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What changed in MVB FINANCIAL CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MVB FINANCIAL CORP'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.

+331 added−330 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in MVB FINANCIAL CORP's 2025 10-K

331 paragraphs added · 330 removed · 272 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

68 edited+9 added−6 removed182 unchanged
Biggest changeOur internal communication structure includes various opportunities for team members to interact with our chief executive officer and other members of the executive leadership team members, including monthly all-hands town hall meetings. At the meetings, our chief executive officer and executive leadership team members present informational topics in sessions open to all team members.
Biggest changeCommunication, Recognition and Engagement We believe it is important to provide our team members with open communication with management and the Board of Directors. Our internal communication structure includes various opportunities for team members to interact with our Chief Executive Officer and other members of the executive leadership team members, including periodic all-hands town hall meetings.
We offer a competitive salary structure with short-term and long-term performance incentives. We designed our total compensation programs to promote the interests of our team members and shareholders, while enabling us to attract and retain top-quality executive talent.
We offer a competitive salary structure with short- and long-term performance incentives. We designed our total compensation programs to promote the interests of our team members and shareholders, while enabling us to attract and retain top-quality executive talent.
We also offer team member education assistance and tuition reimbursement programs. The program provides support to team members wanting to acquire training outside of company-provided support of their position and/or annual certification requirements. Tracking these requests allows us to have visibility into the interests of team members.
We also offer team member education assistance and tuition reimbursement programs. The education assistance program provides support to team members wanting to acquire training outside of company-provided support of their position and/or annual certification requirements. Tracking these requests allows us to have visibility into the interests of team members.
In order for a financial subsidiary of a bank to engage in permissible financial activities, federal law requires, among other conditions, that the parent bank be well managed and have at least a satisfactory Community Reinvestment Act rating, and the parent bank and all of its bank affiliates must be well capitalized.
In order for a financial subsidiary of a bank to engage in permissible financial activities, federal law requires, among other conditions, that the parent bank be well managed and have at least a satisfactory Community Reinvestment Act rating, and that the parent bank and all of its bank affiliates must be well capitalized.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio 13 of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater and a leverage ratio of 5.0% or greater, and is not subject to 13 any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
The Volcker Rule The Volcker Rule implements section 619 of the Dodd-Frank Act and prohibits insured depository institutions and affiliated 11 companies and foreign banks which engage in the banking business in the United States (together, “banking entities”) from engaging in proprietary trading of certain securities, derivatives and commodity futures and options on these instruments, for their own account and prohibits banking entities from investing in or sponsoring certain types of funds (“covered funds”) unless otherwise permitted by the Volcker Rule.
The Volcker Rule The Volcker Rule implements section 619 of the Dodd-Frank Act and prohibits insured depository institutions and affiliated companies and foreign banks which engage in the banking business in the United States (together, “banking entities”) from engaging in proprietary trading of certain securities, derivatives and commodity futures and options on these instruments, for their own account and prohibits banking entities from investing in or sponsoring certain types of funds (“covered funds”) unless otherwise permitted by the Volcker Rule.
In addition, bank holding companies that qualify and elect to be financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the Secretary of the Treasury) or (ii) complementary to 8 a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the Federal Reserve Board).
In addition, bank holding companies that qualify and elect to be financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the Federal Reserve Board).
These and other federal laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict our and the Bank's ability to raise interest rates in certain respects and subject us and the Bank to substantial regulatory oversight.
These and other federal laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, 15 prohibit unfair, deceptive and abusive practices, restrict our and the Bank's ability to raise interest rates in certain respects and subject us and the Bank to substantial regulatory oversight.
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act (“HMDA”), the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these federal laws’ respective state-law counterparts, as well 15 as state usury laws and state and federal laws regarding unfair and deceptive acts and practices.
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act (“HMDA”), the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these federal laws’ respective state-law counterparts, as well as state usury laws and state and federal laws regarding unfair and deceptive acts and practices.
Fintech companies also compete with us directly and in partnership with other banks and financial services providers in lending, deposits, contactless payment cards, digital wallets and mobile payments solutions, installment or other buy now pay later 5 methods, real-time payment systems, peer-to-peer payments, card readers and other point of sale technologies, tools that simplify merchant payments and other markets.
Fintech companies also compete with us directly and in partnership with other banks and financial services providers in lending, deposits, contactless payment cards, digital wallets and mobile payments solutions, installment or other buy now pay later methods, real-time payment systems, peer-to-peer payments, card readers and other point of sale technologies, tools that simplify merchant payments and other markets.
The Capital Rules include a “Common Equity Tier 1” (“CET1”) measure, specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain requirements, define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expand the scope of the deductions/adjustments to capital as compared to existing regulations.
The Capital Rules include a “Common Equity Tier 1” (“CET1”) measure, specify that Tier 1 capital consists of CET1 and 12 “Additional Tier 1 capital” instruments meeting certain requirements, define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expand the scope of the deductions/adjustments to capital as compared to existing regulations.
We believe that our approach of integrating banking services with technology provides flexibility, which enables the Bank to offer an array of banking products and services. ICM and Warp Speed face significant competition from traditional financial institutions, Fintech-focused banks and neobanks and other national and local mortgage banking operations.
We believe that our approach of integrating banking services with technology provides flexibility, which enables the Bank to offer an array of banking products and services. ICM and Warp Speed also face significant competition from traditional financial institutions, Fintech-focused banks, neobanks and other national and local mortgage banking operations.
These modifications, among other changes, include: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) eliminating the requirement for appraisals for 7 certain real estate transactions valued at less than $400,000 in rural areas; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from the Home Mortgage Disclosure Act’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered deposit regulations; (v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tangible equity to average consolidated assets) at a percentage not less than 8% and not greater than 10% that upon the election of a bank would replace the risk-based capital requirements.
These modifications, among other changes, include: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) eliminating the requirement for appraisals for certain real estate transactions valued at less than $400,000 in rural areas; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from the Home Mortgage Disclosure Act’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered deposit regulations; (v) raising eligibility for the 18-month exam cycle from banks with $1 billion in assets to banks with $3 billion in assets; and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio 7 (tangible equity to average consolidated assets) at a percentage not less than 8% and not greater than 10% that upon the election of a bank would replace the risk-based capital requirements otherwise applicable to such bank.
Culture We remain committed to maintaining and growing our culture by leveraging our purpose, values and associated behaviors. We have successfully operationalized our culture initiative by embedding these elements into our day-to-day operations. Examples of this can be found in our talent acquisition, onboarding, education and performance processes.
Culture & EEO We remain committed to maintaining and growing our culture by leveraging our purpose, values and associated behaviors. We have successfully operationalized our culture initiative by embedding these elements into our day-to-day operations. Examples of this can be found in our talent acquisition, onboarding, education and performance processes.
In addition, the ability of a 4 borrower to make payments on commercial loans typically depends on adequate cash flow of a business and thus may be subject to adverse conditions in the general economy or a specific industry to a greater extent than consumer loans.
In addition, the ability of a borrower to make payments on commercial loans typically depends on adequate cash flow of a business and thus may be subject to adverse conditions in the general economy or a specific industry to a greater extent than consumer loans.
The Bank evaluates all new commercial loans and the Bank’s credit department facilitates an annual loan review process that ensures that a significant portion of the commercial loan portfolio, typically a minimum of 60%, is reviewed each year under a risk-based approach.
The Bank evaluates all new commercial loans and the Bank’s credit department facilitates an annual loan review process that 4 ensures that a significant portion of the commercial loan portfolio, typically a minimum of 60%, is reviewed each year under a risk-based approach.
Under the Bank Merger Act, the prior approval of the FDIC (in the case of a state chartered non-member bank) or other appropriate bank regulatory authority is required for a bank to merge with another bank or purchase substantially all of the assets or assume any deposits of another bank.
Under the Bank Merger Act, the prior approval of the FDIC (in the case of a state chartered non-member bank) or other appropriate bank regulatory authority in other instances is required for a bank to merge with another bank or purchase substantially all of the assets or assume any deposits of another bank.
We operate under a “needs-based” selling approach that management believes has proven successful in serving the financial needs of most customers. It is not our strategy to compete solely based on interest rates.
We operate under a “needs-based” selling approach that management believes has proven successful in serving the financial needs 5 of most customers. It is not our strategy to compete solely based on interest rates.
Most of the financial activities that are permissible for financial holding companies also are permissible for a bank’s “financial subsidiary,” except for insurance underwriting, insurance company portfolio investments, real estate investments and development and merchant banking, which must be conducted by a financial holding company.
Most of the financial activities that are permissible for financial holding companies also are permissible for a bank’s “financial 8 subsidiary,” except for insurance underwriting, insurance company portfolio investments, real estate investments and development and merchant banking, which must be conducted by a financial holding company.
The Patriot Act includes the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, which grants the Secretary of the United States Treasury broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ 10 operations.
The Patriot Act includes the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, which grants the Secretary of the United States Treasury broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ operations.
The Bank remains subject to regulatory capital requirements administered by the federal banking agencies. 9 Federal Securities Regulation We are subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
The Bank remains subject to regulatory capital requirements administered by the federal banking agencies. Federal Securities Regulation We are subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
In conjunction with the Amended Restoration Plan, the FDIC Board increased deposit insurance assessment rates for all insured depository institutions, effective the first quarterly assessment period of 2023. The increased assessment rates were effective for 2023 and 2024.
In conjunction with the Amended Restoration Plan, the FDIC Board increased deposit insurance assessment rates for all insured depository institutions, effective the first quarterly assessment period of 2023. The increased assessment rates were effective for 2024 and 2025.
Financial institutions must take certain steps to assist government agencies in detecting and preventing money laundering and report certain types of suspicious transactions.
Financial institutions must take certain steps to assist government agencies in detecting and preventing money laundering and report certain types of transactions, including suspicious transactions.
Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.
Regulatory authorities have imposed cease and desist orders and civil money 10 penalties against institutions found to be violating these obligations.
The CFPB also has examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates, which authority would not apply to us or the Bank. As the Bank’s principal federal regulator, the FDIC has examination and enforcement authority over the Bank.
The CFPB also has examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates, which authority does not apply to us or the Bank. As the Bank’s principal federal regulator, the FDIC has examination and enforcement authority over the Bank.
The re-election of President Trump may also bring about a shift in the laws of state and federal banking regulatory agencies, depending upon the priorities of the Trump administration and the reactions, if any, of state regulatory agencies to the shifts in focus at the federal bank regulatory agencies.
The re-election of President Trump could also bring about a shift in the laws of state and federal banking regulatory agencies, depending upon the priorities of the Trump administration and the reactions, if any, of state regulatory agencies to the shifts in focus at the federal bank regulatory agencies.
As of July 22, 2019, the effective date for the rulemaking implementing the EGRRCPA exemption, and December 31, 2024, we and the Bank are below these thresholds and thus exempt from the Volcker Rule. Limit on Dividends We are a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
As of July 22, 2019, the effective date for the rulemaking implementing the EGRRCPA exemption, and December 31, 2025, we and the Bank are below these thresholds and thus exempt from the Volcker Rule. 11 Limit on Dividends We are a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
The primary factors in competing for deposits are interest rates paid on deposits, account liquidity, convenience of office location, technology offerings and overall financial condition.
The primary factors in competing for deposits are interest rates paid on deposits, account liquidity, convenience of office locations, technology offerings and overall financial condition.
If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties and also could be subject to potential litigation from our customers and the Bank's customers and others who are harmed by a cyber attack against us or the Bank.
If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties and also could be subject to potential litigation from our customers and the Bank's customers and others who are harmed by a cyberattack against us or the Bank.
We believe that the current economic climate in our primary market areas reflect economic climates that are consistent with the general national economic climate. Unemployment in the United States was 3.8%, 3.5% and 3.3% for December 2024, 2023 and 2022, respectively. Segment Reporting We have identified three reportable segments: CoRe Banking, Mortgage Banking and Financial Holding Company.
We believe that the current economic climate in our primary market areas reflect economic climates that are consistent with the general national economic climate. Unemployment in the United States was 4.1%, 3.8% and 3.5% for December 2025, 2024 and 2023, respectively. Segment Reporting We have identified three reportable segments: CoRe Banking, Mortgage Banking and Financial Holding Company.
Human Capital Resources As of December 31, 2024, we employed 453 team members. We seek to attract, retain and develop the most talented team members possible, regardless of location, by promoting a strong, positive culture, offering competitive compensation, maintaining a safe and healthy workplace, investing in training and education and emphasizing open communication with management.
Human Capital Resources As of December 31, 2025, we employed 403 team members. We seek to attract, retain and develop the most talented team members possible, regardless of location, by promoting a strong, positive culture, offering competitive compensation, maintaining a safe and healthy workplace, investing in training and education and emphasizing open communication with management.
ITEM 1. BUSINESS Corporate Overview MVB Financial Corp. is a financial holding company organized as a West Virginia corporation in 2003 that operates principally through its wholly-owned subsidiary, MVB Bank, Inc. (the “Bank”). The Bank’s consolidated subsidiaries include MVB Edge Ventures, LLC (“Edge Ventures”), Paladin Fraud, LLC (“Paladin Fraud”) and MVB Insurance, LLC, (“MVB Insurance”).
ITEM 1. BUSINESS Corporate Overview MVB Financial Corp. is a financial holding company organized in 2003 as a West Virginia corporation that operates principally through its wholly-owned subsidiary, MVB Bank, Inc. (the “Bank”). The Bank’s consolidated subsidiaries include MVB Edge Ventures, Inc. (“Edge Ventures”), Paladin Fraud, LLC ("Paladin Fraud") and MVB Insurance, LLC.
For more information about each of our reportable segments, refer to Note 22 – Segment Reporting accompanying the consolidated financial statements included elsewhere in this report. Commercial Loans At December 31, 2024, the Bank had $1.42 billion outstanding in commercial loans, including commercial and industrial, commercial real estate and construction loans.
For more information about each of our reportable segments, refer to Note 22 – Segment Reporting accompanying the consolidated financial statements included elsewhere in this report. Commercial Loans At December 31, 2025, the Bank had $1.71 billion outstanding in commercial loans, including commercial and industrial, commercial real estate and construction loans.
It is anticipated that the new Trump Administration may undertake a comprehensive review of a full range of bank regulatory laws and regulations. It is not clear that such a review will take place and, if it occurs, what the results will be.
It is anticipated that the current administration may undertake a comprehensive review of a full range of bank regulatory laws and regulations. It is not clear that such a review will take place and, if it occurs, what the results will be.
Primary Market Areas and Customers Our primary market area for CoRe banking services encompasses North Central West Virginia and Northern Virginia, where we currently operate seven full-service branches, comprising of six in West Virginia and one in Virginia.
Primary Market Areas and Customers Our primary market area for CoRe banking services encompasses North Central West Virginia and Northern Virginia, where we currently operate seven full-service branches, including six in West Virginia and one in Virginia.
Anti-Money Laundering and the USA PATRIOT Act A major focus of governmental policy on financial institution regulations in recent years has been aimed at combating money laundering and terrorist financing.
Anti-Money Laundering and the USA PATRIOT Act A major focus of governmental policy on financial institution regulations has been aimed at combating money laundering and terrorist financing.
We have policies and procedures in place to establish internal capital levels and to monitor and stress-test such levels on a regular basis to ensure we remain above regulatory capital requirements. The Bank's CBLR at December 31, 2024 was 11.2%.
We have policies and procedures in place to establish internal capital levels and to monitor and stress-test such levels on a regular basis to ensure we remain above regulatory capital requirements. The Bank's CBLR at December 31, 2025 was 11.1%.
The MAV is determined by taking line item values for various investment and loan classes and applying an FHLB haircut to each item. At December 31, 2024, the Bank held capital stock of FHLB in the amount of $2.0 million.
The MAV is determined by taking line item values for various investment and loan classes and applying an FHLB haircut to each item. At December 31, 2025, the Bank held capital stock of FHLB in the amount of $2.1 million.
These loans represented 67.5% of the total aggregate loan portfolio as of that date. Commercial lending entails significant additional risks compared to residential and consumer lending.
These loans represented 72.9% of the total aggregate loan portfolio as of that date. Commercial lending entails significant additional risks compared to residential and consumer lending.
We take time to listen to our team members, to understand areas of opportunity and to provide support that enables us to execute on our business strategy. Diversity, Equity and Inclusion Our goal is to create and sustain a visible commitment to diversity, equity and inclusion that is recognizable to current and future team members, clients and partners.
We take time to listen to our team members, to understand areas of opportunity and to provide support that enables us to execute on our business strategy. Our goal is to create and sustain a visible commitment to equal opportunity in employment that is recognizable to current and future team members, clients and partners.
We believe leveraging differences in thoughts, experiences, backgrounds and perspectives drives team member engagement, innovation and financial success. We established a Diversity, Equity and Inclusion Team Member Resource Group, composed of company volunteers across the organization.
We believe leveraging differences in thoughts, experiences, backgrounds and perspectives drives team member engagement, innovation and financial success. We established a Workplace Culture Team Member Resource Group, composed of company volunteers across the organization.
In January 2025, we entered into a stock repurchase agreement with Trabian in which Trabian repurchased all the shares held by MVB. As a result of the transaction, we will no longer consolidate Trabian in our financial statements. Refer to Note 24 – Acquisitions and Divestitures accompanying the consolidated financial statements included elsewhere in this report.
In January 2025, we entered into a stock repurchase agreement with Trabian in which Trabian repurchased all the shares held by MVB. As a result of the transaction, we no longer consolidate Trabian in our financial statements. Refer to Note 24 – Acquisitions and Divestitures .
Eligibility criteria to utilize the CBLR includes the following: ● Total assets of less than $10 billion; ● Total trading assets plus liabilities of 5% or less of consolidated assets; ● Total off-balance sheet exposures of 25% or less of consolidated assets; ● Cannot be an advanced approaches banking organization; and ● Leverage ratio greater than 9% or temporarily prescribed threshold established in response to COVID-19.
Eligibility criteria to utilize the CBLR includes the following: ● Total assets of less than $10 billion; ● Total trading assets plus liabilities of 5% or less of consolidated assets; ● Total off-balance sheet exposures of 25% or less of consolidated assets; ● Cannot be an advanced approaches banking organization; and ● Leverage ratio greater than 9%.
In 2024, we assigned team members position-specific curricula designed to support ongoing compliance requirements and development within their individual positions. This training also included 13 custom training videos, which were assigned a combined total 887 times. Team members experience on-the-job training, as well as other company-organized opportunities.
In 2025, we assigned team members position-specific curricula designed to support ongoing compliance requirements and development within their individual positions. This training also included 18 custom training videos, which were assigned a combined total of approximately 1,300 times. Team members experience on-the-job training, as well as other company-organized opportunities.
Consumer Loans At December 31, 2024, the Bank had $18.6 million of consumer loans, including installment loans and personal lines of credit, representing 0.9% of total loans outstanding. Consumer loans include installment loans used by clients to purchase automobiles, boats and recreational vehicles.
Consumer Loans At December 31, 2025, the Bank had $25.6 million of consumer loans, including installment loans and personal lines of credit, representing 1.1% of total loans outstanding. Consumer loans include installment loans used by clients to purchase automobiles, boats and recreational vehicles.
CoRe Banking We offer our customers a full range of products and services including: l Various demand deposit accounts, savings accounts, money market accounts and certificates of deposit; l Commercial, consumer and real estate mortgage loans and lines of credit; l Debit cards; l Cashier’s checks; l Safe deposit rental facilities; and l Non-deposit investment services offered through an association with a broker-dealer.
CoRe Banking We offer our customers a full range of products and services including: l Various demand deposit accounts, savings accounts, money market accounts and certificates of deposit; l Commercial, consumer and real estate mortgage loans and lines of credit; l Debit cards; l Cashier’s checks; and l Safe deposit rental facilities.
Overall, 22.4% of the Bank's lending activity across all loan types occurs to borrowers outside of this region, mostly in loans to healthcare facilities secured by commercial real estate and for working capital lines of credit, as well as loans through SBA lending programs to borrowers across numerous industries.
Overall, 26.0% of the Bank's lending activity across all loan types occurs to borrowers outside of this region, mostly loans to healthcare facilities secured by commercial real estate and working capital lines of credit, as well as loans through Small Business Administration ("SBA") lending programs to borrowers across numerous industries.
We are subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which imposes numerous reporting, accounting, corporate governance and business practices on companies, as well as financial and other professionals who have involvement with the United States public markets. We are generally subject to these requirements and applicable SEC rules and regulations.
We are subject to the Sarbanes-Oxley Act of 2002, which imposes numerous reporting, accounting, corporate governance and business practices on companies, as well as financial and other professionals who have involvement with the United States public markets.
Business Overview We conduct a wide range of business activities through the Bank, primarily commercial and retail (“CoRe”) banking services, as well as Fintech banking.
Refer to Note 24 – Acquisitions and Divestitures . Business Overview We conduct a wide range of business activities through the Bank, primarily commercial and retail (“CoRe”) banking services, as well as Fintech banking.
We held 67 internal learning events in 2024 that provided 123 total hours, or an average of 2.4 hours per week, of learning opportunities facilitated by our Learning & Development team. Additionally, we have built an up-to- 6 date archive of On Demand learning content where team members utilized 1,022 hours of learning resources.
We held 53 internal learning events in 2025 that provided 89 total hours, or an average of 1.7 hours per week, of learning opportunities facilitated by our Learning & Development team. Additionally, we have built an up-to-date archive of On Demand learning content where team members utilized 635 hours of learning resources.
Residential Mortgage Loans At December 31, 2024, the Bank had $663.6 million of residential real estate loans, home equity lines of credit and construction mortgages outstanding, representing 31.6% of total loans outstanding.
Residential Mortgage Loans At December 31, 2025, the Bank had $609.1 million of residential real estate loans, home equity lines of credit and construction mortgages outstanding, representing 26.0% of total loans outstanding.
The Bank owns a controlling interest in Trabian Technology, Inc. (“Trabian”). Edge Ventures wholly-owns Victor Technologies, Inc. (“Victor”) and MVB Technology, LLC ("MVB Technology"). The Bank also owns an equity method investment in Intercoastal Mortgage Company, LLC (“ICM”) and MVB Financial owns equity method investments in Warp Speed Holdings, LLC (“Warp Speed”) and Ayers Socure II, LLC (“Ayers Socure II”).
Edge Ventures wholly-owns MVB Technology, LLC and Victor Technologies, Inc. ("Victor"). The Bank also owns an equity method investment in Intercoastal Mortgage Company, LLC (“ICM”) and MVB Financial Corp. owns equity method investments in Warp Speed Holdings, LLC (“Warp Speed”) and Ayers Socure II, LLC (“Ayers Socure II”). MVB Financial Corp.'s consolidated subsidiaries also include SPE PR, LLC.
The EGRRCPA amended provisions of the Dodd-Frank Act and eased regulations on all but the largest banks.
The Economic Growth, Regulatory Relief, and Consumer Protection Act (the "EGRRCPA") amended provisions of the Dodd-Frank Act and eased regulations on all but the largest banks.
Acquisitions The BHCA, the Bank Merger Act, the Change in Bank Control Act (the “CIBCA”), West Virginia banking law, and other federal and state statutes regulate investments in and acquisitions of commercial banks and their parent holding companies.
We are generally subject to these requirements and applicable SEC rules and regulations. 9 Acquisitions The BHCA, the Bank Merger Act, the Change in Bank Control Act (the “CIBCA”), West Virginia banking law, and other federal and state statutes regulate investments in and acquisitions of commercial banks and their parent holding companies.
Victor’s payment solution provides a real-time sub-ledger that communicates with the client’s core banking system. 3 Professional Services Paladin Fraud Paladin Fraud, a wholly-owned subsidiary of the Bank, provides an extensive and customizable suite of fraud prevention services for merchants, credit agencies, Fintech companies and other vendors to help clients and partners defend against threats.
Professional Services Paladin Fraud Paladin Fraud, a wholly-owned subsidiary of the Bank, provides an extensive and customizable suite of fraud prevention services for merchants, credit agencies, Fintech companies and other vendors to help clients and partners defend against threats.
Also, the terms of such extensions of credit may not involve more than the normal risk of non-repayment or present other unfavorable features, may not exceed certain limitations on the amount of credit extended to such persons individually and in the aggregate and, in certain instances, may require the approval of the Bank's Board of Directors. 12 Capital Requirements Federal regulations require FDIC-insured depository institutions, such as the Bank, to comply with applicable federal capital adequacy standards (the “Capital Rules”).
Also, the terms of such extensions of credit may not involve more than the normal risk of non-repayment or present other unfavorable features, may not exceed certain limitations on the amount of credit extended to such persons individually and in the aggregate and, in certain instances, may require the approval of the Bank's Board of Directors.
State chartered banks, such as the Bank, are subject to similar capital requirements adopted by their state regulators, which, in our case, is the West Virginia Division of Financial Institutions.
Capital Requirements Federal regulations require FDIC-insured depository institutions, such as the Bank, to comply with applicable federal capital adequacy standards (the “Capital Rules”). State chartered banks, such as the Bank, are subject to similar capital requirements adopted by their state regulators, which, in our case, is the West Virginia Division of Financial Institutions.
As noted above, the EGRRCPA eliminated these risk-based capital requirements for banks with less than $10 billion in assets who elect to follow the CBLR.
As noted above, the EGRRCPA eliminated these risk-based capital requirements for banks with less than $10 billion in assets who elect to follow the CBLR. As of December 31, 2025, the Bank had total assets of $3.3 billion and has elected to follow the CBLR framework.
All other operating segments are summarized in an Other category. Our CoRe Banking segment, which includes our Fintech division, represents banking products and services offered to customers by the Bank, primarily loans and deposits accounts. Revenue from banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts.
All other operating segments are summarized in an Other category. We determined these segments based on differences in products and services. Our CoRe Banking segment, which includes our Fintech division, represents banking products and services offered to customers by the Bank, primarily loans and deposits accounts.
For further discussion of risks related to cybersecurity, refer to Item 1C - Cybersecurity included elsewhere in this report. Monetary Policy and Economic Conditions The business of financial institutions is affected not only by general economic conditions, but also by the policies of various governmental regulatory agencies, including the Federal Reserve Board.
Monetary Policy and Economic Conditions The business of financial institutions is affected not only by general economic conditions, but also by the policies of various governmental regulatory agencies, including the Federal Reserve Board.
Revenue from our Mortgage Banking segment is primarily comprised of our share of net income or loss from mortgage banking activities of our equity method investments in ICM and Warp Speed. Revenue from Financial Holding Company activities is mainly comprised of intercompany service income and dividends.
Revenue from banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts. Revenue from our Mortgage Banking segment is primarily comprised of our share of net income or loss from mortgage banking activities of our equity method investments in ICM and Warp Speed.
Also, note that, with respect to construction loans, the Bank generally makes loans to the homeowner, rather than to the builder. At December 31, 2024, residential mortgage construction loans to individuals totaled $79.8 million with an average remaining life of five months. These loans are generally refinanced to a permanent loan upon completion of the construction.
At December 31, 2025, residential mortgage construction loans to individuals totaled $47.0 million with an average remaining life of three months. These loans are generally refinanced to a permanent loan upon completion of the construction.
We thoroughly analyze each industry in which our customers operate, as well as any new products or services provided, from both an operational and regulatory perspective. Edge Ventures Edge Ventures, a wholly-owned subsidiary of the Bank, acts as a holding company for Victor and MVB Technology.
We thoroughly analyze each industry in which our customers operate, as well as any new products or services provided, from an operational and regulatory perspective.
The tuition reimbursement program provides support to team members who wish to further their education with accredited institutions. In 2024, 24 team members participated in education assistance, while four team members were approved for the tuition reimbursement program. Communication, Recognition and Engagement We believe it is important to provide our team members with open communication with management.
The tuition 6 reimbursement program provides support to team members who wish to further their education with accredited institutions. In 2025, 38 team members participated in education assistance, while five team members were approved for the tuition reimbursement program.
As of December 31, 2024, the Bank owned an 80.8% interest in Trabian and consolidated 100% of Trabian within the consolidated financial statements.
Trabian Trabian builds digital products and web and mobile applications for forward-thinking community banks, credit unions, digital 3 banks and Fintech companies. As of December 31, 2024, the Bank owned an 80.8% interest in Trabian and consolidated 100% of Trabian within the Company's consolidated financial statements.
Supervision and Regulation We are subject to extensive regulation under federal and state banking laws. Our earnings are affected by general economic conditions, management policies, changes in state and federal laws and regulations and actions of various regulatory authorities, including those referred to in this section.
Our earnings are affected by general economic conditions, management policies, changes in state and federal laws and regulations and actions of various regulatory authorities, including those referred to in this section. The following discussion describes elements of an extensive regulatory framework applicable to bank holding companies, financial holding companies, banks and their affiliates and contains specific information about us.
The Bank obtains full appraisals from licensed appraisers for the majority of loans secured by real estate. In addition, the Bank purchases residential real estate loans from ICM and Warp Speed. Lenders generally consider residential construction financing to involve a higher risk of loss than long-term financing on improved, occupied real estate.
The Bank obtains full appraisals from licensed appraisers for the majority of loans secured by real estate. In addition, the Bank purchases residential real estate loans from ICM, a residential mortgage lending company, and Warp Speed, a holding company whose subsidiaries are focused on residential and commercial loan origination and servicing.
The risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost (including interest) of construction. If the construction cost estimate proves to be inaccurate, we may advance funds beyond the amount originally committed to permit completion of the project.
Lenders generally consider residential construction financing to involve a higher risk of loss than long-term financing on improved, occupied real estate. The risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost (including interest) of construction.
Removed
MVB Financial's consolidated subsidiaries also includes SPE PR, LLC. Through our professional services entities, which include Paladin Fraud and Trabian, we provide consulting solutions to assist Fintech and corporate clients in building digital products and meeting their fraud defense needs.
Added
As of December 31, 2024, the Bank owned an 80.8% interest in Trabian Technology, Inc. ("Trabian"). In January 2025, the Bank entered into a stock repurchase agreement with Trabian in which Trabian repurchased all the shares held by MVB. Refer to note Note 24 – Acquisitions and Divestitures .
Removed
Victor Victor, a wholly-owned subsidiary of Edge Ventures, was formed to develop technology to make it faster, easier and cost effective to launch and scale a broad spectrum of solutions for the gaming, payments and banking-as-a-service sectors.
Added
On September 30, 2025, we executed an asset purchase agreement to sell substantially all assets and operations of Victor to Jack Henry & Associates ("Jack Henry"). We recorded a $34.2 million pre-tax gain associated with the sale of Victor that is included in gain on divestiture activity in the consolidated statement of income.
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Victor integrates directly with legacy bank core systems allowing developers to build solutions for clients to store, manage and move money securely with application programming interfaces.
Added
Revenue from Financial Holding Company activities is mainly comprised of intercompany service income and dividends. The Other category consists of professional services and our Edge Venture companies. Revenue from the professional services are primarily made up of professional consulting income derived from banks and Fintech companies.
Removed
Trabian Trabian builds digital products and web and mobile applications for forward-thinking community banks, credit unions, digital banks and Fintech companies. Consistent with the Bank's mission to pursue technology to accelerate community finance, Trabian has created technology platforms that have been instrumental to the success of many of today’s leading Fintech companies.
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Revenue from our Edge Ventures companies, including Victor, primarily consist of software services, offering account functionality and transactions to customers through web-based platforms. In September 2025, we sold substantially all assets and operations of Victor.
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The following discussion describes elements of an extensive regulatory framework applicable to bank holding companies, financial holding companies, banks and their affiliates and contains specific information about us.
Added
If the construction cost estimate proves to be inaccurate, we may advance funds beyond the amount originally committed to permit completion of the project. With respect to construction loans, the Bank generally makes loans to the homeowner, rather than to the builder.
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It is anticipated that deposit insurance is one of the areas of bank regulation that might become the subject of reform if the Trump Administration moves forward with a review of the bank regulatory regime that is currently in place.
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At the meetings, our Chief Executive Officer and executive leadership team members present informational topics in sessions open to all team members. Additionally, key members of management are provided the opportunity to engage with the Board of Directors through periodic board committee meetings. Supervision and Regulation We are subject to extensive regulation under federal and state banking laws.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Federal Reserve utilizes benchmark interest rates to manage inflationary pressures within the economy. Elevated levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse.
Biggest changeOur business and overall financial performance is highly dependent upon the U.S. economy and strength of its financial markets, including inflation and interest rates. Difficult economic and market conditions could adversely affect our business, results of operations and financial condition. The Federal Reserve utilizes benchmark interest rates to manage inflationary pressures within the economy.
Also, many of our non-residential real estate borrowers have more than one loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a 20 residential mortgage loan.
Also, many of our non-residential real 20 estate borrowers have more than one loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a residential mortgage loan.
If our clients move money out of bank deposits into investments or to other financial institutions, we could lose a relatively low-cost source of funds. Limited availability of borrowings and liquidity from the FHLB system and other sources could negatively impact earnings. 24 The Bank is currently a member bank of the FHLB of Pittsburgh.
If our clients move money out of bank deposits into investments or to other financial institutions, we could lose a relatively low-cost source of funds. 24 Limited availability of borrowings and liquidity from the FHLB system and other sources could negatively impact earnings. The Bank is currently a member bank of the FHLB of Pittsburgh.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition and results of operations. Consumers may decide not to use banks to complete their financial transactions, or deposit funds electronically with banks that have no branches within our market area, which could affect net income.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition and results of operations. Consumers may decide not to use banks to complete their financial transactions, or may deposit funds electronically with banks that have no branches within our market area, which could affect net income.
To an increasing extent, financial services companies, including us, may face criticism for engaging in business with specific customers or with customers in particular industries or originating in certain foreign countries where the U.S. faces heightened geopolitical tensions, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as environment, consumer health and safety or society at large.
To an increasing extent, financial services companies, including us, may face criticism for engaging in business with specific customers or with customers in particular industries or originating in certain foreign countries where the U.S. faces heightened geopolitical tensions, or where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as environment, consumer health and safety or society at large.
The holders of our common stock are entitled to receive dividends when, and if declared by our Board of Directors out of funds legally available for that purpose. As part of our consideration of whether to pay cash dividends, we intend to retain adequate funds from future earnings to support the development and growth of our business.
The holders of our common stock are entitled to receive dividends when, and if, declared by the Board of Directors out of funds legally available for that purpose. As part of our consideration of whether to pay cash dividends, we intend to retain adequate funds from future earnings to support the development and growth of our business.
A significant decline in general economic conditions in West Virginia or Virginia, whether caused by recession, inflation, unemployment, the imposition of tariffs or other trade policies, changes in crude oil prices, changes in securities markets, acts of terrorism, outbreaks of any epidemics or pandemics, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local 19 economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.
A significant decline in general economic conditions in West Virginia or Virginia, whether caused by recession, inflation, unemployment, the imposition of tariffs or other trade policies, changes in crude oil prices, changes in securities markets, acts of terrorism, outbreaks of any epidemics or pandemics, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.
Criticism can come in many forms, including for providing banking services to companies engaged in, for example, the gaming industry. Many of these issues are divisive without broad agreement as to the appropriate steps a company should take and often with strong feelings on both sides.
Criticism can come in many forms, including for providing banking 26 services to companies engaged in, for example, the gaming industry. Many of these issues are divisive without broad agreement as to the appropriate steps a company should take and often with strong feelings on both sides.
Emerging and evolving factors such as the shift to work-from-home or hybrid-work arrangements, changing consumer preferences and resulting changes in occupancy rates as a result of these and other trends can also impact commercial real estate valuations over relatively short periods.
Emerging and evolving factors, such as the shift to work-from-home or hybrid-work arrangements, changing consumer preferences and changes in occupancy rates as a result of these and other trends can also impact commercial real estate valuations over relatively short periods.
We may not be able to effectively implement new technology-driven products and services or successfully market these products and services to our customers. Additionally, 25 investing in upgraded cybersecurity protection systems, advanced features and adequate controls is expensive and an ongoing, rapidly changing challenge.
We may not be able to effectively implement new technology-driven products and services or successfully market these products and services to our customers. Additionally, investing in upgraded cybersecurity protection systems, advanced features and adequate controls is expensive and an ongoing, rapidly changing challenge.
Treasury Secretary, the FDIC and the Federal Reserve to invoke the systemic risk exception to the least-cost resolution requirement under the FDIA to guarantee uninsured deposits of the failed banks. The systemic bank exception can only be invoked for financial market risks that pose a threat to financial stability.
Treasury Secretary, the FDIC and the Federal Reserve to invoke the systemic risk exception to the least-cost resolution requirement under the FDIC to guarantee uninsured deposits of the failed banks. The systemic bank exception can only be invoked for financial market risks that pose a threat to financial stability.
The source of the funds for our debt obligations is dependent on the Bank. Any significant restriction or disruption of our ability to obtain funding from these or other sources could negatively effect our ability to satisfy our current and future financial obligations, which could materially affect our financial condition.
The source of the funds for our debt obligations is dependent on the Bank. Any significant restriction or disruption of our ability to obtain funding from these or other sources could negatively affect our ability to satisfy our current and future financial obligations, which could materially affect our financial condition.
Our success also depends on our ability to invest in cybersecurity protection systems, implement advanced features and establish controls that will adequately protect our customers as technology continues to evolve. Many of our competitors have substantially greater resources to invest in technological improvements.
Our success also depends on our ability to invest in cybersecurity protection systems, implement advanced features 25 and establish controls that will adequately protect our customers as technology continues to evolve. Many of our competitors have substantially greater resources to invest in technological improvements.
Any future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that our Board of Directors may deem relevant.
Any future determination relating to dividend policy will be made at the discretion of the Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that the Board of Directors may deem relevant.
The local economic conditions in these areas have a significant impact on the demand for our products and services, as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources.
The local economic conditions in these areas have a significant impact on the demand for our products and services, as well as the ability of our customers to repay loans, 19 the value of the collateral securing loans and the stability of our deposit funding sources.
Our stock price can fluctuate significantly in response to a variety of factors including, among other things: l actual or anticipated variations in quarterly results of operations; l sustainable core earnings; l recommendations by securities analysts; 28 l operating and stock price performance of other companies that investors deem comparable to us; l news reports relating to trends, concerns and other issues in the financial services industry, including uncertainty in the financial markets as a result of the new U.S. presidential administration; l perceptions in the marketplace regarding us and/or our competitors; l new technology used, or services offered, by competitors; l significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; l failure to integrate acquisitions or realize anticipated benefits from acquisitions; l changes in government regulations; and l geopolitical conditions, such as acts or threats of terrorism or military conflicts, including geopolitical tensions or conflict that may arise of the new U.S. presidential administration.
Our stock price can fluctuate significantly in response to a variety of factors including, among other things: l actual or anticipated variations in quarterly results of operations; l sustainable core earnings; l recommendations by securities analysts; l operating and stock price performance of other companies that investors deem comparable to us; l news reports relating to trends, concerns and other issues in the financial services industry, including uncertainty in the financial markets as a result of the current U.S. administration; l perceptions in the marketplace regarding us and/or our competitors; l new technology used, or services offered, by competitors; l significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; l failure to integrate acquisitions or realize anticipated benefits from acquisitions; l changes in government regulations; and l geopolitical conditions, such as acts or threats of terrorism or military conflicts, including geopolitical tensions or conflict that may arise as a result of the current U.S. administration.
In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may 23 not be achieved, and price and profitability targets may not prove feasible.
External factors, such as compliance with regulations, 23 competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
As a result, however we respond to 26 such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or current or potential employees refuse to work for us.
As a result, however we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or current or potential employees refuse to work for us.
If we were to conclude that a future write-down of goodwill and other intangible assets is necessary, we would record the appropriate charge, which could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2024 our equity method investment ICM also had $15.3 million of goodwill.
If we were to conclude that a future write-down of goodwill and other intangible assets is necessary, we would record the appropriate charge, which could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2025 our equity method investment ICM also had $15.3 million of goodwill.
Stock price volatility may make it more difficult for shareholders to resell their common stock when they want and at prices they find attractive.
Stock price volatility may make it more difficult for shareholders to resell their common stock when they want and at prices they 28 find attractive.
We are focused on our long-term growth and have undertaken various new business initiatives, many of which involve activities that are new to it, or in some cases, are in the early stages of development. From time to time, we may develop, grow and/or acquire new lines of business or offer new products and services within existing lines of business.
We are focused on our long-term growth and have undertaken various new business initiatives, many of which involve activities that are new to us, or in some cases, are in the early stages of development. From time to time, we may develop, grow and/or acquire new lines of business or offer new products and services within existing lines of business.
We are a financial holding company and our operations are primarily conducted by the Bank, which is subject to significant federal and state regulation. Cash available to pay dividends to shareholders of us is derived primarily from dividends paid by the Bank. As a result, our ability to receive dividends or loans from the Bank is restricted.
We are a financial holding company and our operations are primarily conducted by the Bank, which is subject to significant federal and state regulation. Cash available to pay dividends to our shareholders is derived primarily from dividends paid by the Bank. As a result, our ability to receive dividends or loans from the Bank is restricted.
While the Federal Reserve reduced benchmark interest rates in 2024, it may decide to raise benchmark interest rates in 2025, as it did multiple times in 2022 and 2023, in an effort to curb the upward inflationary pressure on the cost of goods and services across the U.S.
While the Federal Reserve reduced benchmark interest rates in 2025, it may decide to raise benchmark interest rates in 2026, as it did multiple times in 2022 and 2023, in an effort to curb the upward inflationary pressure on the cost of goods and services across the U.S.
Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to our business.
Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to business.
If we or the Bank fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition and results of operations would be materially and adversely affected and could compromise our status as a financial holding company.
Department of Treasury. If we or the Bank fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition and results of operations would be materially and adversely affected and could compromise our status as a financial holding company.
While the Federal Reserve Board reduced 21 benchmark interest rates in 2024, they may decide to rise benchmark interest rates in 2025 in an effort to curb the upward inflationary pressure on the cost of goods and services in the U.S. Resumption of increases in market interest rates could have an adverse effect on our net interest income and profitability.
While the Federal Reserve Board reduced benchmark interest rates in 2025, they may decide to rise benchmark interest rates in 2026 in an effort to curb the upward inflationary pressure on the cost of goods and services in the U.S. Resumption of increases in market interest rates could have an adverse effect on our net interest income and profitability.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, and including regulatory and policy changes as a result of the new U.S. presidential administration, could affect us in substantial and unpredictable ways.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, and including regulatory and policy changes as a result of the current U.S. administration, could affect us in substantial and unpredictable ways.
Unlike larger national or other regional banks that are more geographically diversified, we provide banking and financial services primarily to customers across West Virginia and Virginia.
Unlike larger national or other regional banks that are more geographically diversified, we provide direct lending and deposit banking and financial services primarily to customers across West Virginia and Virginia.
Our accounting policies and estimates are critical to how we report our financial condition and results of operations, and any changes to such accounting policies and estimates could materially affect how we report our financial condition and results of operations. Accounting policies and estimates are fundamental to how our records and reports our financial condition and results of operations.
Our accounting policies and estimates are critical to how we report our financial condition and results of operations, and any changes to such accounting policies and estimates could materially affect how we report our financial condition and results of operations. Accounting policies and estimates are fundamental to how we record and report our financial condition and results of operations.
Our gaming initiative has contributed significantly to our deposits and has allowed us to generate attractive returns on lower risk assets through increased investments in securities and loan growth. On-balance sheet gaming deposits totaled $227.6 million as of December 31, 2024, compared to $354.1 million as of December 31, 2023.
Our gaming initiative has contributed significantly to our deposits and has allowed us to generate attractive returns on lower risk assets through increased investments in securities and loan growth. On-balance sheet gaming deposits totaled $184.3 million as of December 31, 2025, compared to $227.6 million as of December 31, 2024.
Additionally, 75.8% of our total loans are real estate interests (residential and non-residential, including both owner-occupied and investment real estate and construction and land development) mainly concentrated in the West Virginia, Virginia, North Carolina and South Carolina markets.
Additionally, 79.9% of our total loans are real estate interests (residential and non-residential, including both owner-occupied and investment real estate and construction and land development), mainly concentrated in the West Virginia, Virginia, Maryland, North Carolina and South Carolina markets.
Risks Related to Our Business Our non-residential real estate loans expose us to greater risks of non-payment and loss than residential mortgage loans, which may cause us to increase our allowance for credit losses, which would reduce net income. At December 31, 2024, $1.44 billion, or 68.4%, of our loan portfolio consisted of non-residential real estate and other non-residential loans.
Risks Related to Our Business Our non-residential real estate loans expose us to greater risks of non-payment and loss than residential mortgage loans, which may cause us to increase our allowance for credit losses, which would reduce net income. At December 31, 2025, $1.73 billion, or 74.0%, of our loan portfolio consisted of non-residential real estate and other non-residential loans.
Moreover, 24.2% of the securities in our municipal securities portfolio were issued by political subdivisions or agencies within West Virginia and Virginia.
Moreover, 45.1% of the securities in our municipal securities portfolio were issued by political subdivisions or agencies within West Virginia and Virginia.
Furthermore, we often invest in Fintech companies for strategic purposes. Where we are a minority shareholder, we may be unable to influence the activities of these organizations, which could have an adverse impact on our ability to execute our strategic initiatives and successfully develop and implement the banking platform we are developing with these and other partners.
Where we are a minority shareholder, we may be unable to influence the activities of these organizations, which could have an adverse impact on our ability to execute our strategic initiatives and successfully develop and implement the banking platform we are developing with these and other partners.
Volatile interest rate environments could increase this risk initially. ICM and Warp Speed’s ability to readily sell mortgage loans is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and other institutional and non-institutional investors.
ICM and Warp Speed’s ability to readily sell mortgage loans is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac and other institutional and non-institutional investors.
Off-balance sheet gaming deposits totaled $221.0 million as of December 31, 2024, compared to $277.1 million as of December 31, 2023. Of the gaming deposits, $206.8 million is with our three largest clients at December 31, 2024. Our future growth may be adversely impacted if we are unable to retain and grow this strong, low-cost deposit base.
Off-balance sheet gaming deposits totaled $104.0 million as of December 31, 2025, compared to $221.0 million as of December 31, 2024. Of the gaming deposits, $137.0 million can be attributed to our three largest clients at December 31, 2025. Our future growth may be adversely impacted if we are unable to retain and grow this strong, low-cost deposit base.
General market fluctuations, including real or anticipated changes in the strength of the economies we serve; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions and uncertainty in market conditions or boarder economic changes because of the change in administration as a result of the 2024 U.S. presidential election; interest rate changes, crude oil price volatility or credit loss trends could also cause our stock price to decrease, regardless of operating results.
General market fluctuations, including real or anticipated changes in the strength of the economies we serve; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions and uncertainty in market conditions or broader economic changes because of the current administration's policies; interest rate changes, crude oil price volatility or credit loss trends could also cause our stock price to decrease, regardless of operating results.
The profitability of ICM and Warp Speed depend in large part upon their ability to originate a high volume of loans and to sell them in the secondary market. Thus, they are dependent upon (i) the existence of an active secondary market and (ii) their ability to sell loans into that market.
The profitability of ICM and Warp Speed depend in large part upon their ability to originate a high volume of loans and to sell them in the secondary market. Thus, they are dependent upon the existence of an active secondary market and their ability to sell loans into that market. Volatile interest rate environments could increase this risk initially.
Additionally, the Bank is engaged in relationships with clients in the payments, digital savings, crowdfunding, lottery and gaming industries and any change in regulations could impact us from both an operational and regulatory perspective. Investing in these newer industries presents some risks. For example, earnings from our Fintech investments can be volatile and difficult to predict.
Additionally, the Bank is or may be engaged in relationships with clients in the payments, digital assets, digital savings, crowdfunding, lottery and gaming industries and any change in regulations could impact us from both an operational and regulatory perspective. Investing in these newer industries presents some risks.
In these circumstances, the market price of our common stock could decline significantly. Other factors that could affect our financial condition and operations are discussed in the Forward-Looking Statements at the beginning of this report. Risks Related to Economic and Market Conditions Elevated levels of inflation and fluctuations in interest rates could adversely impact our business and results of operations.
In these circumstances, the market price of our common stock could decline significantly. Other factors that could affect our financial condition and operations are discussed in the Forward-Looking Statements at the beginning of this report.
Failure to meet any of the various capital adequacy guidelines which we are subject to could adversely affect our operations and could compromise our status as a financial holding company.
Failure to meet any of the various capital adequacy guidelines which we are subject to could adversely affect our operations and could compromise our status as a financial holding company. We and the Bank are required to meet certain regulatory capital adequacy guidelines and other regulatory requirements imposed by the Federal Reserve Board, the FDIC and the U.S.
For further detail, refer to the sections captioned Supervision and Regulation included in Item 1 – Business and Note 15 – 27 Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. For further detail, refer to the sections captioned Supervision and Regulation included in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.
While we may no longer face the stringent reporting requirements under SEC rules, our reputation and ability to maintain client relationships and attract and retain employees may depend on the sufficiency of our policies and practices related to climate change, including our direct or indirect involvement in certain industries.
Our reputation and ability to maintain client relationships and attract and retain employees may depend on the sufficiency of our policies, practices and disclosures related to climate change, including our direct or indirect involvement in certain industries and any voluntary steps we may take to mitigate our impact on climate change.
For example, as interest rates rise in response to, or as a result of, elevated levels of inflation, the value of our securities portfolio becomes negatively impacted.
Elevated levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse. For example, as interest rates rise in response to, or as a result of, elevated levels of inflation, the value of our securities portfolio becomes negatively impacted.
Our management makes judgments and assumptions in selecting and adopting various accounting policies and in applying estimates so that such policies and estimates comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management has identified certain accounting policies as critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies.
Our management makes judgments and assumptions in selecting and adopting various accounting policies and in applying estimates so that such policies and estimates comply with accounting principles generally accepted in the United States of America (“U.S.
In recent years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board raised certain benchmark interest rates in an effort to combat inflation in both 2022 and 2023.
For instance, if the federal funds rate increased 50 basis points, rates on demand deposits may rise by ten basis points; whereas rates on prime-based loans will instantly rise 50 basis points. 21 In recent years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board raised certain benchmark interest rates in an effort to combat inflation in both 2022 and 2023.
In this regard, government authorities, including the bank regulatory agencies, are pursuing aggressive enforcement actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
In this regard, government authorities, including the bank regulatory agencies, are pursuing aggressive enforcement actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures. We are also subject to the risk of a federal government shutdown, such as the temporary shutdown that occurred in October 2025.
For example, in January 2025, the Bank sold its interest in Trabian.
For example, in January 2025, the Bank sold its interest in Trabian and, in September 2025, we sold substantially all assets and operations of Victor.
As of December 31, 2024, we had $3.1 million of goodwill and other intangible assets.
As of December 31, 2025, we had $1.2 million of goodwill.
For example, because of the inherent uncertainty of estimates, the Bank could need to significantly increase its allowance for credit losses if actual losses are more than the amount reserved. Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on our financial condition and results of operations.
Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on our financial condition and results of operations. In addition, we cannot guarantee that we will not be required to adjust accounting policies or restate prior financial statements.
A variety of factors could affect the ultimate value that is 29 obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability or reducing a liability. Because of the uncertainty surrounding management's judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated.
GAAP”). 29 Management has identified certain accounting policies as critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability or reducing a liability.
Removed
For example, in March 2024, the SEC adopted new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require the inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements.
Added
Risks Related to Economic and Market Conditions Disruption or volatility in general business or economic conditions in the markets in which we operate, including elevated levels of inflation and fluctuations in interest rates, could adversely impact our business, financial condition and results of operations.
Removed
Following a number of challenges to the rules by federal courts and prior statements that the SEC would vigorously defend the validity of the rule, the SEC, under the new administration, changed course in February 2025, stating that it would no longer defend the rules and the rule would be removed under new leadership.
Added
For example, earnings from our Fintech investments can be volatile and difficult to predict. Furthermore, we often invest in Fintech companies for strategic purposes.
Removed
For instance, if the federal funds rate increased 50 basis points, rates on demand deposits may rise by ten basis points; whereas rates on prime-based loans will instantly rise 50 basis points.
Added
Any such shutdown could impact our ability to make required filings and finance-related 27 disclosures and our ability to access the public markets and obtain necessary capital to fund operations. Any such shutdown initiated by the government is difficult to predict and may be outside of our control.
Removed
Additionally, we increasingly compete for talent in and outside of the financial services industry. While our remote work opportunities allow us to hire outside of our traditional footprint, it also increases competition. These factors may constrain our ability to hire or retain a sufficient number of qualified employees, which could impact our ability to serve our customers and clients.
Added
Because of the uncertainty surrounding management's judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated. For example, because of the inherent uncertainty of estimates, the Bank could need to significantly increase its allowance for credit losses, if actual losses are more than the amount reserved.
Removed
We and the Bank are required to meet certain regulatory capital adequacy guidelines and other regulatory requirements imposed by the Federal Reserve Board, the FDIC and the United States Department of Treasury.
Removed
In addition, we cannot guarantee that we will not be required to adjust accounting policies or restate prior financial statements.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−0 removed5 unchanged
Biggest changeOur program provides for the coordination of different corporate functions and serves as a framework for the execution of responsibilities across businesses and operational roles. Our incident response plan includes processes to triage, assess severity for, escalate, contain, investigate and remediate any incidents.
Biggest changeApart from the measures implemented to decrease the possibility of a material cyberattack being successful, we have created clear incident response protocols to deal with any cyber events that may arise. Our program provides for the coordination of different corporate functions and serves as a framework for the execution of responsibilities across businesses and operational roles.
Our risk management team oversees the program and regularly collaborates with our information security function, led by our Chief Information Security Officer, to gather insights for identifying, assessing and managing cybersecurity threat risks, their severity and potential mitigations.
Our risk management team oversees the program and regularly collaborates with our information security function, led by our Chief Information Security Officer ("CISO"), to gather insights for identifying, assessing and managing cybersecurity threat risks, their severity and potential mitigations.
Our Chief Information Security Officer has significant experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs and managing compliance environments.
Our CISO has significant experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs and managing compliance environments.
The Risk & Compliance Committee receives regular updates on cybersecurity risks and incidents and the cybersecurity risk management program through direct interaction with the Chief Information Security Officer and provides periodic updates regarding cybersecurity risks and the cybersecurity risk management program to the full Board of Directors.
The Risk & Compliance Committee receives regular updates on cybersecurity risks and incidents and the cybersecurity risk management program through direct interaction with the CISO and provides periodic updates regarding cybersecurity risks and the cybersecurity risk management program to the full Board of Directors.
Testing, training and exercising of our incident response capabilities are carried out routinely and After Actions Reports are prepared to continuously improve these practices. We also have processes to evaluate potential disclosure, comply with applicable legal obligations, and mitigate reputational damage.
Our incident response plan includes processes to triage, assess severity, escalate, contain, investigate and remediate any incidents. Testing, training and exercising of our incident response capabilities are reviewed and periodically tested to continuously improve these practices. We also have processes to evaluate potential disclosure, comply with applicable legal obligations and mitigate reputational damage.
Furthermore, we are consistently broadening our scope of training and awareness practices to alleviate potential risks associated with human error, including mandatory computer-based training, internal communications and frequent phishing awareness campaigns. 30 Apart from the measures implemented to decrease the possibility of a material cyberattack being successful, we have created clear incident response protocols to deal with any cyber events that may arise.
Furthermore, we are consistently broadening our scope of training and awareness practices to alleviate potential risks associated 30 with human error, including mandatory computer-based training, internal communications and frequent phishing awareness campaigns.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeFor more information regarding the sale-leaseback transaction, refer to Note 4 – Premises and Equipment accompanying the consolidated financial statements included elsewhere in this report. No one facility is material to us. We believe that the facilities are generally in good condition and suitable for the operations for which they are used.
Biggest changeWe believe that the facilities are generally in good condition and suitable for the operations for which they are used.
As of December 31, 2024, we operated seven full-service banking branches for our CoRe banking reportable segment in the locations further described in Item 1 – Business included elsewhere in this report, all of which are leased following the sale-leaseback of certain branch locations in 2024.
As of December 31, 2025, we operated seven full-service banking branches for our CoRe banking reportable segment in the locations further described in Item 1 – Business included elsewhere in this report, all of which are leased. No one facility is material to us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+3 added−0 removed0 unchanged
Biggest changeIndex 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 MVB Financial Corp. $ 100.00 $ 92.39 $ 169.99 $ 94.52 $ 99.42 $ 94.69 KBW Bank Index 100.00 86.37 116.64 88.97 84.71 112.46 Russell 2000 100.00 118.36 134.57 105.56 121.49 133.66 Equity Compensation Plan Information Information about our equity compensation plan is disclosed below under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matte rs, in Part III of this Annual Report on Form 10-K. 32 Recent Sales of Unregistered Securities None.
Biggest changeIndex 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 MVB Financial Corp. $ 100.00 $ 185.35 $ 102.36 $ 107.74 $ 102.54 $ 128.16 KBW Bank Index 100.00 135.04 103.00 98.07 130.19 167.68 Russell 2000 100.00 113.69 89.18 102.64 112.92 125.67 Equity Compensation Plan Information Information about our equity compensation plan is disclosed below under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matte rs, in Part III of this Annual Report on Form 10-K. 32 Recent Sales of Unregistered Securities None.
The stock performance graph assumes $100 was invested on December 31, 2019 and the cumulative return is measured as of each subsequent fiscal year end.
The stock performance graph assumes $100 was invested on December 31, 2020 and the cumulative return is measured as of each subsequent fiscal year end.
In 2024, 2023 and 2022, we paid dividends totaling $0.68, $0.68 and $0.68, respectively, per share and currently expect that comparable dividends will continue to be paid in the future. The following five-year performance graph compares the cumulative total shareholder return (assuming reinvestment of dividends) on our common stock to the KBW Bank Index and the Russell 2000 Index.
In each of 2025, 2024 and 2023, we paid annual dividends totaling $0.68 per share and currently expect that comparable dividends will continue to be paid in the future. The following five-year performance graph compares the cumulative total shareholder return (assuming reinvestment of dividends) on our common stock to the KBW Bank Index and the Russell 2000 Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “MVBF.” As of March 10, 2025, we had 785 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “MVBF.” As of March 11, 2026, we had 765 stockholders of record.
Purchases of Equity Securities by Issuer and Affiliated Purchasers There were no repurchases of common stock during the three months ended December 31, 2024. ITEM 6. [RESERVED] 33
Purchases of Equity Securities by Issuer and Affiliated Purchasers The following table summarized the shares of common stock repurchased during the three months ended December 31, 2025.
Added
Period Total number of shares purchased Average price paid per share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 1 Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands) 1 October 1, 2025 - October 31, 2025 — $ — — 10,000 November 1, 2025 - November 30, 2025 5,485 26.05 5,485 9,857 December 1, 2025 - December 31, 2025 — — — 9,857 Total 5,485 $ 26.05 5,485 1 On October 27, 2025, we announced the authorization by the Board of Directors of a new stock repurchase program of up to $10 million of our common stock.
Added
The stock repurchase program will expire upon the expenditure of $10 million, when terminated or otherwise completed. Purchases may be made in open-market transactions, in block transactions on or off an exchange, in privately negotiated transactions or by other means as determined by MVB’s management and in accordance with the regulations of the Securities and Exchange Commission.
Added
The timing of purchases and the number of shares repurchased under the stock repurchase program will depend on a variety of factors including price, trading volume, market conditions and corporate and regulatory requirements. ITEM 6. [RESERVED] 33

Item 7. Management's Discussion & Analysis

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

122 edited+30 added−26 removed56 unchanged
Biggest changeThe average balances presented are derived from daily average balances. 34 Average Balances and Analysis of Net Interest Income 2024 2023 2022 (Dollars in thousands) Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Assets Interest-bearing deposits in banks $ 422,165 $ 21,814 5.17 % $ 414,466 $ 21,043 5.08 % $ 232,935 $ 1,613 0.69 % CDs with banks — — — — — — 1,033 24 2.32 Investment securities: Taxable 261,986 7,693 2.94 $ 221,395 5,576 2.52 236,344 3,496 1.48 Tax-exempt 1 104,765 3,287 3.14 116,680 4,347 3.73 139,353 5,166 3.71 Loans and loans held-for-sale: 2 Commercial 1,570,284 122,839 7.82 1,621,299 124,078 7.65 1,594,069 87,845 5.51 Tax-exempt 1 3,175 139 4.38 3,732 163 4.37 4,661 203 4.36 Real estate 564,633 25,474 4.51 591,157 24,764 4.19 487,044 15,721 3.23 Consumer 70,943 5,314 7.49 108,988 10,793 9.90 103,345 13,017 12.60 Total loans 2,209,035 153,766 6.96 2,325,176 159,798 6.87 2,189,119 116,786 5.33 Total earning assets 2,997,951 186,560 6.22 3,077,717 190,764 6.20 2,798,784 127,085 4.54 Allowance for credit losses (22,108) (29,746) (22,248) Cash and due from banks 5,246 6,659 5,670 Other assets 302,304 302,036 244,861 Total assets $ 3,283,393 $ 3,356,666 $ 3,027,067 Liabilities Deposits: NOW $ 521,337 $ 17,587 3.37 % $ 697,266 $ 19,851 2.85 % $ 707,282 $ 4,724 0.67 % Money market checking 396,881 12,770 3.22 504,730 10,352 2.05 330,208 1,449 0.44 Savings 115,270 3,756 3.26 76,908 1,871 2.43 56,697 418 0.74 IRAs 7,990 338 4.23 6,662 194 2.91 6,216 71 1.14 CDs 760,714 38,654 5.08 576,726 29,392 5.10 170,648 3,814 2.24 Repurchase agreements 3,477 44 1.27 5,662 1 0.02 10,987 6 0.05 FHLB and other borrowings 25 2 6.46 17,542 889 5.07 15,494 437 2.82 Senior term loan 3 2,355 264 11.21 9,007 766 8.50 2,328 163 7.00 Subordinated debt 73,667 3,229 4.38 73,415 3,219 4.38 73,159 3,072 4.20 Total interest-bearing liabilities 1,881,716 76,644 4.07 1,967,918 66,535 3.38 1,373,019 14,154 1.03 Noninterest-bearing demand deposits 1,071,900 1,074,292 1,357,426 Other liabilities 37,683 40,435 41,098 Total liabilities 2,991,299 3,082,645 2,771,543 Stockholders’ equity Common stock 13,738 13,541 13,320 Additional paid-in capital 162,811 159,523 147,728 Treasury stock (16,741) (16,741) (16,741) Retained earnings 161,181 154,041 137,498 Accumulated other comprehensive loss (28,821) (36,419) (26,918) Total stockholders' equity attributable to parent 292,168 273,945 254,887 Noncontrolling interest (74) 76 637 Total stockholders' equity 292,094 274,021 255,524 Total liabilities and stockholders’ equity $ 3,283,393 $ 3,356,666 $ 3,027,067 Net interest spread (tax-equivalent) 2.15 2.82 3.51 Net interest income and margin (tax-equivalent) 1 $ 109,916 3.67 % $ 124,229 4.04 % $ 112,931 4.04 % Less: Tax-equivalent adjustments (718) (946) (1,128) Net interest spread 2.13 2.79 3.47 Net interest income and margin $ 109,198 3.64 % $ 123,283 4.01 % $ 111,803 3.99 % 1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the years ended December 31, 2024, 2023 and 2022, which is a non-U.S.
Biggest changeThe average balances presented are derived from daily average balances. 34 Average Balances and Analysis of Net Interest Income 2025 2024 2023 (Dollars in thousands) Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Average Balance Interest Income/Expense Yield/Cost Assets Interest-bearing deposits in banks $ 387,985 $ 16,340 4.21 % $ 422,165 $ 21,814 5.17 % $ 414,466 $ 21,043 5.08 % Investment securities: Taxable 315,936 12,618 3.99 261,986 7,693 2.94 221,395 5,576 2.52 Tax-exempt 1 86,231 3,052 3.54 104,765 3,287 3.14 116,680 4,347 3.73 Loans and loans held-for-sale: 2 Commercial 1,573,561 116,248 7.39 1,570,284 122,839 7.82 1,621,299 124,078 7.65 Tax-exempt 1 2,632 117 4.45 3,175 139 4.38 3,732 163 4.37 Real estate 527,951 22,737 4.31 564,633 25,474 4.51 591,157 24,764 4.19 Consumer 64,840 4,878 7.52 70,943 5,314 7.49 108,988 10,793 9.90 Total loans 2,168,984 143,980 6.64 2,209,035 153,766 6.96 2,325,176 159,798 6.87 Total earning assets 2,959,136 175,990 5.95 2,997,951 186,560 6.22 3,077,717 190,764 6.20 Allowance for credit losses (20,947) (22,108) (29,746) Cash and due from banks 9,472 5,246 6,659 Other assets 309,450 302,304 302,036 Total assets $ 3,257,111 $ 3,283,393 $ 3,356,666 Liabilities Deposits: NOW $ 687,351 $ 19,463 2.83 % $ 521,337 $ 17,587 3.37 % $ 697,266 $ 19,851 2.85 % Money market checking 416,336 10,457 2.51 396,881 12,770 3.22 504,730 10,352 2.05 Savings 128,233 3,898 3.04 115,270 3,756 3.26 76,908 1,871 2.43 IRAs 7,487 282 3.77 7,990 338 4.23 6,662 194 2.91 CDs 664,472 30,394 4.57 760,714 38,654 5.08 576,726 29,392 5.10 Repurchase agreements 3,427 66 1.93 3,477 44 1.27 5,662 1 0.02 FHLB and other borrowings 1,300 59 4.54 25 2 6.46 17,542 889 5.07 Senior term loan 3 — — — 2,355 264 11.21 9,007 766 8.50 Subordinated debt 73,922 3,296 4.46 73,667 3,229 4.38 73,415 3,219 4.38 Total interest-bearing liabilities 1,982,528 67,915 3.43 1,881,716 76,644 4.07 1,967,918 66,535 3.38 Noninterest-bearing demand deposits 915,744 1,071,900 1,074,292 Other liabilities 48,764 37,683 40,435 Total liabilities 2,947,036 2,991,299 3,082,645 Stockholders’ equity Common stock 13,865 13,738 13,541 Additional paid-in capital 166,424 162,811 159,523 Treasury stock (21,854) (16,741) (16,741) Retained earnings 176,329 161,181 154,041 Accumulated other comprehensive loss (24,698) (28,821) (36,419) Total stockholders' equity attributable to parent 310,066 292,168 273,945 Noncontrolling interest 9 (74) 76 Total stockholders' equity 310,075 292,094 274,021 Total liabilities and stockholders’ equity $ 3,257,111 $ 3,283,393 $ 3,356,666 Net interest spread (tax-equivalent) 2.52 % 2.15 % 2.82 % Net interest income and margin (tax-equivalent) 1 $ 108,075 3.65 % $ 109,916 3.67 % $ 124,229 4.04 % Less: Tax-equivalent adjustments (667) (718) (946) Net interest spread 2.49 % 2.13 % 2.79 % Net interest income and margin $ 107,408 3.63 % $ 109,198 3.64 % $ 123,283 4.01 % 1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a federal tax rate of 21% for the years ended December 31, 2025, 2024 and 2023, which is a non-U.S.
In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and December 31, 2023, respectively.
In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and 2023, respectively.
This process involves the collection and analysis of updated financial statements from all parties required to provide them under the loan agreements, as well as several other review items, dependent upon the specific loan characteristics, including but not limited to: 42 l Site visit l Field exam l Updated collateral valuation l General discussions with the borrower regarding business conditions and their overall sentiment The internal annual review process is specialized based on the loan type, with emphasis and additional analysis performed based on each specific loan type’s characteristics. l CRE loans are analyzed on the characteristics of the subject property compared to any other aspect of the borrower.
This process involves the collection and analysis of updated financial statements from all parties required to provide them under the loan agreements, as well as several other review items, dependent upon the specific loan characteristics, including but not limited to: l Site visit l Field exam l Updated collateral valuation l General discussions with the borrower regarding business conditions and their overall sentiment The internal annual review process is specialized based on the loan type, with emphasis and additional analysis performed based 42 on each specific loan type’s characteristics. l CRE loans are analyzed on the characteristics of the subject property compared to any other aspect of the borrower.
Based upon internal review procedures and the fair values provided by the pricing services, we believe that the fair values provided by the pricing services are consistent with the principles of ASC 820, Fair Value Measurement .
Based upon internal review procedures and the fair values provided by the pricing services, we believe that the fair values provided by the pricing services are consistent with the principles of ASC 820, Fair Value Measurement ("ASC 820").
ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.
ASC 820 defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.
The guidance prescribes the following guidelines for bank examiners to help identify institutions that are potentially exposed to significant CRE loan risk and may warrant greater supervisory scrutiny: l Total reported loans for construction, land development and other land represent 100 percent or more of the institution’s total capital; or l Total CRE loans as defined in the CRE guidance represent 300 percent or more of the institution’s total capital and the outstanding balance of the institution’s CRE loan portfolio has increased by 50 percent or more during the prior 36 months.
The guidance prescribes the following guidelines for bank examiners to help identify institutions that are potentially exposed to significant CRE loan risk and may warrant greater supervisory scrutiny: l Total reported loans for construction, land development and other land represent 100% or more of the institution’s total capital; or l Total CRE loans as defined in the CRE guidance represent 300% or more of the institution’s total capital and the outstanding balance of the institution’s CRE loan portfolio has increased by 50% or more during the prior 36 months.
To the extent actual outcomes differ from our estimates, we may need additional provisions for credit losses. Any such additional provisions for credit losses will be a direct charge to our earnings. 49 Fair Value of Level III Financial Instruments Available-for-sale investment securities are recorded at fair value based upon quoted prices, if available.
To the extent actual outcomes differ from our estimates, we may need additional provisions for credit losses. Any such additional provisions for credit losses will be a direct charge to our earnings. Fair Value of Level III Financial Instruments Available-for-sale investment securities are recorded at fair value based upon quoted prices, if available.
While we seek to preserve flexibility with respect to cash requirements, there can be no assurance that market conditions would permit us to 48 sell securities on acceptable terms, or at all.
While we seek to preserve flexibility with respect to cash requirements, there can be no assurance that market conditions would permit us to sell securities on acceptable terms, or at all.
GAAP financial measure following this table. 2 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate. 3 The senior term loan was paid off in May 2024 and the unamortized debt issuance costs were recorded as interest expense upon the repayment. 35 Year Ended December 31, (Dollars in thousands) 2024 2023 2022 Net interest margin - U.S.
GAAP financial measure following this table. 2 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate. 3 The senior term loan was paid off in May 2024 and the unamortized debt issuance costs were recorded as interest expense upon the repayment. 35 Year Ended December 31, (Dollars in thousands) 2025 2024 2023 Net interest margin - U.S.
Management continuously reviews the commercial real estate portfolio on an annual basis, through the internal annual review process, third-party review engagements and other specialized ad hoc portfolio reviews as deemed appropriate by management. During the year ended December 31, 2024, management focused on the review of non-owner-occupied real estate, with an emphasis on office properties.
Management continuously reviews the commercial real estate portfolio on an annual basis, through the internal annual review process, third-party review engagements and other specialized ad hoc portfolio reviews as deemed appropriate by management. During the year ended December 31, 2025, management focused on the review of non-owner-occupied real estate, with an emphasis on office properties.
A discussion of changes in our results of operations from 2022 to 2023 may be found in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024.
A discussion of changes in our results of operations from 2023 to 2024 may be found in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 13, 2025.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand our financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand our financial condition, results of operations and cash flows for the year ended December 31, 2025 as compared to 2024.
At December 31, 2024 the fair value and notional amount of the interest rate swap agreements were $5.9 million and $133.9 million, respectively, as compared to $6.2 million and $126.5 million at December 31, 2023. For additional details on our hedging activity, refer to Note 19 – Derivatives accompanying the consolidated financial statements included elsewhere in this report.
At December 31, 2025 the fair value and notional amount of the interest rate swap agreements were $2.6 million and $126.1 million, respectively, as compared to $5.9 million and $133.9 million at December 31, 2024. For additional details on our hedging activity, refer to Note 19 – Derivatives accompanying the consolidated financial statements included elsewhere in this report.
The following table shows the maturities for the available-for-sale investment securities portfolio at December 31, 2024: Within one year After one year, but within five After five years, but within ten After ten years Total investment securities (Dollars in thousands) Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg.
The following table shows the maturities for the available-for-sale investment securities portfolio at December 31, 2025: Within one year After one year, but within five After five years, but within ten After ten years Total investment securities (Dollars in thousands) Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg. Yield Amortized Cost Weighted-Avg.
Loans past due more than 30 days were $45.5 million and $14.0 million, respectively, at December 31, 2024 and 2023. 44 December 31, 2024 2023 Loans past due more than 30 days to gross loans 2.2 % 0.6 % Loans past due more than 90 days to gross loans 1.8 % 0.2 % For tables reflecting the allocation of the ACL, refer to Note 3 – Loans and Allowance for Credit Losses accompanying the consolidated financial statements included elsewhere in this report.
Loans past due more than 30 days were $28.5 million and $45.5 million, respectively, at December 31, 2025 and 2024. 44 December 31, 2025 2024 Loans past due more than 30 days to gross loans 1.2 % 2.2 % Loans past due more than 90 days to gross loans 0.6 % 1.8 % For tables reflecting the allocation of the ACL, refer to Note 3 – Loans and Allowance for Credit Losses accompanying the consolidated financial statements included elsewhere in this report.
Commercial and non-residential real estate loans totaled $1.42 billion at December 31, 2024, compared to $1.60 billion at December 31, 2023. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.
Commercial and non-residential real estate loans totaled $1.71 billion at December 31, 2025, compared to $1.42 billion at December 31, 2024. Management expects to continue to focus on the enhancement and growth of the commercial loan portfolio while maintaining appropriate underwriting standards and risk/price balance.
After both historical peer loan data and various economic factors over the same look-back period were analyzed, two economic variables, national GDP and national unemployment rate, were identified as showing the most correlation to the performance of the loans within each of the pooled segments.
After analyzing both historical peer loan data and various economic factors over the same look-back period, two economic variables, national GDP and national unemployment rate, were identified as showing the highest correlation to the performance of the loans within each of the pooled segments.
Through a loss driver analysis, a forecasting model that correlates specific economic factors with credit quality of each loan segments was developed. Peer bank data was identified and used in this process, as we did not have adequate quarterly loan data to analyze over the look-back period to 2007.
Through a loss driver analysis, a forecasting model that correlates specific economic factors with credit quality of each loan segment was developed. Peer bank data was identified and used in this process, as we did not have adequate quarterly loan data to 49 analyze over the look-back period to 2004.
The result of the evaluation of the adequacy at each period presented herein indicated that the ACL was considered by management to be adequate to absorb forecasted losses over the remaining life of the loan portfolio. At December 31, 2024 and 2023, individually analyzed loans totaled $43.2 million and $11.8 million, respectively.
The result of the evaluation of the adequacy at each period presented herein indicated that the ACL was considered by management to be adequate to absorb forecasted losses over the remaining life of the loan portfolio. At December 31, 2025 and 2024, individually analyzed loans totaled $31.6 million and $43.2 million, respectively.
We use these variables to produce an estimated probability of default for each quarter period and, through a proprietary model, also calculate a loss given default factor to estimate overall losses. Benchmark studies are also prepared for prepayment and curtailment rate estimates for each loan segment, as well as recovery lag estimates.
These variables are used to produce an estimated probability of default for each quarterly period and, through a proprietary model, also calculate a loss given default factor to estimate overall losses. Benchmark studies are prepared for prepayment and curtailment rate estimates for each loan segment, as well as recovery lag estimates.
The Bank's CBLR at December 31, 2024 was 11.2%, which is above the well-capitalized standard of 9%. Management currently believes that capital continues to provide a strong base for profitable growth. Liquidity Maintenance of a sufficient level of liquidity is a primary objective of the ALCO.
The Bank's CBLR at December 31, 2025 was 11.1%, which is above the well-capitalized standard of 9%. Management currently believes that capital continues to provide a strong base for profitable growth. 48 Liquidity Maintenance of a sufficient level of liquidity is a primary objective of the ALCO.
We believe liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources and the portions of the investment and loan portfolios that mature within one year. Our liquid assets totaled $379.7 million and $504.3 million as of December 31, 2024 and 2023, respectively.
We believe liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources and the portions of the investment and loan portfolios that mature within one year. Our liquid assets totaled $453.4 million and $379.7 million as of December 31, 2025 and 2024, respectively.
GAAP metric 2 Noninterest expense as a percentage of net interest income and noninterest income 3 Noninterest expense as a percentage of average assets 4 Charge-offs, less recoveries Tangible book value ("TBV") per common share was $23.37 and $22.43 as of December 31, 2024 and 2023, respectively. TBV per common share is a non-U.S.
GAAP metric 2 Noninterest expense as a percentage of net interest income and noninterest income 3 Noninterest expense as a percentage of average assets 4 Charge-offs, less recoveries Tangible book value ("TBV") per common share was $26.17 and $23.37 as of December 31, 2025 and 2024, respectively. TBV per common share is a non-U.S.
Interest income on loans would have increased by $1.6 million, $0.8 million and $0.5 million for 2024, 2023 and 2022, respectively, if loans had performed in accordance with their terms.
Interest income on loans would have increased by $1.9 million, $1.6 million and $0.8 million for 2025, 2024 and 2023, respectively, if loans had performed in accordance with their terms.
Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report. 37 Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities in an effort to maximize net interest, while maintaining an appropriate level of interest rate risk.
Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report. 37 Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities.
During the year ended December 31, 2024, cash flows from investing activities totaled $144.5 million, while cash used in operating and financing activities totaled $0.3 million and $224.5 million, respectively. Cash flows from operating, investing and financing activities during the year ended December 31, 2023 totaled $58.2 million, $88.2 million and $211.5 million, respectively.
During the year ended December 31, 2024, cash used in operating and financing activities totaled $0.3 million and $224.5 million, respectively, while cash flows from investing activities totaled $144.5 million.
Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 22.7% of total loans receivable at December 31, 2024. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry.
Healthcare loans are a significant component of commercial and non-residential real estate loans and comprise 27.8% of total loans receivable at December 31, 2025. A large portion of commercial loans are secured by real estate and they are diverse with respect to geographical location and industry.
As of December 31, 2024, the Bank's concentration of loans for construction, land development and other land as a percentage of capital totaled 31.3% and the Bank's CRE loan concentration, excluding owner-occupied loans, as a percentage of capital totaled 222.0%.
As of December 31, 2025, the Bank's concentration of loans for construction, land development and other land as a percentage of capital totaled 30.3% and the Bank's CRE loan concentration, excluding owner-occupied loans, as a percentage of capital totaled 293.0%.
Statement of Financial Condition Cash and Cash Equivalents Cash and cash equivalents totaled $317.9 million at December 31, 2024, compared to $398.2 million at December 31, 2023. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs.
Statement of Financial Condition Cash and Cash Equivalents Cash and cash equivalents totaled $244.1 million at December 31, 2025, compared to $317.9 million at December 31, 2024. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs.
Increasing the risk rating by one for all segments would have resulted in an additional allowance of $1.9 million at December 31, 2024 and decreasing the risk grade by one would have resulted in a reduction to the allowance of $1.8 million.
Increasing the risk rating by one for all segments would have resulted in an additional allowance of $1.6 million at December 31, 2025 and decreasing the risk grade by one would have resulted in a reduction to the allowance of $1.5 million.
Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands. 39 Investment Securities Investment securities totaled $454.2 million at December 31, 2024, compared to $386.4 million at December 31, 2023. The following table sets forth a summary of the investment securities portfolio as of the dates indicated.
Total cash and 39 cash equivalents fluctuate daily due to transactions in process and other liquidity demands. Investment Securities Investment securities totaled $461.2 million at December 31, 2025, compared to $453.5 million at December 31, 2024. The following table sets forth a summary of the investment securities portfolio as of the dates indicated.
We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance core deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division.
We remain committed to the gaming, payments and banking-as-a-service industries. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance CoRe deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division.
Through active balance sheet management and analysis of the investment securities portfolio, sufficient liquidity is maintained to satisfy depositor requirements and the various credit needs of our customers. Management believes the risk 40 characteristics inherent in the investment portfolio are acceptable based on these parameters. Management continually evaluates hedging strategies that are available to manage interest rate risk.
Through active balance sheet management and analysis of the investment securities portfolio, sufficient liquidity is maintained to satisfy depositor requirements and the various credit needs of our customers. Management believes the risk 40 characteristics inherent in the investment portfolio are acceptable based on these parameters.
In addition, there are 45 loans to various unrelated borrowers totaling $19.1 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. These are loans for which information about the borrowers’ possible credit problems causes management to have doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.
In addition, there are 21 loans to various unrelated borrowers totaling $7.2 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. Special Mention loans include loans for which information about the borrowers' possible credit problems causes management to have doubts as to the borrowers' ability to comply with the loan repayment terms in the future.
Net interest spread on a tax-equivalent basis was 2.15% in 2024 compared to 2.82% in 2023. The difference between the net interest margin on a tax-equivalent basis and net interest spread on a tax-equivalent basis was 152 basis points in 2024 compared to 122 basis points in 2023.
Net interest spread on a tax-equivalent basis was 2.52% in 2025 compared to 2.15% in 2024. The difference between the net interest margin on a tax-equivalent basis and net interest spread on a tax-equivalent basis was 113 basis points in 2025 compared to 152 basis points in 2024.
Loans classified as Doubtful totaled $3.4 million and $4.6 million as of December 31, 2024 and December 31, 2023, respectively.
Loans classified as Doubtful totaled $3.2 million and $3.4 million as of December 31, 2025 and December 31, 2024, respectively.
The interest rate swap portfolio was in an asset position with a fair value of $0.5 million as of December 31, 2024 and a liability position with a fair value of $4.5 million as of December 31, 2023.
The portfolio was in an liability position with a fair value of $1.0 million as of December 31, 2025 and an asset position with a fair value of $0.5 million as of December 31, 2024.
Of these uninsured deposits, $258.5 million represents collateralized public fund deposits. Further, at December 31, 2024, we had available liquidity of $317.9 million of cash and cash equivalents on hand and $648.6 million remaining borrowing capacity with the FHLB.
Of these uninsured deposits, $258.2 million represents collateralized public fund deposits. Further, at December 31, 2025, we had available liquidity of $244.1 million of cash and cash equivalents on hand and $702.5 million remaining borrowing capacity with the FHLB.
Residential real estate loans to retail customers account for the second largest portion of the loan portfolio, comprising 31.0%. Residential real estate loans totaled $650.7 million at December 31, 2024, compared to $672.5 million at December 31, 2023.
Residential real estate loans to retail customers account for the second largest portion of the loan portfolio, comprising 25.6%. Residential real estate loans totaled $599.1 million at December 31, 2025, compared to $650.7 million at December 31, 2024.
The following table summarizes the primary segments of the ACL as of December 31, 2024 and 2023: (Dollars in thousands) 2024 2023 December 31, Amount % of loans in each category to total loans Amount % of loans in each category to total loans Commercial and non-residential real estate $ 10,838 67 % $ 12,536 69 % Residential 7,322 31 6,412 29 Home equity lines of credit 95 1 97 1 Consumer and other 1,408 1 3,079 1 Total $ 19,663 100 % $ 22,124 100 % Nonperforming assets consist of loans that are no longer accruing interest and real estate acquired through foreclosure.
The following table summarizes the primary segments of the ACL as of December 31, 2025 and 2024: (Dollars in thousands) 2025 2024 December 31, Amount % of loans in each category to total loans Amount % of loans in each category to total loans Commercial and non-residential real estate $ 12,780 73 % $ 10,838 67 % Residential 7,695 26 7,322 31 Home equity lines of credit 101 — 95 1 Consumer and other 1,251 1 1,408 1 Total $ 21,827 100 % $ 19,663 100 % Nonperforming assets consist of loans that are no longer accruing interest and real estate acquired through foreclosure.
Declines in the fair values of these securities can be attributed to general market conditions, rather than credit-related conditions. The municipal securities continue to give us the ability to pledge and to decrease the effective tax rate.
Management has the intent and ability to hold the investments to maturity and they are all high quality investments. Declines in the fair values of these securities can be attributed to general market conditions, rather than credit-related conditions. The municipal securities continue to give us the ability to pledge and to decrease the effective tax rate.
The decrease of $1.2 million, or 26.1%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as two charge offs of commercial loans totaling $0.5 million secured by heavy equipment and vehicles.
The decrease of $0.2 million, or 5.9%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as payoffs of two commercial loans to a single borrower totaling $0.2 million secured by business assets.
(Dollars in thousands, except per share data) December 31, 2024 December 31, 2023 Goodwill $ 2,838 $ 2,838 Intangibles 262 352 Total intangibles $ 3,100 $ 3,190 Total equity attributable to parent $ 305,679 $ 289,384 Less: Total intangibles (3,100) (3,190) Tangible common equity $ 302,579 $ 286,194 Tangible common equity $ 302,579 $ 286,194 Common shares outstanding (000s) 12,945 12,758 Tangible book value per common share $ 23.37 $ 22.43 Net Interest Income Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities.
(Dollars in thousands, except per share data) December 31, 2025 December 31, 2024 Goodwill $ 1,200 $ 2,838 Intangibles — 262 Total intangibles $ 1,200 $ 3,100 Total equity attributable to parent $ 333,968 $ 305,679 Less: Total intangibles (1,200) (3,100) Tangible common equity $ 332,768 $ 302,579 Tangible common equity $ 332,768 $ 302,579 Common shares outstanding (000s) 12,716 12,945 Tangible book value per common share $ 26.17 $ 23.37 Net Interest Income Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities.
Nonperforming assets and past due loans as of December 31, are as follows: (Dollars in thousands) 2024 2023 Non-accrual loans Commercial $ 20,109 $ 7,680 Real estate and home equity 4,278 243 Consumer and other 220 344 Total nonperforming loans 24,607 8,267 Other real estate, net 2,827 825 Total nonperforming assets $ 27,434 $ 9,092 Allowance for credit losses $ 19,663 $ 22,124 Nonperforming loans to gross loans 1.2 % 0.4 % Allowance for credit losses to total loans 0.94 % 0.95 % Allowance for credit losses to nonperforming loans 79.9 % 267.6 % Nonperforming assets to total assets 0.9 % 0.3 % Individually analyzed loans have increased by $31.4 million, or 266.1%, during 2024.
Nonperforming assets and past due loans as of December 31, are as follows: (Dollars in thousands) 2025 2024 Non-accrual loans Commercial $ 22,654 $ 20,109 Real estate and home equity 7,758 4,278 Consumer and other 243 220 Total nonperforming loans 30,655 24,607 Other real estate, net 580 2,827 Total nonperforming assets $ 31,235 $ 27,434 Allowance for credit losses $ 21,827 $ 19,663 Nonperforming loans to gross loans 1.3 % 1.2 % Allowance for credit losses to total loans 0.93 % 0.94 % Allowance for credit losses to nonperforming loans 71.2 % 79.9 % Nonperforming assets to total assets 0.9 % 0.9 % Individually analyzed loans have decreased by $11.6 million, or 26.9%, during 2025.
Within each loan segment forecast, these two economic variables are forecasted based on expected trends over a 12-month period, before reverting to the long-term average quarterly rate of each variable over the next 12-month period, then maintains this quarterly average for the life of the loan segment.
Within each loan segment forecast, these two economic variables are forecasted based on expected trends over a 12-month period. This quarterly average is then maintained for the life of the loan segment.
GAAP basis Net interest income $ 109,198 $ 123,283 $ 111,803 Average interest-earning assets 2,997,951 3,077,717 2,798,784 Net interest margin 3.64 % 4.01 % 3.99 % Net interest margin - non-U.S.
GAAP basis Net interest income $ 107,408 $ 109,198 $ 123,283 Average interest-earning assets 2,959,136 2,997,951 3,077,717 Net interest margin 3.63 % 3.64 % 4.01 % Net interest margin - non-U.S.
The following table sets forth the balance of each of the deposit categories for the years ended December 31, 2024 and 2023: (Dollars in thousands) 2024 2023 Demand deposits of individuals, partnerships and corporations Noninterest-bearing demand $ 940,994 $ 1,197,272 NOW 473,225 538,444 Savings and money markets 437,145 571,299 Time deposits, including CDs and IRAs 842,251 594,461 Total deposits $ 2,693,615 $ 2,901,476 Time deposits that meet or exceed the FDIC insurance limit $ 2,962 $ 3,150 Average interest-bearing deposits totaled $1.80 billion during 2024 compared to $1.86 billion during 2023.
The following table sets forth the balance of each of the deposit categories for the years ended December 31, 2025 and 2024: (Dollars in thousands) 2025 2024 Demand deposits of individuals, partnerships and corporations Noninterest-bearing demand $ 1,144,682 $ 940,994 NOW 575,277 473,225 Savings and money markets 532,928 437,145 Time deposits, including CDs and IRAs 589,159 842,251 Total deposits $ 2,842,046 $ 2,693,615 Time deposits that meet or exceed the FDIC insurance limit $ 596 $ 2,962 Average interest-bearing deposits totaled $1.90 billion during 2025 compared to $1.80 billion during 2024.
As of December 31, 2024, the "economic and business conditions" factor was generally the highest weighted qualitative factor, with a weighting of 10% to 20%, and given a risk rating of “Minor” for fifteen and "Moderate" for five of the 21 portfolio segments.
As of December 31, 2025, the "economic and business conditions" factor was generally the highest weighted qualitative factor, with a weighting of 10% to 20%, and given a risk rating of “No Change” for one, a risk rating of “Minor” for fifteen and "Moderate" for four of the 21 portfolio segments (one segment does not have Q Factors).
The amortized cost basis of the closed portfolio of fixed-rate loans was $443.8 million and $491.0 million as of December 31, 2024 and December 31, 2023, respectively, which include basis adjustments of $1.1 million and $4.1 million.
The amortized cost basis of the closed portfolio of fixed-rate loans was $403.9 million and $443.8 million as of December 31, 2025 and December 31, 2024, respectively, including basis adjustments of $2.4 million and $1.1 million as of December 31, 2025 and December 31, 2024, respectively.
The decline in average total assets was primarily the result of a $116.1 million, or 5.0%, decline in average total loans, partially offset by increases of $28.7 million, or 8.5%, and $7.7 million, or 1.9%, in average investment securities and average interest-bearing deposits with banks, respectively.
The decline in average total assets was primarily the result of a $40.1 million, or 1.8%, decline in average total loans and a $34.2 million, or 8.1%, decline in average interest-bearing deposits with banks, partially offset by an increase of $35.4 million, or 9.7%, in average investment securities.
With stockholders’ equity increasing as noted above and with the decline in assets of $185.2 million, the equity to assets ratio 47 increased from 8.7% at December 31, 2023 to 9.8% at December 31, 2024.
With stockholders’ equity increasing as noted above and an increase in assets of $180.2 million, the equity to assets ratio increased from 9.8% at December 31, 2024 to 10.1% at December 31, 2025.
The increase in individually analyzed loans is primarily due to the addition of two commercial real estate loans totaling $31.5 million. A portion of the ACL of $1.3 million and $1.9 million was allocated to cover any loss in individually analyzed loans at December 31, 2024 and 2023, respectively.
The decrease in individually analyzed loans is primarily due to the payoff of a commercial real estate loan of $18.0 million. A portion of the ACL of $0.4 million and $1.3 million was allocated to cover any loss in individually analyzed loans at December 31, 2025 and 2024, respectively.
At December 31, 2024, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in nine companies with a carrying value of $36.5 million. Investments in our top four equity securities represented $34.1 million, or 93.4%, of our total Fintech investment portfolio at December 31, 2024.
At December 31, 2025, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in 11 companies with a carrying value of $41.3 million. Investments in our top four equity securities represented $37.6 million, or 91.1%, of our total Fintech investment portfolio at December 31, 2025.
Average investment securities increased $28.7 million, or 8.5%, in 2024 as the result of a $40.6 million increase in taxable investments, partially offset by an $11.9 million decline in tax-exempt investments. The yield increased 42 basis points on taxable securities and declined 59 basis points on tax-exempt securities.
Average investment securities increased $35.4 million, or 9.7%, in 2025 as the result of a $54.0 million increase in taxable investments, partially offset by an $18.5 million decline in tax-exempt investments. The yield increased 105 basis points on taxable securities and increased 40 basis points on tax-exempt securities.
The change from release of allowance to provision for credit losses is primarily the result of the level of recognized charge-offs within the loan portfolio, which was partially offset by changes to the outstanding balances of the loan portfolios, including decreases in the commercial, residential and consumer loan segments.
The increase in provision for credit losses is primarily the result of the level of recognized charge-offs within the portfolio, which was compounded by increases to the outstanding balances of the commercial loan portfolio, partially offset by decreases in the residential loan segment.
The notional amount of the interest rate swap portfolio was $126.0 million and $390.3 million as of December 31, 2024 and December 31, 2023, respectively, including amortization adjustments of $24.0 million and $9.7 million related to one of the swaps which is amortizing.
The interest rate swap portfolio had a total notional amount of $84.2 million and $126.0 million as of December 31, 2025 and December 31, 2024, respectively, including amortization adjustments of $35.8 million and $24.0 million related to one of the swaps which is amortizing.
Refer to Note 18 – Fair Value Measurements accompanying the consolidated financial statements included elsewhere in this report for a complete discussion of our use of fair value and the related measurement practices.
Refer to Note 18 – Fair Value Measurements accompanying the consolidated financial statements included elsewhere in this report for a complete discussion of our use of fair value and the related measurement practices. 50 Recent Accounting Pronouncements and Developments Recent accounting pronouncements and developments applicable to us are described further in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. 51
We utilize a custodial deposit transference structure for certain deposit programs whereby we, acting as custodian of account holder funds, place a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a program bank).
Under this structure, we, acting as custodian, place a portion of account holder funds not needed to support near-term settlement at one or more third-party FDIC-insured banks (each, a "program bank"). Accounts at program banks are established in our name as custodian, for the benefit of account holders.
We paid dividends to common shareholders of $8.8 million in 2024 and $8.6 million in 2023, compared to earnings of $20.1 million in 2024 versus $31.2 million in 2023, resulting in an increase in the dividend payout ratio to 43.7% in 2024 from 27.7% in 2023.
We paid dividends to common shareholders of $8.7 million in 2025 and $8.8 million in 2024, compared to earnings of $26.9 million in 2025 versus $20.1 million in 2024, resulting in a decline in the dividend payout ratio to 32.3% in 2025 from 43.7% in 2024.
Net charge-offs in 2024 totaled $4.4 million, in comparison to net charge-offs of $9.3 million in 2023. Lastly, the provision for credit losses was impacted by a $0.6 million decrease in the specific credit loss allocations in 2024, relative to a $0.1 million decrease in provision for such loan losses in 2023.
Lastly, the provision for credit losses was impacted by a $0.9 million decline in the specific credit loss allocations in 2025, relative to a $0.6 million decline in provision for such loan losses in 2024.
Since the COVID-19 pandemic, the office CRE loan concentration has been subject to increased scrutiny by management, due to the lowered demand for office space. This concentration includes three Classified notes to unrelated borrowers, secured by properties in North Central West Virginia and Southwestern Pennsylvania.
Office borrowers are more dispersed, with material loan balances in Northern Virginia, Southwest Pennsylvania and North Central West Virginia. Since the COVID-19 pandemic, the office CRE loan concentration has been subject to increased scrutiny by management, due to the lowered demand for office space.
This increase primarily consists of net income for the year of $20.1 million, stock-based compensation of $2.9 million, common stock options exercised totaling $1.5 million and other comprehensive income of $0.6 million, partially offset by cash dividends paid of $8.8 million.
This increase primarily consists of net income for the year of $26.9 million, stock-based compensation of $3.8 million, common stock options exercised totaling $2.3 million and other comprehensive income of $14.4 million, partially offset by the repurchase of 479,069 shares of common stock for a total of $10.2 million and cash dividends paid of $8.7 million.
Return on Assets and Equity Assets Our return on average assets was 0.6% in 2024, compared to 0.9% in 2023. The decline in 2024 is a result of an $11.1 million, or 35.6%, decline in earnings, which is partially offset by a $73.3 million, or 2.2%, decline in average total assets as compared to 2023.
Return on Assets and Equity Assets Our return on average assets was 0.8% in 2025, compared to 0.6% in 2024. The increase in 2025 is a result of a $6.8 million, or 34.1%, increase in earnings and a $26.3 million, or 0.8%, decline in average total assets as compared to 2024.
Interest-bearing deposits totaled $1.75 billion at December 31, 2024, compared to $1.70 billion at December 31, 2023, or 65.1% and 58.7%, respectively, of total deposits.
At December 31, 2025, noninterest-bearing balances totaled $1.14 billion, compared to $941 million at December 31, 2024, or 40.3% and 34.9%, respectively, of total deposits. Interest-bearing deposits totaled $1.70 billion at December 31, 2025, compared to $1.75 billion at December 31, 2024, or 59.7% and 65.1%, respectively, of total deposits.
However, certain local municipal securities included in available-for-sale securities, which are related to tax increment financing, represent Level III instruments. These are assets that have little to no pricing observability as of the reported date.
However, certain local municipal securities included in available-for-sale securities, which are related to tax increment financing, represent Level III instruments.
Major classification of loans held for investment at December 31, are as follows: (Dollars in thousands) 2024 2023 Business $ 668,458 $ 797,100 Real estate 632,898 670,584 Acquisition, development and construction 115,500 134,004 Commercial $ 1,416,856 $ 1,601,688 Residential 650,708 672,547 Home equity lines of credit 12,933 14,531 Consumer 18,620 27,408 Total loans $ 2,099,117 $ 2,316,174 Deferred loan origination fees and costs, net 1,014 1,420 Loans receivable $ 2,100,131 $ 2,317,594 At December 31, 2024, commercial and non-residential real estate loans represented the largest portion of the portfolio at 67.5%.
Major classification of loans held for investment at December 31, are as follows: (Dollars in thousands) 2025 2024 Business $ 686,245 $ 668,458 Real estate 906,336 632,898 Acquisition, development and construction 116,784 115,500 Commercial $ 1,709,365 $ 1,416,856 Residential 599,094 650,708 Home equity lines of credit 9,969 12,933 Consumer 25,599 18,620 Total loans $ 2,344,027 $ 2,099,117 Deferred loan origination fees and costs, net (864) 1,014 Loans receivable $ 2,343,163 $ 2,100,131 At December 31, 2025, commercial and non-residential real estate loans represented the largest portion of the portfolio at 72.9%.
Capital Resources During the year ended December 31, 2024, stockholders’ equity increased $16.4 million to $305.8 million from $289.3 million.
Capital Resources During the year ended December 31, 2025, stockholders’ equity increased $28.2 million to $334.0 million from $305.8 million.
Total interest expense increased $10.1 million, primarily due to an $11.4 million increase in deposit interest. The result was a 69 basis point increase in the cost of interest-bearing liabilities, from 3.38% in 2023 to 4.07% in 2024.
Total interest expense declined $8.7 million, primarily due to an $8.6 million decline in deposit interest expense. The result was a 64 basis point decline in the cost of interest-bearing liabilities, from 4.07% in 2024 to 3.43% in 2025.
Multifamily borrowers are mainly located in the Northern Virginia and North Central West Virginia areas and are heavily concentrated in three loans to two unrelated borrowers. These three loans make up more than 60% of the total concentration. The Hospitality concentration consists of eight loans to two unrelated ownership groups.
This concentration includes three Classified notes to unrelated borrowers, secured by properties in North Central West Virginia and Southwestern Pennsylvania. Multifamily borrowers are mainly located in the Northern Virginia and North Central West Virginia areas and are heavily concentrated in four loans to three unrelated borrowers. These four loans make up more than 76% of the total concentration.
A majority of these loans are bridge to U.S. Department of Housing and Urban Development loans and have a three to five year term. As of December 31, 2024, these borrowers are in 21 different states. This concentration contains a single classified note, well secured by multiple SNF properties in Michigan.
These loans typically are made to skilled nursing facilities ("SNF") and are secured by the subject properties. A majority of these loans are bridge to U.S. Department of Housing and Urban Development loans and have a three to five year term. As of December 31, 2025, these borrowers are in 20 different states.
This was driven by the 69 basis point increase in the cost of interest-bearing liabilities outpacing the two basis point increase in yield on earning assets. During 2024, net interest income declined $14.1 million, or 11.4%, and total interest income declined $4.0 million, or 2.1%.
This was driven by the 64 basis point decline in the cost of interest-bearing liabilities outpacing the 27 basis point decline in yield on earning assets. During 2025, net interest income declined $1.8 million, or 1.6%, and total interest income declined $10.5 million, or 5.7%.
The “Other” segment above contains all CRE loan types outside of the five listed. These Other concentrations are not tracked through scorecards, and are immaterial to the CRE loan portfolio. Nursing Homes are mainly originated through purchased participation from third-party banks. These loans typically are made to skilled nursing facilities ("SNF") and are secured by the subject properties.
The “Other” segment above contains all CRE loan types outside of the five listed. The loans included in the Other concentration primarily include mixed use CRE loans and are not tracked through scorecards. Nursing Homes are mainly originated through purchased participation from third-party banks.
Equity Our return on average stockholders’ equity was 6.9% in 2024, compared to 11.4% in 2023. The decline in 2024 is a result of an $11.1 million, or 35.6%, decline in earnings and an $18.2 million, or 6.7%, increase in average equity to $292.2 million.
Equity Our return on average stockholders’ equity was 8.7% in 2025, compared to 6.9% in 2024. The increase in 2025 is a result of an $6.8 million, or 34.1%, increase in earnings, partially offset by a $17.9 million, or 6.1%, increase in average equity to $310.1 million.
As of December 31, 2024, there is $0.2 million in in calculated credit loss reserve allocation against these 16 Doubtful loans. Interest Rate Risk Management continually evaluates hedging strategies that are available to manage interest rate risk. We enter into interest rate swap contracts designated as hedging instruments to manage the interest rate risk associated with certain fixed rate loans.
Interest Rate Risk Management continually evaluates hedging strategies that are available to manage interest rate risk. We enter into interest rate swap contracts designated as hedging instruments to manage the interest rate risk associated with certain fixed rate loans.
Approximately, 56% and 54% of noninterest expense for 2024 and 2023, respectively, related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations.
Approximately, 58% and 56% of noninterest expense for 2025 and 2024, respectively, related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to services organizations. Discontinued Operations In February 2023, we completed the sale of the Bank’s wholly-owned subsidiary, ProCo Global, Inc.
Specific loss estimates are derived for individual loans based on specific criteria such as current delinquent status, related deposit account activity, where applicable and changes in the local and national economy. When appropriate, we also consider public knowledge and verifiable information from the local market to assess risks to specific loans and the loan portfolios as a whole.
Specific loss estimates are derived for individually analyzed loans based on specific criteria such as current delinquent status, related deposit account activity, where applicable and changes in the local and national economy.
We have identified the following estimates as critical to the understanding of our financial position and results of operations and which require the application of significant judgment by management.
We have identified the following estimates as critical to the understanding of our financial position and results of operations and which require the application of significant judgment by management. Allowance for Credit Losses The ACL represents management’s current estimate of credit losses for the remaining estimated life of financial instruments, primarily to loans on our balance sheet.
Further discussion on the provision for credit losses is included in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report.
The provision for credit losses, which is a product of management's analysis, is recorded in response to forecasted losses over the remaining life of the loan and available-for-sale investment security portfolios. Further discussion on the provision for credit losses is included in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report.
Accounts opened at program banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at program banks. We maintain the records of each account holders' deposits maintained at program banks.
We remain the issuer of record under all applicable account holder agreements and maintain sole custodial control and transaction authority over program bank accounts, as well as the records of each account holder's beneficial interest in funds held at program banks.
There were also two Special Mention notes that were paid off during the year totaling $0.7 million. These included one commercial note and one HELOC. Loans classified as Substandard totaled $76.8 million and $34.0 million as of December 31, 2024 and December 31, 2023, respectively. The increase of $42.8 million, or 125.9%, was concentrated in the commercial loan portfolio.
Loans classified as Substandard totaled $53.0 million and $76.8 million as of December 31, 2025 and December 31, 2024, respectively. The decrease of $23.8 million, or 31.0%, was concentrated in the commercial loan portfolio. This decrease is primarily the result of nine Substandard notes that were paid off during the year totaling $34.0 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAverage interest rates are shocked by +/- 100, 200, 300 and 400 basis points (“bp”). The goal is to structure the balance sheet so 51 that net interest-earnings at risk over 12-month and 24-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels and scenarios.
Biggest changeThe balance sheet is subjected to quarterly interest rate shock testing, with scenarios involving parallel shifts of ±100, ±200, ±300, and ±400 basis points. The goal is to ensure that projected changes in net interest income over 12- and 24-month horizons, as well as changes in the economic value of equity, remain within policy-defined thresholds under each scenario.
Estimated Changes in EVE Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (35.0) % (25.0) % (17.0) % (12.0) % (12.0) % (17.0) % (25.0) % (35.0) % December 31, 2024 (18.9) % (16.1) % (9.2) % (3.2) % (0.6) % (6.7) % (12.2) % (15.8) % December 31, 2023 (2.3) % (1.9) % (1.3) % (0.6) % 0.7 % (0.7) % (3.5) % (6.0) % The Economic Value of Equity ("EVE") was stable across rate changing scenarios for 2023.
Estimated Changes in EVE Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (35.0) % (25.0) % (17.0) % (12.0) % (12.0) % (17.0) % (25.0) % (35.0) % December 31, 2025 (15.6) % (12.8) % (7.7) % (3.6) % (1.5) % (8.3) % (17.0) % (24.1) % December 31, 2024 (18.9) % (16.1) % (9.2) % (3.2) % (0.6) % (6.7) % (12.2) % (15.8) % The EVE remained stable across various interest rate scenarios throughout 2025.
Estimated Changes in Net Interest Income Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (25.0) % (20.0) % (15.0) % (10.0) % (10.0) % (20.0) % (27.5) % (35.0) % December 31, 2024 31.7 % 23.7 % 15.7 % 7.7 % (6.5) % (12.8) % (18.6) % (24.2) % December 31, 2023 51.8 % 39.7 % 27.6 % 16.1 % (7.6) % (20.2) % (33.4) % (44.8) % Net interest income sensitivity is tested by shocking a forward rate curve.
Estimated Changes in Net Interest Income Change in interest rates +400 bp +300 bp +200 bp +100 bp -100 bp -200 bp -300 bp -400 bp Policy Limit (15.0) % (12.5) % (10.0) % (10.0) % (10.0) % (20.0) % (27.5) % (35.0) % December 31, 2025 24.2 % 18.9 % 13.3 % 7.8 % (3.8) % (10.9) % (15.9) % (17.4) % December 31, 2024 31.7 % 23.7 % 15.7 % 7.7 % (6.5) % (12.8) % (18.6) % (24.2) % Net interest income sensitivity is evaluated by applying parallel shocks to a forward interest rate curve.
Interest Rate Risk The objective of the asset/liability management function is to structure the balance sheet in ways that maintain consistent growth in net interest income and minimize exposure to market risks within our policy guidelines.
Interest Rate Risk The primary objective of the asset/liability management function is to strategically structure the balance sheet to support consistent growth in net interest income, while minimizing exposure to market risks, all within the parameters of established policy guidelines.
We monitor the financial condition of these third parties on an annual basis and we do not currently expect these third parties to fail to meet their obligations. 53
We work with third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk. We monitor the financial condition of these third parties on an annual basis and we do not currently expect these third parties to fail to meet their obligations. 54
Credit Risk We have counter-party risk which may arise from the possible inability of third-party investors to meet the terms of their forward sales contracts, including derivative contracts such as interest rate swaps and fair value hedges. We work with third-party investors that are generally well-capitalized, are investment grade and exhibit strong financial performance to mitigate this risk.
Any additional repricing of deposits would serve as a significant factor influencing variations in EVE calculations. 53 Credit Risk We have counter-party risk which may arise from the possible inability of third-party investors to meet the terms of their forward sales contracts, including derivative contracts such as interest rate swaps and fair value hedges.
The policy establishes limits on risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity (“EVE”) at risk) resulting from a hypothetical change in interest rates.
A comprehensive interest rate risk management policy, approved by the Board of Directors and administered by the ALCO, establishes quantitative limits on acceptable risk. These limits are expressed as the percentage change in net interest income (net interest income at risk) and the fair value of equity capital (economic value of equity, or "EVE") under hypothetical interest rate scenarios.
The difference between these discounted values of the assets and liabilities is the economic value of equity, which theoretically approximates the fair value of our net assets.
These cash flows are discounted to determine the present value of assets and liabilities. The difference between these present values represents the economic value of equity, which serves as a theoretical approximation of the fair value of the Bank’s net assets.
Our interest rate risk represents the levels of exposure our income and market values have to fluctuations in interest rates. Interest rate risk is measured as the change in earnings and the theoretical market value of equity that results from changes in interest rates.
Interest rate risk reflects the sensitivity of both earnings and the market value of equity to changes in interest rates. It is quantified by measuring the potential impact on earnings and the theoretical market value of equity resulting from interest rate fluctuations.
Theoretically, an asset sensitive position is more favorable in a rising rate environment, since more assets than liabilities will be repriced in a given time frame as interest rates rise.
In theory, an asset-sensitive balance sheet is advantageous in a rising interest rate environment, as a greater volume of assets than liabilities will reprice within a given time frame, thereby enhancing net interest income. Conversely, a liability-sensitive position is generally more favorable in a declining rate environment, as liabilities reprice more rapidly than assets, potentially preserving margins.
Essentially, a gradual interest rate decline scenario smooths the impact of falling rates over a 12 or 24 month period. Our expectation is that over any given one to two year period, interest rates will likely move at a gradual pace.
In contrast, when interest rates decline gradually, the impact on net interest income is generally less severe. A gradual rate decline scenario distributes the effects over a 12- to 24-month horizon, thereby smoothing the earnings impact. The Bank anticipates that interest rate movements over any given one- to two-year period will likely follow a gradual trajectory.
A base case forecast is prepared using market consensus rate forecasts and alternative simulations reflecting more and less extreme behavior of rates each quarter. The analysis is presented to the ALCO and the Board of Directors.
Each quarter, a base case forecast is developed using market consensus rate projections, supplemented by alternative simulations reflecting a range of rate scenarios. These analyses are reviewed by the ALCO and the Board of Directors. Additional forecasts 52 may be generated in response to heightened interest rate volatility or other significant business developments.
Interest rate risk is managed through the use of interest rate caps, commercial loan swap transactions and interest rate lock commitments on mortgage loans held-for-sale, as well as the structuring of loan terms that provide cash flows to be consistently re-invested along the rate cycle. Our primary market risk is interest rate fluctuation.
These include retail deposits, various wholesale funding channels and borrowings from the FHLB. Interest rate risk is mitigated through the use of financial instruments, such as interest rate caps, commercial loan swap agreements and interest rate lock commitments on mortgage loans held-for-sale. Additionally, loan structures are designed to ensure a steady reinvestment of cash flows throughout the interest rate cycle.
Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows (repricing risk); changing rate relationships across yield curves that affect bank activities (basis risk); changing rate relationships across the spectrum of maturities (yield curve risk); and interest rate related options embedded in certain bank products (option risk).
Repricing risk arises from misalignment of the timing of changes in interest rates and the timing of cash flows, which can affect earnings and asset values. Basis risk refers to the variability in rate relationships across different yield curves, which may impact the effectiveness of hedging strategies and the pricing of financial instruments.
The ALCO oversees the management of interest rate risk and our objective is to maximize stockholder value, enhance profitability and increase capital, serve customer and community needs and protect us from any material financial consequences associated with changes in interest rates.
Oversight of interest rate risk management is provided by the ALCO, whose mandate is to enhance shareholder value, improve profitability, strengthen capital, meet the needs of customers and communities and safeguard the institution from material financial consequences stemming from interest rate changes. Interest rate risk can take several distinct forms.
Changes in interest rates may also affect a bank’s underlying economic value. The values of a bank’s assets, liabilities and interest-rate related, off-balance sheet contracts are affected by changes in rates because the present values of future cash flows, and in some cases the cash flows themselves, are changed when discounting by different rates.
Interest rate changes can also affect the economic value of the institution by altering the present value of future cash flows and, in some cases, the cash flows themselves. The institution acknowledges that a certain level of interest rate risk is inherent and necessary to achieve its financial objectives.
As of December 31, 2024, the Bank is shown in an asset sensitive position in down rate environments after rate shocks. Management continuously strives to reduce higher costing fixed rate funding instruments, while increasing assets that are more fluid in their repricing.
As of December 31, 2025, the Bank is positioned as asset sensitive in scenarios involving declining interest rates following rate shocks. We remain focused on reducing reliance on higher-cost fixed-rate funding instruments, while simultaneously increasing the proportion of assets that exhibit greater flexibility in repricing.
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This objective is accomplished through management of balance sheet liquidity and interest rate risk exposure based on changes in economic conditions, interest rate levels and customer preferences.
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This objective is achieved through the active management of balance sheet liquidity and interest rate risk, taking into account evolving economic conditions, interest rate environments and customer behavior. Liquidity is managed through a combination of investment portfolio strategies, the sale of commercial and residential real estate loans and the use of diversified funding sources.
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We manage balance sheet liquidity through the investment portfolio, sales of commercial and residential real estate loans and through the utilization of diversified funding sources, including retail deposits, a variety of wholesale funding sources and borrowings through the FHLB.
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The principal market risk faced by the institution is interest rate volatility, which arises from core banking activities, such as deposit gathering and loan origination. This risk is influenced by a range of factors, including macroeconomic trends, financial market conditions, interest rate movements and shifts in consumer preferences.
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Interest rate risk results from the traditional banking activities in which the Bank engages, such as gathering deposits and extending loans. Many factors, including economic conditions, financial conditions, movements in interest rates and consumer preferences affect the difference between interest earned on assets and interest paid on liabilities.
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Yield curve risk is associated with shifts in rate relationships across various maturities, potentially influencing the valuation and performance of assets and liabilities. Lastly, option risk stems from embedded options in bank products, such as prepayment options or interest rate caps, that may be exercised under certain rate conditions, introducing uncertainty into cash flow projections and asset/liability management.
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We believe that accepting some level of interest rate risk is necessary in order to achieve realistic profit goals. Management and the Board of Directors have chosen an interest rate risk profile that is consistent with our strategic business plan.
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Accordingly, we have adopted an interest rate risk profile aligned with the strategic business plan. While proactive measures are taken to monitor and mitigate adverse impacts, the actual effects of interest rate changes on net interest income cannot be predicted with certainty.
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While management carefully monitors the exposure to changes in interest rates and takes actions as warranted to decrease any adverse impact, there can be no assurance about the actual effect of interest rate changes on net interest income. Our Board of Directors has established a comprehensive interest rate risk management policy, which is administered by the ALCO.
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To assess potential adverse impacts, the institution employs simulation analysis using advanced modeling techniques. These models incorporate optionality features, such as call provisions and interest rate caps and floors embedded in investment and loan contracts. However, as with any modeling approach, limitations exist.
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We measure the potential adverse impacts that changing interest rates may have on short-term earnings, long-term value and liquidity by employing simulation analysis through the use of computer modeling. The simulation model captures optionality factors such as call features and interest rate caps and floors embedded in investment and loan portfolio contracts.
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Actual behaviors, such as loan prepayments, deposit withdrawals and shifts in asset and liability categories, may diverge from model assumptions. Furthermore, the models do not capture the potential effects of rising rates on borrowers’ repayment capacity or on the demand for loan and deposit products.
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As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology employed. When interest rates change, actual movements in different categories of interest-earning assets and interest-bearing liabilities, loan prepayments and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model.
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Regardless of the prevailing interest rate direction, management is committed to maintaining a consistent spread between asset yields and the cost of deposits and borrowings.
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Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan customers’ ability to service their debts or the impact of rate changes on demand for loan and deposit products.
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The resulting changes in income are analyzed under scenarios where the curve shifts upward or downward. The deposit repricing betas now reflect a greater responsiveness, both upward and downward, allowing interest expense to adjust more dynamically with rate changes.
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In addition, more frequent forecasts are produced when interest rates are particularly uncertain, when other business conditions so dictate, or when necessary to model potential balance sheet changes. The balance sheet is subject to quarterly testing for interest rate shock possibilities to indicate the inherent interest rate risk.
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As of the end of the fourth quarter of 2025, market expectations suggest a decline in interest rates over the next one to two years. Given the Bank’s exposure to variable-rate loans and deposits, a declining rate environment is expected to impact earnings.
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Similarly, a liability sensitive position is theoretically favorable in a declining interest rate environment, since more liabilities than assets will be repriced in a given time frame as interest rates decline. Management works to maintain a consistent spread between yields on assets and costs of deposits and borrowings, regardless of the direction of interest rates.
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Nevertheless, current simulations indicate that net interest income at risk remains within established policy limits under parallel instantaneous interest rate shock scenarios. Historically, breaches of these policy thresholds have been primarily driven by prevailing market interest rate levels and the Bank’s cost of funding. The preceding discussion pertains to net interest income at risk under immediate and substantial rate shifts.
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The change in income is then examined in scenarios where the rate curve is shocked up or down in a parallel shock. Deposit repricing during the last year lagged the movement of the Fed Funds Rate. As these increases have been realized, interest expense is higher in a flat rate scenario.
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In declining rate environments, mortgage banking activity typically increases, with higher volumes of loan originations and refinancing. This benefit is not captured in net interest income at risk metrics. Measures of equity value at risk assess the Bank’s ongoing economic value by evaluating the effects of interest rate changes on all projected cash flows.
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However, the betas for deposit repricing allow interest expense to increase more in up rates and decrease more in down rates in 2024 than during 2023. At December 31, 2024, the expectation is for rates to begin a steady decline over the next one to two years, through small drops, with another stabilization moving forward.
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During this period, in a persistently high-rate environment, interest-bearing deposits began to stabilize following the increases observed in 2023. This stabilization contributed to an elevated cost of funds, thereby increasing the cost of interest-bearing liabilities. As a result, the cost of these liabilities began to behave similarly to the discount rate applied to projected cash flows.
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There is impact in a downrate environment as the bank deals heavily in variable rate loans and deposits. Net interest income at risk does not currently exceed policy limits in parallel instantaneous interest rate shock scenarios.
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Although the rate changes were initiated in 2023, their full impact was realized in 2024 and continues to be reflected in the results.
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In the past, policy violations in these scenarios were driven largely by the general level or market interest rates described in the preceding paragraph as well as our cost of funding. Our deposit costs are low and have little room to reprice to a lower interest rate in a falling rate environment.
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Conversely, our floating rate assets are exposed to the full effect of repricing to a lower interest rate in a falling rate environment. Additionally, mortgage companies experience a higher volume of loan originations and refinance activity as interest rates fall.
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The impact of this increase in loan volume is reflected in income from equity method investments and represents a benefit to net income that partially offsets the losses to net interest income experienced in a falling rate environment.
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The paragraph above discusses net interest income at risk in various shock scenarios; scenarios in which interest rates immediately move by a large margin. Our net interest income profile exhibits declining net interest income when rates fall gradually, but the impact is not as extreme as is suggested in a shock scenario.
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The measures of equity value at risk indicate the ongoing economic value of us by considering the effects of changes in interest rates on all of our cash flows and by discounting the cash flows to estimate the present value of assets and liabilities.
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The Fed Funds Rate increased significantly during 2022. The full effect of this rate movement was not fully realized in the deposit portfolio until 2023. Throughout 2023, in the rising rate environment, interest-bearing deposits were repriced, leading to increased cost of funds. The significant change in rates also drove previously non-interest-bearing deposits into new interest-bearing account types.
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This migration of noninterest-bearing deposits to interest-bearing impacted the cost of interest-bearing liabilities. This impact drove the 52 cost of interest-bearing liabilities up, allowing the cost to behave similar to the discount rate applied to cash flows. These changes in rates took place in 2023. Any further deposit repricing would also be a major driver in the EVE calculation differences.

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