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What changed in FVCBankcorp, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FVCBankcorp, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+351 added−323 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-20)

Top changes in FVCBankcorp, Inc.'s 2025 10-K

351 paragraphs added · 323 removed · 273 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+19 added−5 removed155 unchanged
Biggest changeOn October 24, 2023, the federal bank regulatory agencies jointly issued a final rule intended to strengthen and modernize the CRA regulatory framework.
Biggest changeOn October 24, 2023, the federal bank regulatory agencies issued a final rule to modernize their respective CRA regulations. The revised rules would have substantially altered the methodology for assessing compliance with the CRA, and likely would have made it more challenging and/or costly for the Bank to maintain its “satisfactory” rating.
We generally require t he owners, managing members, general partners and principals of the borrowing entity or that control more than 20% of the borrower to guaranty the loan, unless a combination of low leverage, significant income and debt service coverage ratios, and substantial experience in operating the business, strong management and internal controls and/or other factors are demonstrated.
We generally require t he owners, managing members, general partners and principals of the borrowing entity that control more than 20% of the borrower to guaranty the loan, unless a combination of low leverage, significant income and debt service coverage ratios, and substantial experience in operating the business, strong management and internal controls and/or other factors are demonstrated.
Under the Federal Right to Privacy Act of 1978, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records, financial institutions are required to disclose their policies for collecting and protecting confidential information.
Financial Privacy . Under the Federal Right to Privacy Act of 1978, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records, financial institutions are required to disclose their policies for collecting and protecting confidential information.
The rule requires financial institutions to notify their primary federal regulator as soon as possible and no later than 36 hours after the institution determines that a cybersecurity incident has occurred that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the institution’s: (i) ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business, (ii) business line(s), including associated operations, services, functions, and support, that upon failure would result in a material loss of revenue, profit, or franchise value, or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.
The rule requires financial institutions to notify their primary federal regulator as soon as possible and no later than 36 hours after the institution determines that a cybersecurity incident has occurred that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the institution’s: (i) ability to carry out 18 Table of Contents banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base in the ordinary course of business, (ii) business line(s), including associated operations, services, functions, and support, that upon failure would result in a material loss of revenue, profit, or franchise value, or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.
In particular, this infrastructure reviews financial performance, trends, and significant variances to budget; reviews and recommends for board approval risk limits and tolerances; reviews ongoing monitoring and reporting regarding our performance with respect to these areas of risk, including compliance with board-approved risk limits and stress-testing; ensures annual back-testing and independent validation of models at a frequency commensurate with risk level; reviews all hedging strategies and recommends changes as appropriate; reviews and recommends our contingency funding plan; establishes wholesale borrowing limits to be submitted to the board of directors; and acts as a second line of defense in reviewing information and reports submitted to the committee for the purpose of identifying, investigating, and assuring remediation, to its satisfaction, of errors or irregularities, if any.
In particular, this infrastructure reviews financial performance, trends, and significant variances to budget; reviews and recommends for board approval risk limits and tolerances; reviews ongoing monitoring and reporting regarding our performance with respect to these areas of risk, including compliance with board-approved risk limits and stress-testing; ensures annual back-testing and independent validation of models at a frequency commensurate with risk level; reviews all 10 Table of Contents hedging strategies and recommends changes as appropriate; reviews and recommends our contingency funding plan; establishes wholesale borrowing limits to be submitted to the board of directors; and acts as a second line of defense in reviewing information and reports submitted to the committee for the purpose of identifying, investigating, and assuring remediation, to its satisfaction, of errors or irregularities, if any.
The Interagency Guidance on Sound Incentive Compensation Policies, which covers all employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with 17 Table of Contents effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors.
The Interagency Guidance on Sound Incentive Compensation Policies, which covers all employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors.
Management believes the allowance for credit losses is adequate to cover expected losses in our loan portfolio as of December 31, 2024. Comprehensive risk management practices and appropriate capital levels are essential elements of a sound commercial real estate lending program. A concentration in commercial real estate adds a dimension of risk that compounds the risk inherent in individual loans.
Management believes the allowance for credit losses is adequate to cover expected losses in our loan portfolio as of December 31, 2025. Comprehensive risk management practices and appropriate capital levels are essential elements of a sound commercial real estate lending program. A concentration in commercial real estate adds a dimension of risk that compounds the risk inherent in individual loans.
Institutions with at least $1.5 billion but less than $3 billion in total assets, including the Company, are required to comply with the final rule by April 1, 2029. On the same day the final rule was released, certain industry participants filed a complaint against the CFPB challenging the final rule.
Institutions with at least $1.5 billion but less than $3 billion in total assets, including the Company, were required to comply with the final rule by April 1, 2029. On the same day the final rule was released, certain industry participants filed a complaint against the CFPB challenging the final rule.
The guidance provides that institutions that have (i) total 8 Table of Contents reported loans for construction, land development, and other land which represent 100% or more of an institution's total risk-based capital; or (ii) total reported commercial real estate loans, excluding loans secured by owner-occupied commercial real estate, representing 300% or more of the institution's total risk-based capital and the institution's commercial real estate loan portfolio has increased 50% or more during the prior 36 months, are identified as having potential commercial real estate concentration risk.
The guidance provides that institutions that have (i) total reported loans for construction, land development, and other land which represent 100% or more of an institution's total risk-based capital; or (ii) total reported commercial real estate loans, excluding loans secured by owner-occupied commercial real estate, representing 300% or more of the institution's total risk-based capital and the institution's commercial real estate loan portfolio has increased 50% or more during the prior 36 months, are identified as having potential commercial real estate concentration risk.
The Act also generally permits the acquisition by a bank holding company of control, or substantially all of the assets of, any bank located in a state other than the home state of the bank holding company, except where the bank has not been in existence for the minimum period of time required by state law; but if the bank is at least five years old, the Federal Reserve may approve the acquisition.
The Act also generally permits the acquisition by a bank holding company of control, or substantially all of the assets of, any bank 11 Table of Contents located in a state other than the home state of the bank holding company, except where the bank has not been in existence for the minimum period of time required by state law; but if the bank is at least five years old, the Federal Reserve may approve the acquisition.
A government contractor borrower must have an acceptable level of eligible accounts receivable, provide appropriate security instruments 7 Table of Contents perfecting our rights in the accounts receivable or other collateral, and are subject to periodic review and monitoring of their receivables, contract backlog and contract compliance. The contractor is typically required to have its primary deposit relationship with us.
A government contractor borrower must have an acceptable level of eligible accounts receivable, provide appropriate security instruments perfecting our rights in the accounts receivable or other collateral, and are subject to periodic review and monitoring of their receivables, contract backlog, and contract compliance. The contractor is typically required to have its primary deposit relationship with us.
Government contract loans are typically made with variable or adjustable rates. Lines of credit typically have a one year term. As with other commercial loans, guarantees are typically required. Consumer Residential. We actively originate loans for residential 1-4 family trust investment purposes and HELOCs in the communities we serve in the Washington and Baltimore MSAs.
Government contract loans are typically made with variable or adjustable rates. Lines of credit typically have a one year term. As with other commercial loans, guarantees are typically required. 7 Table of Contents Consumer Residential. We actively originate loans for residential 1-4 family trust investment purposes and HELOCs in the communities we serve in the Washington and Baltimore MSAs.
The significant presence of national and international businesses make the Washington MSA one of the most economically vibrant and diverse markets in the country. The Washington MSA is currently home to 20 Fortune 500 companies, including eight based in Fairfax County. 5 Table of Contents The Baltimore MSA also has strong economic factors which enhance our business profile.
The significant presence of national and international businesses make the Washington MSA one of the most economically vibrant and diverse markets in the country. The Washington MSA is currently home to 20 Fortune 500 companies, including eight based in Fairfax County. The Baltimore MSA also has strong economic factors which enhance our business profile.
In respect of institutions with high concentrations of loans in areas deemed to be higher 14 Table of Contents risk, or during periods of significant economic stress, regulators may require an institution to maintain a higher level of capital, and/or to maintain more stringent risk management measures, than those required by these regulations. Prompt Corrective Action .
In respect of institutions with high concentrations of loans in areas deemed to be higher risk, or during periods of significant economic stress, regulators may require an institution to maintain a higher level of capital, and/or to maintain more stringent risk management measures, than those required by these regulations. Prompt Corrective Action .
Thus, the earnings and growth of the Bank are subject to the influence of economic conditions generally, both domestic and foreign, 12 Table of Contents and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve, which regulates the supply of money through various means including open market dealings in United States government securities.
Thus, the earnings and growth of the Bank are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve, which regulates the supply of money through various means including open market dealings in United States government securities.
We have determined that we have a concentration in commercial real estate lending, and while we believe we have implemented policies and procedures with respect to our commercial real estate lending consistent with the regulatory guidance, bank regulators could require us to implement additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs to us.
We have determined that we have a concentration in 17 Table of Contents commercial real estate lending, and while we believe we have implemented policies and procedures with respect to our commercial real estate lending consistent with the regulatory guidance, bank regulators could require us to implement additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs to us.
Our strategic goal is to increase our market share through selective new branch additions, opportunistic acquisitions, and acquisitions of customers from larger competitors. We believe these larger competitors generally cannot provide the same level of attention and customization of services to small businesses that we seek to provide.
Our strategic goal is to increase our market share through selective new branch additions, opportunistic 9 Table of Contents acquisitions, and acquisitions of customers from larger competitors. We believe these larger competitors generally cannot provide the same level of attention and customization of services to small businesses that we seek to provide.
Investment Portfolio Our investment securities portfolio is primarily maintained as an on-balance sheet contingent source of liquidity to fund loans and meet the demands of depositors, and provides additional interest income. We currently classify substantially 10 Table of Contents all of our investment securities as available-for-sale.
Investment Portfolio Our investment securities portfolio is primarily maintained as an on-balance sheet contingent source of liquidity to fund loans and meet the demands of depositors, and provides additional interest income. We currently classify substantially all of our investment securities as available-for-sale.
Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the institution’s safety and soundness, and the financial institution is not taking prompt and effective measures to correct the deficiencies.
Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the institution’s safety and soundness, and the financial institution is not taking prompt and effective measures to correct the deficie ncies.
We have also purchased portfolios of 1-4 family residential first mortgage loans on properties primarily located in our market area for yield and diversification. At December 31, 2024, consumer residential loans represented 17% of the loan portfolio. Other Loans. We occasionally originate consumer loans both on an unsecured basis and secured by non-real estate collateral.
We have also purchased portfolios of 1-4 family residential first mortgage loans on properties primarily located in our market area for yield and diversification. At December 31, 2025, consumer residential loans represented 15% of the loan portfolio. Other Loans. We occasionally originate consumer loans both on an unsecured basis and secured by non-real estate collateral.
We provide HELOCs as a service to our customers and when we receive referrals from various mortgage brokers within our market area. As of December 31, 2024, HELOCs comprise 2% of total loans. While we do not typically originate residential first mortgages, we will occasionally originate a mortgage loan meeting our investment preferences presented by a mortgage broker.
We provide HELOCs as a service to our customers and when we receive referrals from various mortgage brokers within our market area. As of December 31, 2025, HELOCs comprise 1% of total loans. While we do not typically originate residential first mortgages, we will occasionally originate a mortgage loan meeting our investment preferences presented by a mortgage broker.
These federal, state and local laws regulate the manner in which financial institutions deal with customers taking deposits, making loans or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, and actions by the U.S. Department of Justice and state attorneys general. Financial Privacy .
These federal, state and local laws regulate the manner in which financial institutions deal with customers taking deposits, making loans or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, and actions by the U.S. Department of Justice and state attorneys general. Fair Access to Financial Services.
We compete as a financial intermediary with other commercial banks, savings banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance 9 Table of Contents companies, money market mutual funds, financial technology companies and other financial institutions operating in the Washington and Baltimore MSAs and elsewhere. Our market area is a highly competitive, highly branched, banking market.
We compete as a financial intermediary with other commercial banks, savings banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds, financial technology companies and other financial institutions operating in the Washington and Baltimore MSAs and elsewhere. Our market area is a highly competitive, highly branched, banking market.
Through our partnership with ACM, we purchase residential mortgage loans primar ily originated in our market area tha t meet our product criteria and pricing, to help with the diversification of our loan portfolio.
Through our partnership with ACM, we 6 Table of Contents purchase residential mortgage loans primar ily originated in our market area tha t meet our product criteria and pricing, to help with the diversification of our loan portfolio.
The EGRRCPA, among other things, provides financial institutions with less than $10 billion in total consolidated assets with relief from certain capital requirements and exempts banks with less than $250 billion in total consolidated assets from the enhanced prudential standards and the company-run and supervisory stress tests required under the Dodd-Frank Act.
The EGRRCPA, among other things, provides financial institutions with 15 Table of Contents less than $10 billion in total consolidated assets with relief from certain capital requirements and exempts banks with less than $250 billion in total consolidated assets from the enhanced prudential standards and the company-run and supervisory stress tests required under the Dodd-Frank Act.
To the extent that we make mortgage loans, we are required to comply with these rules, subject to available exceptions. Fair and Responsible Banking. Banks and other financial institutions are subject to numerous laws and regulations intended to promote fair and responsible banking and prohibit unlawful discrimination and unfair, deceptive or abusive practices in banking.
To the extent that we make mortgage loans, we are required to comply with these rules, subject to available exceptions. 16 Table of Contents Fair and Responsible Banking. Banks and other financial institutions are subject to numerous laws and regulations intended to promote fair and responsible banking and prohibit unlawful discrimination and unfair, deceptive or abusive practices in banking.
As of June 30, 2024, there were approximate ly $291.7 billion in total deposits shared between banking institutions located in the Washington MSA, according to the FDIC. PNC Bank, Capital One, Wells Fargo Bank, Truist Bank, and Bank of America Corporation hold the primary market shares.
As of June 30, 2025, there were approximate ly $314.7 billion in total deposits shared between banking institutions located in the Washington MSA, according to the FDIC. Capital One, Bank of America Corporation, Truist Bank, Wells Fargo Bank, and PNC Bank hold the primary market shares.
At December 31, 2024, the Company and the Bank have not been made aware of any instances of noncompliance with this guidance.
At December 31, 2025, the Company and the Bank have not been made aware of any instances of noncompliance with this guidance.
A bank holding company may, however, engage in, or acquire an interest in a company that engages in, activities which the Federal Reserve has determined by order or regulation to be so closely related to banking or managing 11 Table of Contents or controlling banks as to be properly incident thereto.
A bank holding company may, however, engage in, or acquire an interest in a company that engages in, activities which the Federal Reserve has determined by order or regulation to be so closely related to banking or managing or controlling banks as to be properly incident thereto.
Commercial real estate loans are structured using both variable and fixed rates and renegotiable rates which adjust in three to five years, with maturities of generally five to ten years. At December 31, 2024, owner occupied commercial real estate loans represented 10% of the loan portfolio.
Commercial real estate loans are structured using both variable and fixed rates and renegotiable rates which adjust in three to five years, with maturities of generally five to ten years. At December 31, 2025, owner occupied commercial real estate loans represented 14% of the loan portfolio.
We believe that the Bank met all capital adequacy requirements to which it was subject as of December 31, 2024 and December 31, 2023. As discussed below, the Basel III rules also integrate the new capital requirements into the prompt corrective action provisions under Section 38 of the FDIA.
We believe that the Bank met all capital adequacy requirements to which it was subject to as of December 31, 2025 and December 31, 2024. 14 Table of Contents As discussed below, the Basel III rules also integrate the new capital requirements into the prompt corrective action provisions under Section 38 of the FDIA.
The Company is subject to several federal laws that are designed to combat money laundering, terrorist financing, and transactions with persons, companies or foreign governments designated by U.S. authorities ("AML laws").
The Company is subject to several federal laws that are designed to combat money laundering, terrorist financing, and transactions with persons, companies or foreign governments 13 Table of Contents designated by U.S. authorities ("AML laws").
The Virginia and Maryland localities within the Washington MSA in which we primarily operate have higher median household incomes than the Washington MSA as a whole and have an unemployment rate of 2.8% as of December 31, 2024.
The Virginia and Maryland localities within the Washington MSA in which we primarily operate have higher median household incomes than the Washington MSA as a whole and have an unemployment rate of 3.8% as of December 31, 2025.
When excluding the deposits held by these institutions, as of the aforementioned date, our deposit market share was approximately 2.2% in the Washington MSA.
When excluding the deposits held by these institutions, as of the aforementioned date, our deposit market share was approximately 1.9% in the Washington MSA.
These changes may also require the Company to invest 15 Table of Contents significant management attention and resources to evaluate and make necessary changes to comply with new statutory and regulatory requirements. Consumer Financial Protection Bureau ("CFPB") .
These changes may also require the Company to invest significant management attention and resources to evaluate and make necessary changes to comply with new statutory and regulatory requirements. Consumer Financial Protection Bureau ("CFPB") .
Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of digital banking, mobile banking and other technology-based products and services by us and our customers. 18 Table of Contents
Risks a nd exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of digital banking, mobile banking and other technology-based products and services by us and our customers. Artificial Intelligence.
As of December 31, 2024, the Baltimore MSA had a median household income of $98.0 thousand, which represented 4.0% growth over the previous year. The Baltimore MSA has an unemployment rate of 2.7% as of December 31, 2024.
As of December 31, 2025, the Baltimore MSA had a median household income of $98.7 thousand, which represented 2.0% growth over the previous year. The Baltimore MSA has an unemployment rate of 3.6% as of December 31, 2025.
Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk and interest rate risk which is reflective in the yields obtained on those securities. Employees As of December 31, 2024, we had 110 f ull-time employees and four part-time employees. None of our employees are covered by a collective bargaining agreement.
Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk and interest rate risk which is reflective in the yields obtained on those securities. Employees As of December 31, 2025, we had 119 full-time employees and six part-time employees. None of our employees are covered by a collective bargaining agreement.
Advance rates will be up to 90% of prime eligible government receivables, and lower percentages depending on the nature of th e receivables . At December 31, 2024, outstanding loans to government contractors represented 37% of our commercial and industrial segment. Total commitments to government contractors totaled $326.8 million at December 31, 2024.
Advance rates will be up to 90% of prime eligible government receivables, and lower percentages depending on the nature of th e receivables . At December 31, 2025, outstanding loans to government contractors represented 45% of our commercial and industrial segment. Total commitments to government contractors totaled $350.4 million at December 31, 2025.
Banking is a business, which depends on interest rate differentials. In general, the difference between the interest paid by a bank on its deposits and its other borrowings and the interest received by a bank on loans extended to its customers and on securities held in its investment portfolio constitutes the major portion of the Bank's earnings.
In general, the difference between the interest paid by a bank on its deposits and its other borrowings and the interest received by a bank on loans extended to its customers and on securities held in its investment portfolio constitutes the major portion of the Bank's earnings.
CAMELS composite ratings set a maximum assessment for CAMELS 1 and 2 rated banks, and set minimum assessments for lower rated institutions. For the years ended December 31, 2024 and 2023, the Bank reco rded $1.3 million an d $1.4 million, respectively, for FDIC insurance premiums. Limitations on Incentive Compensation.
CAMELS composite ratings set a maximum assessment for CAMELS 1 and 2 rated banks, and set minimum assessments for lower rated institutions. For the years ended December 31, 2025 and 2024 , the Bank reco r ded $1.1 million and $1.3 million , respectively, for FDIC insurance premiums. Limitations on Incentive Compensation.
In the Baltimore MSA, there were approximately $97.9 billion in total deposits shared between banking institutions as of June 30, 2024, and when excluding deposits held by the above named larger institutions, our deposit market share was approximately 0.09%.
In the Baltimore MSA, there were approximately $101.8 billion in total deposits shared between banking institutions as of June 30, 2025, and when excluding deposits held by the above named larger institutions, our deposit market share was approximately 0.08%.
We believe having such a large group of individuals who actively promote the Company has and will continue to augment our ability to generate both deposits and loans through staff and management led marketing and calling campaigns.
We receive referrals from existing customers and all employees are encouraged to promote the Company. We believe having such a large group of individuals who actively promote the Company has and will continue to augment our ability to generate both deposits and loans through staff and management led marketing and calling campaigns.
At December 31, 2024, non-owner occupied commercial real estate loans represented approximately 36% of the loan portfolio and multi-family residential real estate comprised 9% the portfolio. We seek to mitigate lending risks typical of this type of loan such as declines in real estate values, changes in borrower cash flow and general economic conditions.
At December 31, 2025, non-owner occupied commercial real estate loans represented approximately 31% of the loan portfolio and multi-family residential real estate comprised 8% th e portfolio. We seek to mitigate lending risks typical of these types of loans such as declines in real estate values, changes in borrower cash flow and general economic conditions.
These limits will increase or decrease in response to increases or decreases in our capital levels. At December 31, 2024 , the Bank had a legal lending limit of $41.6 million . At December 31, 2024, our average funded loan size outstanding, for commercial real estate (including commercial construction) and commercial loans was $1.7 million and $622 thousand, respectively.
These limits will increase or decrease in response to increases or decreases in our capital levels. At December 31, 2025 , the Bank had a legal lending limit of $44.5 million. A t December 31, 2025, our average funded loan size outstanding, for commercial real estate (including commercial construction) and commercial loans was $2.4 million and $756 thousand, respectively.
This economic improvement resulted in lower unemployment, increased consumer confidence, and increased housing development and housing prices. Our business opportunities in the future may be tempered by higher interest rates, inflation, and contractionary monetary policy. Volatility in global economic markets, continued domestic political turmoil and various episodes of geopolitical unrest continue to provide a degree of uncertainty in financial markets.
Our business opportunities in the future may be tempered by high interest rates, inflation, and contractionary monetary policy. Volatility in global economic markets, continued domestic political turmoil and various episodes of geopolitical unrest continue to provide a degree of uncertainty in financial markets.
As of June 30, 2024, the Washington MSA had total deposits of $291.7 billion and the Baltimore MSA had total deposits of $97.9 billion, based on Federal Deposit Insurance Corporation ("FDIC") data.
As of June 30, 2025, the Washington MSA had total deposits of $314.7 billion and the Baltimore MSA had total deposits of $101.8 billion, based on Federal Deposit Insurance Corporation (the "FDIC") data.
With a population of 2.9 million, the top industries of the Baltimore MSA include healthcare, education, and professional, scientific and technical services.The Baltimore MSA is currently home to four Fortune 500 companies. The local economies in which we operate that began to strengthen and improve during 2022 post pandemic, showed continued improvement in economic and commercial activity during 2024.
With a population of 2.9 million, the top industries of the Baltimore MSA include healthcare, education, and professional, scientific and technical services.The Baltimore MSA is currently home to three Fortune 500 companies. 5 Table of Contents The local economies in which we operate that began to strengthen and improve during 2022 post pandemic, have recently showed signs of a mild recession.
Commercial construction loans for the acquisition, development and construction of commercial real estate also comprise a significant and growing portion of the portfolio. At December 31, 2024, such loans represented 9% of the loan portfolio. Our typical commercial construction loan involves property that will ultimately be leased to a non-owner occupant.
Commercial construction loans for the acquisition, development and construction of commercial real estate comprise 8% of th e loan portfolio at December 31, 2025. Our typical commercial construction loan involves property that will ultimately be leased to a non-owner occupant.
We have a concentration in commercial real estate loans, and we have experienced significant growth in our commercial real estate portfolio in recent years. As of December 31, 2024, commercial real estate loans as defined for regulatory purposes represented 371% of our total risk-based capital.
We have a concentration in commercial real estate loans, and we have experienced growth in our commercial real estate portfolio in recent years. As of December 31, 2025, 8 Table of Contents commercial real estate loans as defined for regulatory purposes represen ted 313% of our total risk-based capital.
We have partnered with experienced service providers in both insurance and merchant services to further augment the products available to our customers. 6 Table of Contents Lending Products We provide a variety of lending products to small and medium-sized businesses, including (i) commercial real estate loans; (ii) commercial construction loans; (ii) commercial loans for a variety of business purposes such as for working capital, equipment purchases, lines of credit, and government contract financing; (iii) Small Business Administration ("SBA") lending; (iv) asset based lending and accounts receivable financing; (v) home equity loans, or home equity lines of credit; and (vi) consumer loans for constructive purposes.
Lending Products We provide a variety of lending products to small and medium-sized businesses, including (i) commercial real estate loans; (ii) commercial construction loans; (ii) commercial loans for a variety of business purposes such as for working capital, equipment purchases, lines of credit, and government contract financing; (iii) Small Business Administration ("SBA") lending; (iv) asset based lending and accounts receivable financing; (v) home equity loans, or home equity lines of credit; and (vi) consumer loans for constructive purposes.
Of those loans, commercial construction, development and land loans represented 59% of our total risk based capital. Owner-occupied commercial real estate loans represented an additional 68% of our total risk based capital.
Of those loans, commercial construction, development and land loans represe nted 53% o f our total risk based capital. Owner-occupied commercial real estate loans represented an additional 90% of our total risk based capital.
As of December 31, 2024, the Washington MSA had a median household income of $129.3 thousand, which ranks as sixth highest among all MSAs nationally, and a population of 6.35 million.
As of December 31, 2025, the Washington MSA had a median household income of $126.2 thousand, which ranks as eighth highest among all MSAs nationally, and a population of 6.44 million.
Our loan portfolio consists primarily of commercial real estate loans, including construction and land loans, which totale d $1.20 billion and constituted 64% of to tal loans as of December 31, 2024, and commercial loans, includin g loans to government contractors and the ACM warehouse lending facility, which totaled $336.7 million and constituted 18% of total loans as of December 31, 2024.
Our loan portfolio consists primarily of commercial real estate loans, including construction and land loans, which totaled $1.19 billion and constituted 61% of total loans as of December 31, 2025, and commercial loans, includin g loans to government contractors and the ACM warehouse lending facility, which total ed $453.4 million and constituted 23% of to tal loans as of December 31, 2025.
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers. 16 Table of Contents In October 2024, the CFPB issued a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties, upon request, certain covered transaction, account, and payment information.
In October 2024, the CFPB issued a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties, upon request, certain covered transaction, account, and payment information.
The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals and others, which are administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"). The OFAC-administered sanctions targeting countries take many different forms.
To comply with these obligations, the Company has implemented appropriate internal practices, procedures, and controls. Office of Foreign Assets Control. The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals and others, which are administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC").
We invest in the growth of our employees and we give back to the communities in which we do business to foster a brighter future for everyone who lives there.
We invest in the growth of our employees and we give back to the communities in which we do business to foster a brighter future for everyone who lives there. Much of our early growth was the result of the active promotion by our organizing shareholders, our board of directors, and our shareholders as many of the aforementioned are customers.
The regulations of these various agencies govern most aspects of the Bank's business, including required reserves against deposits, loans, investments, mergers and acquisitions, borrowing, dividends and location and number of branch offices. The laws and regulations governing the Bank generally have been promulgated to protect depositors and the Deposit Insurance Fund, and not for the purpose of protecting shareholders.
The regulations of these various agencies govern most aspects of the Bank's business, including required reserves against deposits, loans, investments, mergers and acquisitions, borrowing, dividends and location and number of branch offices.
The Company has adopted a clawback policy compliant with such rule. Cybersecurity . In March 2015, federal regulators issued two related statements regarding cybersecurity.
The Company has adopted a clawback policy compliant with such rule. A copy of the Company’s clawback policy is included as Exhibit 97 to this Annual Report on 10 K. Cybersecurity . In March 2015, federal regulators issued two related statements regarding cybersecurity.
Commercial banks, savings and loan associations and credit unions are generally able to engage in interstate banking or acquisition activities. As a result, banks in the Washington, D.C. metropolitan area can, subject to limited restrictions, acquire or merge with a bank in another jurisdiction, and can branch de novo in any jurisdiction.
As a result, banks in the Washington, D.C. metropolitan area can, subject to limited restrictions, acquire or merge with a bank in another jurisdiction, and can branch de novo in any jurisdiction. Banking is a business, which depends on interest rate differentials.
Commercial loans, for a variety of business purposes, including working capital, equipment purchases, lines of cr edit, and government contract financing and asset based lending and accounts receivable financing, comprise approximately 18% of our loan portfolio at December 31, 2024. The warehouse facility provided to ACM is also included in this loan type.
We originate commercial loans for a variety of business purposes, including working capital, equipment purchases, lines of cr edit, government contract financing, asset based lending and accounts receivable financing. These loans are a significant and growing portion of our portfolio, comprising approximately 23% of our loan portfolio at December 31, 2025.
Consumers generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties that market the institutions' own products and services.
Consumers generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties that market the institutions' own products and services. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers.
The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes.
The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants.
The changes may also require us to dedicate significant management attention and resources to evaluate and make necessary changes to comply with the new statutory and regulatory requirements. In February 2025, the Trump administration halted the CFPB’s operations, and its employees were instructed to cease all supervision and examination activity.
The changes may also require us to dedicate significant management attention and resources to evaluate and make necessary changes to comply with the new statutory and regulatory requirements. During 2025, the CFPB reduced its staff by over 80%.
Other Services Through third party networks, we offer our customers access to a full range of business insurance products and business and consumer credit card products. Competition We are one of the few remaining locally owned and managed independent community banks headquartered in Northern Virginia.
Other Services Through third party networks, we offer our customers access to a full range of business insurance products and business and consumer credit card products. Cannabis Related Banking Business The Bank provides banking services to customers that are licensed to do business in the cannabis industry, primarily in Virginia, Maryland and the District of Columbia.
The final rule has been subject to an injunction since March 29, 2024, and the effective dates will be extended pending resolution of the lawsuit. Concentration and Risk Guidance. The federal bank regulatory agencies have issued guidance governing financial institutions with concentrations in commercial real estate lending.
The agencies continue to apply the CRA rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the rescission of the modernization rule. Concentration and Risk Guidance. The federal bank regulatory agencies have issued guidance governing financial institutions with concentrations in commercial real estate lending.
We make commercial loans on a secured or unsecured basis.
The warehouse facility provided to ACM is also included in this loan type. We make commercial loans on a secured or unsecured basis.
Removed
Our acquisition of Colombo supported our business allowing us to expand our presence in adjacent markets where we lend, but in which we had no physical presence. Our strong infrastructure and wide range of products and services allowed us to develop deeper relationships with Colombo's customers, as well as enhance our platform for generating new relationships.
Added
Payrolls have fallen in recent months as a result of workforce reductions within the federal government. The unemployment rate in our regional economy, while still below the national average, has climbed to its highest level in four years, and house prices are falling despite holding steady nationally.
Removed
Much of our early growth was the result of the active promotion by our organizing shareholders, our board of directors, our advisory board, and our shareholders as many of the aforementioned are customers. We receive referrals from existing customers and all employees are encouraged to promote the Company.
Added
We have partnered with experienced service providers in both insurance and merchant services to further augment the products available to our customers.
Removed
Federal banking regulators are required, when reviewing bank holding company acquisition and bank 13 Table of Contents merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants. To comply with these obligations, the Company has implemented appropriate internal practices, procedures, and controls. Office of Foreign Assets Control.
Added
These customers include multi-state operators, fully integrated state-wide operators, independent dispensary/cultivation licensees, as well as provisional cannabis licensees. The Bank maintains stringent written policies and procedures related to the on-boarding of such businesses and to the monitoring and maintenance of such business accounts.
Removed
The final rule updates the CRA regulations to, among other things, (i) expand access to credit, investment and basic banking services in low- and moderate-income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity, consistency and transparency in the application of the regulations and (iv) tailor performance standards to account for differences in bank size, business model, and local conditions.
Added
In accordance with federal regulatory guidance and industry best practices, the Bank's cannabis banking business is conducted through a comprehensive, defined, and multi-department process, which includes extensive compliance and on-boarding due diligence with subsequent involvement by bank experts in cannabis within the Bank's operations, branch, treasury management, lending, and credit departments.
Removed
The final rule adopts a new metrics-based approach to evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data. Most of the rule’s requirements are effective beginning January 1, 2026. The remaining requirements, including the data reporting requirements, are effective January 1, 2027.
Added
The Bank performs a multilayered due diligence review of a cannabis business before the business is on-boarded, including site visits and confirmation that the business is properly licensed by the state in which it is conducting business.
Added
Throughout the relationship, the Bank continues to monitor the business, including additional site visits, to ensure that the cannabis business continues to meet strict requirements, including maintenance of required licenses. The Bank performs periodic financial reviews of the business and monitors the business in accordance with the Bank Secrecy Act of 1970 and other state requirements.
Added
Competition We are one of the few remaining locally owned and managed independent community banks headquartered in Northern Virginia.
Added
The laws and regulations governing the Bank generally have been promulgated to protect depositors and the Deposit Insurance Fund, and not for the purpose of protecting shareholders. 12 Table of Contents Commercial banks, savings and loan associations and credit unions are generally able to engage in interstate banking or acquisition activities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we endeavor to maintain our allowance for credit losses at a level adequate to absorb expected losses in the loan portfolio, the determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risk and future trends, and the accuracy of our judgments depends on the outcome of future events.
Biggest changeAdditionally, future additions to the allowance may be required based on changes in the forecasted economic conditions, changes in the loans comprising the portfolio and changes in the financial condition of borrowers, or as a result of assumptions used by management in determining the allowance. 24 Table of Contents Although we endeavor to maintain our allowance for credit losses at a level adequate to absorb expected losses in the loan portfolio, the determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risk and future trends, and the accuracy of our judgments depends on the outcome of future events.
Goodwill and other intangible assets are tested for impairment on an annual basis or when facts and circumstances indicate that impairment may have occurred. Our financial condition and results of operations may be adversely affected if that goodwill is determined to be impaired, which would require us to take an impairment charge.
Goodwill and other intangible assets are tested for impairment on an annual basis or when facts and circumstances indicate that impairment may have occurred. Our financial condition and results of operations may be adversely affected if goodwill is determined to be impaired, which would require us to take an impairment charge.
Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits.
Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of the Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits.
Our inability to raise funds through deposits, borrowings, the sale of loans, other sources, and our ability to maintain sufficient deposits, could have a substantial negative effect on our business, and could result in the closure of the Bank.
Our inability to raise funds through deposits, borrowings, the sale of loans, or other sources, and our ability to maintain sufficient deposits, could have a substantial negative effect on our business, and could result in the closure of the Bank.
When short-term interest rates rise, the rate of interest we pay on our interest-bearing liabilities may rise more quickly than the rate of interest that we receive on our interest-earning assets, which may cause our net interest income to decrease.
When short-term interest rates rise, the rate of interest we pay on our interest-bearing liabilities may rise more quickly than the rate of interest we receive on our interest-earning assets, which may cause our net interest income to decrease.
Our deposits are subject to potentially 20 Table of Contents dramatic fluctuations in availability or price due to certain factors outside of our control, such as increasing competitive pressures for deposits, changes in interest rates and returns on other investment classes, customer perceptions of our financial health, and general reputation and adverse developments in general economic conditions of an individual's business, which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current customer deposits or attract additional deposits.
Our deposits are subject to potentially dramatic fluctuations in availability or price due to certain factors outside of our control, such as increasing competitive pressures for deposits, changes in interest rates and returns on other investment classes, customer perceptions of our financial health, and general reputation and adverse developments in general economic conditions of an individual's business, which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current customer deposits or attract additional deposits.
Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the outputs of their models, matters over which we may have limited visibility.
Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the outputs of their models, matters 31 Table of Contents over which we may have limited visibility.
If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial condition, and results of operations.
If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial 27 Table of Contents condition, and results of operations.
Strategic Risks We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers, which could adversely impact our profitability. The banking business is highly competitive.
We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers, which could adversely impact our profitability. The banking business is highly competitive.
Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. Credit Risks We are subject to credit risk, which could adversely affect our profitability.
Additionally, significant unrealized losses could negatively 21 Table of Contents impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. Credit Risks We are subject to credit risk, which could adversely affect our profitability.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition and results of operations. 21 Table of Contents A substantial portion of our loans are and will continue to be real estate related loans in the Washington, D.C. and Baltimore metropolitan areas.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition and results of operations. A substantial portion of our loans are and will continue to be real estate related loans in the Washington, D.C. and Baltimore metropolitan areas.
Our failure to sustain our historical rate of growth or adequately manage the factors that have contributed to our growth could have a material adverse effect on our earnings and profitability and therefore on our business, financial condition, and results of operations. 25 Table of Contents We may face risks with respect to future expansion or acquisition activity.
Our failure to sustain our historical rate of growth or adequately manage the factors that have contributed to our growth could have a material adverse effect on our earnings and profitability and therefore on our business, financial condition, and results of operations. We may face risks with respect to future expansion or acquisition activity.
We compete for loans and deposits with other commercial banks, savings banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions operating in the Washington, D.C. and Baltimore metropolitan areas and elsewhere, as well as nontraditional competitors such as fintech companies and internet-based 24 Table of Contents lenders, depositories and payment systems.
We compete for loans and deposits with other commercial banks, savings banks, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions operating in the Washington, D.C. and Baltimore metropolitan areas and elsewhere, as well as nontraditional competitors such as fintech companies and internet-based lenders, depositories and payment systems.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. 29 Table of Contents We face increasing regulation and supervision of our industry. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. We face increasing regulation and supervision of our industry. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes.
We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they become due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress.
We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they become due 20 Table of Contents and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress.
Credit unions have federal tax exemptions, which may allow them to offer lower rates on loans and higher rates on deposits than taxpaying financial institutions such as commercial banks. In addition, non-depository institution competitors are generally not subject to the extensive regulation applicable to institutions that offer federally insured deposits.
Credit unions have federal tax exemptions, which may allow them to offer lower rates on loans and higher rates on deposits than taxpaying financial institutions such as commercial banks. In 25 Table of Contents addition, non-depository institution competitors are generally not subject to the extensive regulation applicable to institutions that offer federally insured deposits.
Failure to successfully keep pace with technological change affecting the financial services industry could harm our ability to compete effectively and could have a material adverse effect on our business, financial condition, or results of operations.
Failure 28 Table of Contents to successfully keep pace with technological change affecting the financial services industry could harm our ability to compete effectively and could have a material adverse effect on our business, financial condition, or results of operations.
Actual and proposed spending cuts by the U.S. government, particularly those resulting in job losses in and around the Washington, D.C. metropolitan area, could have a negative impact on the markets we serve, which could adversely affect our business, financial condition, and results of operations.
Prolonged or repeated shutdowns and actual and proposed spending cuts by the U.S. government, particularly those resulting in job losses in and around the Washington, D.C. metropolitan area, could have a negative impact on the markets we serve, which could adversely affect our business, financial condition, and results of operations.
In the event of significant reductions in spending and/or a government shutdown, these customers may have their government contracts reduced or terminated, or have payments delayed, causing a loss of anticipated revenues or reduced cash flow, resulting in an increase in credit risk, and potentially defaults by such customers on their respective loans.
In the event of significant reductions in spending and/or prolonged or repeated government shutdowns, these customers may have their government contracts reduced or terminated, or have payments delayed, causing a loss of anticipated revenues or reduced cash flow, resulting in an increase in credit risk, and potentially defaults by such customers on their respective loans.
Our government contractor customers, and businesses in the Washington, D.C. metropolitan area in general, may be adversely impacted by reductions in spending by the federal government and/or a budget impasse. At December 31, 2024, 18% of our total loans were outstanding to commercial and industrial customers.
Our government contractor customers, and businesses in the Washington, D.C. metropolitan area in general, may be adversely impacted by reductions in spending by the federal government and/or a budget impasse. At December 31, 2025, 23% of our total loans were outstanding to commercial and industrial customers.
Item 1A. RISK FACTORS The material risks and uncertainties that management believes affect us are described below. Any of these risks, if they are realized, could materially adversely affect our business, financial condition and results of operations, and consequently, the market value of our common stock.
Item 1A. RISK FACTORS The material risks and uncertainties that we believe affect us are described below. Any of these risks, if they are realized, could materially adversely affect our business, financial condition and results of operations, and consequently, the market value of our common stock.
Our inability to overcome these risks could have an adverse effect on our ability to implement our business strategy and enhance shareholder value, which, in turn, could have a material adverse effect on our business, financial condition, or results of operations. Additionally, at December 31, 2024, we had $7.2 million of goodwill related to our acquisition of Colombo.
Our inability to overcome these risks could have an adverse effect on our ability to implement our business strategy and enhance shareholder value, which, in turn, could have a material adverse effect on our business, financial condition, or results of operations. Additionally, at December 31, 2025, we had $7.2 million of goo dwill related to our acquisition of Colombo.
Additionally, the resolution of nonperforming assets and other problem assets requires the active involvement of management, which can distract management from its overall supervision of operations and other income producing activities. As of December 31, 2024, we had no OREO. Our concentrations of loans may create a greater risk of loan defaults and losses.
Additionally, the resolution of nonperforming assets and other problem assets requires the active involvement of management, which can 22 Table of Contents distract management from its overall supervision of operations and other income producing activities. As of December 31, 2025 , we had no OREO. Our concentrations of loans may create a greater risk of loan defaults and losses.
Because our 26 Table of Contents information technology and telecommunications systems interface with and depend on third party systems, we could experience service denials if demand for such services exceeds capacity or such third party systems fail or experience interruptions.
Because our information technology and telecommunications systems interface with and depend on third party systems, we could experience service denials if demand for such services exceeds capacity or such third party systems fail or experience interruptions.
As a 23 Table of Contents result, significant reductions in spending and/or a government shutdown could lead to an increase in the levels of past due loans, nonperforming loans, allowance for credit losses and charge-offs, and a decline in liquidity. We have extended off-balance sheet commitments to borrowers which expose us to credit and interest rate risk.
As a result, significant reductions in spending and/or prolonged or repeated government shutdowns could lead to an increase in the levels of past due loans, nonperforming loans, allowance for credit losses and charge-offs, and a decline in liquidity. We have extended off-balance sheet commitments to borrowers which expose us to credit and interest rate risk.
Of that, approximately 37% of outstanding commercial and industrial loans are to government contractors or their subcontractors specializing in the defense and homeland security and defense readiness sectors, and we have commitments of $326.8 million to such borrowers. We are actively seeking to expand our exposure to this business segment.
Of that, approximately 45% of outstanding commercial and industrial loans are to government contractors or their subcontractors specializing in the defense and homeland security and defense readiness sectors, and we have commitments of $350.4 million to such borrowers. We are actively seeking to expand our exposure to this business segment.
Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to its commercial real estate portfolio.
Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong 23 Table of Contents underwriting criteria with respect to its commercial real estate portfolio.
We have a concentration in commercial real estate loans, and we have experienced significant growth in our commercial real estate portfolio in recent years. As of December 31, 2024, commercial real estate loans, as defined for regulatory purposes, represented 371% of our total risk-based capital.
We have a concentration in commercial real estate loans, and we have experienced growth in our commercial real estate portfolio in recent years. As of December 31, 2025, commercial real estate loans, as defined for regulatory purposes, represented 313% of our total risk-based capital.
As of December 31, 2024, approximately 31% of our deposits were uninsured when excluding collateralized deposits, and we rely on these deposits for liquidity. Any such loss of funds could result in lower loan originations and decrease in liquidity, which could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2025, approxim ately 34.9% of our deposits were uninsured when excluding collateralized deposits, and we rely on these deposits for liquidity. Any such loss of funds could result in lower loan originations and decrease in liquidity, which could have a material adverse effect on our business, financial condition and results of operations.
Of those loans, commercial construction, development and land loans represented 59% of our total risk based capital. Owner-occupied commercial real estate loans represented an additional 68% of our total risk based capital.
Of those loans, commercial construction, development and land loans represented 53% of our total risk based capital. Owner-occupied commercial real estate loans represented an additional 90% of our total risk based capital.
Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowings.
We are subject to interest rate risk, which could adversely affect our profitability. Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowings.
In addition, we are a bank holding company, and our ability to declare and pay dividends to our shareholders is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
The amount of dividends that a bank may pay is limited by state and federal laws and regulations. In addition, we are a bank holding company, and our ability to declare and pay dividends to our shareholders is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business. 30 Table of Contents We or our third-party vendors, clients, or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
We or our third-party vendors, clients, or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
From time to time, regulators implement changes to these regulatory capital adequacy guidelines. If we fail to meet these minimum capital guidelines and/or other regulatory requirements, our financial condition would be materially and adversely affected.
We are subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital that we must maintain. From time to time, regulators implement changes to these regulatory capital adequacy guidelines. If we fail to meet these minimum capital guidelines and/or other regulatory requirements, our financial condition would be materially and adversely affected.
Increases to our nonperforming assets or other problem assets will have an adverse effect on our earnings. As of December 31, 2024, we had nonperforming loans and loans 90 days or more past due of $12.9 million, or 0.69% of total loans, net of deferred fees.
Increases to our nonperforming assets or other problem assets will have an adverse effect on our earnings. As of December 31, 2025, we had nonperforming loans and accruing loans 90 days or more past due o f $10.7 million, or 0.55% of total loans, net of deferred fees.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition and results of operations. We are subject to interest rate risk, which could adversely affect our profitability.
Changes in any of 19 Table of Contents these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition and results of operations.
At December 31, 2024, 83% of our total loans were secured by real estate; commercial real estate loans, excluding construction and land development, comprised the largest portion of these loans at 56% of our portfolio. Construction and land development loans comprised 9% of total loans at December 31, 2024.
At December 31, 2025, 78% of our total loans were secured by real estate; commercial real estate loans, excluding construction and land development, comprised the largest portion of these loans at 53% of our portfolio. Construction and land development loans comprised 8% of total loans at December 31, 2025.
An inability to raise additional capital on acceptable terms when needed could have a material adverse impact on our business, financial condition, and results of operations. We have no current plans to pay cash dividends.
An inability to raise additional capital on acceptable terms when needed could have a material adverse impact on our business, financial condition, and results of operations. Our ability to pay dividends is limited and we may be unable to pay future dividends.
We selectively seek to expand our banking operations through limited de novo branching or opportunistic acquisition activities. We cannot be certain that any expansion activity, through de novo branching, acquisition of branches of another financial institution or a whole institution, or the establishment or acquisition of nonbanking financial service companies, will prove profitable or will increase shareholder value.
We cannot be certain that any expansion activity, through de novo branching, acquisition of branches of another financial institution or a whole institution, or the establishment or acquisition of nonbanking financial service 26 Table of Contents companies, will prove profitable or will increase shareholder value.
These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.These changes could adversely affect our capital, regulatory capital ratios, ability to make larger loans, earnings and performance metrics.
These changes can materially impact how we record and report our financial 30 Table of Contents condition and results of operations. In some instances, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.
If any of the matters included in the following information about risk factors were to occur, our business, financial condition, results of operations, cash flows or prospects could be materially and adversely affected. Risks Related to the Economy, Financial Markets, Interest Rates and Liquidity Our business and operations may be materially adversely affected by weak economic conditions.
If any of the matters included in the following information about risk factors were to occur, our future business, financial condition, results of operations, cash flows or prospects could be materially and adversely affected.
Liquidity risk can increase due to a number of factors, including an over-reliance on a particular source of funding or market-wide phenomena such as market dislocation and major disasters.
Liquidity risk can increase due to a number of factors, including an over-reliance on a particular source of funding or market-wide phenomena such as market dislocation and major disasters. Approximately 10% of our deposits are derived from one customer relationship, which increases our liquidity risk.
Our business is significantly affected by monetary and related policies of the U.S. federal government and its agencies. Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates are concerns for businesses, consumers and investors in the U.S.
Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, shutdowns and potential reductions in spending by the federal government and related reductions in the federal workforce, and future tax rates are concerns for businesses, consumers and investors in the U.S.
The occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
The occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business.
We may not be able to implement new technology driven products and services effectively or be successful in marketing these products and services to our customers.
Many of our competitors have substantially greater resources to invest in technological improvements than we have. We may not be able to implement new technology driven products and services effectively or be successful in marketing these products and services to our customers.
Further, any settlement, consent order, other enforcement agreement or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities. 28 Table of Contents As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, financial condition and results of operations.
Further, any settlement, consent order, other enforcement agreement or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities.
Additionally, a shrinking yield premium between short-term and long-term market interest rates, a pattern usually indicative of investors' waning expectations of future growth and inflation, commonly referred to as a flattening of the yield curve, typically reduces our profit margin as we borrow at shorter terms than the terms at which we lend and invest. 19 Table of Contents In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations.
Additionally, a shrinking yield premium between short-term and long-term market interest rates, a pattern usually indicative of investors' waning expectations of future growth and inflation, commonly referred to as a flattening of the yield curve, typically reduces our profit margin as we borrow at shorter terms than the terms at which we lend and invest.
Because the loan portfolio contains a significant number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in nonperforming assets.
Because the loan portfolio contains a significant number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in nonperforming assets. Some segments have shown some signs of weakness as rising expenses and debt costs and lower valuations have impacted credit quality metrics.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we have.
The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations.
As of December 31, 2024, we had $1.87 billion in deposits and approximately 8% of our deposits are derived from one customer relationship.
As of December 31, 2025, we had $2.0 billion in d eposits and approximately 10% o f our deposits are derived from one customer relationship.
Higher interest rates reduce the demand for loans and increase the attractiveness of alternative investment and savings products, like U.S. Treasury securities and money market funds, which can make it difficult to attract and retain deposits. Additionally, inflation generally increases the cost of products and services we use in our business operations, as well as labor costs.
As market interest rates rise, the value of our investment securities generally decreases, although this effect can be less pronounced for floating rate instruments. Higher interest rates reduce the demand for loans and increase the attractiveness of alternative investment and savings products, like U.S. Treasury securities and money market funds, which can make it difficult to attract and retain deposits.
Some segments have shown some signs of weakness as rising expenses and debt costs and lower valuations have impacted 22 Table of Contents credit quality metrics. Vacancy rates have risen in the office sector, which is experiencing significant structural shifts that could take several years to fully materialize as remote work practices normalize.
Vacancy rates have risen in the office sector, which is experiencing significant structural shifts that could take several years to fully materialize as remote work practices normalize.
All these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
In addition, foreign economic and political conditions could affect the stability of global financial markets, which could hinder economic growth. All these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
We may find that we need to give higher than normal raises to employees and start new employees at a higher wage. Furthermore, our clients are also affected by inflation and the rising costs of products and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
Furthermore, our clients are also affected by inflation and the rising costs of products and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. If inflationary pressures do not subside, sustained higher interest rates by the Federal Reserve may be needed, which could weaken economic activity.
Any such changes could have a material adverse effect on our business, financial condition, and results of operations. Regulatory initiatives regarding bank capital requirements may require heightened capital. We are subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital that we must maintain.
These changes could adversely affect our capital, regulatory capital ratios, ability to make larger loans, earnings and performance metrics. Any such changes could have a material adverse effect on our business, financial condition, and results of operations. Regulatory initiatives regarding bank capital requirements may require heightened capital.
During 2024, the federal funds target rate reduced 100 basis points, but remained at an elevated level of 4.25 - 4.50%. Higher market interest rates have increased funding costs and decreased loan demand. As market interest rates rise, the value of our investment securities generally decreases, although this effect can be less pronounced for floating rate instruments.
During 2024 and 2025, the federal funds target rate reduced 175 basis points, decreasing to 3.50% - 3.75% as of December 31, 2025. Higher market interest rates relative to interest rates from 2008 to 2022 have increased funding costs and decreased loan demand.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. Risks Related to Our Securities We may need to raise additional capital in the future, and we may not be able to do so.
As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, financial condition and results of operations. 29 Table of Contents Risks Related to Our Securities We may need to raise additional capital in the future, and we may not be able to do so.
Removed
In addition, foreign economic and political conditions could affect the stability of global financial markets, which could hinder economic growth. The current economic environment is characterized by higher interest rates as a result of contractionary monetary policy which could impact our ability to attract deposits and to generate attractive earnings through our loan and investment portfolios.
Added
References to past events in these risk factors are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
Removed
If inflationary pressures do not subside, sustained higher interest rates by the Federal Reserve may be needed, which could weaken economic activity.
Added
Risks Related to the Economy, Financial Markets, Interest Rates and Liquidity Our business and operations may be materially adversely affected by weak economic conditions.
Removed
Additionally, future additions to the allowance may be required based on changes in the forecasted economic conditions, changes in the loans comprising the portfolio and changes in the financial condition of borrowers, or as a result of assumptions used by management in determining the allowance.
Added
Our business is significantly affected by monetary and related policies of the U.S. federal government and its agencies.
Removed
The effective use of technology increases efficiency and enables financial 27 Table of Contents institutions to better serve customers and reduce costs.
Added
In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations.
Removed
Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks. We face scrutiny from customers, regulators, investors, and other stakeholders related to ESG practices and disclosure.
Added
Additionally, inflation generally increases the cost of products and services we use in our business operations, as well as labor costs. We may find that we need to give higher than normal raises to employees and start new employees at a higher wage.
Removed
In March 2024, the SEC adopted rules requiring public companies, such as the Company, to provide climate-related disclosures in their annual reports and registration statements. Investor advocacy groups, investment funds and influential investors may also focus on these practices, especially as they relate to climate risk, hiring practices, the diversity of the work force, and racial and social justice issues.
Added
Strategic Risks We provide banking services to customers who do business in the cannabis industry and the strict enforcement of federal laws regarding cannabis could likely result in our inability to continue to provide banking services to these customers and we could have legal action taken against us by the federal government.
Removed
Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price.
Added
We provide banking services to customers that are licensed to do business in the cannabis industry, primarily in Virginia, Maryland and the District of Columbia. These customers include multi-state operators, fully integrated state-wide operators, independent dispensary/cultivation licensees, as well as provisional cannabis licensees.
Removed
The amount of dividends that a bank may pay is limited by state and federal laws and regulations. While we have sufficient retained earnings and expect our future earnings to be sufficient to pay cash dividends, our board of directors currently intends to retain earnings for the purpose of financing growth.
Added
While cannabis is legal in these states of operation, it remains classified as a controlled substance under the Controlled Substances Act. As such, the cultivation, use, distribution, and possession of cannabis is a violation of federal law that is punishable by imprisonment and fines.
Added
Additionally, as the possession and use of cannabis remains illegal under the Controlled Substances Act, we may be deemed to be aiding and abetting illegal activities through the services that we provide to these customers and could have legal action taken against us by the federal government, including imprisonment and fines.
Added
Any change in the federal government’s position on adult-use cannabis enforcement, or a change in federal appropriations law, could result in significant financial damage to us and our stockholders. FinCEN published guidelines in 2014 for financial institutions servicing state legal cannabis business.
Added
These guidelines were issued for the explicit purpose so “that financial institutions can provide services to marijuana-related businesses in a manner consistent with their obligations to know their customers and to report possible criminal activity.” The Bank has and will continue to follow this and other FinCEN guidance in the areas of cannabis banking.
Added
Any adverse change in this FinCEN guidance, any new regulations or legislation, any change in existing regulations or oversight, whether a change in regulatory policy or a change in a regulator’s interpretation of a law or regulation, could have a negative impact on our interest income and noninterest income, as well as the cost of our operations, increasing our cost of regulatory compliance and of doing business, and/or otherwise affect us, which could have a material adverse effect on our business, financial condition and results of operations.
Added
We selectively seek to expand our banking operations through limited de novo branching or opportunistic acquisition activities.
Added
These guidelines also require that we review our net income for the current and past four quarters, and the level of dividends on common stock and other Tier 1 capital instruments for those periods, as well as our projected rate of earnings retention.
Added
If we do not satisfy these regulatory requirements or the Federal Reserve’s policies, we will be unable to pay dividends on our common stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−1 removed12 unchanged
Biggest changeThis assessment tool incorporates regulatory guidance as well as concepts from other industry standards, including the National Institute of Standards and Technology Cybersecurity Framework. The results of the assessment are used to determine risk management practices and controls in order to align our cybersecurity preparedness to address the identified risks within our risk appetite.
Biggest changeThe findings from the vendor are used to determine risk management practices and controls in order to align our cybersecurity preparedness to address the identified risks within our risk appetite. We also ngage a third-party to provide an annual risk assessment of our compliance with interagency guidelines for safeguarding confidential customer information.
The Technology Committee is chaired by our Chief Technology & Information Security Officer and members include two members from our Board of Directors, one independent Director and the President, Chief Financial Officer, Chief Banking Officer, IT Infrastructure & Security Manager, and officers of key business systems.
The Technology Committee is chaired by our Chief Technology & Information Security Officer and members include two members from our board of directors, one independent Director and the President, Chief Financial Officer, Chief Banking Officer, Chief Risk Officer, Chief Services Officer, IT Infrastructure & Security Manager, and officers of key business systems.
Examples of cyber threat intelligence sources include the Financial Services Information Sharing and Analysis Center, trade organizations, the Cybersecurity and Infrastructure Security Agency, security service providers, vendor alerts, and open-source intelligence sources. The Bank utilizes cybersecurity tools to detect and prevent successful phishing campaigns.
Examples of cyber threat intelligence sources include the Financial Services Information Sharing and Analysis Center, trade organizations, the Cybersecurity and Infrastructure Security Agency, security service providers, vendor alerts, and open-source intelligence sources. The Ba nk utilizes cybersecurity tools to detect and prevent successful phishing campaigns.
Internal audits, regulatory examinations and third-party assessments of our processes in information technology and information security also help us assess our cybersecurity preparedness and whether risk management practices and controls need adjustment. Risk issues are identified through assessments, audits, 31 Table of Contents examinations and security testing.
Internal audits, regulatory examinations and third-party assessments of our processes in information technology and information security also help us assess our cybersecurity preparedness and whether risk management practices and controls need adjustment. Risk issues are identified through assessments, audits, examinations and security testing.
All employees receive three training sessions annually covering social engineering, phishing and current scam events, followed by periodic testing. Our cybersecurity risk management processes are integrated into our overall risk management system through our risk management committee structure.
All employees receive three training sessions annually covering social engineering, phishing and current scam events, followed by periodic testing. 32 Table of Contents Our cybersecurity risk management processes are integrated into our overall risk management system through our risk management committee structure.
We have contracted with various service providers (vendors) who provide a broad range of services, including core banking, communications, collaboration and infrastructure services.
Findings are tracked and reported to the Bank’s Technology Committee and the Audit Committee of the board of directors. We have contracted with various service providers (vendors) who provide a broad range of services, including core banking, communications, collaboration and infrastructure services.
On an annual basis, the Board of Directors reviews and approves our information security program and information security policy. We currently use the Federal Financial Institutions Examination Council’s Cybersecurity Assessment Tool ("FFIEC CAT") to help us identify our cybersecurity risks and determine our cybersecurity preparedness.
On an annual basis, the board of directors reviews and approves our information security program and information security policy. We currently partner with a third-party vendor to help us identify our cybersecurity risks and determine our cybersecurity preparedness.
We engage a third-party to provide an annual risk assessment of our compliance with interagency guidelines for safeguarding confidential customer information. This risk assessment focuses on our information security program and the controls in place to protect client information. The results of the risk assessment are analyzed and used to improve our information security program where needed.
This risk assessment focuses on our information security program and the controls in place to protect client information. The results of the risk assessment are analyzed and used to improve our information security program where needed.
Removed
Findings are tracked and reported to the Bank’s Technology Committee, and the Audit Committee of the Board of Directors. The FFIEC CAT will sunset in Fall 2025. We are currently evaluating other assessment tools which will be implemented in 2026.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeWe typically establish branches as necessary to provide support for established business development professionals with substantial books of business and customer relationships. We believe that upon expiration of each of our leases we will be able to extend the leases on satisfactory terms or relocate to another acceptable location. 32 Table of Contents
Biggest changeWe typically establish branches as necessary to provide support for established business development professionals with substantial books of business and customer relationships. We believe that upon expiration of each of our leases we will be able to extend the leases on satisfactory terms or relocate to another acceptable location.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−6 removed3 unchanged
Biggest changeShares may be repurchased in the open market or through privately negotiated transactions. For the year ended December 31, 2024, no shares of our common stock were repurchased under the program. Item 6. Reserved
Biggest changeShares may be repurchased in the open market or through privately negotiated transactions. For the year ended December 31, 2025, we repurchased 572,310 shares of our common stock at a total cost of $6.6 million under the program. All of these shares have been cancelled and returned to the status of authorized but unissued.
The Repurchase Program will expire on March 31, 2025, subject to earlier termination of the program by the Board of Directors. The timing and amount of repurchases, if any, will depend on market conditions, share price, 34 Table of Contents trading volume, and other factors, and there is no assurance that we will purchase shares during any period.
The Repurchase Program will expire on March 31, 2026, subject to earlier termination of the program by the Board of Directors. The timing and amount of repurchases, if any, will depend on market conditions, share price, trading volume, and other factors, and there is no assurance that we will purchase shares during any period.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price for Common Stock and Dividends. Our common stock is currently listed on the Nasdaq Capital Market under the symbol "FVCB." As of March 14, 2025, there were 402 holders of record of our common stock and approximately 1,682 total beneficial shareholders.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price for Common Stock and Dividends. Our common stock is currently listed on the Nasdaq Capital Market under the symbol "FVCB." As of March 12, 2026, there were 365 holders of record of our common stock and approximately 1,682 total beneficial shareholders.
Repurchases On March 21, 2024, we publicly announced that the Board of Directors had renewed the share repurchase program (the "Repurchase Program") that was initiated in 2020. Under the renewed Repurchase Program, we may purchase up to 1,300,000 shares of our common stock, or approximately 8% of our outstanding shares of common stock at December 31, 2023.
Repurchases On March 20, 2025, we publicly announced that the board of directors had renewed the share repurchase program (the "Repurchase Program") that was initiated in 2020. Under the renewed Repurchase Program, we may purchase up to 1,300,000 shares of our common stock, or approximately 7% of our outstanding shares of common stock at December 31, 2024.
Any future determination relating to our dividend policy will be made by our board of directors and will depend on a number of factors, including general and economic conditions, industry standards, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, our ability to service debt obligations senior to our common stock, banking regulations, contractual, legal, tax and regulatory restrictions, and limitations on the payment of dividends by us to our shareholders or by the Bank to us, and such other factors as our board of directors may deem relevant.
Although we currently expect to continue to pay quarterly dividends, any future dividend determinations will be made by our board of directors and will depend on a number of factors, including general and economic conditions, industry standards, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, our ability to service debt obligations senior to our common stock, banking regulations, contractual, legal, tax and regulatory restrictions, and limitations on the payment of dividends by us to our shareholders or by the Bank to us, and such other factors as our board of directors may deem relevant.
As we are a bank holding company and do not engage directly in business activities of a material nature, our ability to pay dividends on our common stock depends, in large part, upon our receipt of dividends from the Bank.
As the Company is a bank holding company and does not engage directly in business activities of a material nature, its ability to pay dividends on its common stock depends, in large part, upon its receipt of dividends from the Bank.
Removed
Dividends To date, we have not paid, and we do not currently intend to pay, a cash dividend on our common stock. Holders of our common stock are only entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends.
Added
Dividend Policy. We began paying a quarterly dividend on our common stock in the third quarter of 2025. We declared a quarterly dividend of $0.06 per share in each of the third and fourth quarters of 2025.
Removed
The Federal Reserve has established requirements with respect to the maintenance of appropriate levels of capital by registered bank holding companies. Compliance with such standards, as presently in effect, or as they may be amended from time to time, could possibly limit the amount of dividends that the Company may pay in the future.
Added
The following table provides details of our common stock repurchases for the three months ended December 31, 2025: Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share ($) (c) Total Number of Shares Purchased as Part of Publicly Announced Program (d) Maximum Number of Shares that May Yet Be Purchased Under the Program October 1, 2025 - October 31, 2025 — — — 885,000 November 1, 2025 - November 30, 2025 157,310 12.69 157,310 727,690 December 1, 2025 - December 31, 2025 — — — 727,690 Total 157,310 12.69 157,310 34 Table of Contents Item 6.
Removed
The Federal Reserve has issued guidance on the payment of cash dividends by bank holding companies. In the statement, the Federal Reserve expressed its view that a holding company experiencing earnings weaknesses should not pay cash dividends exceeding its net income, or which could only be funded in ways that weaken the holding company's financial health, such as by borrowing.
Removed
Under Federal Reserve guidance, as a general matter, the board of directors of a holding company should inform the Federal Reserve and should eliminate, defer, or significantly reduce the dividends if: (i) the holding company's net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the holding company's prospective rate of earnings retention is not consistent with the capital needs and overall current and prospective financial condition; or (iii) the holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Removed
As a depository institution, the deposits of which are insured by the FDIC, the Bank may not pay dividends or distribute any of its capital assets while it remains in default on any assessment due the FDIC. The Bank currently is not in default under any of its obligations to the FDIC.
Removed
On December 15, 2022, the Company announced that the Board of Directors approved a five-for-four split of the Company's common stock in the form of a 25% stock dividend for shareholders of record on January 9, 2023. This dividend was paid on January 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

134 edited+42 added−30 removed47 unchanged
Biggest changeThe following table provides further stratification of these and additional classes of commercial real estate and construction loans at December 31, 2024 (dollars in thousands). 49 Owner Occupied Commercial Real Estate Non-Owner Occupied Commercial Real Estate Construction Total CRE Asset Class Average Loan-to-Value (1) Number of Total Loans Bank Owned Principal (2) Average Loan-to-Value (1) Number of Total Loans Bank Owned Principal (2) Top 3 Geographic Concentration Number of Total Loans Bank Owned Principal (2) Total Bank Owned Principal (2) % of Total Loans Office, Class A 69% 6 $7,374 46% 1 $2,982 Counties of Fairfax and Loudoun, Virginia and Montgomery County, Maryland — $— $10,356 Office, Class B 45% 27 10,173 45% 29 56,502 — — 66,675 Office, Class C 53% 9 5,326 39% 8 1,842 1 857 8,025 Office, Medical 39% 7 1,093 47% 6 28,060 1 9,633 38,786 Subtotal 49 $23,966 44 $89,386 2 $10,490 $123,842 7% Retail- Neighborhood/Community Shop — $— 44% 31 $86,706 Prince George's County, Maryland, Baltimore County, MD, Fairfax County, VA 1 $5,538 92,244 Retail- Restaurant 57% 7 6,152 44% 16 25,832 — — 31,984 Retail- Single Tenant 58% 5 1,919 41% 20 35,856 — — 37,775 Retail- Anchored,Other 0 — 52% 12 35,266 — — 35,266 Retail- Grocery-anchored — — 46% 9 53,753 0 — 53,753 Subtotal 12 $8,071 88 $237,413 1 $5,538 $251,022 13% Multi-family, Class A (Market) — $— 2 $1,438 Washington, D.C., Baltimore City, Maryland and Richmond City, Virginia 1 $1,276 $2,714 Multi-family, Class B (Market) — — 62% 21 69,752 1 3,991 73,743 Multi-family, Class C (Market) — — 55% 58 73,141 1 997 74,138 Multi-Family-Affordable Housing — — 52% 5 12,157 0 — 12,157 Subtotal — $— 86 $156,488 3 $6,264 $162,752 9% Industrial 51% 40 $65,926 47% 39 $124,079 Prince William County, Virginia, Fairfax County, Virginia and Howard County, Maryland 1 $1,781 $191,786 Warehouse 51% 14 18,745 27% 7 9,188 — — 27,933 Flex 50% 12 10,212 54% 14 56,393 3 132 66,737 Subtotal 66 $94,883 60 $189,660 4 $1,913 $286,456 15% Hotels $— 43% 9 $54,752 1 $7,791 $62,543 3% Mixed Use 45% 10 5,745 60% 33 60,898 — — 66,643 4% Land $ — $ — 11 $ 57,213 $57,213 3% 1- 4 family construction $ — $ — 3 48,504 48,504 2% Other (including net deferred fees) $55,517 $61,528 $24,654 141,699 8% Total commercial real estate and construction loans, net of fees, at December 31, 2024 $ 188,182 $ 850,125 $ 162,367 $ 1,200,674 64% Total commercial real estate and construction loans, net of fees, at December 31, 2023 $ 212,889 $ 878,744 $ 147,998 $ 1,239,631 68% _________________________ (1).
Biggest changeThe following table provides further stratification of these and additional classes of commercial real estate and construction loans at December 31, 2025 (dollars in thousands). 49 Table of Contents Owner Occupied Commercial Real Estate Non-Owner Occupied Commercial Real Estate Construction Total CRE Asset Class Average Loan-to-Value (1) Number of Total Loans Bank Owned Principal (2) Average Loan-to-Value (1) Number of Total Loans Bank Owned Principal (2) Top 3 Geographic Concentration Number of Total Loans Bank Owned Principal (2) Total Bank Owned Principal (2) % of Total Loans Office, Class A 67% 7 $40,532 17% 1 $2,894 Counties of Fairfax and Loudoun, VA and Montgomery County, MD — $— $43,426 Office, Class B 49% 23 8,232 44% 22 44,776 — — 53,008 Office, Class C 46% 9 5,081 30% 7 7,568 2 942 13,591 Office, Medical 33% 7 971 43% 5 24,616 1 13,583 39,170 Subtotal 46 $54,816 35 $79,854 3 $14,525 $149,195 8% Retail- Neighborhood/Community Shop — $— 43% 32 $91,965 Counties of Prince George's and Baltimore, MD and Fairfax County, VA — $— $91,965 Retail- Restaurant 53% 4 4,331 40% 11 20,446 — — 24,777 Retail- Single Tenant 54% 5 1,823 42% 14 27,143 — — 28,966 Retail- Anchored,Other 0 — 51% 12 33,359 — — 33,359 Retail- Grocery-anchored — — 40% 6 36,446 — — 36,446 Subtotal 9 $6,154 75 $209,359 — $— $215,513 11% Multi-family, Class A — $— 30% 2 $1,425 Washington, D.C., Baltimore City, MD and Richmond City, VA 2 $33,087 $34,512 Multi-family, Class B — — 61% 18 63,092 — — 63,092 Multi-family, Class C — — 53% 58 71,598 1 982 72,580 Multi-Family-Affordable Housing — — 36% 3 9,321 — — 9,321 Subtotal — $— 81 $145,436 3 $34,069 $179,505 9% Industrial 47% 38 $124,217 53% 29 $114,780 Counties of Prince William and Fairfax, VA and Howard County, MD — $— $238,997 Warehouse 50% 8 6,951 27% 7 8,907 — — 15,858 Flex 49% 12 10,350 52% 13 54,939 2 — 65,289 Subtotal 58 $141,518 49 $178,626 2 $— $320,144 16% Hotels $— 40% 7 $35,383 1 $7,635 $43,018 2% Mixed Use 44% 8 6,719 59% 27 44,965 — — 51,684 3% Land 66% 1,680 1% 2 605 19 33,572 35,857 2% 1- 4 family construction — — 14 48,406 48,406 2% Other (including net deferred fees) 55,430 72,104 14,799 142,333 7% Total commercial real estate and construction loans, net of fees, at December 31, 2025 $ 266,317 $ 766,332 $ 153,006 $ 1,185,655 61% Total commercial real estate and construction loans, net of fees, at December 31, 2024 $ 188,182 $ 850,125 $ 162,367 $ 1,200,674 64% _________________________ (1).
The minimum capital requirements for the Bank are: (i) a CET1 capital ratio of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6%; (iii) a total risk-based capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%.
The minimum capital requirements for the Bank are: (i) CET1 capital ratio of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6%; (iii) a total risk-based capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%.
In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from minority membership interest in ACM, merchant services fee income, insurance commission income, income from bank owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.
In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from our minority membership interest in ACM, merchant services fee income, insurance commission income, income from bank owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.
Critical Accounting Policies General The accounting principles we apply under GAAP are complex and require management to apply significant judgment to various accounting, reporting, and disclosure matters. Management must use assumptions, judgments, and estimates when applying these principles where precise measurements are not possible or practical.
Critical Accounting Estimates General The accounting principles we apply under GAAP are complex and require management to apply significant judgment to various accounting, reporting, and disclosure matters. Management must use assumptions, judgments, and estimates when applying these principles where precise measurements are not possible or practical.
Stable core deposits and a strong capital position provide 56 the base for our liquidity position. We believe we have demonstrated our ability to attract deposits because of our convenient branch locations, personal service, technology and pricing.
Stable core deposits and a strong capital position provide the base for our liquidity position. We believe we have demonstrated our ability to attract deposits because of our convenient branch locations, personal service, technology and pricing.
The following table shows the effect of variations in the volume and mix of our assets and liabilities, as well as the changes in interest rates had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities for the years ended December 31, 2024 and 2023.
The following table shows the effect of variations in the volume and mix of our assets and liabilities, as well as the changes in interest rates had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities for the years ended December 31, 2025 and 2024.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following presents management's discussion and analysis of our consolidated financial condition at December 31, 2024 and 2023 and the results of our operations for the years ended December 31, 2024 and 2023.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following presents management's discussion and analysis of our consolidated financial condition at December 31, 2025 and 2024 and the results of our operations for the years ended December 31, 2025 and 2024.
Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the minimum plus the conservation buffer will face constraints on dividends, equity repurchases, and compensation. We believe that the Bank met all capital adequacy requirements to which it was subject as of December 31, 2024 and December 31, 2023.
Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the minimum plus the conservation buffer will face constraints on dividends, equity repurchases, and compensation. We believe that the Bank met all capital adequacy requirements to which it was subject at December 31, 2025 and 2024.
The decrease in residential loans was primarily a result of principal repayments during 2024. 47 The following table sets forth the repricing characteristics and sensitivity to interest rate changes to the outstanding principal balance of our loan portfolio at December 31, 2024.
The decrease in residential loans was primarily a result of principal repayments during 2025. 47 Table of Contents The following table sets forth the repricing characteristics and sensitivity to interest rate changes to the outstanding principal balance of our loan portfolio at December 31, 2025.
As a result of the assessment performed as of December 31, 2024, the investment securities with unrealized losses are a result of pricing changes due to recent rising interest rate conditions in the current market environment and not as a result of credit deterioration. Contractual cash flows for agency-backed portfolios are guaranteed and funded by the U.S. government.
As a result of the assessment performed as of December 31, 2025, the investment securities with unrealized losses are a result of pricing changes due to recent rising interest rate conditions in the current market environment and not as a result of credit deterioration. C ontractual cash flows for agency-backed portfolios are guaranteed and funded by the U.S. government.
Average balances of nonperforming loans, which consist of nonaccrual loans, are included in the net interest margin calculation and did not have a material impact on our net interest margin in 2024 and 2023.
The average balances of nonperforming loans, which consist of nonaccrual loans, are included in the net interest margin calculation and did not have a material impact on our net interest margin for 2025 and 2024.
As of December 31, 2024 and 2023, the majority of the investment securities portfolio consisted of securities rated AAA by a leading rating agency. Investment securities which carry a AAA rating are judged to be of the best quality and carry the smallest degree of investment risk.
At December 31, 2025 and 2024, the majority of the investment securities portfolio consisted of securities rated AAA by a leading rating agency. Investment securities which carry a AAA rating are judged to be of the best quality and carry the smallest degree of investment risk.
The following tables shows the minimum capital requirements and the Bank's capital position at December 31, 2024 and December 31, 2023.
The following tables shows the minimum capital requirements and the Bank's capital position at December 31, 2025 and 2024.
In terest income on non-accruing loans was not material for the periods presented. Net loan fees and late charges included in interest income on loans totaled $1.9 million and $2.1 million for the year ended December 31, 2024 and 2023, respectively. 41 (2) The average balances for investment securities includes restricted stock.
In terest income on non-accruing loans was not material for the periods presented. Net loan fees and late charges included in interest income on loans totaled $2.3 million and $1.9 million for the year ended December 31, 2025 and 2024, respectively. 41 Table of Contents (2) The average balances for investment securities includes restricted stock.
Our allowance for credit losses on loans as a percent of total loans, net of deferred fees and costs, was 0.97% and 1.03% at December 31, 2024 and 2023, respectively. We lend to well-established and relationship-driven borrowers which has contributed to our track record of low historical credit losses.
Our allowance for credit losses on loans as a percent of total loans, net of deferred fees and costs, was 0.97% at each of December 31, 2025 and 2024. We lend to well-established and relationship-driven borrowers which has contributed to our track record of low historical credit losses.
The Bank has obtained a letter of credit of $80 million to secure public funds. (2) The Bank has pledged a portion of the commercial and industrial loan portfolio to the FRB to secure the line of the credit. We have established a formal liquidity contingency plan which establishes a liquidity management team and provides guidelines for liquidity management.
(2) The Bank has pledged a portion of the commercial and industrial loan portfolio to the FRB to secure the line of the credit. We have established a formal liquidity contingency plan which establishes a liquidity management team and provides guidelines for liquidity management.
Our commercial relationship officers focus on attracting small and medium sized businesses, commercial real estate developers and builders, including government contractors, non-profit organizations, and professionals. Our approach to our market features competitive customized financial services offered to customers and prospects in a personal relationship context by seasoned professionals.
Our commercial relationship officers focus on attracting small and medium sized businesses, commercial real estate developers and builders, including government contractors, non-profit organizations, and professionals. Our approach to our market features competitive customized financial services offered to customers and prospects in a personal relationship context by seasoned professionals. Net interest income is our primary source of revenue.
As of December 31, 2024, estimated uninsured deposits (excluding collateralized deposits) for the Bank were 31 .2% of total deposits and were 31.1% at December 31, 2023. In addition to deposits, we have access to the various wholesale funding markets. These markets include the brokered certificate of deposit market and the federal funds market.
As of December 31, 2025 and 2024 , estimated uninsured deposits (excluding collateralized deposits) for the Bank were 45% and 31% of total deposits, respectively . In addition to deposits, we have access to the various wholesale funding markets. These markets include the brokered certificate of deposit market and the federal funds market.
For each of our criticized assets, we individually evaluate each loan, generally through the performance of a collateral analysis to determine the amount of allowance required. As a result of the analysis completed, we had a reserve for individually assessed loans totaling $468 thousand and $676 thousand at December 31, 2024 and 2023, respectively.
For each of our criticized assets, we individually evaluate each loan, generally through the performance of a collateral analysis to determine the amount of allowance required. As a result of the analysis completed, we had a reserve for individually assessed loans totali ng $1.1 million and $468 thousand at December 31, 2025 and 2024, respectively.
Our regulatory commercial real estate concentration (which includes nonowner-occupied real estate and construction loans) was 371% of our total risk-based capital at December 31, 2024. Our commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of our portfolio in a disciplined manner.
Our regulatory commercial real estate concentration (which includes nonowner-occupied real estate and construction loans) w as 313% o f our total risk-based capital at December 31, 2025. Our commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of our portfolio in a disciplined manner.
Our ratio of nonperforming loans to total assets was 0.58% and 0.08% at December 31, 2024 and 2023, respectively. We had no other real estate owned and there were no loan modifications for borrowers who were experiencing financial difficulty during the quarter ended December 31, 2024.
Our ratio of nonperforming loans to total assets was 0.47% and 0 .58% at December 31, 2025 and 2024, respectivel y. We had no other real estate owned and there were no loan modifications for borrowers who were experiencing financial difficulty during the year ended December 31, 2025.
As mentioned above, our commercial real estate loan portfolio totaled $1.04 billion, or 56% of total loans, at December 31, 2024 and $1.09 billion, or 60% of total loans, at December 31, 2023. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration.
As mentioned above, our commercial real estate loan portfolio total ed $1.03 billion, or 53% of total loans, at December 31, 2025 and $1.04 billion, or 56% of total loans, at December 31, 2024. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration.
For a reconciliation of this non-GAAP information which excludes the effect of these non-recurring items, please refer to the table below. • Net interest income increased $1.2 million, or 2%, to $55.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
For a reconciliation of this non-GAAP information which excludes the effect of these non-recurring items, please refer to the table below. • Net interest incom e increased $8.2 million, or 15%, to $63.8 million for the year ended December 31, 2025 compared to $55.6 million for the year ended December 31, 2024.
See “Critical Accounting Policies” above for more information on our allowance for credit losses methodology. The following tables present additional information pertaining to the activity in and allocation of the allowance for credit losses on loans by loan type and the percentage of the loan type to the total loan portfolio for the periods and at the dates presented.
The following tables present additional information pertaining to the activity in and allocation of the allowance for credit losses on loans by loan type and the percentage of the loan type to the total loan portfolio for the periods and at the dates presented.
All of our mortgage-backed securities are guaranteed by either the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association. The effective duration of the investment securities portfolio continues to be slightly over five years, which is within the industry average.
All of our mortgage-backed securities are guaranteed by either the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association. The effective duration of the investment securities portfolio is 5.25 years, which is within the industry average.
Nonperforming Loans and Assets At December 31, 2024 and 2023 (Dollars in thousands) December 31, 2024 December 31, 2023 Nonperforming assets: Nonaccrual loans, gross $ 11,241 $ 1,689 Loans contractually past‑due 90 days or more and still accruing 1,619 140 Total nonperforming loans (NPLs) $ 12,860 $ 1,829 Total nonperforming assets (NPAs) $ 12,860 $ 1,829 NPLs/Total Assets 0.58 % 0.08 % NPAs/Total Assets 0.58 % 0.08 % Allowance for credit losses on loans/NPLs 140.97 % 1,031.77 % We closely and proactively monitor the effects of recent market activity.
Nonperforming Loans and Assets At December 31, 2025 and 2024 (Dollars in thousands) December 31, 2025 December 31, 2024 Nonperforming assets: Nonaccrual loans, gross $ 10,168 $ 11,241 Loans contractually past‑due 90 days or more and still accruing 545 1,619 Total nonperforming loans (NPLs) $ 10,713 $ 12,860 Total nonperforming assets (NPAs) $ 10,713 $ 12,860 NPLs/Total Assets 0.47 % 0.58 % NPAs/Total Assets 0.47 % 0.58 % Allowance for credit losses on loans/NPLs 172.86 % 140.97 % We closely and proactively monitor the effects of recent market activity.
Investment Securities by Stated Yields At December 31, 2024 and 2023 At December 31, 2024 Within One Year One to Five Years Five to Ten Years Over Ten Years Total Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Held‑to‑maturity Securities of state and local municipalities tax exempt — % 2.32 % — % — % 2.32 % Total held‑to‑maturity securities — % 2.32 % — % — % 2.32 % Available‑for‑sale Securities of U.S. government and federal agencies — 1.75 1.55 — 1.59 Securities of state and local municipalities — — — 2.92 2.92 Corporate bonds — 9.26 4.01 — 4.50 Mortgaged‑backed securities — 2.09 4.31 1.59 1.63 Total available‑for‑sale securities — % 5.19 % 3.34 % 1.59 % 1.92 % Total investment securities — % 5.01 % 3.34 % 1.59 % 1.92 % At December 31, 2023 Within One Year One to Five Years Five to Ten Years Over Ten Years Total Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Held‑to‑maturity Securities of state and local municipalities tax exempt — % 2.32 % — % — % 2.32 % Total held‑to‑maturity securities — % 2.32 % — % — % 2.32 % Available‑for‑sale Securities of U.S. government and federal agencies — — 1.59 — 1.59 Securities of state and local municipalities 3.00 — — 2.92 2.98 Corporate bonds — 10.35 4.09 — 4.40 Mortgaged‑backed securities — 2.11 3.22 1.60 1.61 Total available‑for‑sale securities 3.00 % 9.52 % 3.23 % 1.60 % 1.89 % Total investment securities 3.00 % 8.13 % 3.23 % 1.60 % 1.89 % 53 Deposits and Other Borrowed Funds The following table sets forth the average balances of deposits and the percentage of each category to total average deposits for the years ended December 31, 2024 and 2023.
Investment Securities by Stated Yields At December 31, 2025 and 2024 At December 31, 2025 Within One Year One to Five Years Five to Ten Years Over Ten Years Total Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Held‑to‑maturity Securities of state and local municipalities tax exempt — % 2.32 % — % — % 2.32 % Total held‑to‑maturity securities — % 2.32 % — % — % 2.32 % Available‑for‑sale Securities of U.S. government and federal agencies — 1.59 — — 1.59 Securities of state and local municipalities — — — 2.92 2.92 Corporate bonds — 9.12 3.60 — 4.55 Mortgaged‑backed securities — 4.41 4.52 1.61 1.70 Total available‑for‑sale securities — % 3.30 % 3.79 % 1.62 % 1.95 % Total investment securities — % 3.29 % 3.79 % 1.62 % 1.95 % At December 31, 2024 Within One Year One to Five Years Five to Ten Years Over Ten Years Total Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Weighted Average Yield Held‑to‑maturity Securities of state and local municipalities tax exempt — % 2.32 % — % — % 2.32 % Total held‑to‑maturity securities — % 2.32 % — % — % 2.32 % Available‑for‑sale Securities of U.S. government and federal agencies — 1.75 1.55 — 1.59 Securities of state and local municipalities — — — 2.92 2.92 Corporate bonds — 9.26 4.01 — 4.50 Mortgaged‑backed securities — 2.09 4.31 1.59 1.63 Total available‑for‑sale securities — % 5.19 % 3.34 % 1.59 % 1.92 % Total investment securities — % 5.01 % 3.34 % 1.59 % 1.92 % 53 Table of Contents Deposits and Other Borrowed Funds The following table sets forth the average balances of deposits and the percentage of each category to total average deposits for the years ended December 31, 2025 and 2024.
The yield on average interest-earning deposits decreased 4 basis points to 5.17% for the year ended December 31, 2024, primarily as a result of the Federal Reserve's Federal Open Market Committee ("FOMC") decision to begin decreasing its targeted federal funds rate in September 2024.
The yield on average interest-earning deposits decreased 85 basis points to 4.32% for the year ended December 31, 2025, primarily as a result of the Federal Reserve's Federal Open Market Committee ("FOMC") decision to decrease its targeted federal funds rate beginning September 2024.
Our FHLB advances have pay-fixed/receive-floating interest rate swaps to reduce our funding costs, and as such, the weighted average rate of these FHLB advances are 3.60% and 3.21% at December 31, 2024 and 2023, respectively.
Our FHLB advances at December 31, 2024 had pay-fixed/receive-floating interest rate swaps to reduce our funding costs, a nd as such, the weighted average rate of these FHLB advances are 3.60% at December 31, 2024.
When excluding collateralized deposits, our estimate of uninsured deposits decreases to $584.0 million, or 31.2% of total deposits at December 31, 2024. 54 The following table reports maturities of the estimated amount of uninsured certificates of deposit at December 31, 2024.
When excluding collateralized deposits, our estimate of uninsured deposits decreases to $697.0 million, or 34.9% of total deposits at December 31, 2025. 54 Table of Contents The following table reports maturities of the estimated amount of uninsured certificates of deposit at December 31, 2025.
Tangible book value per share (a non-GAAP financial measure which is defined in the table below) at December 31, 2024 and December 31, 2023 was $12.52 and $11.77, respectively. As noted above, regulatory capital levels for the Bank meets those established for "well capitalized" institutions.
Tangible book value per share (a non-GAAP financial measure which is defined in the table below) at December 31, 2025 and December 31, 2024 was $13.74 and $12.52, respectiv ely. 55 Table of Contents As noted above, regulatory capital levels for the Bank meets those established for "well capitalized" institutions.
At December 31, 2024 and 2023, investment securities available-for-sale that were pledged as collateral for municipal deposits totaled $55.1 million and $7.2 million, respectively. Cash flow from amortizing assets or maturing assets also provides funding to meet the needs of depositors and borrowers.
At December 31, 2025 and 2024, investment securities available -for-sale that were pledged as collateral for municipal deposits total ed $19.4 million and $55.1 million, re spectively. Cash flow from amortizing assets or maturing assets also provides funding to meet the needs of depositors and borrowers.
A deterioration in the financial condition or prospects of a particular industry or a failure or downgrade of, or default by, any particular entity or group of entities could negatively impact our business, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities and industries, may not function as we have anticipated.
A deterioration in the financial condition or prospects of a particular industry or a failure or downgrade of, or default by, any particular entity or group of entities could negatively impact our business, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities and industries, may not function as we have anticipated. 50 Table of Contents See “Critical Accounting Policies” above for more information on our allowance for credit losses methodology.
Those lines of credit may not be drawn upon to the total extent to which we have committed. Standby letters of credit are conditional commitments we issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions.
Standby letters of credit are conditional commitments we issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions.
The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off.
The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio. 35 Table of Contents Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.
In addition to managing interest rate risk, we also analyze our loan portfolio for exposure to credit risk. Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit.
Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit.
Liquid assets, which include cash and due from banks, federal funds sold and investment securities available for sale, totaled $247.4 million at December 31, 2024, or 11% of total assets, an increase from $232.1 million, or 11% of total assets, at December 31, 2023.
Liquid assets, which include cash and due from banks, federal funds sold and investment securities available for sale, totaled $280.8 million at December 31, 2025, or 12% of to tal ass ets, an increase from $247.4 million, or 11% of total assets, at December 31, 2024.
At December 31, 2023, we owned $3.6 million in FRB stock and $5.8 million in FHLB stock. 52 The following table presents the weighted average yields of our investment portfolio for each of the maturity ranges at December 31, 2024 and 2023.
At December 31, 2024, we owned $4.1 million in FRB stock and $4.0 million in FHLB stock. 52 Table of Contents The following table presents the weighted average yields of our investment portfolio for each of the maturity ranges at December 31, 2025 and 2024.
The fair value of our investment securities available-for-sale was $156.5 million at December 31, 2024, a decrease of $15.1 million, or 9%, from $170.6 million at December 31, 2023, primarily due to principal repayments and maturities of $15.6 million offset by new purchases for $1.8 million, and a decrease in the market value of the investment securities portfolio totaling $1.3 million at December 31, 2024.
The fair value of our investment securities available-for-sale was $153.2 million at December 31, 2025, a decrease of $3.3 million, or 2%, from $1 56.5 million at December 31, 2024 , primarily due to principal repayments, calls and maturities of $16.3 million, offset by new purchases of $2.9 million, and an increase in the market value of the investment securities portfolio totaling $10.2 million at December 31, 2025.
(3) Efficiency ratio is calculated as total noninterest expense divided by the total of net interest income and noninterest income. 39 Non‑GAAP Reconciliation Years Ended December 31, (Dollars in thousands, except per share data) 2024 2023 Total stockholders' equity $ 235,354 $ 217,117 Less: goodwill and intangibles, net (7,420) (7,585) Tangible Common Equity $ 227,934 $ 209,532 Book value per common share $ 12.93 $ 12.19 Less: intangible book value per common share (0.41) (0.42) Tangible book value per common share $ 12.52 $ 11.77 Results of Operations— Years Ended December 31, 2024 and December 31, 2023 Overview We recorded net income of $15.1 million, or $0.82 per diluted common share, for the year ended December 31, 2024, compared to net income of $3.8 million, or $0.21 per diluted common share for the year ended December 31, 2023.
(3) Efficiency ratio is calculated as total noninterest expense divided by the total of net interest income and noninterest income. 39 Table of Contents Non‑GAAP Reconciliation December 31, (Dollars in thousands, except per share data) 2025 2024 Total stockholders' equity $ 253,600 $ 235,354 Less: goodwill and intangibles, net (7,295) (7,420) Tangible Common Equity $ 246,305 $ 227,934 Book value per common share $ 14.15 $ 12.93 Less: intangible book value per common share (0.41) (0.41) Tangible book value per common share $ 13.74 $ 12.52 Results of Operations— Years Ended December 31, 2025 and December 31, 2024 Overview We recorded net incom e of $22.1 million, or $1.21 per d iluted common share, for the year ended December 31, 2025, compared to net income of $15.1 million, or $0.82 per diluted common share for the year ended December 31, 2024.
Included in commercial real estate are loans secured by office properties totaling $123.8 million, or 7% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with only $2.3 million, or 0.12% of total loans, located in Washington, D.C.
Included in commercial real estate are loans secured by office properties tota ling $149.2 million, or 8% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with o nly $1.0 million, or 0.05% of total loans, located in Washington, D.C.
This analysis includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. At December 31, 2024, we had $3.3 million in loans identified as special mention, a decrease of $3.0 million from December 31, 2023.
This analysis includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. At December 31, 2025 , we had $47.7 million in loans identified as special mention, an increase of $44.4 million fr om December 31, 2024.
We recorded net charge-offs of $839 thousand and $375 thousand for the years ended December 31, 2024 and December 31, 2023, respectively. See “Asset Quality” below for additional information on the credit quality of the loan portfolio. 44 Noninterest Income The following table provides detail for noninterest incom e for the years ended December 31, 2024 and 2023.
See “Asset Quality” below for additional information on the credit quality of the loan portfolio. 44 Table of Contents Noninterest Income The following table provides detail for noninterest incom e for the years ended December 31, 2025 and 2024.
Reconciliation of Book Value (GAAP) to Tangible Book Value (non-GAAP) At December 31, 2024 and December 31, 2023 (Dollars in thousands, except per share data) 2024 2023 Total stockholders' equity (GAAP) $ 235,354 $ 217,117 Less: goodwill and intangibles, net (7,420) (7,585) Tangible Common Equity (non-GAAP) $ 227,934 $ 209,532 Book value per common share (GAAP) $ 12.93 $ 12.19 Less: intangible book value per common share (0.41) (0.42) Tangible book value per common share (non-GAAP) $ 12.52 $ 11.77 Liquidity Liquidity in the banking industry is defined as the ability to meet the demand for funds of both depositors and borrowers.
Reconciliation of Book Value (GAAP) to Tangible Book Value (non-GAAP) At December 31, 2025 and December 31, 2024 (Dollars in thousands, except per share data) 2025 2024 Total stockholders' equity (GAAP) $ 253,600 $ 235,354 Less: goodwill and intangibles, net (7,295) (7,420) Tangible Common Equity (non-GAAP) $ 246,305 $ 227,934 Book value per common share (GAAP) $ 14.15 $ 12.93 Less: intangible book value per common share (0.41) (0.41) Tangible book value per common share (non-GAAP) $ 13.74 $ 12.52 56 Table of Contents Liquidity Liquidity in the banking industry is defined as the ability to meet the demand for funds of both depositors and borrowers.
Nonperforming loans at December 31, 2024 totaled $12.9 million, or 0.58% of total assets, compared to $1.8 million, or 0.08%, of total assets at December 31, 2023. We had no other real estate owned at December 31, 2024 and 2023, respectively.
Nonperforming loans at December 31, 2025 total ed $10.9 million, or 0.48% of tota l assets, compared to $12.9 million, or 0.58%, of total assets at December 31, 2024 . We had no other real estate owned at December 31, 2025 and 2024, respectively.
Income from BOLI decreased to $397 thousand for the year ended December 31, 2024 compared to $1.5 million for same period of 2023, the decrease being a result of surrendering our BOLI policies during the first quarter of 2024. 45 Noninterest Expense The following table reflects the components of noninterest expense for the years ended December 31, 2024 and 2023.
Income from BOLI decreased to $289 thousand for the year ended December 31, 2025 compared to $397 thousand for same period of 2024, a direct result of the BOLI policies we surrendered during the first quarter of 2024. 45 Table of Contents Noninterest Expense The following table reflects the components of noninterest expense for the years ended December 31, 2025 and 2024.
While we are currently considered "well capitalized," we may from time to time find it necessary to access the capital markets to meet our growth objectives or capitalize on specific business opportunities. 55 As the Company is a bank holding company with less than $3.00 billion in assets, and which does not (i) conduct significant off-balance sheet activities, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Exchange Act, it is not currently subject to risk-based capital requirements adopted by the Federal Reserve, pursuant to the small bank holding company policy statement.
As the Company is a bank holding company with less than $3 billion in assets, and which does not (i) conduct significant off-balance sheet activities, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Exchange Act, it is not currently subject to risk-based capital requirements adopted by the Federal Reserve, pursuant to the small bank holding company policy statement.
Asset Quality Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest and still accruing, were $12.9 million and $1.8 million at December 31, 2024 and 2023, respectively, an increase of $11.0 million.
Asset Quality Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest and still accruing, were $10.7 million and $12.9 million at December 31, 2025 and 2024, respectively, a decrease of $2.2 million.
The provision for income taxes for the year ended December 31, 2024 includes additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand related to the above mentioned surrender of our BOLI policies. Our effective tax rate, excluding the additional income taxes and penalties associated with our BOLI surrender, for December 31, 2024 was 22.0%.
For the year ended December 31, 2025 and 2024, the provision for income taxe s was $6.2 million and $7.2 million, respectiv ely. The provision for income taxes for the year ended December 31, 2024 includes additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand related to the above mentioned surrender of our BOLI policies.
Additional provisions for such losses, if necessary, would be recorded, and would negatively impact earnings. 36 Financial Overview For the years ended December 31, 2024 and 2023, we continued our focus on organic growth, capitalizing on new customer relationships we obtained through centers of influence and portfolio cultivation. • Total assets increased to $2.20 billion compared to $2.19 billion at December 31, 2024 and 2023, respectively, an increase of $8.4 million. • Total loans, net of deferred fees, increased $41.7 million, or 2%, from December 31, 2023 to December 31, 2024.
Additional provisions for such losses, if necessary, would be recorded, and would negatively impact earnings. 36 Table of Contents Financial Overview For the years ended December 31, 2025 and 2024, we continued our focus on organic growth, capitalizing on new customer relationships we obtained through centers of influence and portfolio cultivation. • T otal assets increased to $2.29 billion at December 31, 2025 com pared to $2.20 billion at December 31, 2024, an increase of $93.3 million. • Total loans, net of deferred fee s, increased $71.0 million, or 4%, fr om December 31, 2024 to December 31, 2025.
Reserves on loans that do not share risk characteristics are evaluated on an individual basis. Nonaccrual loans are specifically reviewed for loss potential and when deemed appropriate are assigned a reserve based on an individual evaluation.
Recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off. Reserves on loans that do not share risk characteristics are evaluated on an individual basis. Nonaccrual loans are specifically reviewed for loss potential and when deemed appropriate are assigned a reserve based on an individual evaluation.
Interest income on non-accruing loans was not material for the years presented. 42 Net interest income for the year ended December 31, 2024 was $55.6 million compared to $54.4 million for the year ended December 31, 2023, an increase of $1.2 million, or 2%.
Interest income on non-accruing loans was not material for the years presented. 42 Table of Contents Net interest income for the year ended December 31, 2025 was $63.8 million comp ared to $55.6 million for the year ended December 31, 2024 , an increase of $8.2 million, or 15%.
We recorded provision for credit losses totaling $6 thousand and $132 thousand for the years ended December 31, 2024 and 2023, respectively. The allowance for credit losses was $18.1 million and $18.9 million at December 31, 2024 and 2023, respectively.
We recorded a provision for credit losses tota ling $1.6 million an d $6 thousand for the years ended December 31, 2025 and 2024, respectively. The allowance for credit loss es was $18.9 million an d $18.1 million at December 31, 2025 and 2024, respectively.
The accounting policies we view as critical are those relating to judgments, assumptions, and estimates regarding the determination of the allowance for credit losses on our loan portfolio.
The accounting policies we view as critical are those relating to judgments, assumptions, and estimates regarding the determination of the allowance for credit losses on our loan portfolio. Allowance for Credit Losses - Loans We maintain the allowance for credit losses ("ACL") at a level that represents management’s best estimate of expected losses in our loan portfolio.
At December 31, 2024, we downgraded a non-owner occupied commercial real estate loan to substandard and placed it on nonaccrual as a result of its past due status and recent poor payment history. 48 At December 31, 2023, we downgraded an owner-occupied commercial real estate loan totaling $19.9 million to substandard due to concerns regarding the financial condition of this borrower’s parent company.
At December 31, 2024, we downgraded a non-owner occupied commercial real estate loan to substandard and placed it on nonaccrual as a result of its past due status and recent poor payment history.
Selected Financial Data (Dollars and shares in thousands, except per share data) Years Ended December 31, 2024 2023 Income Statement Data: Interest income $ 113,312 $ 106,615 Interest expense 57,723 52,219 Net interest income 55,589 54,396 Provision for credit losses 6 132 Net interest income after provision for credit losses 55,583 54,264 Non‑interest income (loss) 2,534 (13,370) Non‑interest expense 35,820 36,662 Net income before income taxes 22,297 4,232 Provision for income taxes 7,233 410 Net income $ 15,064 $ 3,822 38 Years Ended December 31, 2024 2023 Balance Sheet Data: Total assets $ 2,198,950 $ 2,190,558 Loans receivable, net of fees 1,870,235 1,828,564 Allowance for credit losses (18,129) (18,871) Total investment securities 156,740 171,859 Total deposits 1,870,605 1,845,292 Other borrowed funds 68,695 104,620 Total shareholders' equity 235,354 217,117 Common shares outstanding 18,204 17,807 Per Common Share Data: Basic net income $ 0.83 $ 0.22 Fully diluted net income 0.82 0.21 Book value 12.93 12.19 Tangible book value (1) 12.52 11.77 Performance Ratios: Return on average assets 0.69 % 0.17 % Return on average equity 6.64 1.82 Net interest margin (2) 2.62 2.49 Efficiency ratio (3) 61.63 89.36 Non‑interest income to average assets 0.12 (0.59) Non‑interest expense to average assets 1.65 1.61 Loans receivable, net of fees to total deposits 99.98 99.09 Asset Quality Ratios: Net charge‑offs (recoveries) to average loans receivable, net of fees 0.04 % 0.02 % Nonperforming loans to loans receivable, net of fees 0.69 0.10 Nonperforming assets to total assets 0.58 0.08 Allowance for credit losses to nonperforming loans 141.38 1,031.77 Allowance for credit losses on loans to loans receivable, net of fees 0.97 1.03 Capital Ratios (Bank Only): Tangible common equity 10.87 % 10.12 % Total risk‑based capital 14.73 13.83 Common Equity Tier 1 capital 13.74 12.80 Leverage capital ratio 11.74 10.77 Other: Average shareholders' equity to average total assets 10.42 % 9.24 % Average loans receivable, net of fees to average total deposits 102.54 96.52 Average common shares outstanding: Basic 18,057 17,723 Diluted 18,397 18,231 ______________________ (1) Non-GAAP: Tangible book value is calculated as total stockholders' equity, less goodwill and other intangible assets, divided by common shares outstanding.
Selected Financial Data (Dollars and shares in thousands, except per share data) Years Ended December 31, 2025 2024 Income Statement Data: Interest income $ 118,397 $ 113,312 Interest expense 54,628 57,723 Net interest income 63,769 55,589 Provision for credit losses 1,589 6 Net interest income after provision for credit losses 62,180 55,583 Non‑interest income 3,637 2,534 Non‑interest expense 37,570 35,820 Net income before income taxes 28,247 22,297 Provision for income taxes 6,190 7,233 Net income $ 22,057 $ 15,064 38 Table of Contents Years Ended December 31, 2025 2024 Balance Sheet Data: Total assets $ 2,292,256 $ 2,198,950 Loans receivable, net of fees 1,941,283 1,870,235 Allowance for credit losses (18,886) (18,129) Total investment securities 153,424 156,740 Total deposits 1,997,277 1,870,605 Other borrowed funds — 68,695 Total shareholders' equity 253,600 235,354 Common shares outstanding 17,918 18,204 Per Common Share Data: Basic net income $ 1.22 $ 0.83 Fully diluted net income 1.21 0.82 Book value 14.15 12.93 Tangible book value (1) 13.74 12.52 Performance Ratios: Return on average assets 0.99 % 0.69 % Return on average equity 8.99 6.64 Net interest margin (2) 2.92 2.62 Efficiency ratio (3) 55.74 61.63 Non‑interest income to average assets 0.16 0.12 Non‑interest expense to average assets 1.68 1.65 Loans receivable, net of fees to total deposits 97.20 99.98 Asset Quality Ratios: Net charge‑offs to average loans receivable, net of fees 0.05 % 0.04 % Nonperforming loans to loans receivable, net of fees 0.55 0.69 Nonperforming assets to total assets 0.48 0.58 Allowance for credit losses to nonperforming loans 172.86 141.38 Allowance for credit losses on loans to loans receivable, net of fees 0.97 0.97 Capital Ratios (Bank Only): Tangible common equity 11.38 % 10.87 % Total risk‑based capital 15.38 14.73 Common Equity Tier 1 capital 14.37 13.74 Leverage capital ratio 12.23 11.74 Other: Average shareholders' equity to average total assets 11.00 % 10.42 % Average loans receivable, net of fees to average total deposits 97.76 102.54 Average common shares outstanding: Basic 18,121 18,057 Diluted 18,260 18,397 ______________________ (1) Non-GAAP: Tangible book value is calculated as total stockholders' equity, less goodwill and other intangible assets, divided by common shares outstanding.
During 2024, we surrendered $48.0 million in BOLI policies, which resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation.
During 2025, we unwound $80 million of our pay-fixed/receive floating interest rate swaps, resulting in a pre-tax gain of $91 thousand. During 2024, we surrendered $48.0 million in BOLI policies, which resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation.
At December 31, 2024 and 2023, we had $269.7 million and $254.1 million, respectively, in CDARS reciprocal and ICS reciprocal products. As of December 31, 2024, the estimated amount of total uninsured deposits (excluding collateralized deposits) was $763.1 million, or 40.8%, of total deposits.
At December 31, 2025 and 2024 , we had $291.9 million and $269.6 million , respectively, in CDARS reciprocal and ICS reciprocal products. As of December 31, 2025, the estimated amount of total uninsured deposits (excluding collateralized deposits) was $896.3 million, or 44.9%, of total deposits.
This resulted in additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand. The tax penalties related to the surrender of the BOLI were recorded in income tax expense. The net proceeds of the BOLI surrender were reinvested in our loan portoflio.
The tax penalties related to the surrender of the BOLI were recorded in income tax expense. The net proceeds of the BOLI surrender were reinvested in our loan portoflio.
Loans Receivable, Net Loans receivable, net of deferred fees, were $1.87 billion at December 31, 2024 and $1.83 billion at December 31, 2023, an increase of $41.7 million, or 2%.
Loans Receivable, Net Loans receivable, net of deferred fees, were $1.94 billion at December 31, 2025 and $1.87 billion at December 31, 2024 , an increase of $71.0 million, or 4%.
Our cost of funds increased 44 basis points to 3.00% for the year ended December 31, 2024, from 2.56% for the year ended December 31, 2023, which was primarily attributable to the repricing of our interest-bearing deposits to higher interest rates during 2024.
Our cost of fund s decreased 22 basis points to 2.78% fo r the year ended December 31, 2025, from 3.00% for the year ended December 31, 2024, which was primarily attributable to the repricing of our interest-bearing deposits to lower interest rates during 2025.
Average noninterest-bearing deposits decreased $57.3 43 million, or 13%, to $368.6 million at December 31, 2024, compared to $425.9 million at December 31, 2023. Competition for deposits along with higher interest rates resulted in customers' movement of excess funds from noninterest-bearing into interest-bearing deposit products.
Average noninterest-bearing deposits decreased $4.8 million, or 1%, to $363.8 million at December 31, 2025, c ompared to $368.6 million at 43 Table of Contents December 31, 2024. Competition for deposits along with high interest rates resulted in customers' movement of excess funds from noninterest-bearing into interest-bearing deposit products.
Average loans receivable increased $21.2 million to $1.87 billion for the year ended December 31, 2024, compared to $1.85 billion for the year ended December 31, 2023. The yield on average loans increased 39 basis points to 5.71% for the year ended December 31, 2024.
Average loans receivable slightly decreased $7.1 million to $1.86 billion for t he year ended December 31, 2025, compared to $1.87 billion for the year ended December 31, 2024. The yield on average loans increased 14 basis points to 5.85% for the year ended December 31, 2025.
Net interest margin for 2024 was 2.62% compared to 2.49% for 2023, an increase of 13 basis points, or 5%. • The provision for credit losses totaled $6 thousand in 2024, compared to a provision for credit losses totaling $132 thousand in 2023.
Net interest margin for 2025 was 2.92% compared to 2 .62% for 2024, an increase of 30 basis points, or 11%. • The provision for credit los ses totaled $1.6 million in 2025, compare d to a provision for credit losses totaling $6 thousand in 2024.
Allowance for Credit Losses on Loans Years Ended December 31, 2024 and 2023 (Dollars in thousands) 2024 2023 Net (charge-offs) recoveries Percentage of net charge-offs to average loans outstanding during the year Net (charge-offs) recoveries Percentage of net charge-offs to average loans outstanding during the year Commercial real estate $ — — % $ (53) — % Commercial and industrial $ (747) (0.04) % $ (347) (0.02) % Consumer residential (121) (0.01) % 1 — % Consumer nonresidential 28 — % 24 — % Total $ (840) (0.04) % $ (375) (0.02) % Average loans outstanding during the period $ 1,869,470 $ 1,848,308 December 31, 2024 2023 Allowance for credit losses on loans receivable, net of fees 0.97 % 1.03 % Allocation of the Allowance for Credit Losses on Loans At December 31, 2024 and 2023 (Dollars in thousands) 2024 2023 Allocation % of Total* Allocation % of Total* Commercial real estate $ 9,434 52.04 % $ 10,174 59.88 % Commercial and industrial 3,139 17.31 % 3,385 12.07 % Commercial construction 1,713 9.45 % 1,425 8.13 % Consumer residential 3,775 20.82 % 3,822 19.61 % Consumer nonresidential 68 0.38 % 65 0.31 % Total allowance for credit losses $ 18,129 100.00 % $ 18,871 100.00 % 51 ___________________ * Percentage of loan type to the total loan portfolio .
Allowance for Credit Losses on Loans Years Ended December 31, 2025 and 2024 (Dollars in thousands) 2025 2024 Net (charge-offs) recoveries Percentage of net charge-offs to average loans outstanding during the year Net (charge-offs) recoveries Percentage of net charge-offs to average loans outstanding during the year Commercial real estate $ — — % $ — — % Commercial and industrial (873) (0.05) % (747) (0.04) % Consumer residential — — % (121) (0.01) % Consumer nonresidential 2 — % 28 — % Total $ (871) (0.05) % $ (840) (0.04) % Average loans outstanding during the period $ 1,862,377 $ 1,869,470 December 31, 2025 2024 Allowance for credit losses on loans receivable, net of fees 0.97 % 0.97 % Allocation of the Allowance for Credit Losses on Loans At December 31, 2025 and 2024 (Dollars in thousands) 2025 2024 Allocation % of Total* Allocation % of Total* Commercial real estate $ 9,236 48.90 % $ 9,434 52.04 % Commercial and industrial 4,523 23.95 % 3,139 17.31 % Commercial construction 1,940 10.27 % 1,713 9.45 % Consumer residential 3,054 16.17 % 3,775 20.82 % Consumer nonresidential 133 0.70 % 68 0.38 % Total allowance for credit losses $ 18,886 100.00 % $ 18,129 100.00 % ___________________ * Percentage of loan type to the total loan portfolio .
Asset quality remains sound with nonperforming loans and loans past due 90 days or more as a percentage of total assets of 0.58% at December 31, 2024, compared to 0.08% at December 31, 2023. • Total deposits increased $25.3 million or 1%, from December 31, 2023 to December 31, 2024.
Asset quality remains sound with nonperforming loans and loans past due 90 days or more as a percentage of total as sets of 0.47% at December 31, 2025, compared to 0.58% at December 31, 2024. • Total deposit s increased $126.7 million or 7%, fr om December 31, 2024 to December 31, 2025.
As such, no impairment was recognized for our investment securities portfolio as of December 31, 2024. We hold restricted investments in equities of the FRB and FHLB. At December 31, 2024, we owned $4.1 million in FRB stock and $4.0 million in FHLB stock.
As such, no allowance for credit losses was recognized for our investment securities portfolio as of December 31, 2025. We ho ld restricted investments in equities of the FRB and FHLB. At December 31, 2025, we owned $3.6 million in FRB stock and $1.7 million in F HLB stock.
Shareholders' equity at December 31, 2024 was $235.4 million, an increase of $18.2 million, compared to $217.1 million at December 31, 2023. Net income recorded for the year ended December 31, 2024 contributed $15.1 million to the increase in shareholders' equity.
Shareholders' equity at December 31, 2025 was $253.6 million, an increase of $18.2 million, compa red to $235.4 million at December 31, 2024. Net income recorded for the year ended December 31, 2025 contr ibuted $22.1 million to the increase in sha reholders' equity.
Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The Bank’s maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.
The Bank’s maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
Secondary Liquidity Available and In Use At December 31, 2024 (Dollars in thousands) Liquidity in Use Liquidity Available FHLB secured borrowings (1) $ 130,000 $ 473,307 FRB discount window secured borrowings (2) — 146,106 Unsecured federal fund purchase lines — 185,000 Total $ 130,000 $ 804,413 ________________________ (1) The Bank has pledged a portion of the commercial real estate and residential loan portfolio to the FHLB to secure the line of credit.
Secondary Liquidity Available and In Use At December 31, 2025 (Dollars in thousands) Liquidity in Use Liquidity Available FHLB secured borrowings (1) $ 130,000 $ 464,373 FRB discount window secured borrowings (2) — 256,688 Unsecured federal fund purchase lines — 209,196 Total $ 130,000 $ 930,257 ________________________ (1) The Bank has pledged a portion of the commercial real estate and residential loan portfolio to the FHLB to obtain a letter of credit to secure public funds in addition to the collateral in use for FHLB advances.
Investment securities that were pledged to secure public deposits totaled $55.3 million and $7.2 million at December 31, 2024 and 2023, respectively. There were no investment securities that were pledged to secure FRB borrowings at December 31, 2024 and December 31, 2023, respectively.
Investment securities that were pledged to secure public deposits totale d $19.4 million and $55.1 million at December 31, 2025 and 2024, respectivel y. There were no investment securities that were pledged to secure FRB borrowings at December 31, 2025 and December 31, 2024, respectively.
This decrease was primarily a result of a decrease in salaries and benefits expense through reduced staffing associated with process improvements through our investment in technology. 37 Reconciliation of Net Income (GAAP) to Commercial Bank Operating Earnings (Non-GAAP) Years Ended December 31, 2024 and 2023 (Dollars in thousands, except per share data) 2024 2023 Net income (as reported) $ 15,064 $ 3,822 (Gain) loss on sale of available-for-sale investment securities (9) 15,577 Non-recurring tax and 10% modified endowment contract penalty on early surrender of BOLI policies 2,386 — Office space reduction and severance costs — 457 Provision (benefit) for income taxes associated with non-GAAP adjustments — (3,527) Non-GAAP commercial bank operating earnings, excluding above items $ 17,441 $ 16,329 Earnings per share - basic (GAAP net income) $ 0.83 $ 0.22 Adjusted Earnings per share - Non-GAAP expenses including provision for income taxes $ 0.14 $ 0.70 Earnings per share - basic (non-GAAP commercial bank operating earnings) $ 0.97 $ 0.92 Earnings per share - diluted (GAAP net income) $ 0.82 $ 0.21 Adjusted earnings per share - Non-GAAP expenses including provision for income taxes $ 0.13 $ 0.69 Adjusted earnings per share - diluted (non-GAAP commercial bank operating earnings) $ 0.95 $ 0.90 Return on average assets (GAAP net income) 0.69 % 0.17 % Adjusted Non-GAAP expenses including provision for income taxes 0.11 % 0.55 % Adjusted return on average assets (non‑GAAP commercial bank operating earnings) 0.80 % 0.72 % Return on average equity (GAAP net income) 6.64 % 1.82 % Adjusted Non-GAAP expenses including provision for income taxes 1.05 % 5.96 % Adjusted return on average equity (non‑GAAP commercial bank operating earnings) 7.69 % 7.78 % Below shows selected financial data for the periods ended December 31, 2024 and 2023.
This increase was primarily a result of an increase in salaries and benefits expense, which increased due to the filling of open positions and market adjustments to existing positions along with an increase in the incentive compensation expense for 2025. 37 Table of Contents Reconciliation of Net Income (GAAP) to Commercial Bank Operating Earnings (Non-GAAP) Years Ended December 31, 2025 and 2024 (Dollars in thousands, except per share data) 2025 2024 Net income (as reported) $ 22,057 $ 15,064 (Gain) on redemption of subordinated debt — (9) (Gain) on the termination of derivative instruments (91) — Non-recurring tax and 10% modified endowment contract penalty on early surrender of BOLI policies — 2,386 Provision for income taxes associated with non-GAAP adjustments 21 — Non-GAAP commercial bank operating earnings, excluding above items $ 21,987 $ 17,441 Earnings per share - basic (GAAP net income) $ 1.22 $ 0.83 Adjusted Earnings per share - Non-GAAP expenses including provision for income taxes — 0.14 Earnings per share - basic (non-GAAP commercial bank operating earnings) $ 1.22 $ 0.97 Earnings per share - diluted (GAAP net income) $ 1.21 $ 0.82 Adjusted earnings per share - Non-GAAP expenses including provision for income taxes — 0.13 Adjusted earnings per share - diluted (non-GAAP commercial bank operating earnings) $ 1.21 $ 0.95 Return on average assets (GAAP net income) 0.99 % 0.69 % Adjusted Non-GAAP expenses including provision for income taxes — % 0.11 % Adjusted return on average assets (non‑GAAP commercial bank operating earnings) 0.99 % 0.80 % Return on average equity (GAAP net income) 8.96 % 6.64 % Adjusted Non-GAAP expenses including provision for income taxes — % 1.05 % Adjusted return on average equity (non‑GAAP commercial bank operating earnings) 8.96 % 7.69 % Below shows selected financial data for the periods ended December 31, 2025 and 2024.
Nonowner-occupied commercial real estate loans were $850.1 million at December 31, 2024 compared to $878.7 million at December 31, 2023. Commercial construction loans totaled $162.4 million at December 31, 2024, compared to $148.0 million at December 31, 2023 and comprised of 9% and 8% of total loans receivable at such dates, respectively.
Nonowner-occupied commercial real estate loans w ere $766.3 million a t December 31, 2025 compared to $850.1 million at December 31, 2024. Commercial construction loans to taled $153.0 million at December 31, 2025, compared to $162.4 million at December 31, 2024 and comprised o f 8% and 9% of total l oans receivable at such dates, respectively.
Average Deposit Balances Years Ended December 31, 2024 and 2023 (Dollars in thousands) December 31, 2024 December 31, 2023 Noninterest-bearing demand $ 368,591 20.22 % $ 425,914 22.24 % Interest-bearing deposits Interest checking 571,432 31.34 % 581,655 30.37 % Savings and money markets 344,272 18.88 % 254,721 13.30 % Certificate of deposits, $100,000 to $249,999 70,024 3.84 % 106,865 5.58 % Certificate of deposits, $250,000 or more 205,264 11.26 % 242,405 12.66 % Wholesale deposits 263,664 14.46 % 303,472 15.85 % Total $ 1,823,247 100.00 % $ 1,915,032 100.00 % Total deposits increased $25.3 million, or 1%, to $1.87 billion at December 31, 2024 from $1.85 billion at December 31, 2023.
Average Deposit Balances Years Ended December 31, 2025 and 2024 (Dollars in thousands) December 31, 2025 December 31, 2024 Noninterest-bearing demand $ 363,764 19.09 % $ 368,591 20.22 % Interest-bearing deposits Interest checking 683,069 35.86 % 571,432 31.34 % Savings and money markets 347,461 18.24 % 344,272 18.88 % Certificate of deposits, $100,000 to $249,999 108,172 5.68 % 70,024 3.84 % Certificate of deposits, $250,000 or more 160,449 8.42 % 205,264 11.26 % Wholesale deposits 242,109 12.71 % 263,664 14.46 % Total $ 1,905,024 100.00 % $ 1,823,247 100.00 % Total deposits increased $126.7 million, or 7%, to $2.00 billion at December 31, 2025 from $1.87 billion at December 31, 2024.
Bank Capital Components At December 31, 2024 and December 31, 2023 (Dollars in thousands) Actual Minimum Capital Requirement (1) Minimum to be Well Capitalized Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio At December 31, 2024 Total risk-based capital $ 277,248 14.73 % $ 197,582 > 10.50 % $ 188,174 > 10.00 % Tier 1 risk-based capital 258,608 13.74 % 159,948 > 8.50 % 150,539 > 8.00 % Common equity tier 1 capital 258,608 13.74 % 131,722 > 7.00 % 122,313 > 6.50 % Leverage capital ratio 258,608 11.74 % 88,115 > 4.00 % 110,144 > 5.00 % At December 31, 2023 Total risk-based capital $ 261,403 13.83 % $ 198,413 > 10.50 % $ 188,965 > 10.00 % Tier 1 risk-based capital 241,930 12.80 % 160,620 > 8.50 % 151,172 > 8.00 % Common equity tier 1 capital 241,930 12.80 % 132,275 > 7.00 % 122,827 > 6.50 % Leverage capital ratio 241,930 10.77 % 89,842 > 4.00 % 112,302 > 5.00 % ________________________ (1).
Bank Capital Components At December 31, 2025 and December 31, 2024 (Dollars in thousands) Actual Minimum Capital Requirement (1) Minimum to be Well Capitalized Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio At December 31, 2025 Total risk-based capital $ 296,612 15.38 % $ 202,553 > 10.50 % $ 192,908 > 10.00 % Tier 1 risk-based capital 277,254 14.37 % 163,972 > 8.50 % 154,326 > 8.00 % Common equity tier 1 capital 277,254 14.37 % 135,036 > 7.00 % 125,390 > 6.50 % Leverage capital ratio 277,254 12.23 % 90,659 > 4.00 % 113,324 > 5.00 % At December 31, 2024 Total risk-based capital $ 277,248 14.73 % $ 197,582 > 10.50 % $ 188,174 > 10.00 % Tier 1 risk-based capital 258,608 13.74 % 159,948 > 8.50 % 150,539 > 8.00 % Common equity tier 1 capital 258,608 13.74 % 131,722 > 7.00 % 122,313 > 6.50 % Leverage capital ratio 258,608 11.74 % 88,115 > 4.00 % 110,144 > 5.00 % ________________________ (1).
These instruments represent obligations to extend credit or guarantee borrowings and are not recorded on the consolidated statements of financial condition. The rates and terms of these instruments are competitive with others in the market in which we do business. Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers.
The rates and terms of these instruments are competitive with others in the market in which we do business. Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not be drawn upon to the total extent to which we have committed.
Allowance for Credit Losses - Loans We maintain the allowance for credit losses ("ACL") at a level that represents management’s best estimate of expected losses in our loan portfolio. 35 Accounting Standards Codification ("ASC") 326 requires that an estimate of expected credit losses be immediately recognized and reevaluated over the contractual life of the financial asset.
Accounting Standards Codification ("ASC") 326 requires that an estimate of expected credit losses be immediately recognized and reevaluated over the contractual life of the financial asset.
Interest expense on deposits increased $5.9 million to $53.2 million for the year ended December 31, 2024 compared to $47.3 million for the year ended December 31, 2023, primarily a result of the increase in the cost of interest-bearing deposits, which increased 48 basis points to 3.66% for the year ended December 31, 2024, compared to 3.18% for the year ended December 31, 2023.
Interest expense on deposit s decreased $1.2 million to $52.0 million for the year ended December 31, 2025 compared to $53.2 million for the year ended December 31, 2024, primarily as a result of the decrease in interest rates in 2025, which decreased the cost of interest-bearing deposits 28 basis points to 3.38% for the year ended December 31, 2025, compared to 3.66% for the year ended December 31, 2024.
Average Balances and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities Years Ended December 31, 2024 and 2023 (Dollars in thousands) 2024 2023 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Assets Interest‑earning assets: Loans receivable, net of fees Commercial real estate $ 1,076,027 $ 55,116 5.12 % $ 1,103,325 $ 53,356 4.84 % Commercial and industrial 262,844 21,099 8.03 % 206,432 15,170 7.35 % Commercial construction 165,134 12,044 7.29 % 154,658 10,917 7.06 % Consumer real estate 341,843 16,616 4.86 % 358,740 17,039 4.75 % Warehouse facilities 17,408 1,284 7.38 % 19,097 1,343 7.03 % Consumer nonresidential 6,214 509 8.19 % 6,056 548 9.05 % Total loans (1) 1,869,470 106,668 5.71 % 1,848,308 98,373 5.32 % Investment securities (2) 208,406 4,351 2.09 % 287,454 5,606 1.95 % Interest-bearing deposits at other financial institutions 44,360 2,293 5.17 % 50,705 2,641 5.21 % Total interest‑earning assets and interest income $ 2,122,236 $ 113,312 5.34 % $ 2,186,467 $ 106,620 4.88 % Noninterest‑earning assets: Cash and due from banks 7,474 6,168 Premises and equipment, net 930 1,121 Accrued interest and other assets 64,310 97,440 Allowance for credit losses (18,963) (18,602) Total assets $ 2,175,987 $ 2,272,594 Liabilities and Stockholders' Equity Interest ‑ bearing liabilities: Interest ‑ bearing deposits: Interest checking $ 571,432 $ 19,526 3.42 % $ 581,655 $ 16,903 2.91 % Savings and money markets 344,272 12,384 3.60 % 254,721 6,102 2.40 % Time deposits 275,288 11,979 4.35 % 349,270 12,791 3.66 % Wholesale deposits 263,664 9,317 3.53 % 303,472 11,549 3.81 % Total interest ‑ bearing deposits 1,454,656 53,206 3.66 % 1,489,118 47,345 3.18 % Other borrowed funds 79,874 3,490 4.37 % 102,050 3,844 3.77 % Subordinated notes, net of issuance costs 19,613 1,027 5.23 % 19,590 1,030 5.26 % Total interest‑bearing liabilities and interest expense $ 1,554,143 $ 57,723 3.71 % $ 1,610,758 $ 52,219 3.24 % Noninterest‑bearing liabilities: Demand deposits 368,591 425,914 Other liabilities 26,408 26,013 Common stockholders' equity 226,845 209,909 Total liabilities and stockholders' equity $ 2,175,987 $ 2,272,594 Net interest income and net interest margin $ 55,589 2.62 % $ 54,401 2.49 % ________________________ (1) Nonaccrual loans are included in average balances and do not have a material effect on the average yield.
Average Balances and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities Years Ended December 31, 2025 and 2024 (Dollars in thousands) 2025 2024 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Assets Interest‑earning assets: Loans receivable, net of fees Commercial real estate $ 1,000,330 $ 51,836 5.18 % $ 1,076,027 $ 55,116 5.12 % Commercial and industrial 347,464 27,796 8.00 % 262,844 21,099 8.03 % Commercial construction 168,747 12,112 7.18 % 165,134 12,044 7.29 % Consumer real estate 307,653 14,644 4.76 % 341,843 16,616 4.86 % Warehouse facilities 31,638 1,987 6.28 % 17,408 1,284 7.38 % Consumer nonresidential 6,545 537 8.20 % 6,214 509 8.19 % Total loans (1) 1,862,377 108,912 5.85 % 1,869,470 106,668 5.71 % Investment securities (2) 194,232 4,104 2.11 % 208,406 4,351 2.09 % Interest-bearing deposits at other financial institutions 124,682 5,381 4.32 % 44,360 2,293 5.17 % Total interest‑earning assets and interest income $ 2,181,291 $ 118,397 5.43 % $ 2,122,236 $ 113,312 5.34 % Noninterest‑earning assets: Cash and due from banks 12,167 7,474 Premises and equipment, net 778 930 Accrued interest and other assets 55,241 64,310 Allowance for credit losses (18,180) (18,963) Total assets $ 2,231,297 $ 2,175,987 Liabilities and Stockholders' Equity Interest ‑ bearing liabilities: Interest ‑ bearing deposits: Interest checking $ 683,069 $ 21,329 3.12 % $ 571,432 $ 19,526 3.42 % Savings and money markets 347,461 11,357 3.27 % 344,272 12,384 3.60 % Time deposits 268,621 10,884 4.05 % 275,288 11,979 4.35 % Wholesale deposits 242,109 8,456 3.49 % 263,664 9,317 3.53 % Total interest ‑ bearing deposits 1,541,260 52,026 3.38 % 1,454,656 53,206 3.66 % Other borrowed funds 39,193 1,468 3.75 % 79,874 3,490 4.37 % Subordinated notes, net of issuance costs 18,721 1,134 6.06 % 19,613 1,027 5.23 % Total interest‑bearing liabilities and interest expense $ 1,599,174 $ 54,628 3.42 % $ 1,554,143 $ 57,723 3.71 % Noninterest‑bearing liabilities: Demand deposits 363,764 368,591 Other liabilities 23,021 26,408 Common stockholders' equity 245,338 226,845 Total liabilities and stockholders' equity $ 2,231,297 $ 2,175,987 Net interest income and net interest margin $ 63,769 2.92 % $ 55,589 2.62 % ________________________ (1) Nonaccrual loans are included in average balances and do not have a material effect on the average yield.
While we believe we have a healthy liquidity position and do not anticipate the loss of deposits of any of the significant deposit customers, any of the factors discussed above could materially impact our liquidity position in the future.
While we believe we have a healthy liquidity position and do not anticipate the loss of deposits of any of the significant deposit customers, any of the factors discussed above could materially impact our liquidity position in the future. 57 Table of Contents Financial Instruments with Off-Balance-Sheet Risk and Other Contingencies We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers.

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