interest income and spread (GAAP) | ​ | ​ ​ | ​ | $14,097 | ​ | 1.51% | ​ ​ | ​ | $11,744 | ​ | 1.02% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest income/earning assets | ​ | ​ ​ | ​ | ​ ​ | ​ | 4.99% | ​ ​ | ​ | ​ ​ | ​ | 4.83% |
| Interest expense/earning assets | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.41% | ​ ​ | ​ | ​ ​ | ​ | 2.72% |
| Net interest margin | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.58% | ​ ​ | ​ | ​ ​ | ​ | 2.11% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Tax-equivalent interest income/earning assets (Non-GAAP)(1) | ​ | ​ ​ | ​ | ​ ​ | ​ | 4.99% | ​ ​ | ​ | ​ ​ | ​ | 4.83% |
| Interest expense/earning assets | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.41% | ​ ​ | ​ | ​ ​ | ​ | 2.72% |
| Tax-equivalent net interest margin (Non-GAAP)(3) | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.58% | ​ ​ | ​ | ​ ​ | ​ | 2.11% |

(1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2) The Company did not have any loans on nonaccrual as of March 31, 2025 or March 31, 2024.

(3) Tax-equivalent net interest margin adjusts for differences in tax treatment of interest income sources. The entire tax-equivalent adjustment is attributable to interest income on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the tax-equivalent components.

Tax-equivalent net interest margin as presented above is calculated by dividing tax-equivalent net interest income by total average earning assets. Net interest income, on a tax-equivalent basis, is a financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes. Tax-equivalent net interest income is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The following table, “Tax-Equivalent Net Interest Income,” reconciles net interest income to tax-equivalent net interest income, which is a non-GAAP measure.

### Tax-Equivalent Net Interest Income

*(Dollars in thousands)*

| ​ ​ ​ GAAP Financial Measurements: | ​ ​ ​ | ​ ​ Three months ended March 31, 2025 ​ | ​ | ​ ​ 2024 ​ |
| --- | --- | ---: | --- | ---: |
| Interest Income - Loans | ​ | $24,807 | ​ | $23,623 |
| Interest Income - Securities and Other Interest-Earning Assets | ​ | 2,498 | ​ | 3,296 |
| Interest Expense - Deposits | ​ | 12,300 | ​ | 13,931 |
| Interest Expense - Borrowings | ​ | 908 | ​ | 1,244 |
| **Total Net Interest Income (GAAP)** | ​ | $14,097 | ​ | $11,744 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Non-GAAP Financial Measurements:** | ​ |  | ​ |  |
| Add: Tax Benefit on Tax-Exempt Interest Income - Loans | ​ | 34 | ​ | 44 |
| Add: Tax Benefit on Tax-Exempt Interest Income - Securities | ​ | 2 | ​ | 2 |
| **Total Tax Benefit on Tax-Exempt Interest Income (1)** | ​ | $36 | ​ | $46 |
| **Tax-Equivalent Net Interest Income (Non-GAAP)** | ​ | $14,133 | ​ | $11,790 |

(1) Tax benefit was calculated using the federal statutory tax rate of 21%.

Net interest income increased $2.4 million or 20.0% on a fully tax-equivalent basis for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, driven primarily by the increase in loan yields, reduction in the average balance of maturing deposits and borrowings, and the increase in the average balance of loans.

On a fully tax-equivalent basis, the net interest margin was 2.58% for the three months ended March 31, 2025, compared to 2.11% for the three months ended March 31, 2024. The increase in net interest margin was primarily due to an increase in yields on the Company’s interest-earning assets and reduction in rates on deposits in addition to a reduction of volume of time deposits.

The loan portfolio’s yield for the three months ended March 31, 2025 was 5.39% compared to 5.18% for the three months ended March 31, 2024. The increase of 21 basis points was primarily attributable to an increase in yield on the Company’s commercial real estate portfolio.

The following table presents the effects of changing rates and volumes on tax-equivalent net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume.

### Rate/Volume Analysis

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ Interest-earning Assets: Securities: | ​ ​ ​ ​ ​ ​ | ​ ​ For the Three Months Ended March 31, 2025 and 2024 Increase (Decrease) Due to Volume ​ | ​ ​ | ​ ​ Rate ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Total Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Taxable | ​ | $(197) | ​ | $1 | ​ | $(196) |
| Tax-exempt(1) | ​ | — | ​ | — | ​ | — |
| Total securities | ​ | $(197) | ​ | $1 | ​ | $(196) |
| Loans, net of unearned income: | ​ |  | ​ |  | ​ |  |
| Taxable | ​ | 508 | ​ | 713 | ​ | 1,221 |
| Tax-exempt(1) | ​ | (56) | ​ | ​ 9 | ​ | (47) |
| Total loans, net of unearned income(2) | ​ | $452 | ​ | $722 | ​ | $1,174 |
| Interest-bearing deposits in other banks | ​ | $(222) | ​ | $(380) | ​ | $(602) |
| Total interest-earning assets | ​ | $33 | ​ | $343 | ​ | $376 |
| **Interest-bearing Liabilities:** | ​ |  | ​ |  | ​ |  |
| Interest-bearing deposits: | ​ |  | ​ |  | ​ |  |
| NOW accounts | ​ | $306 | ​ | $(378) | ​ | $(72) |
| Money market accounts | ​ | 120 | ​ | (415) | ​ | (295) |
| Savings accounts | ​ | (24) | ​ | (47) | ​ | (71) |
| Time deposits | ​ | (920) | ​ | (273) | ​ | (1,193) |
| Total interest-bearing deposits | ​ | $(518) | ​ | $(1,113) | ​ | $(1,631) |
| Federal funds purchased | ​ | (2) | ​ | — | ​ | (2) |
| Subordinated debt | ​ | ​ — | ​ | — | ​ | — |
| Federal Reserve Bank borrowings | ​ | ​ (893) | ​ | ​ — | ​ | ​ (893) |
| Federal Home Loan Bank advances | ​ | 559 | ​ | — | ​ | 559 |
| Total interest-bearing liabilities | ​ | $(854) | ​ | $(1,113) | ​ | $(1,967) |
| Change in tax-equivalent net interest income (Non-GAAP) | ​ | $887 | ​ | $1,456 | ​ | $2,343 |

(1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%.

(2) The Company did not have any loans on nonaccrual as of March 31, 2025 or March 31, 2024.

### Interest Income

Interest income increased by $0.4 million or 1.4% to $27.3 million on a fully tax-equivalent basis for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, driven by both an increase in rates and volume on interest earning assets. The increase in rates on interest-earning assets was primarily attributable to the Company’s loan portfolio.

Fully tax-equivalent interest income on loans increased by approximately $1.2 million as a result of volume and an increase in rates. Average loans increased $32.3 million between the three months ended March 31, 2025 and the three months ended March 31, 2024, which was primarily attributable to origination volume in the investor real estate and residential loan portfolios subsequent to March 31, 2024.

Fully tax-equivalent interest income on investment securities decreased by approximately $196 thousand primarily as a result of a decrease in volume. Average investment securities decreased approximately $39.3 million between the three months ended March 31, 2025 and March 31, 2024 primarily due to maturities and amortization.

Interest income on interest-bearing deposits in other banks decreased by $602 thousand primarily as a result of a decrease in rates, coupled with a decrease in volume. Average interest-bearing deposits in other banks decreased approximately $19.9 million between the three months ended March 31, 2025 and March 31, 2024.

### Interest Expense

Interest expense decreased by $2.0 million to $13.2 million for the three months ended March 31, 2025 compared to $15.2 million for the three months ended March 31, 2024, primarily due to a decrease in rates on deposits and decrease in volume on borrowings. The decrease in rates on deposits was primarily a result of the repricing of the Company’s deposits accounts in conjunction with the decrease in benchmark interest rates that took place starting in September of 2024.

### Provision for Credit Losses

The Company recorded a $170 thousand provision for credit losses for the first quarter of 2025 compared to a recovery of provision for credit losses of $776 thousand for the first quarter of 2024. The provision for credit losses for the current period that is directly attributable to the funded and unfunded loan portfolios was $111 thousand and $59 thousand, respectively.

The provision for credit losses during the three months ended March 31, 2025 was primarily a result of changes in the Company’s loss driver analysis and assumptions, changes in the composition of the loan portfolio, and considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

During the quarter ending March 31, 2025, our funded construction and land development loans grew by $8.3 million which resulted in a $277 thousand increase to the reserve. This increase was partially offset by a decrease in our funded commercial loans of $8.4 million which resulted in a decrease of $113 thousand to the reserve.

See “Asset Quality” section below for additional information on the credit quality of the loan portfolio.

### Non-interest Income

The following table summarizes non-interest income for the three months ended March 31, 2025 and March 31, 2024.

*(Dollars in thousands)*

| ​ ​ ​ Service charges on deposit accounts | ​ ​ ​ ​ | ​ ​ Three months ended March 31, 2025 ​ ​ | ​ ​ | ​ ​ 2024 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Overdrawn account fees | ​ | $18 | ​ | $21 |
| Account service fees | ​ | 64 | ​ | 67 |
| Other service charges and fees | ​ |  | ​ |  |
| Interchange income | ​ | 80 | ​ | 88 |
| Other charges and fees | ​ | 73 | ​ | 61 |
| Net gains on premises and equipment | ​ | (3) | ​ | — |
| Insurance commissions | ​ | 213 | ​ | 252 |
| Gain on sale of government guaranteed loans | ​ | ​ 36 | ​ | ​ 133 |
| Non-qualified deferred compensation plan asset gains, net | ​ | ​ 24 | ​ | ​ 124 |
| Other operating income | ​ | — | ​ | 72 |
| Total non-interest income | ​ | $505 | ​ | $818 |

Non-interest income was $505 thousand for the first quarter of 2025 compared to $818 thousand for the first quarter of 2024. The $313 thousand decrease in non-interest income was primarily attributable to a decrease of $100 thousand due to unfavorable mark-to-market adjustments on investments related to the Company’s nonqualified deferred compensation plan (“NQDC”), a $97 thousand decrease in gains recorded on the sale of the guaranteed portion of SBA 7(a) loans due to decreased sale activity, a $64 thousand decrease in swap fee income and a $39 thousand decrease in insurance commissions.

### Non-interest Expense

The following table summarizes non-interest expense for the three months ended March 31, 2025 and March 31, 2024.

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three months ended March 31, 2025 | ​ | ​ ​ 2024 |
| --- | --- | ---: | --- | ---: |
| Salaries and employee benefits expense | ​ | $5,099 | ​ | $4,810 |
| Occupancy expense of premises | ​ | 407 | ​ | 451 |
| Furniture and equipment expenses | ​ | 316 | ​ | 297 |
| Advertising expense | ​ | 162 | ​ | 97 |
| Data processing | ​ | 589 | ​ | 527 |
| FDIC insurance | ​ | 247 | ​ | 260 |
| Professional fees | ​ | 221 | ​ | 286 |
| State franchise tax | ​ | 597 | ​ | 570 |
| Bank insurance | ​ | 59 | ​ | 60 |
| Vendor services | ​ | 164 | ​ | 143 |
| Supplies, printing, and postage | ​ | 23 | ​ | 21 |
| Director costs | ​ | 169 | ​ | 211 |
| Other operating expenses | ​ | 195 | ​ | 191 |
| Total non-interest expense | ​ | $8,248 | ​ | $7,924 |

Non-interest expense increased $324 thousand or 4.1% during the first quarter of 2025 compared to the first quarter of 2024 primarily as a result of an increase in salary and employee benefit expense. The $289 thousand or 6.0% increase in salary and employee benefit expense stemmed from the hiring of additional personnel. The Company hired three business development officers during the three months ended March 31, 2025. The Company’s occupancy expense decreased $44 thousand or 9.8% when comparing the three months ended March 31, 2025 to the same period in 2024. The decrease resulted from relocating a branch to a lower cost and more favorable location. Furniture and equipment expenses increased $19 thousand or 6.4% for the three months ended March 31, 2025 versus the comparable quarter a year ago. The increase resulted from investment in and maintenance of technology. Other expenses for the three months ended March 31, 2025 increased $60 thousand or 2.5% when compared to the three months ended March 31, 2024. Increases primarily in data processing and marketing were partially offset by a reduction in professional fees.

### Income Taxes

Income tax expense increased $0.2 million to $1.4 million for the three months ended March 31, 2025 compared to $1.2 million for the three months ended March 31, 2024.

### Discussion and Analysis of Financial Condition

### Assets, Liabilities, and Shareholders’ Equity

The Company’s total assets increased $37.5 million or 1.7% to $2.27 billion at March 31, 2025 compared to $2.23 billion at December 31, 2024. The increase in total assets is primarily attributable to increases in interest-bearing deposits in banks of $42.0 million, partially offset by a decrease in investments of $5.8 million.

The Company’s total liabilities increased $31.1 million or 1.6% to $2.02 billion at March 31, 2025 compared to $1.99 billion at December 31, 2024. The increase in total liabilities was primarily attributable to a net increase in deposits of $29.8 million.

Shareholders’ equity increased $6.3 million or 2.6% to $253.0 million at March 31, 2025 compared to $246.6 million at December 31, 2024. The increase in shareholders’ equity was primarily attributable to an increase in net income and a decrease in accumulated other comprehensive loss due to lower interest rates during the three months ended March 31, 2025. Book value per share was $17.72 as of March 31, 2025 compared to $17.28 as of December 31, 2024.

### Investment Securities

The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $215.6 million at March 31, 2025 and $222.3 million at December 31, 2024. The investment portfolio provides liquidity, interest income, credit risk diversification, means to manage rate sensitivity and collateral for secured public funds and secured credit lines. Investment securities are classified as available-for-sale or held-to-maturity based on management’s investment strategy and management’s assessment of the intent and ability to hold the securities until maturity. Investment securities that we may sell prior to maturity in response to changes in management’s investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available-for-sale. The Company also had restricted stock and equity securities within its investment securities portfolio with total carrying values of $7.6 million and $2.9 million, respectively, as of March 31, 2025 and $7.6 million and $2.8 million, respectively, as of December 31, 2024.

The Company purchased $3.6 million of investment securities during the three months ended March 31, 2025, which were comprised of $2.6 million of agency mortgage-backed securities and $1.0 million of agency collateralized mortgage obligation securities. The Company did not sell any fixed income investment securities during the three months ended March 31, 2025. The Company had $12.1 million in maturities and principal repayments on securities during the three months ended March 31, 2025, which was comprised of $4.8 million of U.S. Treasuries, $4.3 million of U.S. agency mortgage-backed securities, $2.0 million of U.S. government and federal agencies securities and $1.0 million of U.S. agency collateralized mortgage obligation securities.

The following table summarizes the amortized cost and fair value of the Company’s fixed income investment portfolio as of March 31, 2025 and December 31, 2024, respectively.

*(Dollars in thousands)*

| ​ ​ ​ Held-to-maturity | ​ ​ ​ | ​ ​ March 31, 2025 Amortized Cost ​ | ​ ​ | ​ ​ Fair Value ​ | ​ ​ | ​ ​ December 31, 2024 Amortized Cost ​ | ​ ​ | ​ ​ Fair Value ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| U.S. Treasuries | ​ | $6,002 | ​ | $5,522 | ​ | $6,001 | ​ | $5,418 |
| U.S. government and federal agencies | ​ | 35,341 | ​ | 31,338 | ​ | 35,349 | ​ | 30,606 |
| U.S. agency collateralized mortgage obligations | ​ | 17,430 | ​ | 13,836 | ​ | 17,805 | ​ | 13,857 |
| Taxable municipal | ​ | 6,037 | ​ | 5,090 | ​ | 6,041 | ​ | 4,952 |
| U.S. agency mortgage-backed | ​ | 26,362 | ​ | 21,670 | ​ | 26,813 | ​ | 21,437 |
| Total Held-to-maturity Securities | ​ | $91,172 | ​ | $77,456 | ​ | $92,009 | ​ | $76,270 |
| **Available-for-sale** | ​ |  | ​ |  | ​ |  | ​ |  |
| U.S. Treasuries | ​ | $23,195 | ​ | $22,638 | ​ | $27,920 | ​ | $27,137 |
| U.S. government and federal agencies | ​ | 8,976 | ​ | 8,689 | ​ | 10,966 | ​ | 10,581 |
| Corporate bonds | ​ | 3,000 | ​ | 2,788 | ​ | 3,000 | ​ | 2,739 |
| U.S. agency collateralized mortgage obligations | ​ | 36,370 | ​ | 30,421 | ​ | 36,032 | ​ | 29,611 |
| Tax-exempt municipal | ​ | 1,379 | ​ | 1,157 | ​ | 1,379 | ​ | 1,171 |
| Taxable municipal | ​ | 270 | ​ | 265 | ​ | 270 | ​ | 263 |
| U.S. agency mortgage-backed | ​ | 63,086 | ​ | 58,511 | ​ | 64,274 | ​ | 58,755 |
| Total Available-for-sale Securities | ​ | $136,276 | ​ | $124,469 | ​ | $143,841 | ​ | $130,257 |

In the prevailing rate environments as of March 31, 2025 and December 31, 2024, the Company’s investment portfolio had an estimated weighted average remaining life of approximately 4.2 years and 4.2 years, respectively. The available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years and 3.1 years as of March 31, 2025 and December 31, 2024, respectively. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.8 years and 6.0 years as of March 31, 2025 and December 31, 2024, respectively.

The following table summarizes the maturity composition of our fixed income investment securities as of March 31, 2025, including the weighted average yield of each maturity band. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security.

*(Dollars in thousands)*

| ​ ​ ​ Held-to-maturity | ​ ​ | ​ ​ March 31, 2025 Amortized Cost ​ | ​ ​ | ​ ​ Fair Value ​ | ​ ​ ​ ​ Weighted-Average Yield ​ |
| --- | --- | ---: | --- | ---: | ---: |
| Due in one year or less | ​ | $— | ​ | $— | — ​ |
| Due after one year through five years | ​ | 27,434 | ​ | 25,153 | 1.17% |
| Due after five years through ten years | ​ | 22,605 | ​ | 19,253 | 1.67% |
| Due after ten years | ​ | 41,133 | ​ | 33,050 | 1.44% |
| Total Held-to-maturity Securities | ​ | $91,172 | ​ | $77,456 | 1.42% |
| **Available-for-sale** | ​ |  | ​ |  | ​ |
| Due in one year or less | ​ | $22,410 | ​ | $22,112 | 1.94% |
| Due after one year through five years | ​ | 23,528 | ​ | 22,774 | 2.25% |
| Due after five years through ten years | ​ | 33,374 | ​ | 31,830 | 2.66% |
| Due after ten years | ​ | 56,964 | ​ | 47,753 | 1.72% |
| Total Available-for-sale Securities | ​ | $136,276 | ​ | $124,469 | 2.08% |

### Loan Portfolio

Gross loans, net of unearned income, decreased $1.7 million to $1.87 billion as of March 31, 2025 compared to $1.87 billion as of December 31, 2024. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns.

The following table presents the Company’s composition of loans held for investment, net of deferred fees and costs, in dollar amounts and as a percentage of total gross loans as of March 31, 2025 and December 31, 2024.

*(Dollars in thousands)*

| ​ ​ Real Estate Loans: | ​ ​ | ​ ​ March 31, 2025 Amount ​ | ​ | ​ ​ Percent | ​ ​ December 31, 2024 Amount ​ | ​ | ​ ​ Percent ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: |
| Commercial | ​ | $1,172,645 |  | 62.84% | $1,181,090 |  | 63.24% |
| Construction and land development | ​ | 173,270 |  | 9.29% | 164,988 |  | 8.83% |
| Residential | ​ | 472,747 |  | 25.33% | 472,932 |  | 25.32% |
| Commercial - Non Real Estate: | ​ |  |  | ​ ​ |  |  | ​ ​ |
| Commercial loans | ​ | 46,603 |  | 2.50% | 47,736 |  | 2.56% |
| Consumer - Non-Real Estate: | ​ |  |  | ​ ​ |  |  | ​ ​ |
| Consumer loans | ​ | 809 |  | 0.04% | 906 |  | 0.05% |
| Total Gross Loans | ​ | $1,866,074 |  | 100.00% | $1,867,652 |  | 100.00% |
| Allowance for loan credit losses | ​ | (18,826) | ​ | ​ ​ | (18,715) | ​ | ​ ​ |
| Net deferred loan costs | ​ | 4,398 | ​ | ​ ​ | 4,521 | ​ | ​ ​ |
| Total net loans | ​ | $1,851,646 | ​ | ​ ​ | $1,853,458 | ​ | ​ ​ |

The following table summarizes the contractual maturities of the loans as of March 31, 2025 by loan type. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The table also summarizes the fixed and floating rate composition of loans held for investment for contractual maturities greater than one year.

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ Real Estate Loans: | ​ ​ ​ ​ ​ | ​ ​ March 31, 2025 ​ ​ ​ ​ Within 1 Year ​ | ​ ​ ​ ​ | ​ ​ After 1 Year Within 5 Years ​ | ​ ​ ​ ​ | ​ ​ After 5 years Within 15 Years ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Maturing After 15 Years ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ Total ​ |
| --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | ---: |
| Commercial | ​ | $51,627 | ​ | $444,943 | ​ | $665,212 | ​ | $10,863 | ​ | $1,172,645 |
| Construction and land development | ​ | 73,641 | ​ | 78,488 | ​ | ​ 21,141 | ​ | ​ — | ​ | 173,270 |
| Residential | ​ | ​ 13,208 | ​ | ​ 32,540 | ​ | ​ 35,676 | ​ | ​ 391,323 | ​ | ​ 472,747 |
| Commercial - Non-Real Estate: | ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ |
| Commercial loans | ​ | 6,630 | ​ | 26,496 | ​ | ​ 11,979 | ​ | ​ 1,498 | ​ | 46,603 |
| Consumer - Non-Real Estate: | ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ |
| Consumer loans | ​ | 73 | ​ | 722 | ​ | ​ — | ​ | ​ 14 | ​ | 809 |
| Total Gross Loans | ​ | $145,179 | ​ | $583,189 | ​ | $734,008 | ​ | $403,698 | ​ | $1,866,074 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| For Maturities Over One Year: | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Floating rate loans | ​ | ​ ​ | ​ | $243,297 | ​ | $294,072 | ​ | $401,910 | ​ | $939,279 |
| Fixed rate loans | ​ | ​ ​ | ​ | 339,892 | ​ | ​ 439,936 | ​ | ​ 1,788 | ​ | 781,616 |
| ​ | ​ | ​ ​ | ​ | $583,189 | ​ | $734,008 | ​ | $403,698 | ​ | $1,720,895 |

### Asset Quality

The Company maintains policies and procedures to promote sound underwriting and mitigate credit risk. The Chief Credit Officer is responsible for establishing credit risk policies and procedures, including underwriting and hold guidelines and credit approval authority, and monitoring credit exposure and performance of the Company’s lending-related transactions.

The Company’s asset quality remained strong through the first quarter of 2025. The Company did not have any nonperforming assets, which includes nonperforming loans, OREO, or loans classified as substandard as of March 31, 2025. The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025. As a result, the Company did not have any nonperforming loans, which consists of loans that are 90 days or more past due or loans placed on nonaccrual as of March 31, 2025.

The Company did not have any nonaccrual loans as of March 31, 2025 or December 31, 2024 nor were there any loans placed on nonaccrual during those periods. A loan is placed on nonaccrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection. As a result, the Company did not have any interest income that would have been recognized on nonaccrual loans for the three months ended March 31, 2025 or the three months ended March 31, 2024.

The following table summarizes the Company’s asset quality as of March 31, 2025 and December 31, 2024.

*(Dollars in thousands)*

| ​ | ​ | ​ ​ ​ March 31, 2025 | ​ ​ ​ December 31, 2024 |
| --- | --- | ---: | ---: |
| Nonaccrual loans | ​ | $— ​ | $— ​ |
| Loans past due 90 days and accruing interest | ​ | — ​ | 9,978 ​ |
| Other real estate owned and repossessed assets | ​ | — ​ | — ​ |
| Total nonperforming assets | ​ | $— ​ | $9,978 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| Allowance for loan credit losses to nonperforming assets | ​ | NM ​ | NM ​ |
| Nonaccrual loans to gross loans | ​ | 0.00% | 0.00% |
| Nonperforming assets to period end loans and OREO | ​ | 0.00% | 0.53% |

NM – Not meaningful

### Allowance for Loan Credit Losses

Refer to the discussion in Note 1 of the audited financial statements and notes for the year ended December 31, 2024 contained in the Company’s 2024 Annual Report on Form 10-K for management’s approach to estimating the allowance for loan credit losses.

The Company recorded no net charge-offs or recoveries during the three months ended March 31, 2025 compared to no net charge-offs and a $1 thousand recovery during the three months ended March 31, 2024. At March 31, 2025, the allowance for loan credit losses was $18.8 million or 1.01% of outstanding loans, net of unearned income, compared to $18.7 million or 1.00% of outstanding loans, net of unearned income, at December 31, 2024. The increase in the allowance as a percentage of outstanding loans, net of unearned income, was primarily a result of changes in the composition of the loan portfolio and considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

The following table summarizes the Company’s loan loss experience by loan portfolio for the three months ended March 31, 2025 and March 31, 2024.

*(Dollars in thousands)*

| ​ ​ ​ ​ Real estate loans: | ​ ​ ​ ​ | ​ ​ March 31, 2025 Net (charge-offs) recoveries ​ | ​ ​ ​ | ​ Net (charge-off) recovery rate (1) ​ | ​ ​ ​ ​ ​ | ​ ​ March 31, 2024 Net (charge-offs) recoveries ​ | ​ ​ ​ | ​ ​ Net (charge-off) recovery rate (1) ​ |
| --- | --- | ---: | --- | --- | ---: | ---: | --- | ---: |
| Commercial | ​ | $— |  | ​ | — ​ | $— |  | — ​ |
| Construction and land development | ​ | — |  | ​ | — ​ | — |  | — ​ |
| Residential | ​ | — |  | ​ | — ​ | — |  | — ​ |
| Commercial loans | ​ | — |  | ​ | — ​ | 1 |  | —% |
| Consumer loans | ​ | — |  | ​ | — ​ | — |  | — ​ |
| Total | ​ | $— | ​ | ​ | ​ ​ | $1 | ​ | ​ ​ |
| ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| Average loans outstanding during the period | ​ | $1,868,303 | ​ | ​ | ​ ​ | $1,835,966 | ​ | ​ ​ |
| Allowance coverage ratio (2) | ​ | ​ | ​ |  | 1.01% | ​ | ​ | 1.02% |
| Total net (charge-off) recovery rate | ​ | ​ | ​ |  | 0.00% | ​ | ​ | 0.00% |
| Allowance to nonaccrual loans ratio(3) | ​ | ​ | ​ |  | NM ​ | ​ | ​ | NM ​ |

NM – Not meaningful

(1) The net (charge-off) recovery rate is calculated by dividing annualized total net (charge-offs) recoveries during the period by average gross loans outstanding during the period.

(2) The allowance coverage ratio is calculated by dividing the allowance for loan credit losses at the end of the period by gross loans, net of unearned income at the end of the period.

(3) The allowance to nonaccrual loans ratio is calculated by dividing the allowance for loan credit losses at the end of the period by nonaccrual loans at the end of the period.

The following tables summarize the allowance for loan credit losses by portfolio with a comparison of the percentage composition in relation to total allowance for loan credit losses and total loans as of March 31, 2025 and December 31, 2024.

*(Dollars in thousands)*

| ​ ​ ​ ​ Real Estate Loans: | ​ ​ ​ ​ ​ | ​ ​ March 31, 2025 Allowance for Loan Credit Losses ​ | ​ ​ ​ ​ Percent of Allowance ​ ​ in Each Category to ​ ​ Total Allocated Allowance ​ | ​ ​ Percent of Loans in Each Category to Total Loans ​ |
| --- | --- | ---: | ---: | ---: |
| Commercial | ​ | $11,619 | 61.72% | 62.84% |
| Construction and land development | ​ | 2,038 | 10.83% | 9.29% |
| Residential | ​ | 4,570 | 24.27% | 25.33% |
| Commercial - Non-Real Estate: | ​ |  |  | ​ |
| Commercial loans | ​ | 595 | 3.16% | 2.50% |
| Consumer - Non-Real Estate: | ​ |  |  | ​ |
| Consumer loans | ​ | 4 | 0.02% | 0.04% |
| Total | ​ | $18,826 | 100.00% | 100.00% |

*(Dollars in thousands)*

| ​ ​ ​ ​ Real Estate Loans: | ​ ​ ​ ​ | ​ ​ December 31, 2024 Allowance for Loan Credit Losses ​ ​ | ​ ​ ​ Percent of Allowance ​ in Each Category to ​ ​ Total Allocated Allowance ​ | ​ ​ Percent of Loans in Each Category to Total Loans ​ |
| --- | --- | ---: | ---: | ---: |
| Commercial | ​ | $11,732 | 62.69% | 63.24% |
| Construction and land development | ​ | 1,761 | 9.41% | 8.83% |
| Residential | ​ | 4,594 | 24.54% | 25.32% |
| Commercial - Non-Real Estate: | ​ |  |  | ​ |
| Commercial loans | ​ | 548 | 2.93% | 2.56% |
| Consumer - Non-Real Estate: | ​ |  |  | ​ |
| Consumer loans | ​ | 80 | 0.43% | 0.05% |
| Total | ​ | $18,715 | 100.00% | 100.00% |

Management believes that the allowance for loan credit losses is adequate to absorb lifetime expected credit losses inherent in the portfolio as of March 31, 2025. There can be no assurance, however, that adjustments to the provision for (recovery of) credit losses will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments; adverse developments in the economy, on a national basis or in the Company’s market area; or changes in the circumstances of particular borrowers are criteria that could change and make adjustments to the provision for (recovery of) credit losses necessary.

### Deposits

Total deposits increased $29.8 million or 1.6% to $1.92 billion as of March 31, 2025 compared to $1.89 billion as of December 31, 2024.

Non-interest bearing demand deposits increased $4.5 million or 1.0% to $437.8 million as of March 31, 2025 compared to $433.3 million at December 31, 2024. Non-interest bearing demand deposits represented 22.8% and 22.9% of total deposits at March 31, 2025 and December 31, 2024, respectively.

Interest-bearing deposits, which include NOW accounts, regular savings accounts, money market accounts, and time deposits, increased $25.2 million or 1.7% to $1.48 billion as of March 31, 2025 compared to $1.46 billion as of December 31, 2024. Interest-bearing deposits represented 77.2% and 77.1% of total deposits at March 31, 2025 and December 31, 2024, respectively.

The Company focuses on funding asset growth with deposit accounts, with an emphasis on core deposit growth, as its primary source of deposits. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts, time deposits, reciprocal IntraFi Demand® deposits, IntraFi Money Market® deposits and IntraFi CD® deposits. Core deposits totaled $1.63 billion or 84.8% of total deposits and $1.62 billion or 85.4% of total deposits at March 31, 2025 and December 31, 2024, respectively.

The following table sets forth the average balances of deposits and the average interest rates paid for the three months ended March 31, 2025 and March 31, 2024.

*(Dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ March 31, 2025 Average Amount | ​ ​ | ​ ​ ​ ​ Rate ​ | ​ ​ March 31, 2024 Average Amount | ​ ​ | ​ ​ ​ Rate |
| --- | --- | ---: | --- | ---: | --- | --- | ---: |
| Non-interest bearing | ​ | $424,795 | ​ | ​ | $414,033 | ​ | ​ ​ |
| Interest bearing: | ​ |  | ​ |  | ​ | ​ | ​ |
| NOW accounts | ​ | 357,206 | ​ | 2.41% | ​ 313,478 | ​ | 2.82% |
| Money market accounts | ​ | 339,248 | ​ | 2.73% | ​ 324,753 | ​ | 3.19% |
| Savings accounts | ​ | 43,062 | ​ | 0.98% | ​ 53,064 | ​ | 1.33% |
| Time deposits | ​ | 720,658 | ​ | 4.38% | ​ 808,845 | ​ | 4.47% |
| Total interest-bearing | ​ | 1,460,174 | ​ | 3.42% | ​ 1,500,140 |  | 3.73% |
| Total | ​ | $1,884,969 | ​ | 2.65% | $1,914,173 |  | 2.93% |

The following table sets forth the maturity ranges of certificates of deposit with balances of $250,000 or more as of March 31, 2025.

*(Dollars in thousands)*

| ​ ​ | ​ ​ | ​ ​ March 31, 2025 Total | ​ | ​ ​ Uninsured |
| --- | --- | ---: | --- | ---: |
| Three months or less | ​ | $117,141 | ​ | $100,391 |
| Over three through 6 months | ​ | 34,079 | ​ | 25,329 |
| Over 6 through 12 months | ​ | 131,629 | ​ | 102,378 |
| Over 12 months | ​ | 39,781 | ​ | 32,031 |
| Total | ​ | $322,630 | ​ | $260,129 |

The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $819.1 million at March 31, 2025 and $816.7 million at December 31, 2024. Included in these amounts were $167.8 million and $157.4 million of public fund deposits that are collateralized as of March 31, 2025 and December 31, 2024, respectively. Deposits that were not insured or not collateralized represented 37% and 35% of total deposits, respectively, as of March 31, 2025 and December 31, 2024.

### Capital Resources

The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Exchange Act. As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory capital requirements.

The Bank is subject to capital adequacy standards adopted by the Federal Reserve, including the capital rules that implemented the Basel III regulatory capital reforms developed by the Basel Committee on Banking Supervision.

Note 11 to the Consolidated Financial Statements, included in Item 1 of this Form 10-Q, contains additional discussion and analysis regarding the Company and Bank’s regulatory capital requirements.

Shareholders’ equity increased $6.3 million or 2.6% to $253.0 million at March 31, 2025 compared to $246.6 million at December 31, 2024. The increase in shareholders’ equity was primarily attributable to an increase in net income and a decrease in accumulated other comprehensive loss due to lower interest rates during the three months ended March 31, 2025. Book value per share was $17.72 as of March 31, 2025 compared to $17.28 as of December 31, 2024.

In July of 2024, the Company’s Board of Directors authorized the extension of the Company’s stock repurchase program that was originally adopted in August of 2021. Under the stock repurchase program, the Company may repurchase up to 700,000 shares of its outstanding common stock, or 5.0% of outstanding shares as of September 30, 2024. The stock repurchase program will expire on August 31, 2025, or earlier if all the authorized shares have been repurchased. The Company repurchased 2,639 shares of its outstanding common stock under the program during the three months ended March 31, 2025.

### Liquidity

Liquidity reflects a financial institution’s ability to fund assets and meet current and future financial obligations. Liquidity is essential in all banks to meet customer withdrawals, compensate for balance sheet fluctuations, and provide funds for growth. Monitoring and managing both liquidity measurements is critical in developing prudent and effective balance sheet management. Management conducts liquidity stress testing on a quarterly basis to prepare for unexpected adverse scenarios and contemporaneously develops mitigating strategies to reduce losses in the event of an economic downturn.

The Company’s principal source of liquidity and funding is its deposit base. The level of deposits necessary to support the Company’s lending and investment activities is determined through monitoring loan demand. In addition to the liquidity provided by balance sheet cash flows, the Company supplements its liquidity with additional sources such as secured borrowing credit lines with the FHLB and the Reserve Bank. Specifically, the Company has pledged a portion of its commercial real estate and residential real estate loan portfolios to the FHLB and the Reserve Bank. Based on collateral pledged as of March 31, 2025, the total FHLB available borrowing capacity was $401.0 million. Additional borrowing capacity with the Reserve Bank was approximately $107.1 million as of March 31, 2025.

On September 3, 2024, the Company took out three fixed interest rate advances with terms of 18, 24, and 36 months. The interest rates on the advances range from 3.92% to 4.15%. At March 31, 2025, the Company had three outstanding FHLB advances totaling $56 million.

Total liquidity, defined as cash and cash equivalents, unencumbered securities at fair value, and available secured borrowing capacity, was $786.9 million at March 31, 2025 compared to $727.3 million at December 31, 2024.

In addition to available secured borrowing capacity, the Company had available federal funds lines with correspondent banks of $110.0 million at March 31, 2025.

### Off-Balance Sheet Arrangements

The Company enters into certain off-balance sheet arrangements in the normal course of business to meet the financing needs of its customers. These off-balance sheet arrangements include commitments to extend credit, standby letters of credit and financial guarantees which would impact the Company’s liquidity and capital resources to the extent customers accept and or use these commitments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. With the exception of these off-balance sheet arrangements, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, that is material to investors. For further information, see Note 7 to the Consolidated Financial Statements, included in Item 1 of this Form 10-Q, for further discussion of the nature, business purpose and elements of risk involved with these off-balance sheet arrangements.

## Controls and procedures

As filed, 1,065 characters.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on their evaluation of the Company’s disclosure controls and procedures, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations are designed and operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the first fiscal quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 207 characters.

There have been no material changes in the risk factors that were disclosed in Item 1A, under the caption “Risk Factors” in our 2024 Annual Report on Form 10-K, which we filed with the SEC on March 28, 2025.

Filed May 13, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-007505. Last ingested by Listed: Nov 6, 2026, 12:25 ET. No prices; not investment advice.