FVCB 10-K & 10-Q changes, risk factors and insider trading

The material risks and uncertainties that managementwe believesbelieve affect us are described below. Any of these risks, if they are realized, could materially adversely affect our business, financial condition and results of operations, and consequently, the market value of our common stock. Additional risks and uncertainties not currently known to us or that we currently believe to be immaterial may also materially and adversely affect us. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. If any of the matters included in the following information about risk factors were to occur, our future business, financial condition, results of operations, cash flows or prospects could be materially and adversely affected. References to past events in these risk factors are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

Our business and operations, which primarily consist of banking activities, including lending money to customers and borrowing money from customers in the form of deposits, are sensitive to general business and economic conditions in the U.S. generally, and in the Washington, D.C. metropolitan area in particular. The economic conditions in our local markets may be different from the economic conditions in the U.S. as a whole. If economic conditions in the U.S. or any of our markets weaken, our growth and profitability from our operations could be constrained. In addition, foreign economic and political conditions could affect the stability of global financial markets, which could hinder economic growth. The current economic environment is characterized by higher interest rates as a result of contractionary monetary policy which could impact our ability to attract deposits and to generate attractive earnings through our loan and investment portfolios. All these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable. Unfavorable market conditions can result in a deterioration in the credit quality of our borrowers and the demand for our products and services, an increase in the number of loan delinquencies, defaults and charge-offs, additional provisions for credit losses, a decline in the value of our collateral, and an overall material adverse effect on the quality of our loan portfolio.

Our business is significantly affected by monetary and related policies of the U.S. federal government and its agencies. Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, shutdowns and potential reductions in spending by the federal government and related reductions in the federal workforce, and future tax rates are concerns for businesses, consumers and investors in the U.S. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition and results of operations.

When short-term interest rates rise, the rate of interest we pay on our interest-bearing liabilities may rise more quickly than the rate of interest that we receive on our interest-earning assets, which may cause our net interest income to decrease. Additionally, a shrinking yield premium between short-term and long-term market interest rates, a pattern usually indicative of investors' waning expectations of future growth and inflation, commonly referred to as a flattening of the yield curve, typically reduces our profit margin as we borrow at shorter terms than the terms at which we lend and invest.

In 2022 and continuing into 2023, the United States experienced the highest rates of inflation since the 1980s. In an effort to reduce inflation, the Federal Reserve increased the federal funds target rate seven times in 2022 and four times in 2023 from 0 - 0.25% at the beginning of 2022 to 5.25 - 5.50% as of December 31, 2023. During 2024,2024 and 2025, the federal funds target rate reduced 100175 basis points, butdecreasing remainedto at3.50% an- elevated3.75% levelas of 4.25December -31, 4.50%.2025. Higher market interest rates relative to interest rates from 2008 to 2022 have increased funding costs and decreased loan demand. As market interest rates rise, the value of our investment securities generally decreases, although this effect can be less pronounced for floating rate instruments. Higher interest rates reduce the demand for loans and increase the attractiveness of alternative investment and savings products, like U.S. Treasury securities and money market funds, which can make it difficult to attract and retain deposits. Additionally, inflation generally increases the cost of products and services we use in our business operations, as well as labor costs. We may find that we need to give higher than normal raises to employees and start new employees at a higher wage. Furthermore, our clients are also affected by inflation and the rising costs of products and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. If inflationary pressures do not subside, sustained higher interest rates by the Federal Reserve may be needed, which could weaken economic activity. A deterioration in economic conditions in the United States and our markets could result in a further increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition, and results of operations.

Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they become due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost, in a timely manner and without adverse conditions or consequences. We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they become due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. Liquidity risk can increase due to a number of factors, including an over-reliance on a particular source of funding or market-wide phenomena such as market dislocation and major disasters. Approximately 10% of our deposits are derived from one customer relationship, which increases our liquidity risk. Factors that could detrimentally impact access to liquidity sources include, but are not limited to, a decrease in the level of our business activity as a result of a slowdown in our market, adverse regulatory actions against us, or changes in the liquidity needs of our depositors. Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner, and without adverse consequences. Our inability to raise funds through deposits, borrowings, the sale of loans, or other sources, and our ability to maintain sufficient deposits, could have a substantial negative effect on our business, and could result in the closure of the Bank. Our access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our organization specifically or the financial services industry or economy in general. Any substantial, unexpected, and/or prolonged change in the level or cost of liquidity could impair our ability to fund operations and meet our obligations as they become due and could have a material adverse effect on our business, financial condition and results of operations.

Like many financial institutions, we rely on customer deposits as our primary source of funding for our lending activities, and we continue to seek customer deposits to maintain this funding base. Our future growth will largely depend on our ability to retain and grow our diverse deposit base. As of December 31, 2024,2025, we had $1.87$2.0 billion in deposits and approximately 8%10% of our deposits are derived from one customer relationship. Our deposits are subject to potentially dramatic fluctuations in availability or price due to certain factors outside of our control, such as increasing competitive pressures for deposits, changes in interest rates and returns on other investment classes, customer perceptions of our financial health, and general reputation and adverse developments in general economic conditions of an individual's business, which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current customer deposits or attract additional deposits. Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of ourthe company,Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. Furthermore, as many regional banking organizations experienced in 2023, the failure of other financial institutions may cause deposit outflows as customers spread deposits among several different banks so as to maximize their amount of FDIC insurance, move deposits to banks deemed “too big to fail” or remove deposits from the banking system entirely. As of December 31, 2024,2025, approximately 31%34.9% of our deposits were uninsured when excluding collateralized deposits, and we rely on these deposits for liquidity. Any such loss of funds could result in lower loan originations and decrease in liquidity, which could have a material adverse effect on our business, financial condition and results of operations.

We make loans primarily to borrowers in the Washington, D.C. and Baltimore metropolitan areas, focusing on the Virginia counties of Arlington, Fairfax, Loudoun, and Prince William and the independent cities located within those counties, Washington D.C., and its Maryland suburbs, and have a substantial portion of our loans secured by real estate. These concentrations expose us to the risk that adverse developments in the real estate market, or in the general economic conditions in such areas, or the continuation of such adverse developments, could increase the levels of nonperforming loans and charge-offs, and reduce loan demand and deposit growth. ActualProlonged or repeated shutdowns and actual and proposed spending cuts by the U.S. government, particularly those resulting in job losses in and around the Washington, D.C. metropolitan area, could have a negative impact on the markets we serve, which could adversely affect our business, financial condition, and results of operations. Additionally, if economic conditions in the area deteriorate, or there is significant volatility or weakness in the economy or any significant sector of the area's economy, our ability to develop our business relationships may be diminished, the quality and collectability of our loans may be adversely affected, our provision for credit losses may increase, the value of collateral may decline and loan demand may be reduced.

As of December 31, 2024,2025, we had nonperforming loans and accruing loans 90 days or more past due of $12.9$10.7 million, or 0.69%0.55% of total loans, net of deferred fees. If loans become 90 or more days past due and still accruing and move to nonaccrual, we will not record interest income on such loans, and may be required to reverse prior accruals, thereby adversely affecting our earnings. If the level of our nonperforming or other problem assets increases, we may be required to make additional provisions for credit losses, which will negatively impact our earnings. If we are required to foreclose on any collateral properties securing our loans, we will incur legal and other expenses in connection with the foreclosure and sale process and possible losses on the sale of other real estate owned ("OREO") or other collateral. Additionally, the resolution of nonperforming assets and other problem assets requires the active involvement of management, which can distract management from its overall supervision of operations and other income producing activities. As of December 31, 2024,2025, we had no OREO.

The federal banking agencies have issued guidance governing financial institutions that have concentrations in commercial real estate lending. The guidance provides that institutions which have (i) total reported loans for construction, land development, and other land loans which represent 100% or more of an institution's total risk-based capital; or (ii) total reported commercial real estate loans, excluding loans secured by owner-occupied commercial real estate, representing 300% or more of the institution's total risk-based capital, where the institution's commercial real estate loan portfolio has increased 50% or more during the prior 36 months, are identified as having potential commercial real estate concentration risk. Institutions which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios, and may be required to hold higher levels of capital. We have a concentration in commercial real estate loans, and we have experienced significant growth in our commercial real estate portfolio in recent years. As of December 31, 2024,2025, commercial real estate loans, as defined for regulatory purposes, represented 371%313% of our total risk-based capital. Of those loans, commercial construction, development and land loans represented 59%53% of our total risk based capital. Owner-occupied commercial real estate loans represented an additional 68%90% of our total risk based capital. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to its commercial real estate portfolio. Nevertheless, we could be required to maintain higher levels of capital as a result of our commercial real estate concentration, which could limit our growth, require us to obtain additional capital, and have a material adverse effect on our business, financial condition and results of operations.

At December 31, 2024,2025, 18%23% of our total loans were outstanding to commercial and industrial customers. Of that, approximately 37%45% of outstanding commercial and industrial loans are to government contractors or their subcontractors specializing in the defense and homeland security and defense readiness sectors, and we have commitments of $326.8$350.4 million to such borrowers. We are actively seeking to expand our exposure to this business segment. In the event of significant reductions in spending and/or aprolonged or repeated government shutdown,shutdowns, these customers may have their government contracts reduced or terminated, or have payments delayed, causing a loss of anticipated revenues or reduced cash flow, resulting in an increase in credit risk, and potentially defaults by such customers on their respective loans.

Our government contractor customers could also withdraw their deposit balances during a shutdown to fund current operations, resulting in additional liquidity risk. Additionally, layoffs, salary reductions or furloughs of government employees or government contractors could have adverse impacts on other businesses in our market and the general economy of the Washington, D.C. metropolitan area, and may indirectly lead to a loss of revenues by our customers. As a result, significant reductions in spending and/or aprolonged or repeated government shutdownshutdowns could lead to an increase in the levels of past due loans, nonperforming loans, allowance for credit losses and charge-offs, and a decline in liquidity.

Additionally, at December 31, 2024,2025, we had $7.2 million of goodwill related to our acquisition of Colombo. Goodwill and other intangible assets are tested for impairment on an annual basis or when facts and circumstances indicate that impairment may have occurred. Our financial condition and results of operations may be adversely affected if that goodwill is determined to be impaired, which would require us to take an impairment charge.

In the normal course of business, from time to time, we may be named as a defendant in various legal actions, arising in connection with our current and/or prior business activities. Legal actions could include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. Further, we may in the future be subject to consent orders or other formal or informal enforcement agreements with our regulators. We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current and/or prior business activities. Any such legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. Our involvement in any such matters, whether tangential or otherwise, and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. Further, any settlement, consent order, other enforcement agreement or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities. As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, financial condition and results of operations.

Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments. The Bank is our primary operating business and the source of substantially all of our earnings, and our ability to pay dividends will be subject to the earnings, capital levels, capital needs and limitations relating to the payment of dividends by the Bank to us. The amount of dividends that a bank may pay is limited by state and federal laws and regulations. While we have sufficient retained earnings and expect our future earnings to be sufficient to pay cash dividends, our board of directors currently intends to retain earnings for the purpose of financing growth. In addition, we are a bank holding company, and our ability to declare and pay dividends to our shareholders is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends. It is the policy of the Federal Reserve that bank holding companies should generally pay dividends on common stock only out of earnings, and only if prospective earnings retention is consistent with the organization's expected future needs, asset quality and financial condition. These guidelines also require that we review our net income for the current and past four quarters, and the level of dividends on common stock and other Tier 1 capital instruments for those periods, as well as our projected rate of earnings retention. If we do not satisfy these regulatory requirements or the Federal Reserve’s policies, we will be unable to pay dividends on our common stock.

The nature of our business makes us sensitive to the large body of accounting rules in the U.S. From time to time, the governing bodies that oversee changes to accounting rules and reporting requirements may release new guidance for the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.Thesestatements. These changes could adversely affect our capital, regulatory capital ratios, ability to make larger loans, earnings and performance metrics. Any such changes could have a material adverse effect on our business, financial condition, and results of operations.

Net interest income is our primary source of revenue. We define revenue as net interest income plus noninterest income. We manage our balance sheet and interest rate risk exposure to maximize, and concurrently stabilize, net interest income. We do this by monitoring our liquidity position and the spread between the interest rates earned on interest-earning assets and the interest rates paid on interest-bearing liabilities. We attempt to minimize our exposure to interest rate risk, but are unable to eliminate it entirely. In addition to managing interest rate risk, we also analyze our loan portfolio for exposure to credit risk. Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit. In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from our minority membership interest in ACM, merchant services fee income, insurance commission income, income from bank owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.

Critical Accounting PoliciesEstimates

Accounting Standards Codification ("ASC") 326 requires that an estimate of expected credit losses be immediately recognized and reevaluated over the contractual life of the financial asset. The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off.

•Total assets increased to $2.20 billion compared to $2.19$2.29 billion at December 31, 20242025 andcompared 2023,to respectively,$2.20 billion at December 31, 2024, an increase of $8.4$93.3 million.

•Net income was $15.1$22.1 million for the year ended December 31, 20242025 compared to $3.8$15.1 million for 2023.2024, an increase of $7.0 million, or 46%. During 2025, we unwound $80 million of our pay-fixed/receive floating interest rate swaps, resulting in a pre-tax gain of $91 thousand. During 2024, we surrendered $48.0 million in BOLI policies, which resulted in a nonrecurring increase of $2.4 million to our tax provisioning related to the loss of the tax favored status of prior appreciation. For the year ended December 31, 2023, net income included after-tax losses totaling $12.2 million related to the sale of $101.7 million in book value available-for-sale investment securities and nonrecurring noninterest expense totaling $457 thousand related to office space reductions and severance costs. Commercial bank operating earnings (non-GAAP), which excludes the securities sales and otherthese nonrecurring items discussed more fully below under "Results of Operations",items, for the yearyears ended December 31, 20242025 and 20232024 was $17.4$22.0 million and $16.3$17.4 million, respectively. For a reconciliation of this non-GAAP information which excludes the effect of these non-recurring items, please refer to the table below.

•Net interest income increased $1.2$8.2 million, or 2%,15%, to $63.8 million for the year ended December 31, 2025 compared to $55.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.2024. Interest income on loans increased $8.3$2.2 million and interest expense on deposits increaseddecreased $5.9$1.2 million for 20242025 compared to 2023.2024. Net interest margin for 20242025 was 2.62%2.92% compared to 2.49%2.62% for 2023,2024, an increase of 1330 basis points, or 5%.11%.

•The provision for credit losses totaled $6$1.6 thousandmillion in 2024,2025, compared to a provision for credit losses totaling $132$6 thousand in 2023.2024. The decreaseincrease in the provision for credit losses infor 20242025 was theprimarily a result of the declineincrease in ourtotal realloans estateas concentrationwell qualitativeas factor,changes which reducedin the qualitative portiondistribution of loans within the ACLsegments duringof 2024.our portfolio.

•Noninterest expense was $35.8$37.6 million and $36.7$35.8 million for the years ended December 31, 20242025 and 2023,2024, respectively, aan decreaseincrease of $842$1.8 thousand,million, or 2%.5%. This decreaseincrease was primarily a result of aan decreaseincrease in salaries and benefits expenseexpense, throughwhich reducedincreased staffingdue associatedto the filling of open positions and market adjustments to existing positions along with processan improvements through our investmentincrease in technology.the incentive compensation expense for 2025.

We recorded net income of $22.1 million, or $1.21 per diluted common share, for the year ended December 31, 2025, compared to net income of $15.1 million, or $0.82 per diluted common share, for the year ended December 31, 2024, compared to net income of $3.8 million, or $0.21 per diluted common share for the year ended December 31, 2023.2024. Included in net income for the year ended December 31, 2025 is a pre-tax gain of $91 thousand resulting from the unwind of $80 million of our pay-fixed/receive floating interest rate swaps. Net income for 2024 includes the surrender of certain BOLI policies with an aggregate cash surrender value of $48.0 million. Upon the surrender, we received a cash payout and were required to accrue additional income tax on the appreciation of those policies which had previously been treated as tax-exempt income. This resulted in additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand. The tax penalties related to the surrender of the BOLI were recorded in income tax expense. The net proceeds of the BOLI surrender were reinvested in our loan portoflio. For the year ended December 31, 2023, net income included after-tax losses totaling $12.2 million related to the sale of $102.5 million in book value available-for-sale investment securities. Commercial bank operating earnings (non-GAAP), which exclude gains and the taxes associated with the BOLI surrender, securities losses, and other nonrecurring expense items that were recorded during 2024 and 2023, were $17.4$22.0 million and $16.3$17.4 million, for the years ended December 31, 2025 and 2024, respectively. Diluted commercial bank operating earnings per share (non-GAAP) for the yearyears ended December 31, 20242025 and 20232024 were $0.95$1.21 and $0.90,$0.95, respectively.

Net interest income increased $1.2$8.2 million, or 15%, to $63.8 million for the year ended December 31, 2025, compared to $55.6 million for the year ended December 31, 2024, compared to $54.4 million for the year ended December 31, 2023.2024. For the year ended December 31, 2024,2025, we recorded a provision for credit losses of $6$1.6 thousandmillion compared to $132$6 thousand for the year ended December 31, 2023.2024, Weprimarily reporteddue noninterestto the increase in total loans receivable for the year ended December 31, 2025. Noninterest income oftotaled $2.5$3.6 million for the year ended December 31, 2024,2025, an increase of $1.1 million, or 44%, compared to a loss of $13.4$2.5 million for 2023,2024, which was primarily driven by theincome lossesreceived recordedfrom onour theminority saleinvestment ofin available-for-sale securitiesACM totaling $15.6$1.2 million for the year ended December 31, 2023.2025.

Noninterest expense was $35.8$37.6 million and $36.7$35.8 million for the years ended December 31, 20242025 and 2023,2024, respectively, aan decreaseincrease of $842$1.8 thousand,million, or 2%.5%. The decreaseincrease in noninterest expense was primarily a result of aan decreaseincrease in salaries and benefits expense, which decreasedincreased $1.9$1.4 million,million adue resultto the filling of reducedopen staffingpositions and processmarket improvementsadjustments throughto technologyexisting investments.positions Includedalong with an increase in noninterestthe incentive compensation expense for the year ended December 31, 2023 was $457 thousand related to office space reductions and severance costs.2025.

Our net interest margin for the years ended December 31, 20242025 and 20232024 was 2.62%2.92% and 2.49%,2.62%, respectively.respectively, an increase of 30 basis points, or 11%. The increase in our net interest margin was primarily a result of a decrease in the increasedcost rateof environment,our interest-bearing liabilities, which improveddecreased our yields on earning assets during 2024. The yield on interest-earning assets increased 4629 basis points to 5.34% for the year ended December 31, 2024,2025 when compared to 4.88%the same period of 2024, as we reduced the cost of our deposits simultaneously with federal funds rate decisions. In addition, the yield on our interest-earning assets increased 9 basis points to 5.43% for the year ended December 31, 2025, compared to 5.34% for the same period of 2023, a result of the increased rate environment during 2024 and our balance sheet repositionings from 2023.2024. Our cost of funds increaseddecreased 4422 basis points to 2.78% for the year ended December 31, 2025, from 3.00% for the year ended December 31, 2024, from 2.56% for the year ended December 31, 2023, which was primarily attributable to the repricing of our interest-bearing deposits to higherlower interest rates during 2024.2025. Cost of deposits (which includes noninterest-bearing deposits) wasdecreased 2.92%19 basis points to 2.73% for the year ended December 31, 20242025, compared to 2.47%2.92% for the same period of 2023. Cost of other borrowed funds increased 60 basis points to 4.37% for the year ended December 31, 2024 compared to 3.77% for the year ended December 31, 2023.2024.

Average interest-earning assets increased $59.1 million, or 3%, to $2.18 billion at December 31, 2025 compared to $2.12 billion at December 31, 2024. This increase was primarily related to an increase in interest-bearing deposits held at other financial institutions, consistingwhich consisted primarily of excess cash reserves maintained at the Federal Reserve,Reserve. decreasedThis $6.3increase millionin our average volume was the main driver to $44.4the increase in interest income, as average interest-bearing deposits held at other financial institutions increased $80.3 million for the year ended December 31, 2024,2025 when compared to $50.7the same period of 2024. Interest income from deposits held at other financial institutions increased $3.1 million to $5.4 million for the year ended December 31, 2023.2025 compared to $2.3 million for the year ended December 31, 2024. Average volume contributed $4.2 million in interest income, while the decrease in the average rate decreased interest income by $1.1 million. The yield on average interest-earning deposits decreased 485 basis points to 5.17%4.32% for the year ended December 31, 2024,2025, primarily as a result of the Federal Reserve's Federal Open Market Committee ("FOMC") decision to begin decreasingdecrease its targeted federal funds rate inbeginning September 2024.

Total average interest-bearing liabilities decreasedincreased $56.6$45.0 million to $1.60 billion at December 31, 2025 compared to $1.55 billion at December 31, 2024 compared to $1.61 billion at December 31, 2023.2024. Conversely, interest expense increaseddecreased $5.5$3.1 million to $54.6 million for the year ended December 31, 2025 compared to $57.7 million for the year ended December 31, 20242024. comparedThe average rate on interest-bearing liabilities decreased 29 basis points to $52.2 million3.42% for the year ended December 31, 2023.2025 compared to 3.71% for the year ended December 31, 2024. The increasedecrease in the average rate significantly impactedreduced interest expense by $4.1 million during 2024,2025, as average volume decreasedincreased interest expense $3.2by million$1.1 while average rate increases contributed $8.7 million in interest expense.million.

Total average interest-bearing deposits decreasedincreased $34.5$86.6 million to $1.54 billion at December 31, 2025 compared to $1.45 billion at December 31, 2024 compared to $1.49 billion at December 31, 2023.2024. Interest expense on deposits increaseddecreased $5.9$1.2 million to $52.0 million for the year ended December 31, 2025 compared to $53.2 million for the year ended December 31, 20242024, comparedprimarily as a result of the decrease in interest rates in 2025, which decreased the cost of interest-bearing deposits 28 basis points to $47.3 million3.38% for the year ended December 31, 2023,2025, primarily a result of the increase in the cost of interest-bearing deposits, which increased 48 basis pointscompared to 3.66% for the year ended December 31, 2024, compared to 3.18% for the year ended December 31, 2023.2024. Average noninterest-bearing deposits decreased $57.3$4.8 million, or 13%,1%, to $363.8 million at December 31, 2025, compared to $368.6 million at December 31, 2024, compared to $425.9 million at December 31, 2023.2024. Competition for deposits along with higherhigh interest rates resulted in customers' movement of excess funds from noninterest-bearing into interest-bearing deposit products. Average interest checking deposits decreasedincreased $10.2$111.6 million to $683.1 million for the year ended December 31, 2025 compared to $571.4 million asfor ofthe year ended December 31, 2024 compared to $581.7 million as of December 31, 2023.2024. Average savings and money market deposits increased $89.6$3.2 million to $347.5 million for the year ended December 31, 2025 compared to $344.3 million asfor ofthe year ended December 31, 2024 compared to $254.7 million as of December 31, 2023.2024. Average time deposits decreased $74.0$6.7 million to $268.6 million for the year ended December 31, 2025 compared to $275.3 million asfor ofthe year ended December 31, 2024 compared to $349.3 million at December 31, 2023, as time deposits that were originated during 2023 with a weighted average rate of 4.81% matured during 2024. Average wholesale deposits decreased $39.8$21.6 million to $242.1 million for the year ended December 31, 2025 compared to $263.7 million asfor ofthe year ended December 31, 2024 compared to $303.5 million as of December 31, 2023.2024.

We recorded a provision for credit losses totaling $6$1.6 thousandmillion and $132$6 thousand for the years ended December 31, 20242025 and 2023,2024, respectively. The allowance for credit losses was $18.1$18.9 million and $18.9$18.1 million at December 31, 20242025 and 2023,2024, respectively. Our allowance for credit losses on loans as a percent of total loans, net of deferred fees and costs, was 0.97% andat 1.03%each atof December 31, 20242025 and 2023, respectively.2024.

Noninterest income includes service charges on deposits and loans, loan swap fee income, income from our membership interest in ACM and other investments, income from our BOLI policies, and other fee income, and continues to supplement our operating results. For the year ended December 31, 2024,2025, we recorded noninterest income of $2.5$3.6 million compared to a lossincome of $13.4$2.5 million for same period of 2023.2024.

Fee income from loans was $185$220 thousand for the year ended December 31, 2024,2025, compared to $388$185 thousand for the same period of 2023, a result of decreased loan swap fee income.2024. Service charges on deposits were $1.1$1.2 million for the year ended December 31, 2024,2025, compared to $1.0$1.1 million for the same period of 2023,2024, an increase of $98$122 thousand, or 10%.11%. Income from BOLI decreased to $397$289 thousand for the year ended December 31, 20242025 compared to $1.5$397 millionthousand for same period of 2023, the decrease being2024, a direct result of surrendering ourthe BOLI policies we surrendered during the first quarter of 2024.

Noninterest expense includes, among other things, salaries and benefits, occupancy and equipment costs, professional fees, data processing, insurance and miscellaneous expenses. Noninterest expense was $35.8$37.6 million and $36.7$35.8 million for the years ended December 31, 20242025 and 2023,2024, respectively.respectively, an increase of $1.8 million, or less than 5%.

Salaries and benefits expense decreasedincreased $1.9$1.4 million to $18.8$20.1 million for the year ended December 31, 20242025 compared to $20.6$18.8 million for the same period in 2023,2024, which increase was primarily related to reduced staffing as a result of process improvements from technology investments. Occupancy expense decreased $330 thousand for the year ended December 31, 2024 compareddue to the same periodfilling of 2023,open whichpositions wasand primarilymarket relatedadjustments to theexisting officepositions spacealong reduction initiatives that were completed during the fourth quarter of 2023. These decreases were partially offset bywith an increase in internetthe incentive compensation expense for 2025. Internet banking and software expense ofincreased $485$461 thousand to $3.0$3.5 million for the year ended December 31, 2024,2025, compared to $2.5$3.0 million for the same period of 2023,2024, a result of the implementation of enhanced customer software solutions during 2023.2025, Lastly,which loanwas relatedoffset by a decrease in data processing expenses increasedtotaling $909$483 thousand duringthrough 2024negotiated comparedcontract torenewals with certain service providers for the priorBank year, as we received a recovery of legal expensescompleted in 2023early associated with a previous watchlist credit.2025.

For the year ended December 31, 20242025 and 2023,2024, the provision for income taxes was $7.2$6.2 million and $410$7.2 thousand,million, respectively. The provision for income taxes for the year ended December 31, 2024 includes additional statutory income tax expense of $1.6 million and tax penalties of $722 thousand related to the above mentioned surrender of our BOLI policies. Our effective tax rate,rate for December 31, 2025 was 21.9%. For the year ended December 31, 2024, excluding the additional income taxes and penalties associated with our BOLI surrender, for December 31, 2024 was 22.0%. For the year ended December 31, 2023, our effective tax rate was 9.7%, which was reduced as a result of the losses recorded on the sale of investment securities available-for-sale during 2023.22.0%.

At December 31, 2024,2025, total assets were $2.20$2.29 billion, an increase of $8.4$93.3 million, from $2.19$2.20 billion at December 31, 2023.2024. Total loans, net of fees, increased $71.0 million, or 4%, to $1.94 billion at December 31, 2025 from $1.87 billion at December 31, 2024. Investment securities were $153.4 million at December 31, 2025, a decrease of $3.3 million, from $156.7 million at December 31, 2024,2024. aTotal decreasedeposits ofincreased $15.1$126.7 million, fromor $171.97%, millionto $2.00 billion at December 31, 2023.2025, Total deposits increased $25.3 million, or 1%, tofrom $1.87 billion at December 31, 2024, from $1.85 billion at December 31, 2023.2024. From time to time, we may utilize funding sources such as federal funds purchased and FHLB advances as an additional funding source for the Bank. We had no federal funds purchased at December 31, 20242025 and December 31, 2023.2024. The Bank had no FHLB advances outstanding ofat December 31, 2025 compared to $50.0 million and $85.0 million at December 31, 2024 and December 31, 2023, respectively.2024. Subordinated debt, net of unamortized issuance costs, totaled $18.7$18.8 million and $19.6$18.7 million at December 31, 20242025 and December 31, 2023,2024, respectively.

Commercial real estate loans totaled $1.04$1.03 billion and $1.09$1.04 billion at December 31, 20242025 and 2023,2024, respectively, and were approximately 56%53% and 60%56% of the total loans receivable at such dates, respectively. Owner-occupied commercial real estate loans were $187.8$266.3 million at December 31, 20242025 compared to $212.9$188.2 million at December 31, 2023.2024. Nonowner-occupied commercial real estate loans were $766.3 million at December 31, 2025 compared to $850.1 million at December 31, 2024. Commercial construction loans totaled $153.0 million at December 31, 2025, compared to $162.4 million at December 31, 2024 compared to $878.7 million at December 31, 2023. Commercial construction loans totaled $162.4 million at December 31, 2024, compared to $148.0 million at December 31, 2023 and comprised of 9%8% and 8%9% of total loans receivable at such dates, respectively. Our regulatory commercial real estate concentration (which includes nonowner-occupied real estate and construction loans) was 371%313% of our total risk-based capital at December 31, 2024.2025. Our commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of our portfolio in a disciplined manner. We have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring and administrative practices. Additional information on the stratification of these portfolio segments can be found below under "Asset Quality".

Commercial and industrial loans increased $116.8$116.7 million to $453.4 million at December 31, 2025, an increase of 35%, from $336.7 million at December 31, 2024,2024. The increase in commercial and industrial loans was a result of an increase ofin 53%,loan fromoriginations $219.9during 2025 in addition to an increase in the our warehouse lending facility which totaled $30.0 million at December 31, 2023.2025 compared to $22.4 million at December 31, 2024. Consumer residential loans decreased $38.0$28.3 million to $297.0 million at December 31, 2025, from $325.3 million at December 31, 2024, from $363.3 million at December 31, 2023.2024. The decrease in residential loans was primarily a result of principal repayments during 2024.2025.

Nonperforming loans, defined as nonaccrual loans and loans contractually past due 90 days or more as to principal or interest and still accruing, were $12.9$10.7 million and $1.8$12.9 million at December 31, 20242025 and 2023,2024, respectively, ana increasedecrease of $11.0$2.2 million. The increasedecrease in nonperforming loans at December 31, 20242025 is primarily a result of the payoff of three loans totaling $520 thousand, one commercial real estate loan placedupgraded onto nonaccrual during the fourth quarter of 2024,pass totaling $10.3$382 million.thousand, and a decrease in loans past due 90 days or more and still accruing totaling $861 thousand. Loans that we have classified as nonperforming are a result of customer specific deterioration, mostly financial in nature, that are not a result of economic, industry, or environmental causes that we might see as a pattern for possible future losses within our loan portfolio. For each of our criticized assets, we individually evaluate each loan, generally through the performance of a collateral analysis to determine the amount of allowance required. As a result of the analysis completed, we had a reserve for individually assessed loans totaling $468$1.1 thousandmillion and $676$468 thousand at December 31, 20242025 and 2023,2024, respectively. Our ratio of nonperforming loans to total assets was 0.58%0.47% and 0.08%0.58% at December 31, 20242025 and 2023,2024, respectively. We had no other real estate owned and there were no loan modifications for borrowers who were experiencing financial difficulty during the quarteryear ended December 31, 2024.2025.

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans.loans, This analysisand is performed on an ongoing basis as new information is obtained. At December 31, 2024,2025, we had $3.3$47.7 million in loans identified as special mention, aan decreaseincrease of $3.0$44.4 million from December 31, 2023.2024. Special mention rated loans have a potential weakness that deserves our close attention; however, the borrower continues to pay in accordance with their contractual terms, unless modified and disclosed. The decrease from December 31, 2023 was driven by several loans that were upgraded from special mention or paid off during 2024. Loans rated as special mention are generally considered to be well-secured, and are not individually evaluated. The increase from December 31, 2024 was a result of five loans downgraded to special mention during 2025. Four of these loans are commercial real estate loans, with collateral in retail, mixed-use and multifamily, each located in Washington, D.C. Three of the four loans have executed listing agreements are currently either listed for sale or are in the process thereof. The Company expects that some of these properties will close prior to the end of the second quarter of 2026. These loans are well-secured with updated valuations as of December 31, 2025, and are not individually impaired. We believe there will be satisfactory resolution to each of these loans.

At December 31, 2024,2025, we had $11.2$10.2 million in loans identified as substandard, a decrease of $11.2$1.0 million from December 31, 2023.2024. Substandard rated loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. For each of these substandard loans, aan liquidationindividual analysis is completed. At December 31, 2024,2025, reserves for individually assessed loans totalingtotaled $468$1.1 thousandmillion and were allocated within the allowance for credit losses to supplement any shortfall of collateral. At December 31, 2024, we downgraded a non-owner occupied commercial real estate loan to substandard and placed it on nonaccrual as a result of its past due status and recent poor payment history.

We recorded net charge-offs of $840$871 thousand and $375$840 thousand for the years ended December 31, 2024,2025 and 2023,2024, respectively. Net charge-offs to average loans were 0.04%0.05% and 0.02%0.04% for the years ended December 31, 20242025 and 2023,2024, respectively. The increase in netNet charge-offs for the year ended December 31, 20242025 iswere aprimarily resultcomprised of two loanunsecured relationshipssmall thatbusiness were individually evaluated and for which reserves had been established for the shortfall of the related collateral.loans. Each loan relationship had specific circumstances that are not indicative of any systemic issues within the Company’s loan portfolio.

We closely and proactively monitor the effects of recent market activity. As mentioned above, our commercial real estate loan portfolio totaled $1.03 billion, or 53% of total loans, at December 31, 2025 and $1.04 billion, or 56% of total loans, at December 31, 2024 and $1.09 billion, or 60% of total loans, at December 31, 2023.2024. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. We manage this portion of the portfolio in a disciplined manner, and have comprehensive policies to monitor, measure, and mitigate our loan concentrations within this portfolio segment, including rigorous credit approval, monitoring, and administrative practices. Included in commercial real estate are loans secured by office properties totaling $123.8$149.2 million, or 7%8% of total loans, which are primarily located in the Virginia and Maryland suburbs of our market area, with only $2.3$1.0 million, or 0.12%0.05% of total loans, located in Washington, D.C. Loans secured by retail properties totaltotaled $251.0$215.5 million, or 13%11% of total loans, at December 31, 2024.2025, with $8.9 million, or less than 0.46% of total loans, located in Washington, D.C. Loans secured by multi-family commercial properties totaled $162.8$179.5 million, or 9% of total loans, at December 31, 2024.2025, with $98.7 million, or 5% of total loans, located in Washington, D.C.

The loans shown in the above table exhibit strong credit quality, with one classified delinqencydelinquency at December 31, 20242025 totaling $10.2 million, which has a specific reserve of $468 thousand.million. During our assessment of the allowance for credit losses on loans, we addressed the credit risks associated with these portfolio segments and believe that as a result of our conservative underwriting discipline at loan origination and our ongoing loan monitoring procedures, we have appropriately reserved for possible credit concerns in the event of a downturn in economic activity.

Our investment securities portfolio is used as a source of income and liquidity. The investment portfolio consists of investment securities available-for-sale and investment securities held-to-maturity. Investment securities available-for-sale are those securities that we intend to hold for an indefinite period of time, but not necessarily until maturity. These securities are carried at fair value and may be sold as part of an asset/liability strategy, liquidity management, or regulatory capital management. Investment securities held-to-maturity at each of December 31, 20242025 and 20232024 totaled $265 thousand and $264 thousand, respectively, and are those securities that we have the intent and ability to hold to maturity and are carried at amortized cost. The fair value of our investment securities available-for-sale was $153.2 million at December 31, 2025, a decrease of $3.3 million, or 2%, from $156.5 million at December 31, 2024, a decrease of $15.1 million, or 9%, from $170.6 million at December 31, 2023, primarily due to principal repaymentsrepayments, calls and maturities of $15.6$16.3 millionmillion, offset by new purchases forof $1.8$2.9 million, and aan decreaseincrease in the market value of the investment securities portfolio totaling $1.3$10.2 million at December 31, 2024.2025.

As ofAt December 31, 20242025 and 2023,2024, the majority of the investment securities portfolio consisted of securities rated AAA by a leading rating agency. Investment securities which carry a AAA rating are judged to be of the best quality and carry the smallest degree of investment risk. All of our mortgage-backed securities are guaranteed by either the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association. The effective duration of the investment securities portfolio continuesis to be slightly over five5.25 years, which is within the industry average. Investment securities that were pledged to secure public deposits totaled $55.3$19.4 million and $7.2$55.1 million at December 31, 20242025 and 2023,2024, respectively. There were no investment securities that were pledged to secure FRB borrowings at December 31, 20242025 and December 31, 2023,2024, respectively.

In accordance with ASC 326, we complete periodic assessments on at least a quarterly basis to determine if credit deterioration exists within our investment securities portfolio and if an allowance for credit losses would be required as of a valuation date. As a result of the assessment performed as of December 31, 2024,2025, the investment securities with unrealized losses are a result of pricing changes due to recent rising interest rate conditions in the current market environment and not as a result of credit deterioration. Contractual cash flows for agency-backed portfolios are guaranteed and funded by the U.S. government. Municipal securities have third party protective elements and there are no negative indications that the contractual cash flows will not be received when due. We do not intend to sell nor do we believe we will be required to sell any of our investment securities portfolio prior to the recovery of the amortized cost as of the valuation date. As such, no impairmentallowance for credit losses was recognized for our investment securities portfolio as of December 31, 2024.2025.

Total deposits increased $25.3$126.7 million, or 1%,7%, to $2.00 billion at December 31, 2025 from $1.87 billion at December 31, 2024 from $1.85 billion at December 31, 2023.2024. Noninterest-bearing deposits were $365.7$363.2 million at December 31, 2024,2025, or 19.5%18.2% of total deposits. At December 31, 2024, coreCore deposits, which exclude wholesale deposits, increased $20.7$91.6 millionmillion, fromor 6%, to $1.71 billion at December 31, 2023.2025, compared to $1.62 billion at December 31, 2024. Interest checking increased $47.3$117.2 million, or 8%,19%, to $741.0 million at December 31, 2025 compared to $623.8 million at December 31, 2024 compared to $576.5 million at December 31, 2023.2024. Savings and money market deposits increaseddecreased $62.6$52.0 million, or 20%,14%, to $331.0 million at December 31, 2025 compared to $383.1 million at December 31, 20242024. comparedTime deposits increased $28.9 million, or 12%, to $320.5$277.0 million at December 31, 2023.2025 Time deposits decreased $58.2 million, or 19%, tofrom $248.2 million at December 31, 2024 from $306.3 million at December 31, 2023, as time deposits that were originated during 2023 with a weighted average rate of 4.81% matured during 2024.

Wholesale deposits were $285.0 million at December 31, 2025 compared to $249.9 million at December 31, 2024 compared to $245.3 million at December 31, 2023,2024, an increase of $4.6$35.1 million, or 2%.14%. Wholesale deposits increased during 2025 as we paid off an FHLB advance totaling $50 million using excess liquidity and issued $35 million in wholesale deposits. Wholesale deposits are partially fixed atwith a weighted average rate of 3.40%3.58%, as we have previously executed $200.0$170 million in pay-fixed/receive-floating interest rate swaps to reduce funding costs. In addition, we are a member of the IntraFi Network (“IntraFi”), which gives us the ability to offer Certificates of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) products to our customers who seek to maximize FDIC insurance protection. When a customer places a large deposit with us for IntraFi, funds are placed into certificates of deposit or other deposit products with other banks in the CDARS and ICS networks in increments of less than $250 thousand so that principal and interest are eligible for FDIC insurance protection. These deposits are part of our core deposit base. At December 31, 20242025 and 2023,2024, we had $269.7$291.9 million and $254.1$269.6 million, respectively, in CDARS reciprocal and ICS reciprocal products.

OtherWe had no other borrowed funds,funds at December 31, 2025. At December 31, 2024, we had other borrowed funds totaling $50.0 million, which arewere comprised only of FHLB advances, were $50.0 million at December 31, 2024 compared to $85.0 million at December 31, 2023, a decrease of $35.0 million, or 41%.advances. Subordinated debt, net of unamortized issuance costs, totaled $18.7$18.8 million and $19.6$18.7 million at December 31, 20242025 and 2023,2024, respectively. At December 31, 20242025 and December 31, 2023,2024, we did not have any federal funds purchased. Our FHLB advances haveat December 31, 2024 had pay-fixed/receive-floating interest rate swaps to reduce our funding costs, and as such, the weighted average rate of these FHLB advances are 3.60% and 3.21% at December 31, 2024 and 2023, respectively.2024.

The following presents management’s discussion and analysis of our consolidated financial condition at MarchJune 31,30, 2026 and December 31, 2025 and the results of our operations for the three and six months ended MarchJune 31,30, 2026 and 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto appearing elsewhere in this report and the audited consolidated financial statements and the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations.

This Form 10-Q, as well as other periodic reports filed with the U.S. Securities and Exchange Commission (the "SEC"), and written or oral communications made from time to time by or on behalf of FVCBankcorp, Inc. and our subsidiary (the “Company”), may contain statements relating to future events or our future results that are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phasesphrases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements.

Net interest income is our primary source of revenue. We define revenue as net interest income plus noninterest income. We manage our balance sheet and interest rate risk exposure to maximize, and concurrently stabilize, net interest income. We do this by monitoring our liquidity position and the spread between the interest rates earned on interest-earning assets and the interest rates paid on interest-bearing liabilities. We attempt to minimize our exposure to interest rate risk, but are unable to eliminate it entirely. In addition to managing interest rate risk, we also analyze our loan portfolio for exposure to credit risk. Loan defaults and foreclosures are inherent risks in the banking industry, and we attempt to limit our exposure to these risks by carefully underwriting and then monitoring our extensions of credit. In addition to net interest income, noninterest income is a complementary source of revenue for us and includes, among other things, service charges on deposits and loans, income from our minority membership interest in Atlantic Coast MortgageMortgage, LLC ("ACM"), merchant services fee income, insurance commission income, income from bank-owned life insurance ("BOLI"), and gains and losses on sales of investment securities available-for-sale.

The determination of the appropriate level of the ACL on loans inherently involves a high degree of subjectivity and requires us to make significant judgments concerning credit risks and trends using quantitative and qualitative information, as well as reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and significant changes. Changes in conditions, including unforeseen events, changes in asset-specific risk characteristics, and other economic factors, both within and outside our control, may indicate the need for an increase or decrease in the ACL on loans. While we make every effort to utilize the best information available in making our assessment of the ACL estimate, the estimation process is inherently challenging as potential changes in any one factor or input may occur at different rates and/or impact pools of loans in different ways. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others. Our methodology utilized in the estimation of the ACL, which is performed at least quarterly, is designed to be dynamic and responsive to changes in our loan portfolio credit quality, composition, and forecasted economic conditions. The review of the reasonableness and appropriateness of the ACL is reviewed by the ACL Committee for approval as of the valuation date. Additionally, information is provided to the Board of Directors on a quarterly basis along with our consolidated financial statements.

Results of Operations— Three and Six Months Ended MarchJune 31,30, 2026 and 2025

We recorded net income of $6.4$8.2 million, or $0.35$0.45 diluted earnings per share, for the three months ended MarchJune 31,30, 2026, compared to net income of $5.2$5.7 million, or $0.28$0.31 diluted earnings per share, for the three months ended MarchJune 31,30, 2025, an increase of $1.2$2.6 million, or 24%.45%.

Net interest income increased $2.4$3.4 million, or 16%,22%, to $17.4$19.1 million for the three months ended MarchJune 31,30, 2026, compared to $15.1$15.8 million for the same period of 2025. Provision for credit losses totaled $168$241 thousand for the three months ended MarchJune 31,30, 2026 compared to $200$105 thousand for the three months ended MarchJune 31,30, 2025.

Noninterest income was $883$2.2 thousandmillion and $671$1.0 thousandmillion for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $212$1.1 thousand,million, or 32%.113%. Noninterest expense was $9.9$10.6 million for the three months ended MarchJune 31,30, 2026 compared to $9.1$9.4 million for the three months ended MarchJune 31,30, 2025, an increase of $739$1.2 thousand,million, or 8%.12%.

The annualized return on average assets for the three months ended MarchJune 31,30, 2026 and 2025 was 1.17%1.48% and 0.94%,1.02%, respectively. The annualized return on average equity for the three months ended MarchJune 31,30, 2026 and 2025 was 10.04%12.50% and 8.61%,9.39%, respectively.

CoreProvision operatingfor earningscredit (non-GAAP)losses was $409 thousand and $305 thousand for the threesix months ended MarchJune 31,30, 2026 and 20252025, wererespectively. $6.6Noninterest income was $3.0 million and $5.2$1.7 million,million for the six months ended June 30, 2026 and 2025, respectively, an increase of $1.4 million, or 27%.81%. DilutedNoninterest coreexpense operatingwas earnings$20.5 permillion shareand (non-GAAP)$18.6 million for the threesix months ended MarchJune 31,30, 2026 and 20252025, wererespectively, $0.36an andincrease $0.28,of respectively.$1.9 million, or 10%.

The following table presents average balance information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended MarchJune 31,30, 2026 and 2025. Average balance presented are based on daily average for each of the periods presented.

(1)Nonaccrual loans are included in average balances and do not have a material effect on the average yield. Interest income on non-accruing loans was not material for the quarters presented. Net loan fees and late charges included in interest income on loans totaled $331$1.6 thousandmillion and $670$501 thousand for the quarters ended MarchJune 31,30, 2026 and 2025, respectively.

The following table shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025.

Net interest income totaled $17.4 million for the threesix months ended MarchJune 31,30, 2026 comparedand to2025, $15.1was $36.6 million forand the$30.8 threemillion, months ended March 31, 2025,respectively, an increase of $2.4$5.7 million, or 16%.19%. The increase in net interest income iswas primarily due to an increase in loan interest income fromof both$2.9 increased yields onmillion and thea leveldecrease in interest expense of average$2.8 loansmillion receivable.for the six months ended June 30, 2026 compared to the same period of 2025. Additionally, as previously mentioned, we recorded $1.0 million in loan fees related to the prepayment of a commercial real estate loan during the second quarter of 2026.

Our net interest margin for the threesix months ended MarchJune 31,30, 2026 and 2025 was 3.26%3.40% and 2.83%,2.87%, respectively, an increase of 4353 basis points, or 15%.18%. The increase in our net interest margin was a result of continued repricing of our loan renewals and newly originated loans to current market interest rates over the past year.year Wealong alsowith reducedthe reduction in the cost of our non-maturity funding sourcessources. simultaneouslyIn withaddition, federalnet fundsinterest rate decisions during 2025. The yield on interest-earning assets increased 19 basis points to 5.50%income for the threesix months ended MarchJune 31,30, 2026,2026 comparedincluded $1.0 million in loan fees related to 5.31% for the same periodprepayment of 2025.a Ourcommercial costreal ofestate interest-bearingloan. liabilitiesWhen decreasedexcluding 27these basisloan points to 3.19% for the three months ended March 31, 2026, compared to 3.46% for the same period of 2025. During the first quarter of 2026, we recorded $244 thousand in accelerated debt issuance costs associated with the redemption of our subordinated debt in January 2026, which decreasedfees, net interest margin bywas 23.30% for the six months ended June 30, 2026, an increase of 43 basis points forfrom the threesix months ended MarchJune 31,30, 2026.2025.

Average interest-earning assets for each of the threesix month periods ended June 30, 2026 and 2025 was $2.17 billion. The yield on interest-earning assets increased 29 basis points to 5.61% for the six months ended MarchJune 31,30, 2026 increased $14.0 million to $2.17 billion2026, compared to $2.15 billion5.32% for the threesame months ended March 31, 2025. This increase was primarily related to an increase in loans receivable, which increased $65.0 million, or 3%, offset by a decrease in interest-bearing deposits at other financial institutionsperiod of $35.6 million, or 41%.2025. Total interest income increased $1.3$2.9 million, or 4%,5%, to $29.8$60.9 million for the threesix months ended MarchJune 31,30, 2026 compared to $28.6$58.0 million for the threesix months ended MarchJune 31,30, 2025. The increase in our average volume of interest earning assets was the main driver toof the increase into our interest income, contributing $901$2.8 thousandmillion of the increase for the threesix months ended MarchJune 31,30, 20262026, compared to the yearsame agosix quarter,month period of 2025, along with an increase in addition to the average rate which increased interest income by $363$1.5 thousand.million.

Average loans receivable increased $65.0$62.2 million to $1.93 billion for the threesix months ended MarchJune 31,30, 2026,2026. Loan interest income for the six months ended June 30, 2026 increased $4.3 million compared to $1.87the billionsame forsix month period of 2025, primarily as a result of the threechange monthsin endedour Marchloan 31,mix 2025.towards commercial and industrial loans, which earn a higher yield than other portions of our loan portfolio. The yield on average loans increased 1929 basis points to 5.88%6.01% for the threesix months ended MarchJune 31,30, 2026, compared to 5.69%5.72% for the threesix months ended MarchJune 31,30, 2025. TheFor the six months ended June 30, 2026, net loan fees included in interest income increased $1.2 million to $2.2 million compared to $1.0 million for the six months ended June 30, 2025, primarily due to the aforementioned early prepayment of a commercial real estate loan during the second quarter of 2026. When excluding this early prepayment fee, the yield on loans for the six months ended June 30, 2026 was 5.90%, an increase in our average loan yields was primarily a result of new18 loanbasis originationspoints andwhen loans repricingcompared to current market interest rates and the increasesix inmonths theended volumeJune of30, commercial and industrial loans.2025. Average balances of nonperforming loans, which consist of nonaccrual loans, are included in the net interest margin calculation and did not have a material impact on our net interest margin in 2026 and 2025.

Average interest-earninginterest-bearing deposits at other financial institutions, consisting primarily of excess cash reserves maintained at the Federal Reserve,reserves, decreased $35.6$43.0 million to $52.2$62.5 million for the quartersix months ended MarchJune 31,30, 2026, compared to $87.8$105.5 million for the quartersame endedsix Marchmonth 31,period of 2025. The decrease in our excess cash reserves is primarily duea toresult anof the $62.2 million increase in loan originations, as average loans receivable increased $65.0 million year-over-year. The yield on average interest-earninginterest-bearing deposits at other financial institutions decreased 7079 basis points to 3.69%3.66% for the quartersix months ended MarchJune 31,30, 2026 compared to 4.39%4.45% for the same period of 2025, primarily as a result of the Federal Open Market Committee's decision to decrease itsin the targeted federal funds rate 75during basis2025. pointsInterest duringincome earned on average deposits at other financial institutions decreased $1.2 million to $1.1 million for the coursesix months ended June 30, 2026 compared to $2.3 million for the same period of 2025.

InterestAverage expenseinterest-bearing liabilities decreased $1.1$26.2 million to $12.4$1.57 millionbillion for the threesix months ended MarchJune 31,30, 2026,2026 compared to $13.5$1.59 millionbillion for the threesame monthsperiod ended March 31,of 2025. TheOur cost of interest-bearing liabilities decreased 2731 basis points to 3.19%3.13% for the threesix months ended MarchJune 31,30, 20262026, compared to 3.46%3.44% for the threesame period of 2025. Interest expense decreased $2.8 million to $24.3 million for the six months ended MarchJune 31,30, 2026, compared to $27.2 million for the six months ended June 30, 2025. The decrease in theinterest average rateexpense was theprimarily primarya driverresult of the decrease in short-term interest rates, decreasing interest expense $2.4 million for the firstsix quartermonth period of 2026 as compared to the same period of 2025.

Total averageAverage interest-bearing deposits increased $32.0$9.7 million to $1.55$1.53 billion for the threesix months ended MarchJune 31,30, 2026 compared to $1.51$1.52 billion for the threesix months ended MarchJune 31,30, 2025. Interest expense on average interest-bearing deposits decreased $1.1$2.7 million to $11.7$23.1 million for the threesix months ended MarchJune 31,30, 20262026, compared to $12.8$25.8 million for the threesix months ended MarchJune 31,30, 2025, primarily as a result of the decrease in short-term interest rates on interest-bearing deposits for the three months ended March 31, 2026.year-over-year. The cost of interest-bearing deposits decreased 3638 basis points to 3.07%3.03% for the threesix months ended MarchJune 31,30, 20262026, compared to 3.43%3.41% for the same period of 2025.2025, Averagewhich noninterest-bearingwas primarily attributable to the repricing of our interest-bearing deposits increased $827 thousand to $355.5lower millioninterest for the three months ended March 31, 2026, compared to $354.6 million for the three months ended March 31, 2025. Average wholesale deposits decreased $11.1 million to $238.8 million for the three months ended March 31, 2026 compared to $249.9 million for the three months ended March 31, 2025.rates. Cost of deposits (which includes noninterest-bearing deposits) was 2.50%2.45% for the threesix months ended MarchJune 31,30, 2026 compared to 2.78%2.76% for the same threesix month period of 2025, a decrease of 2831 basis points,points. orAverage 10%.noninterest-bearing deposits increased $9.3 million to $367.4 million for the six months ended June 30, 2026 compared to $358.1 million for the same period of 2025.

Average other borrowed funds decreased $34.8$37.5 million to $15.2$12.5 million for the quartersix months ended MarchJune 31,30, 2026, compared to $50.0 million for the quartersix months ended MarchJune 31,30, 2025. Interest expense on other borrowed funds decreased $320$693 thousand,thousand orto 68%,$243 thousand for the quartersix months ended MarchJune 31,30, 2026 to $148 thousand compared to $468$936 thousand for the same period of 2025. The cost of other borrowed funds increased 1316 basis points to 3.93% for the threesix months ended MarchJune 31,30, 2026 compared to 3.80%3.77% for the threesix months ended MarchJune 31,30, 2025, as other borrowed funds for the six months ended June 30, 2026 were comprised of short-term federal funds purchased versus longer-term Federal Home Loan Bank of Atlanta ("FHLB") advances that were part of a cash flow hedge during 2025.

AverageAs mentioned earlier in this discussion, average long-term debt, net of issuance costs, includesincluded our subordinated debt issued in October 2020 until it was redeemed on January 15, 2026 and our unsecured senior notes since their issuance on February 11, 2026. For the six months ended June 30, 2025, our subordinated debt paid a fixed rate of 4.77%. The unsecured senior notes pay a fixed rate of 6.75%. Upon redemption of our subordinated debt on January, 15, 2026, we recognized $244 thousand in unamortized issuance costs associated with that debt issuance, which increasedcontributed to the increase in interest expense to $566$1.0 thousandmillion for the threesix months ended MarchJune 31,30, 2026. Excluding these debt issuance costs, interest expense would have been $322$798 thousand, an increase of $77$308 thousand from the yearsix ago quartermonths ended MarchJune 31, 2025, which was primarily due to the subordinated debt reverting from a fixed rate of 4.77% to a floating rate paying 3-month Secured Overnight Funding Rate ("SOFR") plus 471 basis points, or 8.59%, in October30, 2025. In addition, excluding the recognition of the unamortized debt issuance costs, the cost of long-term debt for the quartersix months ended MarchJune 31,30, 2026 was 8.05%,7.90%, an increase of 273261 basis points from 5.32%5.29% for the quartersix months ended MarchJune 31,30, 2025. The unsecured senior notes pay a fixed rate of 6.75%, a decrease of 184 basis points from 8.59% on the floating rate subordinated debt.

We recorded a provision for credit losses of $168$241 thousand and $409 thousand for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to provision for credit losses of $105 thousand and $200$305 thousand for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The allowance for credit losses was $19.1$19.2 million and $18.9 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. Our allowance for credit losses as a percent of total loans, net of deferred fees and costs, was 1.00%1.01% and 0.97% for MarchJune 31,30, 2026 and December 31, 2025, respectively. The increase in the allowance for credit losses percentage at March 31, 2026 as compared to December 31, 2025 was due to an increase in our individually evaluated reserves and a slight increase in qualitative factors.

We lend to well-established and relationship-driven borrowers, which has contributed to our track record of low historical credit losses. We continue to maintain our disciplined credit guidelines during the current rate environment. We proactively monitor the impact of changes in economic conditions, such as inflation and recessionary conditions, changes in market interest rates, and changes in government policy. Nonperforming loans, net of fees, at MarchJune 31,30, 2026 totaled $12.2$11.4 million, or 0.52%0.48% of total assets, compared to $10.7 million, or 0.47% of total assets at December 31, 2025. We had no other real estate owned at MarchJune 31,30, 2026 and December 31, 2025. We recorded net charge-offs of $3 thousand and net recoveries of $139 thousand for the quarters ended March 31, 2026 and 2025, respectively.

The following table provides detail for noninterest income for the three and six months ended MarchJune 31,30, 2026 and 2025.

Noninterest income includes service charges on deposits and loans, loan swap fee income, income from our membership interest in ACM and other investments, income from our bank-owned life insurance ("BOLI") policies, and other fee income, and continues to supplement our operating results. For the three months ended March 31, 2026 and 2025, we recorded noninterest income of $883 thousand and $671 thousand, respectively, an increase of $212 thousand, or 32%.

The following table reflects the components of noninterest expense for the three and six months ended MarchJune 31,30, 2026 and 2025.

Noninterest expense includes, among other things, salaries and benefits, occupancy and equipment costs, professional fees, data processing, insurance and miscellaneous expenses. Noninterest expense was $9.9$10.6 million and $9.1$9.4 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $739$1.2 thousand,million, or 8%.12%.