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

Our primary market areas are concentrated in North Carolina (the Asheville metropolitan area, the "Piedmont" region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, KnoxvilleCity and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta). Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and adversely impact our financial condition and earnings. General economic conditions, including inflation, unemployment and money supply fluctuations, also may adversely affect our profitability.

A deterioration in economic conditions, particularly within our primary market areas, could result in the following consequencesconsequences, among others, any of which could materially hurt our business:

Inflation rose sharply starting at the end of calendar year 2021 to levels not seen in more than 40 years. This rise continued through the first half of calendar year 2024. From September through the end of calendar year 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve reduced the targeted federal funds rate three times to a range of 4.25% to 4.50%4.50%, and further reduced the rate in September, October and December 2025 to a range of 3.50% to 3.75%; however, despite these actions, general market rates of interest remain elevated. Small- and medium-sized businesses may be impacted more during periods of high inflation, as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition.

Severe weather and other natural disasters such as Hurricane Helene,disasters, acts of war or terrorism, new public health issues or other adverse external events could have a significant impact on our ability to conduct business. Such events could harm our operations through interference with communications, including the interruption or loss of our computer systems, which could prevent or impede us from gathering deposits, originating loans and processing and controlling the flow of business, as well as through the destruction of our facilities and our operational, financial and management information systems. There is no assurance that our business continuity and disaster recovery program can adequately mitigate these risks. Such events could also affect the stability of our deposit base, cause significant property damage, adversely affect our employees, adversely impact the values of collateral securing our loans and/or interfere with our borrowers’ abilities to repay their debt obligations to us.

Our non-owner occupied residential real estate loans may expose us to increased credit risk.

In addition, during the term of some of our construction and land development loans, no payment from the borrower is required since the accumulated interest is added to the principal of the loan through an interest reserve. As a result, these loans often involve the disbursement of funds with repayment substantially dependent on the ultimate success of the project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If our appraisal of the value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Because construction loans require active monitoring of the building process, including cost comparisons and on-site inspections, these loans are more difficult and costly to monitor. In addition, increases in market rates of interest may have a more pronounced effect on construction loans by rapidly increasing the end-purchaser's borrowing costs, thereby reducing the overall demand for the project. Properties under construction are often difficult to sell and typically must be completed in order to be successfully sold, which also complicates the process of working out problem construction loans. This may require us to advance additional funds and/or contract with another builder to complete construction and assume the market risk of selling the project at a future market price, which may or may not enable us to fully recover unpaid loan funds and associated construction and liquidation costs. Furthermore, in the case of speculative construction loans, there is the added risk associated with identifying an end-purchaser or tenant for the finished project. At December 31, 2024,2025, $70.5$161.0 million of our construction and land development loans were for speculative construction and none were classified as nonaccruing.

Our non-owner occupied and owner occupied commercial real estate loans involve higher principal amounts than other loans and repayment of these loans may be dependent on factors outside our control or the control of our borrowers.

The level of our non-owner occupied commercial real estate loan portfolio may subject us to additional regulatory scrutiny.

Specific to the equipment finance portfolio, during the year ended December 31, 2023, our balances of both nonaccrual loans and net charge-offs increased significantly due to pressure in the over-the-road trucking sector, in particular loans to smaller operators. In response, we elected to cease further originations within the sector as of December 31, 2023 and devotehave devoted additional attention towards resolving loans within the existing portfolio. As a resultreflection of those efforts, although net charge-offs within the portfolio remained elevated, the outstanding balance of over-the-road trucking loans to smaller operatorshas declined from $56.2$121.4 million at December 31, 2023 to $28.2$74.5 million overat theDecember course31, 2024 and $38.0 million as of calendarDecember year31, 2024.2025, respectively.

Lastly, as a result of our decision to cease indirect auto finance loan originations as of March 31, 2024, the outstanding balance of the portfolio has declined from $107.0 million at December 31, 2023 to $69.1 million overat theDecember course31, of2024 calendarand year$38.3 2024.million at December 31, 2025, respectively. The collectability of the existing portfolio of auto loans depends on the borrower’s continuing financial stability, and therefore is more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy.

•our reserve on individually evaluated loans whichthat no longer share similar risk characteristics, which is based on a DCF analysis unless the loan meets the criteria for use of the fair value of collateral, either by virtue of an expected foreclosure or through meeting the definition of "collateral dependent."

We obtain updated valuations in the form of appraisals and broker price opinions when a loan has been foreclosed upon and the property repossessed, and at certain other times during the asset’s holding period. Our NBVnet book value in the loan at the time of foreclosure and thereafter is compared to the updated market value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the asset’s NBVnet book value over its fair value. If our valuation process is incorrect, or if property values decline, the fair value of our repossessed assets may not be sufficient to recover our carrying value in such assets, resulting in the need for additional charge-offs. Significant charge-offs to our repossessed assets could have a material adverse effect on our financial condition and results of operations.

Our earnings and cash flows are largely dependent upon our net interest income, which is the difference, or spread, between the interest earned on loans, securities and other interest-earning assets and the interest paid on deposits, borrowings and other interest-bearing liabilities. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. In March 2020, in response to the COVID-19 pandemic, the FOMC of the Federal Reserve reduced the targeted federal funds rate by 150 basis points to a range of 0.00% to 0.25%. The reduction in the targeted federal funds rate resulted in a decline in overall interest rates which negatively impacted our net interest income. Starting in March 2022, the FOMC increased the targeted federal funds rate 11 separate times, raising the rate by 525 basis points to a range of 5.25% to 5.50%, before decreasing the rate three times starting in September 2024 to a range of 4.25% to 4.50%.4.50% and three additional times in 2025 to a range of 3.50% to 3.75%. If the FOMC increases the targeted federal funds rate, overall interest rates will likely rise, which may negatively impact both the housing market, by reducing refinancing activity and new home purchases, and the U.S. economy. In addition, deflationary pressures, while possibly lowering our operational costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of collateral securing loans, which could negatively affect our financial performance.

Changes in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations (generally, if rates increase) or by reducing our margins and profitability (generally, if rates decrease). Our net interest margin is the difference between the yield we earn on our assets and the rate we pay for deposits and our other sources of funding. Changes in interest rates, up or down, could adversely affect our net interest margin and, as a result, our net interest income. Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract. When we anticipate a rising-rate environment, we work to adjust our assets to be shorter in duration than our liabilities, so that they may adjust faster in response to changes in interest rates. As a result, when interest rates decline, the yield we earn on our assets may decline faster than the rate we pay on funding, causing our net interest margin to contract until the interest rates on interest-bearing liabilities catch up. When we anticipate a declining-rate environment, we work to adjust our liabilities to be shorter in duration than our assets, so that they may adjust faster in response to changes in interest rates. As a result, when interest rates rise, our funding costs may rise faster than the yield we earn on our assets, causing our net interest margin to contract until the yields on interest-earning assets catch up. Changes in the slope of the “yield curvecurve,”, or the spread between short-term and long-term interest rates, could also reduce our net interest margin. Normally, the yield curve is upward sloping, meaning short-term rates are lower than long-term rates. As our liabilities tend to be shorter in duration than our assets in periods where we anticipate a declining-rate environment, when the yield curve flattens or even inverts, we will experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets. Also, interest rate decreases can lead to increased prepayments of loans and mortgage-backed securities as borrowers refinance their loans to reduce borrowing costs. Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such repayment proceeds into lower yielding investments, which would likely hurt our income.

The financial services industry is extensively regulated. Federal and state banking regulations are designed primarily to protect the deposit insurance funds and consumers, not to benefit a company’s stockholders. These regulations may sometimes impose significant limitations on operations. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s ACL. Bank regulators can also have the ability to impose conditions inon the approval of merger and acquisition transactions.

Further, our cardholders use their debit and credit cards to make purchases from third-partiesthird parties or through third-party processing services. As such, we are subject to risk from data breaches of a third-party’sthird party’s information systems or their payment processors. Such a data security breach could compromise our account information. The payment methods that we offer also subject us to potential fraud and theft by criminals who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for losses associated with reimbursing our clients for fraudulent transactions on clients’ card accounts, as well as costs incurred by payment card issuing banks and other third-parties. We may also be subject to fines and higher transaction fees, and our ability to accept or facilitate certain types of payments may be impaired. In addition, we may incur other costs related to data security breaches, such as replacing cards associated with compromised card accounts. Our customers could also lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

Liquidity is essential to our business. We rely on a number of different sources in order to meet our potential liquidity demands. Our primary sources of liquidity are increases in deposit accounts, cash flows from loan payments and our securities portfolio. Borrowings also provide us with a source of funds to meet liquidity demands. An inability to raise funds through deposits, borrowings, the sale of loans or debt securities and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities or on terms which are acceptable to us could be impaired by factors that affect us specifically, or the financial services industry or economy in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the Georgia, North Carolina, South Carolina, Tennessee and/or Virginia markets inmarkets, which is where the majority of our loans are concentratedconcentrated, or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry or deterioration in credit markets. In particular, our liquidity position could be significantly constrained if we are unable to access funds from the FHLB Atlanta or other wholesale funding sources, or if adequate financing is not available at acceptable interest rates. Finally, if we are required to rely more heavily on more expensive funding sources, our revenues may not increase proportionately to cover our costs. Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could, in turn, have a material adverse effect on our business, financial condition and results of operations. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity” of this Form 10-K.

Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified persons with knowledge of, and experience in, the community banking industry where the Bank conducts its business. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. Our success depends to a significant degree upon our ability to attract and retain qualified management, loan origination, finance, administrative, marketing and technical personnel and upon the continued contributions of our management and personnel. Our ability to retain and grow our loans, deposits and fee income depends upon the business generation capabilities, reputation and relationship management skills of our bankers. If we were to lose the services of any of our bankers, including successful bankers employed by banks that we may acquire, to a new or existing competitor, or otherwise, we may not be able to retain valuable relationships and some of our customers could choose to use the services of a competitor instead of our services. In addition, our success has been and continues to be highly dependent upon the services of our directors, several of whom have reached or are nearing the mandatory retirement age,age under our bylaws, and we may not be able to identify and attract suitable candidates to replace suchthese directors.

We rely on numerous external vendors to provide us with products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements because of changes in the vendor’s organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could be disruptive to our operations, which in turn could have a material negative impact on our financial condition and results of operations. We also could be adversely affected to the extent such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. Additionally, the bank regulatory agencies expect financial institutions to be responsible for all aspects of a vendor’s performance, including aspects which the vendor delegates to third-parties.third parties. Disruptions or failures in the physical infrastructure or operating systems that support our business and clients could result in client attrition, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensation costs and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.

The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 20242025 and 20232024 and results of operations for the years ended December 31, 20242025 and December 31, 2023.2024. Refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our TransitionAnnual Report on Form 10-KT10-K filed with the SEC on March 12,13, 20242025 (the “20232024 Form 10-KT10-K") for a discussion and analysis of the more significant factors that affected periods prior to the year ended December 31, 2024.2025.

Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex,complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances which could include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The following representrepresents our critical accounting policiespolicy:

Allowance for Credit Losses, or ACL, on Loans. The ACL on loans held for investment reflects our estimate of credit losses that will result from the inability of our borrowers to make required loan payments. We charge off loans against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. We use a systematic methodology to determine our ACL for loans held for investment and certain off-balance-sheetoff-balance sheet credit exposures. The ACL on loans held for investment is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. The estimate of our ACL on loans held for investment involves a high degree of judgment including consideration of the effects of past events, current conditions and reasonable and supportable forecasts on the collectability of the loan portfolio. We recognize in net income the amount needed to adjust the ACL on loans held for investment and certain off-balance-sheetoff-balance sheet credit exposures for management’s current estimate of ECLs. Our ACL on loans held for investment is calculated using collectively evaluated and individually evaluated loans.

Net Income. Net income totaled $64.4 million, or $3.72 per diluted share, for the year ended December 31, 2025 compared to $54.8 million, or $3.20 per diluted share, for the year ended December 31, 2024 compared to $50.0 million, or $2.97 per diluted share, for the year ended December 31, 2023,2024, an increase of $4.8$9.6 million, or 9.5%.17.4%. The results for the year ended December 31, 20242025 compared to the prior year were positively impacted by a $7.6$7.2 million increase in net interest income, a $2.9 million increase in noninterest income, a $607,000 decrease in the provision for credit losses and a $1.4 million increase in noninterest income, partially offset by a $758,000$321,000 decrease in net interest income and a $1.6 million increase in noninterest expense. Details of the changes in the various components of net income are further discussed below.

Total interest and dividend income for the year ended December 31, 20242025 increaseddecreased $27.1$5.5 million, or 11.6%,2.1%, compared to the year ended December 31, 2023,2024. whichRegarding wasthe drivencomponents byof athis $25.0 million increase inincome, loan interest income,income decreased $7.2 million, or 2.9%, primarily due to an overall decrease in average loan balances and the impact of decreases in the federal funds rate upon loan yields, partially offset by a $1.1 million increase in interest income on other investments and interest-bearing accounts, and a $1.0 million$661,000 increase in interest income on debt securities available for sale. Accretion income on acquired loans of $3.2$2.2 million and $2.1$3.2 million was recognized during the same periods, respectively, and was included in loan interest income.

Total interest expense for the year ended December 31, 20242025 increaseddecreased $27.9$12.7 million, or 42.9%,13.8%, compared to the year ended December 31, 2023,2024, the result of a $33.0$9.8 million, or 59.8%,11.2%, increasedecrease in interest expense on deposits and a $5.3$2.8 million, or 58.4%,73.8%, decrease in interest expense on other borrowings. The increasedecrease in interest expense on deposits wascan primarily thebe resulttraced ofto botha increasesdecrease in the average cost of funds across funding sources and average deposits,funds, while the decrease in interest expense on other borrowings was primarily the result of a decline in average borrowings outstanding.

•$0.7 million benefit due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments. Included in this change was the addition of a $2.2 million qualitative allocation in the quarter ended September 30, 2024 for the potential impact of Hurricane Helene on our loan portfolio.

For the years ended December 31, 20242025 and December 31, 2023,2024, the amounts recorded for off-balance-sheetoff-balance sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and the projected economic forecast as outlined above.

Noninterest Income. Noninterest income for the year ended December 31, 20242025 increased $1.4$2.9 million, or 4.3%,8.6%, when compared to thelast year ended December 31, 2023.year. Changes in the components of noninterest income are discussed below:

•BOLI income: The decrease was primarilydue the result ofto a $1.5$1.0 million decrease in tax-free gains on death benefit proceeds in excess of the cash surrender value of the policies compared to the prior year,year-over-year, partially offset by the impact of higher yielding policies dueas toa theresult partialof restructuring of the portfolio at the end of thecalendar prioryear year.2023.

Noninterest Expense. Noninterest expense for the year ended December 31, 20242025 increaseddecreased $1.6 million,$321,000, or 1.3%,0.3%, when compared to thelast year ended December 31, 2023.year. Changes in the components of noninterest expense are discussed below:

•Salaries and employee benefits: The increase was primarily the result of pay increases, partially offset by reductionsincreases in both pay and incentive pay.compensation.

•Operating lease depreciation expense: The increasedecrease was due to a higherdecline averagein outstandingthe balancepopulation of associatedoperating contracts.lease contracts (assets being depreciated) year-over-year.

•Core deposit intangible amortization: The intangible recorded asassociated a result ofwith the Quantum merger is being amortized on an accelerated basis, so the rate of amortization slowed year-over-year.

•Contract renewal consulting fee: In the currentprior year we paid a fee to a consultant to assist in negotiatingnegotiate the multiyear renewal of our largest core processing contract.contract, with no similar fee being recognized in the current year.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax ratesrate was 20.5% and 21.6% for the years ended December 31, 20242025 and 2023 were 21.6% and 21.0%,2024, respectively. For more information on income taxes and deferred taxes, see "Note 12 – Income Taxes” of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Assets. Total assets were $4.6$4.5 billion and $4.7$4.6 billion at December 31, 20242025 and December 31, 2023,2024, respectively, a decrease of $77.2$49.8 million, or 1.7%, period-over-period,1.1%, the components of which are discussed below.

Debt Securities Available for Sale. Debt securities available for sale increaseddecreased $25.1$9.5 million, or 19.7%,6.2%, to $152.0$142.5 million at December 31, 2024.2025. Outside of changes in value, the changes between years were the result of $28.7$36.6 million in proceeds from the maturity, call and paydown of securitiessecurities, partially offset by $52.8$23.0 million in purchases. All purchases were residential MBS and consistent with the composition of the existing securities held in the portfolio. The following table illustrates the changes in the fair value of the portfolio.

Total Loans, Net of Deferred Loan Fees and Costs. Loans held for investment totaled $3.6 billion at December 31, 2024,2025, ana increasedecrease of $8.3$70.1 millionmillion, or 0.2%.1.9%, compared to the balance as of December 31, 2024. The following table illustrates the changes within the portfolio.

Commercial Real Estate – Construction and Land Development. We originate residential construction and development loans for the construction of single-family residences, condominiums, townhouses and residential developments. Our commercial construction development loans are for the development of business properties, including multifamily, retail, office/warehouse and office buildings. Our land, lots and development loans are predominately for the purchase or refinance of unimproved land held for future residential development, improved residential lots held for speculative investment purposes and for the future construction of one-to-four family (speculative and pre-sold) or commercial real estate. Unfunded commitments totaled $111.9 million and $48.1 million at December 31, 2025 and 2024, respectively.

Commercial Real Estate Lending, including Multifamily. We originate commercial real estate loans, including loans secured by retail/wholesale facilities, hotels, industrial facilities, medical and professional buildings, office buildings, churches and multifamily residential properties located primarily in our market areas. The average outstanding loan balance was $957,000$1.0 million as of December 31, 2024.2025. Specific to our non-owner occupied portfolio, the outstanding balance of loans secured by offices totaled $97.0 million and $93.7 million as of December 31, 2024.2025 and 2024, respectively.

We offer both fixed- and adjustable-rate commercial real estate loans. Our commercial real estate mortgage loans generally include a balloon maturity of five years or less. Amortization terms are generally limitedoffered up to 2025 years. Adjustable rate-based loans typically include a floor and ceiling interest rate and are indexed to The Wall Street Journal prime rate or the one-month term SOFR, plus or minus an interest rate margin and rates generally adjust daily. The maximum loan-to-value ratio for commercial real estate loans is generally up to 80%85% on purchases and refinances.

Commercial – Commercial and Industrial Loans. Over the last year,two years, we have intentionally focused on the growth of commercial and industrial loans to businesses located in our primary market areas. These loans are primarily originated as conventional loans to business borrowers, which include lines of credit, term loans and letters of credit. These loans are typically secured by collateral and are used for general business purposes, including working capital financing, equipment financing, capital investment and general investments. Loan terms typically vary from one to five years. The interest rates on such loans are either fixed rate or adjustable rate indexed to The Wall Street Journal prime rate plus a margin.

Residential Real Estate – Home Equity Lines of Credit. Our HELOCs consist primarily of adjustable-rate lines of credit. The lines of credit may be originated in amounts, together with the amount of the existing first mortgage, typically up to 85% of the value of the property securing the loan (less any prior mortgage loans) with an adjustable-rate based on The Wall Street Journal prime rate plus a margin. HELOCs generally have up to a 10-year draw period and amounts may be reborrowed after payment at any time during the draw period. Once the draw period has lapsed, the payment is amortized over a 15-year period based on the loan balance at that time. At December 31, 2024, unfundedUnfunded commitments on these lines of credit, including loans held for sale, totaled $491.2 million and $436.0 million.million at December 31, 2025 and 2024, respectively.

For the quarter ended MarchJune 31,30, 2026 compared to the quarter ended DecemberMarch 31, 20252026:

•provision for credit losses was $370,000$920,000 compared to $2.1 million$370,000;

•quarterly cash dividends continuedincreased at$0.02 per share, or 15.4%, to $0.15 per share totaling $2.4 million compared to $0.13 per share totaling $2.2 million for both periods; and

Comparison of Results of Operations for the Three Months Ended June 30, 2026 and March 31, 2026 and December 31, 2025

Net Income. Net income totaled $15.6 million, or $0.94 per diluted share, for the three months ended June 30, 2026 compared to $16.8 million, or $0.99 per diluted share, for the three months ended March 31, 20262026, compareda todecrease $16.1of $1.2 million, or $0.93 per diluted share, for the three months ended December 31, 2025, an increase of $648,000, or 4.0%.6.8%. The results for the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026 benefitedwere fromnegatively impacted by a $1.7 million$784,000 decrease in thenoninterest provision for credit lossesincome and a $635,000$1.0 million increase in noninterest income,expense due to a $1.1 million loss resulting from the redemption of junior subordinated debt securities, partially offset by a $1.3$1.0 million increase in thenet noninterestinterest expense.income. Details of the changes in the various components of net income are further discussed below.

(4)Tax-equivalent results include adjustments to interest income of $435$458 and $448$435 for the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively, calculated based on a combined federal and state tax ratesrate of 23% and 24% for the same periods, respectively.23%.

Total interest expenseand dividend income for the three months ended MarchJune 31,30, 2026 decreased $2.1 million,$324,000, or 10.7%,0.5%, when compared to the three months ended DecemberMarch 31, 2025.2026. A decline of $2.1 million, or 10.9%,$605,000 in depositaccretion interestincome expensewas drovethe primary driver of this change, partially offset by the resultimpact of aan declineadditional in the average balance of certificate accounts, specifically brokered deposits, a decline in the average cost of funds across funding categories, and fewer daysday in the current quarter.

For the quartersix months ended DecemberJune 31,30, 2025,2026, the "loans" portion of the provision for credit losses was primarily the result of the following, offset by net charge-offs of $3.1$3.7 million during the quarterperiod:

•$0.1$1.6 million benefit due to changes in qualitative adjustments, partially offset by a slight worsening of the projected economic forecast, specifically the national unemployment rate,rate. andOf changesnote, we released the $2.2 million qualitative allocation previously established for the potential impact of Hurricane Helene upon our loan portfolio which had been established in qualitativethe adjustments.quarter ended September 30, 2024.

•$0.6$1.4 million decreaseincrease in specific reserves on individually evaluated loans.

For the quarterssix months ended MarchJune 31,30, 2026 and DecemberJune 31,30, 2025, the amounts recorded for off-balance sheet credit exposure were the result of changes in the balance of loan commitments, loan mix, projected economic forecast and qualitative allocations as outlined above.

Noninterest Income. Noninterest income for the threesix months ended MarchJune 31,30, 2026 increased $635,000,$1.1 million, or 6.8%,6.0%, when compared to the quartersame endedperiod Decemberlast 31, 2025.year. Changes in the components of noninterest income are discussed below:

•Gain on sale of loans held for sale: The increase was primarily driven by an increase in the sales volume of HELOCthe loansguaranteed originatedportion forof sale,SBA commercial loans, partially offset by reduceda reduction in the sales volume of HELOC loans. During the six months ended June 30, 2026, there were $31.7 million of sales of the guaranteed portion of SBA commercial loans with gains of $2.5 million compared to $11.9 million sold with gains of $936,000 for the corresponding period in the prior year. There were $63.2 million of residential mortgage loans andsold SBAduring commercialthe loans.current period for gains of $912,000 compared to $49.1 million sold with gains of $1.0 million for the corresponding period in the prior year. There were $103.0$120.2 million of HELOCs originated for sale which were sold during the current quarterperiod with gains of $934,000$1.0 million compared to $13.7$198.2 million sold with gains of $121,000$2.0 million for the corresponding period in the prior quarter.year. ThereLastly, were $23.3 million of residential mortgage loans sold for gains of $431,000 during the current quarter compared to $31.1 million sold with gains of $606,000 in the prior quarter. There were $16.4 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.2 million for the current quarter compared to $18.9 million sold and gains of $1.5 million for the prior quarter. Ourour hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a net gain of $68,000$72,000 for the currentsix quartermonths ended June 30, 2026 compared to a net loss of $295,000$40,000 for the priorsix quarter.months ended June 30, 2025.

•Gain on sale of premises and equipment: In both periods presented, gains were recognized on the sale of excess parcels of land.real estate.

Noninterest Expense. Noninterest expense for the threesix months ended MarchJune 31,30, 2026 increased $1.3$4.7 million, or 4.0%,7.6%, when compared to the threesame monthsperiod endedlast December 31, 2025.year. Changes in the components of noninterest expense are discussed below: