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

ElevatedDisruption or volatility in general business or economic conditions in the markets in which we operate, including elevated levels of inflation and fluctuations in interest ratesrates, could adversely impact our businessbusiness, financial condition and results of operations.

Throughout 2023, certain banking institutions with elevated concentrations of uninsured deposits experienced large deposit outflows, resulting in the institutions being placed into FDIC receiverships. In the aftermath, there has been substantial market disruption and indications that deposit concerns could spread within the banking industry, leading to deposit outflows and other destabilizing results. Following the 2023 bank failures, the FDIC published new rules regarding uninsured deposits and has increased regulatory scrutiny in the financial industry. Bank failures have led the U.S. Treasury Secretary, the FDIC and the Federal Reserve to invoke the systemic risk exception to the least-cost resolution requirement under the FDIAFDIC to guarantee uninsured deposits of the failed banks. The systemic bank exception can only be invoked for financial market risks that pose a threat to financial stability. The FDIC may impose a special assessment on insured depository institutions to recover the loss to the failed bank resulting from the use of the systemic risk exception to protect the uninsured depositors. The potential impact of a special assessment to us could increase noninterest expense for that quarter. These market events could materially adversely affect our business.

Unlike larger national or other regional banks that are more geographically diversified, we provide direct lending and deposit banking and financial services primarily to customers across West Virginia and Virginia. The local economic conditions in these areas have a significant impact on the demand for our products and services, as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources. Moreover, 24.2% of the securities in our municipal securities portfolio were issued by political subdivisions or agencies within West Virginia and Virginia. A significant decline in general economic conditions in West Virginia or Virginia, whether caused by recession, inflation, unemployment, the imposition of tariffs or other trade policies, changes in crude oil prices, changes in securities markets, acts of terrorism, outbreaks of any epidemics or pandemics, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.

Additionally, 75.8%79.9% of our total loans are real estate interests (residential and non-residential, including both owner-occupied and investment real estate and construction and land development), mainly concentrated in the West Virginia, Virginia, Maryland, North Carolina and South Carolina markets. As a result, declining real estate values in these markets could negatively impact the value of the real estate collateral securing such loans. Emerging and evolving factorsfactors, such as the shift to work-from-home or hybrid-work arrangements, changing consumer preferences and resulting changes in occupancy rates as a result of these and other trends can also impact commercial real estate valuations over relatively short periods. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values in satisfaction of any nonperforming or defaulted loans, our earnings and capital could be adversely affected.

Climate change exposes us to physical risk as its effects may lead to more frequent and extreme shifts in weather patterns and more extreme weather events that could damage, destroy or otherwise impact the value or productivity of our properties and other assets;assets, reduce the availability of insurance to cover losses; and/or disrupt our operations through prolonged outages. Such events and long-term shifts may also have a significant impact on our customers, which could amplify credit risk by diminishing borrowers’ repayment capacity or collateral values, and other businesses and counterparties with whom we transact, which could have a broader impact on the economy, supply chains and distribution networks.

Furthermore, banking regulators and other supervisory authorities, investors and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate changechange, both directly and with respect to their customers, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities. Given that climate change could impose systemic risks upon the financial sector, we face regulatory risk of increasing focus on our resilience to climate-related risks, including in the context of stress testing for various climate stress scenarios. Ongoing legislative or regulatory changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. For example, in March 2024, the SEC adopted new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require the inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements. Following a number of challenges to the rules by federal courts and prior statements that the SEC would vigorously defend the validity of the rule, the SEC, under the new administration, changed course in February 2025, stating that it would no longer defend the rules and the rule would be removed under new leadership. While we may no longer face the stringent reporting requirements under SEC rules, ourOur reputation and ability to maintain client relationships and attract and retain employees may depend on the sufficiency of our policiespolicies, practices and practicesdisclosures related to climate change, including our direct or indirect involvement in certain industries.industries and any voluntary steps we may take to mitigate our impact on climate change.

We have made significant investments in ICM and Warp Speed. The profitability of ICM and Warp Speed depend in large part upon their ability to originate a high volume of loans and to sell them in the secondary market. Thus, they are dependent upon (i) the existence of an active secondary market and (ii) their ability to sell loans into that market. Volatile interest rate environments could increase this risk initially.

Our gaming initiative has contributed significantly to our deposits and has allowed us to generate attractive returns on lower risk assets through increased investments in securities and loan growth. On-balance sheet gaming deposits totaled $184.3 million as of December 31, 2025, compared to $227.6 million as of December 31, 2024,2024. comparedOff-balance tosheet $354.1gaming deposits totaled $104.0 million as of December 31, 2023.2025, Off-balancecompared sheet gaming deposits totaledto $221.0 million as of December 31, 2024, compared to $277.1 million as of December 31, 2023.2024. Of the gaming deposits, $206.8$137.0 million iscan withbe attributed to our three largest clients at December 31, 2024.2025. Our future growth may be adversely impacted if we are unable to retain and grow this strong, low-cost deposit base. There may be competitive pressures to pay higher interest rates on deposits to our gaming customers, which could increase funding costs and compress net interest margins. Further, even if we are otherwise able to grow and maintain our gaming deposit base, our deposit balances may still decrease if our gaming customers are offered more attractive returns from our competitors. If our gaming customers withdraw deposits, we could lose a low cost source of funds which would likely increase our funding costs and reduce our net interest income and net interest margin. These factors could have a material adverse effect on our business, financial condition and results of operations.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources. Such competitors primarily include national, regional and community banks within the various markets where we operate. We also face competition from many other types of financial institutions, including, without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies and other financial intermediaries. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Also, technology and other changes have lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directlydirectly, without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. Further, many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services, as well as better pricing for those products and services than we can. Additionally, we increasingly compete for talent in and outside of the financial services industry. While our remote work opportunities allow us to hire outside of our traditional footprint, it also increases competition. These factors may constrain our ability to hire or retain a sufficient number of qualified employees, which could impact our ability to serve our customers and clients. Additionally, we increasingly compete for talent in and outside of the financial services industry. While our remote work opportunities allow us to hire outside of our traditional footprint, it also increases competition. These factors may constrain our ability to hire or retain a sufficient number of qualified employees, which could impact our ability to serve our customers and clients.

As of December 31, 2024,2025, we had $3.1$1.2 million of goodwill and other intangible assets.goodwill. A significant decline in our expected future cash flows, a significant adverse change in the business climate, slower growth rates or a significant and sustained decline in the price of our common stock may necessitate taking charges in the future related to the impairment of our goodwill and other intangible assets. If we were to conclude that a future write-down of goodwill and other intangible assets is necessary, we would record the appropriate charge, which could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 20242025 our equity method investment ICM also had $15.3 million of goodwill. A future write-down of goodwill at ICM could have an adverse effect on our results of operations based on our proportionate share of equity method investment income.

We are focused on our long-term growth and have undertaken various new business initiatives, many of which involve activities that are new to it,us, or in some cases, are in the early stages of development. From time to time, we may develop, grow and/or acquire new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets for these products and services are not fully developed.

For example, we are involved in new innovative strategies to provide independent banking to corporate clients throughout the United States by leveraging recent investments and depositor relationships in the Fintech industry. As Fintech technologies become more widely available, we expect the services and products associated with them to evolve. Our evolving business and product diversification initiatives implemented to effectively compete and stay current with the industry may subject us to, among other risks, increased business, reputational and operational risk, as well as more complex legal, regulatory and compliance costs and risks. Additionally, the Bank is or may be engaged in relationships with clients in the payments, digital assets, digital savings, crowdfunding, lottery and gaming industries and any change in regulations could impact us from both an operational and regulatory perspective.

We generally seek merger or acquisition partners that are culturally similar, have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services. Additionally, we may from time to time dispose of certain of our assets or businesses. For example, in January 2025, the Bank sold its interest in Trabian.Trabian and, in September 2025, we sold substantially all assets and operations of Victor. Acquiring other banks, businesses or branches or disposing of certain assets or businesses involves various risks commonly associated with acquisitions and dispositions, including, among other things:

Any significant restriction or disruption of our ability to obtain funding from these or other sources could negatively effectaffect our ability to satisfy our current and future financial obligations, which could materially affect our financial condition.

Consumers may decide not to use banks to complete their financial transactions, or may deposit funds electronically with banks that have no branches within our market area, which could affect net income.

Our ability to compete effectively, to attract and retain customers and employees and to grow our business is dependent on maintaining our reputation and having the trust of our customers and employees. Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to our business.

To an increasing extent, financial services companies, including us, may face criticism for engaging in business with specific customers or with customers in particular industries or originating in certain foreign countries where the U.S. faces heightened geopolitical tensions, or where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as environment, consumer health and safety or society at large. Criticism can come in many forms, including for providing banking services to companies engaged in, for example, the gaming industry. Many of these issues are divisive without broad agreement as to the appropriate steps a company should take and often with strong feelings on both sides. As a result, however we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or current or potential employees refuse to work for us. This can be true regardless of whether we are perceived by some as not having done enough to address concerns or by others as having inappropriately yielded to pressures. This pressure can also be a factor in decisions as to which business opportunities and customers we pursue, potentially resulting in foregone profit opportunities.

We, primarily through the Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision, which vests a significant amount of discretion in the various regulatory authorities. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not security holders. These regulations and supervisory guidance affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes. Additionally, federal bank regulators are increasingly focused on the risks related to bank and Fintech partnerships, raising concerns regarding risk management, oversight, internal controls, information security and information technology operational resilience. This focus is demonstrated by recent regulatory enforcement actions against other banks that have allegedly not adequately addressed these concerns while growing their banking-as-a-service offerings, as well as by a request for information by the federal banking regulators on bank-fintechbank-Fintech arrangements. Accordingly, we may face additional regulatory scrutiny with respect to the Fintech portion of our business. Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, and including regulatory and policy changes as a result of the newcurrent U.S. presidential administration, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, limit the types of financial services and products we may offer, cause us to exit certain lines of business and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations, policies or supervisory guidance could result in enforcement and other legal actions by Federalfederal or state authorities, including criminal and civil penalties, the loss of FDIC insurance, the revocation of a banking charter, other sanctions by regulatory agencies, civil money penalties and/or reputational damage. In this regard, government authorities, including the bank regulatory agencies, are pursuing aggressive enforcement actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures. We are also subject to the risk of a federal government shutdown, such as the temporary shutdown that occurred in October 2025. Any such shutdown could impact our ability to make required filings and finance-related disclosures and our ability to access the public markets and obtain necessary capital to fund operations. Any such shutdown initiated by the government is difficult to predict and may be outside of our control. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We and the Bank are required to meet certain regulatory capital adequacy guidelines and other regulatory requirements imposed by the Federal Reserve Board, the FDIC and the United StatesU.S. Department of Treasury. If we or the Bank fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition and results of operations would be materially and adversely affected and could compromise our status as a financial holding company. Refer to the sections captioned Supervision and Regulation – Capital Requirements included in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report, for detailed capital guidelines for bank holding companies and banks.

We are a financial holding company and our operations are primarily conducted by the Bank, which is subject to significant federal and state regulation. Cash available to pay dividends to our shareholders of us is derived primarily from dividends paid by the Bank. As a result, our ability to receive dividends or loans from the Bank is restricted. Under federal law, the payment of dividends by the Bank is subject to capital adequacy requirements. The Federal Reserve Board and/or the FDIC prohibit a dividend payment by us or the Bank that would constitute an unsafe or unsound practice. Refer to the sections captioned Supervision and Regulation – Limit on Dividends included in Item 1 – Business and Note 15 – Regulatory Capital Requirements accompanying the consolidated financial statements included elsewhere in this report.

General market fluctuations, including real or anticipated changes in the strength of the economies we serve; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions and uncertainty in market conditions or boarderbroader economic changes because of the changecurrent inadministration's administration as a result of the 2024 U.S. presidential electionpolicies; interest rate changes, crude oil price volatility or credit loss trends could also cause our stock price to decrease, regardless of operating results.

Our ability to pay dividends in the future is not certain. Any future determination relating to dividend policy will be made at the discretion of ourthe Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that ourthe Board of Directors may deem relevant. The holders of our common stock are entitled to receive dividends when, and ifif, declared by ourthe Board of Directors out of funds legally available for that purpose. As part of our consideration of whether to pay cash dividends, we intend to retain adequate funds from future earnings to support the development and growth of our business. In addition, our ability to pay dividends is restricted by federal policies and regulations and by the terms of our existing indebtedness. It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. For further information, refer to the section captioned Supervision and Regulation – Limit on Dividends in Item 1 – Business included elsewhere in this report.

Accounting policies and estimates are fundamental to how ourwe recordsrecord and reportsreport our financial condition and results of operations. Our management makes judgments and assumptions in selecting and adopting various accounting policies and in applying estimates so that such policies and estimates comply with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Management has identified certain accounting policies as critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability or reducing a liability. Because of the uncertainty surrounding management's judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated. For example, because of the inherent uncertainty of estimates, the Bank could need to significantly increase its allowance for credit losseslosses, if actual losses are more than the amount reserved. Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on our financial condition and results of operations. In addition, we cannot guarantee that we will not be required to adjust accounting policies or restate prior financial statements. Refer to the section captioned Allowance for Credit Losses in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses.

We continue to adapt our business model due to challenging market conditions, primarily broughtdue onto bythe ancurrent interest rate environment and economy, as well as consideration of sustained higher interest rates, a slowing economyregulatory and multiplegeopolitical high-profileenvironments, bankamong failuresothers. that occurred during the first half of 2023. Interest rates have remained at an elevated level through December 31, 2024, although theThe Federal Reserve did reducelowered its key interest rate to a range of 4.25%3.50% to 4.50%3.75% in December 2024.2025. LowerHigher loan balances areprimarily reflect the resultBank's execution of slowerits marketasset demand,generation strategies that include the impactdiversification of loanrisk amortizationamong andloans payoffswith andrelatively slowersmaller loan growthbalances, basedas well as a focus on overallloans marketwith conditionsfixed andinterest portfolio management. We initiated the process of winding down our digital asset program account relationships, while maintaining operating accounts, during the second quarter of 2024. This decision was prompted by changing market conditions and profitability challenges that contributed to an unfavorable risk/reward dynamic.rates. We remain committed to the gaming, payments and banking-as-a-service industries. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance coreCoRe deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division. Additionally, we have expanded our compliance and risk management team to support the growth in these lines of business.

Net interest income decreaseddeclined $14.1$1.8 million to $109.2$107.4 million, noninterest income increased $23.2$17.4 million to $42.9$60.3 million and noninterest expense increaseddeclined $4.6$0.1 million to $122.2$122.1 million during 20242025 compared to 2023.2024. Our tax-equivalent yield on earning assets was 6.22%5.95% in 2024,2025, compared to 6.20%6.22% in 2023.2024. Total loans decreasedincreased by $218.1$243.0 million to $2.34 billion as of December 31, 2025 from $2.10 billion as of December 31, 2024 from $2.32 billion as of December 31, 2023.2024. Our overall cost of interest-bearing liabilities was 4.07%3.43% in 20242025 compared to 3.38%4.07% in 2023.2024. TheDespite increasethe decline in the cost of interest-bearing liabilities outpacedoutpacing the increasedecline in the earning assets yield, whichthe shift in the mix of earning assets and the increase in interest-bearing liabilities resulted in our tax-equivalent net interest margin decreasingdeclining to 3.67%3.65% atduring the year ended December 31, 20242025 from 4.04%3.67% atduring the year ended December 31, 2023.2024.

Net income available to common shareholders in 20242025 totaled $20.1$26.9 million, compared to $31.2$20.1 million in 2023,2024, aan decreaseincrease of $11.1$6.8 million. TheEarnings 2024for earnings2025 equated to a return on average assets of 0.6%0.8% and a return on average equity of 6.9%,8.7%, compared to 20232024 results of 0.9%0.6% and 11.4%,6.9%, respectively. Basic and diluted earnings per share were $2.11 and $2.06, respectively, in 2025 compared to $1.56 and $1.53, respectively, in 2024 compared to $2.46 and $2.40, respectively, in 2023.2024.

Net interest income is the amount by which interest income on earning assets exceeds interest expense incurred on interest-bearing liabilities. Interest-earning assets include loans, investment securities and interest-bearing balances with banks. Interest-bearing liabilities include interest-bearing deposits and borrowed fundsfunds, such as sweep accounts, repurchase agreements,agreements and subordinated debt and the senior term loan.debt. Net interest income, which is the primary source of revenue for the Bank, is also impacted by changes in market interest rates and the mix of interest-earning assets and interest-bearing liabilities.

Net interest margin is calculated by dividing net interest income by average interest-earning assets and measures the net revenue generated by the Bank’sour balance sheet. Net interest margin on a tax-equivalent basis was 3.67%3.65% and 4.04%3.67% in 20242025 and 2023,2024, respectively.

InDuring 2024,2025, the Federal Reserve lowered its key interest rate from a range of 5.25% to 5.50% to a range of 4.25% to 4.50% as of December 31, 2024.2024 to a range of 3.50% to 3.75% as of December 31, 2025. We continue to analyze methods to deploy assets into an earning asset mix to result in a stronger net interest margin. Management’s estimate of the impact of future changes in market interest rates is shown in the section captioned Interest Rate Risk, in Item 7A – Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Net interest spread is calculated by taking the difference between interest earned on earning assets and interest paid on interest-bearing liabilities in an effort to maximize net interest, while maintaining an appropriate level of interest rate risk.liabilities. Net interest spread on a tax-equivalent basis was 2.15%2.52% in 20242025 compared to 2.82%2.15% in 2023.2024. The difference between the net interest margin on a tax-equivalent basis and net interest spread on a tax-equivalent basis was 113 basis points in 2025 compared to 152 basis points in 2024 compared to 122 basis points in 2023.2024. This was driven by the 6964 basis point increasedecline in the cost of interest-bearing liabilities outpacing the two27 basis point increasedecline in yield on earning assets.

During 2024,2025, net interest income declined $14.1$1.8 million, or 11.4%,1.6%, and total interest income declined $4.0$10.5 million, or 2.1%.5.7%. These declines were primarily driven by a $116.1$40.1 million decline in average total loans and a 40$34.2 basismillion point increasedecline in theaverage costinterest-bearing ofdeposits fundswith banks as compared to 2023.2024. The $116.1$40.1 million decline in average total loans during 20242025 reflects declines of $51.0 million in average commercial loans, $38.0 million in average consumer loans and $26.5$36.7 million in average real estate loans and $6.1 million in average consumer loans, partially offset by a $3.3 million increase in average commercial loans. The yield on total loans increaseddeclined nine32 basis points during 2024.2025.

Average investment securities increased $28.7$35.4 million, or 8.5%,9.7%, in 20242025 as the result of a $40.6$54.0 million increase in taxable investments, partially offset by an $11.9$18.5 million decline in tax-exempt investments. The yield increased 42105 basis points on taxable securities and declinedincreased 5940 basis points on tax-exempt securities.

Average interest-bearing liabilities declinedincreased $86.2$100.8 million, or 4.4%,5.4%, in 2024,2025, primarily as a result of declinesincreases of $175.9 million and $107.8$166.0 million in average NOW accountsaccounts, and$19.5 million in average money market checking accounts and $13.0 million in savings accounts, respectively, partially offset by ana increasedecline of $184.0$96.2 million in average certificates of deposit.

Average interest-bearing deposits declined $60.1 million in 2024. Total interest expense increaseddeclined $10.1$8.7 million, primarily due to an $11.4$8.6 million increasedecline in deposit interest.interest expense. The result was a 6964 basis point increasedecline in the cost of interest-bearing liabilities, from 3.38% in 2023 to 4.07% in 2024.2024 to 3.43% in 2025. This increasedecline is primarily the result of a 7567 basis point increasedecline in the cost of deposits, reflecting a shift in the mix of average deposits driven by the highly-competitive deposit environment.environment, as well as decreasing interest rates. There was also a 271 basis point increasedecline in the cost of funds related to the senior term loan associated with unamortized debt issuance costs that werewas recorded as interest expense upon the repaymentrepaid in May 2024. Further discussion on borrowings is included in Note 7 – Borrowed Funds accompanying the consolidated financial statements included elsewhere in this report.

Our provisionProvision for credit losses forwas 2024$8.7 wasmillion and $3.5 million comparedin to2025 aand release2024, of allowance for credit losses of $1.9 million for 2023.respectively. The provision for credit losses, which is a product of management's analysis, is recorded in response to forecasted losses over the remaining life of the loan and available-for-sale investment security portfolios. Further discussion on the provision for credit losses is included in Note 1 – Summary of Significant Accounting Policies accompanying the consolidated financial statements included elsewhere in this report. The changeincrease from release of allowance toin provision for credit losses is primarily the result of the level of recognized charge-offs within the loan portfolio, which was partially offsetcompounded by changesincreases to the outstanding balances of the commercial loan portfolios,portfolio, includingpartially offset by decreases in the commercial, residential and consumer loan segments. The 2023 release was primarily the result of the sale of subprime automobile loans.segment.

Total loan receivable balances decreasedincreased $243.0 million in 2025, compared to a decline of $217.5 million in 2024 versus a decrease of $55.0 million in 2023.2024. The commercial loan portfolio decreasedincreased by $292.5 million in 2025, compared to a decline of $184.8 million in 2024, in comparison to a decrease of $9.2 million in 2023, while the consumer loan portfolio decreasedincreased by $7.0 million in 2025, compared to a decline of $8.8 million in 2024, in comparison to a decrease of $104.2 million in 2023.2024. Additionally, the residential mortgage loan portfolio decreaseddeclined by $51.6 million and $21.8 million and $63.0 million in 20242025 and 2023,2024, respectively. Net charge-offs in 20242025 totaled $4.4$5.6 million, in comparison to net charge-offs of $9.3$4.4 million in 2023.2024. Lastly, the provision for credit losses was impacted by a $0.6$0.9 million decreasedecline in the specific credit loss allocations in 2024,2025, relative to a $0.1$0.6 million decreasedecline in provision for such loan losses in 2023.2024.

Payment card and service charge income, consulting compliance income, equity method investment income or lossloss, investments portfolio gains or losses and gains or losses on saleacquisition ofand loansdivestiture activity generally account for the majority of our noninterest income. From time to time, we also recognize gains or losses on acquisition and divestiture activity, sales of assets or our investment portfolio. Total noninterest income for 2024,2025, 2024 and 2023 and 2022 was $42.9$60.3 million, $19.7$42.9 million and $27.6$19.7 million, respectively.

The increase in noninterest income for 20242025 compared to 20232024 was primarily the result of increasesa of $11.7$34.2 million in gain on divestiture activity from the sale of assets,Victor, a $6.7 million increase in equity method investment income from our mortgage segment and a $2.5 million in payment card and service charge income and $1.0 millionincrease in holding gains on equity securities. The gain on sale of assets in 2024 was primarily driven by the sale-leaseback transaction, resulting in a pre-tax gain on sale of assets of $11.8 million. For more information regarding the sale-leasebacksale transaction,of Victor, refer to Note 424 – PremisesAcquisitions and EquipmentDivestitures accompanying the consolidated financial statements included elsewhere in this report. Additionally,These thereincreases waswere $1.4partially offset by the $11.7 million gain on sale of assets in equity2024 method investment income from our mortgage segment, comparedrelated to equitythe methodsale-leaseback investmenttransaction, lossesa of $2.5$7.6 million innet 2023. Gainloss on the sale of available-for-sale investment securities wasin $0.72025 associated with our previously disclosed investment portfolio restructuring, a $4.1 million decline in 2024,compliance comparedand toconsulting income and a loss of $1.5$2.3 million in 2023, and gain on sale of loans was $1.0 milliondecline in 2024,other drivenoperating by government guaranteed loan sales, compared to a loss of $0.7 million on the sale of subprime automobile loans in 2023.income.

Noninterest expense was $122.2$122.1 million and $117.6$122.2 million in 20242025 and 2023,2024, respectively. The increasedecline of noninterest expense relative to the year ended December 31, 20232024 primarily reflects increasesdeclines of $4.6$6.2 million in professional fees and $1.3 million in equipment depreciation and maintenance, offset by increase of $3.0 million in salaries and employee benefitsbenefits, and $3.0$2.4 million in professionalother fees,operating incurredexpenses, to$1.3 enhancemillion ourin risksoftware managementcosts and compliance$1.2 relatedmillion infrastructure.in occupancy expense.

In February 2023, we completed the sale of the Bank’s wholly-owned subsidiary, ProCo Global, Inc. (“Chartwell,” which does business under the registered trade name Chartwell Compliance) for total consideration of $14.4 million in the form of a loan issued to the buyer, resulting in a gain on sale of $11.8 million. Chartwell provides integrated regulatory compliance, state licensing, financial crimes prevention and enterprise risk management services that include consulting, outsourcing, testing and training solutions. To facilitate a transition of the Chartwell services and support the onboarding and conversion of systems, we entered into a 60-day Employee Lease and Service Agreement, whereby we provided the purchaser with finance and accounting, human capital, information technology, marketing and record/data retention services. In addition, we entered into a contract with the purchaser for Chartwell to continue to provide services and support for three years following the sale. We paid $3.9 million and $2.5 million in fees related to this contract during the years ended December 31, 2024 and 2023, respectively. The fees paid related to this contract were not material for the year ended December 31, 2023, respectively.2025.

We incurred income tax expense of $6.1$9.9 million and $8.1$6.1 million in 20242025 and 2023,2024, respectively. Our effective tax rate was 23%26.9% and 21%23.2% in 20242025 and 2023,2024, respectively. Our effective tax rate is affected by certain permanent tax differences caused by statutory requirements in the tax code. The largest permanent differencedifferences relatesrelate to tax-exempt interest income relatedtax to municipal investmentscredits and loansexecutive heldcompensation. by us. Other, smallerOther permanent differences arise from interest income derivedon frommunicipal bonds and bank owned life insurance purchased on certain key employees and directors and meals and entertainment expenses.insurance. For 2024,2025, we expect to file tax returns in 2829 states.

Our return on average assets was 0.6%0.8% in 2024,2025, compared to 0.9%0.6% in 2023.2024. The declineincrease in 20242025 is a result of ana $11.1$6.8 million, or 35.6%,34.1%, declineincrease in earnings,earnings which is partially offset byand a $73.3$26.3 million, or 2.2%,0.8%, decline in average total assets as compared to 2023.2024. The decline in average total assets was primarily the result of a $116.1$40.1 million, or 5.0%,1.8%, decline in average total loans,loans partiallyand offseta by increases of $28.7$34.2 million, or 8.5%,8.1%, and $7.7 million, or 1.9%,decline in average investment securities and average interest-bearing deposits with banks, respectively.partially offset by an increase of $35.4 million, or 9.7%, in average investment securities.

Our return on average stockholders’ equity was 6.9%8.7% in 2024,2025, compared to 11.4%6.9% in 2023.2024. The declineincrease in 20242025 is a result of an $11.1$6.8 million, or 35.6%,34.1%, declineincrease in earningsearnings, andpartially anoffset $18.2by a $17.9 million, or 6.7%,6.1%, increase in average equity to $292.2$310.1 million.

At December 31, 2024,2025, all investment securities are available-for-sale or equity securities. Management believes the available-for-sale classification provides flexibility in terms of managing the portfolio for liquidity, yield enhancement and interest rate risk management opportunities. The increase in investment securities balances during 2024 was driven by purchases of available-for-sale mortgage-backed securities. At December 31, 2024,2025, the amortized cost of available-for-sale investment securities totaled $445.5$426.1 million, resulting in a net unrealized loss in the investment portfolio of $33.9$15.6 million. Management has the intent and ability to hold the investments to maturity and they are all high quality investments. Declines in the fair values of these securities can be attributed to general market conditions, rather than credit-related conditions. The municipal securities continue to give us the ability to pledge and to decrease the effective tax rate.

At December 31, 2024,2025, equity securities primarily consist of our Fintech investment portfolio and are comprised of investments in nine11 companies with a carrying value of $36.5$41.3 million. Investments in our top four equity securities represented $34.1$37.6 million, or 93.4%,91.1%, of our total Fintech investment portfolio at December 31, 2024.2025. The Fintech equity securities do not have readily determinable fair values and are recorded at cost and adjusted for observable price changes for underlying transactions for identical or similar investments.

Our primary market areas are North Central West Virginia, Northern Virginia, Maryland, North Carolina and South Carolina. Our loan portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, home equity lines of credit and consumer lending. Loans receivable totaled $2.34 billion as of December 31, 2025, an increase of $243.0 million from $2.10 billion as of December 31, 2024, a decrease of $217.5 million from $2.32 billion as of December 31, 2023.2024.

At December 31, 2024,2025, Special Mention loans amounted to $50.4$30.3 million. The balance is comprised of 5225 loans, which include fourone loans totaling $12.1$9.5 million to a single borrowerloan for retailan office commercial real estate projects,project, an $8.9 million line of credit secured by a borrowing base, a $7.7 milliontwo commercial real estate loanloans totaling $11.0 million to a senior care facilityfacilities and a $2.5$2.6 million commercial term loan to finance a business acquisition. In addition, there are 4521 loans to various unrelated borrowers totaling $19.1$7.2 million in commercial, home equity line of credit ("HELOC"), installment and mortgage loans. TheseSpecial areMention loans include loans for which information about the borrowers’borrowers' possible credit problems causes management to have doubts as to the borrowers’borrowers' ability to comply with the loan repayment terms in the future.

There were 5439 additional loans that management identified as Substandard loans, totaling $76.8$49.7 million as of December 31, 2024.2025. These loans include a $18.0 million loan to a skilled nursing facility, $17.7 million in three loans to finance hospitality properties to three relatedseparate borrowers andtotaling $12.7 million secured by commercial real estate office properties, a $13.5$12.3 million loan to finance a multifamily real estate property.property and a $4.1 million loan to a hotel. In addition, there are 4934 loans to various unrelated borrowers totaling $27.6$20.6 million in commercial, HELOC, installment and mortgage loans. TheseSubstandard areloans include loans where known information about the borrowers’ credit problems causes management to have serious doubts as to the borrowers’ ability to comply with the loan repayment terms in the future.

Overall, these concentrations have weighted average LTVs between 47%approximately -45% 63%.and 64%. The “Other” segment above contains all CRE loan types outside of the five listed. TheseThe loans included in the Other concentrationsconcentration primarily include mixed use CRE loans and are not tracked through scorecards, and are immaterial to the CRE loan portfolio.scorecards.

Nursing Homes are mainly originated through purchased participation from third-party banks. These loans typically are made to skilled nursing facilities ("SNF") and are secured by the subject properties. A majority of these loans are bridge to U.S. Department of Housing and Urban Development loans and have a three to five year term. As of December 31, 2024,2025, these borrowers are in 2120 different states. This concentration contains atwo singleunrelated classifiedSpecial note,Mention notes totaling $11.0 million, well secured by multiple SNF properties in Michigan.Florida and North Carolina, respectively.

Multifamily borrowers are mainly located in the Northern Virginia and North Central West Virginia areas and are heavily concentrated in threefour loans to twothree unrelated borrowers. These threefour loans make up more than 60%76% of the total concentration.

The Hospitality concentration consists of eight10 loans to two unrelated ownership groups. One group with five loans to a single ownership group totaling 38% of the concentration total. All these loans are performing and are located in the Washington,Northwest D.C.Virginia metroarea. area,This with all loans performing. The second groupconcentration includes threea loanssingle inClassified Northnote, Westwhich Virginia/Southeastis Ohio,considered performing and arehas all classified. However, these notes arebeen paying as agreed under a forbearance agreements.agreement.

Management continually monitors the risk in the loan portfolio through the review of the monthly delinquency reports and the Loan Review Committee. The Loan Review Committee is responsible for the determination of the adequacy of the ACL. This analysis involves both experience of the portfolio to date and the makeup of the overall portfolio. Specific loss estimates are derived for individualindividually analyzed loans based on specific criteria such as current delinquent status, related deposit account activity, where applicable and changes in the local and national economy. Loans are moved to individual analysis when, based on current information and events, the loan no longer exhibits similar risk characteristics as its pool and we analyze the loan individually on a collateral or cash flow basis. When appropriate, we also consider public knowledge and verifiable information from the local market to assess risks to specificindividually analyzed loans and the loan portfolios as a whole.

At December 31, 20242025 and 2023,2024, individually analyzed loans totaled $43.2$31.6 million and $11.8$43.2 million, respectively. The increasedecrease in individually analyzed loans is primarily due to the additionpayoff of twoa commercial real estate loansloan totalingof $31.5$18.0 million. A portion of the ACL of $1.3$0.4 million and $1.9$1.3 million was allocated to cover any loss in individually analyzed loans at December 31, 20242025 and 2023,2024, respectively. Loans past due more than 30 days were $45.5$28.5 million and $14.0$45.5 million, respectively, at December 31, 20242025 and 2023.2024.

The $0.6$25.3 million of principal curtailments/payoffs of individually analyzed loans were concentrated in a single governmentcommercial leasereal commercialestate relationship, in which a curtailmentpayoff of $0.5$18.0 million was received under a forbearance agreement,received, or 83% of the total principal curtailments, and a curtailment of $0.1 million received from the sale of heavy equipment collateral, or 17%71% of the total principal curtailments.

The $0.9$1.3 million of charged off loans were concentrated in onenine commercial relationshiprelationships with government guarantees representing $0.6 million, or 67%,all of the charge offs. ThisThese notenotes was a government guaranteed note that waswere secured by business assets. The subprime auto segment also saw a net change of $0.1 million, which has been attributed to charge offs. These charge offs were to various individual loans secured by automobilesassets and comprisedowner-occupied 11%real of the total charge offs.estate.

Loans classified as Doubtful totaled $3.4$3.2 million and $4.6$3.4 million as of December 31, 20242025 and December 31, 2023,2024, respectively. The decrease of $1.2$0.2 million, or 26.1%,5.9%, was concentrated in the commercial loan portfolio and is the result of the implementation of the workout of these loans resulting in principal reduction from paydowns, loan sales and foreclosures of various loans to unrelated borrowers, as well as payoffs of two chargecommercial offsloans ofto a single borrower totaling $0.2 million secured by business assets. One residential mortgage totaling $0.1 million was upgraded to Pass during the year, and six commercial loans totaling $0.5$1.7 million were downgraded to Doubtful during the period, including two loans to a single borrower totaling $1.4 million, secured by heavybusiness equipment and vehicles.assets. As of December 31, 2024,2025, there is $0.2an million in inimmaterial calculated credit loss reserve allocation against these 16 Doubtful loans.

Management continually evaluates hedging strategies that are available to manage interest rate risk. We enter into interest rate swap contracts designated as hedging instruments to manage the interest rate risk associated with certain fixed rate loans. InAs 2023of weDecember entered31, into2025, fourthere were two active portfolio layer method interestfair ratevalue swaps designated as hedging instruments over a closed portfolio of fixed-rate mortgage loans, one of which was voluntarily discontinued during 2024.loans. The notional amount of the interest rate swap portfolio washad $126.0a total notional amount of $84.2 million and $390.3$126.0 million as of December 31, 20242025 and December 31, 2023,2024, respectively, including amortization adjustments of $24.0$35.8 million and $9.7$24.0 million related to one of the swaps which is amortizing. The interest rate swap portfolio was in an liability position with a fair value of $1.0 million as of December 31, 2025 and an asset position with a fair value of $0.5 million as of December 31, 2024 and a liability position with a fair value of $4.5 million as of December 31, 2023.2024. The amortized cost basis of the closed portfolio of fixed-rate loans was $443.8$403.9 million and $491.0$443.8 million as of December 31, 20242025 and December 31, 2023,2024, respectively, which includeincluding basis adjustments of $1.1$2.4 million and $4.1$1.1 million.million as of December 31, 2025 and December 31, 2024, respectively.

The Bank considers a number of alternatives, including but not limited to deposits, short-term borrowings and long-term borrowings, when evaluating funding sources. Deposits continue to be the most significant source of funds, totaling $2.69$2.84 billion, or 97.2%97.3% of funding sources, at December 31, 2024,2025, versus $2.90$2.69 billion, or 97.1%97.2% of such funding sources, at December 31, 2023. Of these amounts, gaming deposits totaled $227.6 million and $354.1 million at December 31, 2024 and 2023, respectively. Borrowings, consisting of subordinated debt, senior term loan and other borrowings represented 2.7% of funding sources at December 31, 2024 and December 31, 2023. Repurchase agreements, which are available to large corporate customers, represented 0.1% and 0.2% of funding sources at December 31, 2024 and 2023, respectively.2024.

Management continues to emphasize the development of noninterest-bearing deposits as a core funding source. At December 31, 2024,2025, noninterest-bearing balances totaled $941.0$1.14 million,billion, compared to $1.20$941 billionmillion at December 31, 2023,2024, or 34.9%40.3% and 41.3%,34.9%, respectively, of total deposits. Interest-bearing deposits totaled $1.70 billion at December 31, 2025, compared to $1.75 billion at December 31, 2024, compared to $1.70 billion at December 31, 2023, or 65.1%59.7% and 58.7%,65.1%, respectively, of total deposits.

Average interest-bearing deposits totaled $1.90 billion during 2025 compared to $1.80 billion during 2024 compared to $1.86 billion during 2023.2024. Average noninterest bearing deposits totaled $915.7 million and $1.07 billion during 20242025 and 2023.2024.

WeDuring utilizethe year ended December 31, 2025, we utilized a custodial deposit transferenceplacement structurenetwork for certain deposit programsprograms. wherebyUnder this structure, we, acting as custodian of account holder funds,custodian, place a portion of such account holder funds that are not needed to support near termnear-term settlement at one or more third-party FDIC-insured banks insured by the FDIC (each, a "program bank"). Accounts opened at program banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accountsrecord under theall applicable account holder agreements and havemaintain sole custodial control and transaction authority over the accounts opened at program banks.bank Weaccounts, maintainas well as the records of each account holders'holder's depositsbeneficial maintainedinterest in funds held at program banks. Program banks undergo robust due diligence prior to becoming a program bank and are also subject to continuous monitoring. These off-balance sheet deposits totaled $1.42 billion at December 31, 2024 and $1.09 billion at December 31, 2023, and substantially all represent banking-as-a-service clients.

Total uninsured deposits were $966.0$1.2 million,billion, or 35.9%43.1% of total deposits, as of December 31, 2024.2025. Of these uninsured deposits, $258.5$258.2 million represents collateralized public fund deposits. Further, at December 31, 2024,2025, we had available liquidity of $317.9$244.1 million of cash and cash equivalents on hand and $648.6$702.5 million remaining borrowing capacity with the FHLB.

During the year ended December 31, 2024,2025, stockholders’ equity increased $16.4$28.2 million to $305.8$334.0 million from $289.3$305.8 million. This increase primarily consists of net income for the year of $20.1$26.9 million, stock-based compensation of $2.9$3.8 million, common stock options exercised totaling $1.5$2.3 million and other comprehensive income of $0.6$14.4 million, partially offset by the repurchase of 479,069 shares of common stock for a total of $10.2 million and cash dividends paid of $8.8$8.7 million.

With stockholders’ equity increasing as noted above and withan the declineincrease in assets of $185.2$180.2 million, the equity to assets ratio increased from 8.7% at December 31, 2023 to 9.8% at December 31, 2024.2024 to 10.1% at December 31, 2025. We paid dividends to common shareholders of $8.7 million in 2025 and $8.8 million in 2024 and $8.6 million in 2023,2024, compared to earnings of $26.9 million in 2025 versus $20.1 million in 2024 versus $31.2 million in 2023,2024, resulting in ana increasedecline in the dividend payout ratio to 32.3% in 2025 from 43.7% in 2024 from 27.7% in 2023.2024.

Our main source of liquidity comes through deposit growth. Liquidity is also provided from cash generated from investment maturities, principal payments from loans and income from loans and investment securities. During the year ended December 31, 2024,2025, cash flows from operating activities totaled $4.0 million, cash used in investing activities totaled $144.5$208.6 million,million whileand cash flows from financing activities totaled $130.8 million. During the year ended December 31, 2024, cash used in operating and financing activities totaled $0.3 million and $224.5 million, respectively.respectively, Cashwhile cash flows from operating, investing and financing activities during the year ended December 31, 2023 totaled $58.2$144.5 million, $88.2 million and $211.5 million, respectively.million. Significant changes in cash flows during the year ended December 31, 20242025 include inflows from the net change in loansdeposits of $199.6$147.2 million, sales of available-for-sale investment securities of $24.3 million and net maturities/paydowns of available-for-sale investment securities of $17.4$126.9 million,million partiallyand sales of available-for-sale investment securities of $95.7 million. These inflows were offset by cash outflows of $207.9 million from the net change in depositsloans of $278.7 million and $111.8$212.0 million to purchase available-for-sale investment securities. When appropriate, the Bank has the ability to take advantage of external sources of funds such as advances from the FHLB, national market certificate of deposit issuance programs, the Federal Reserve discount window, brokered deposits and Certificate of Deposit Account Registry Services.

We periodically evaluate and enter into new specialty lending programs as part of our strategic growth initiatives, including programs involving non-traditional asset classes, such as litigation finance. While we believe diversifying our loan portfolio and expanding into new markets can create long-term value for our shareholders, theseThese activities introduce risks that differ materially from those associated with our existing banking operations. Our experience, historical loss data and established underwriting frameworks may not be directly applicable to these new specialty lending categories, and we may be unable to accurately assess or manage the risks inherent in them. There can be no assurance that our entry into new specialty lending programs will be profitable, and our failure to effectively identify, evaluate and manage the unique risks associated with such programs could have a material adverse effect on our business, financial condition and results of operations.

We continue to adapt our business model due to challenging market conditions, primarily due to the current interest rate environment and economy, as well as consideration of regulatory and geopolitical environments, among others. The Federal Reserve lowered its federal funds interest rate range tofrom 3.50% to 3.75% in December 2025. Higher loan balances primarily reflect the Bank's execution of its asset generation strategies that include the diversification of risk among loans with relatively smaller loan balances, as well as a focus on loans with fixed interest rates. We remain committed to the gaming, payments and banking-as-a-service industries. We continue to expand the Bank's treasury services function to support the banking needs of financial and emerging technology companies, which we believe will further enhance CoRe deposits, notably through the expansion of deposit acquisition and fee income strategies through the Fintech division. Additionally, we have expanded our compliance and risk management team to support the growth in these lines of business.

During the three months ended MarchJune 31,30, 2026, net interest income increased $1.8$6.5 million, noninterest income increased $1.2$10.9 million and noninterest expense declinedincreased by $0.6$1.8 million compared to the three months ended MarchJune 31,30, 2025. OurThe tax-equivalent yield on tax-equivalent earning assets for the three months ended MarchJune 31,30, 2026 was 5.86%6.25% compared to 5.91%6.04% for the three months ended MarchJune 31,30, 2025. Loans receivable increased by $60.6$72.7 million to $2.40$2.48 billion during the three months ended MarchJune 31,30, 2026. Our overallThe cost of interest-bearing liabilities was 3.26%3.20% for the three months ended MarchJune 31,30, 2026 compared to 3.71%3.55% at MarchJune 31,30, 2025. This cost of interest-bearing liabilities, combined with the earning asset yield, resulted in aThe tax-equivalent net interest margin ofwas 3.73%4.16% infor the three months ended MarchJune 31,30, 2026, compared to 3.66%3.69% infor the three months ended MarchJune 31,30, 2025. The tax-equivalent net interest margin for the three months ended June 30, 2026 includes $2.3 million of non-recurring net interest income.

Our netNet income for the three months ended MarchJune 31,30, 2026 was $5.2$12.3 million compared to $3.6$2.0 million for the three months ended MarchJune 31,30, 2025. EarningsNet income for the three months ended MarchJune 31,30, 2026 equatedincludes a $10.0 million pre-tax gain related to an existing Fintech investment recognized in the second quarter. Net income for the three months ended June 30, 2026 resulted in a return on average assets of 0.6%1.4% and a return on average equity of 6.1%,14.3%, compared to 0.3% and 2.6%, respectively, for the three months ended MarchJune 31,30, 2025 results of 0.4% and 4.7%, respectively.2025. Basic and diluted earnings per share were $0.41$0.95 and $0.39,$0.93, respectively, for the three months ended MarchJune 31,30, 2026, compared to $0.28$0.16 and $0.27,$0.15, respectively, for the three months ended MarchJune 31,30, 2025. The provision for credit losses was $4.7 million for the three months ended June 30, 2026, inclusive of $2.6 million of provision related to loan growth in the quarter, compared to a $2.0 million provision for credit losses for the three months ended June 30, 2025.

1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a federal tax rate of 21% for the three months ended MarchJune 31,30, 2026 and 2025, which is a non-U.S. GAAP financial measure. See the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP financial measure following this table.

1 Non-U.S. GAAP metric.financial measure. See the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP financial measure following this table.

Tangible book value (“TBV”) per common share was $25.98$26.52 and $23.85$23.68 as of MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. TBV per common share is a non-U.S. GAAP financial measure that we believe is helpful to interpreting financial results. A reconciliation of TBV per common share is included below.

Net interest margin on a tax-equivalent basis was 3.73%4.16% for the three months ended MarchJune 31,30, 2026 compared to 3.66%3.69% for the three months ended MarchJune 31,30, 2025. The increase in net interest margin on a tax-equivalent basis primarily reflects a decline in funding costs,costs partiallyand offsetan byincrease lowerin earning asset yields.

During the three months ended MarchJune 31,30, 2026, net interest income increased by $1.8$6.5 million,million or 6.7%,25.2% to $28.5$32.3 million from $26.7$25.8 million during the three months ended MarchJune 31,30, 2025. This increase iswas largely due to a decrease in cost of funds,funds partiallyand offsetan byincrease lowerin yields on earning assets. Average total earning assets were $3.11$3.13 billion inas theof threeJune months30, ended March 31, 20262026, compared to $2.98$2.82 billion inas theof threeJune months ended March 31,30, 2025. Total interest income increased by $1.5$6.2 million, or 3.6%,14.6%, to $44.8$48.6 million infor the three months ended MarchJune 31,30, 2026 from $43.2$42.4 million infor the three months ended MarchJune 31,30, 2025, primarily reflecting higher average loan balances, partially offset by lower interest rates. Average total loans increased to $2.35$2.44 billion in the three months ended MarchJune 31,30, 2026 from $2.10$2.09 billion in the three months ended MarchJune 31,30, 2025, primarily as the result of a $282.5$313.2 million increase in average commercial loans and a $21.3$89.6 million increase in average consumer loans, partially offset by a $58.3$48.6 million declinedecrease in average real estate loans.

Average investment securities declinedincreased $11.7$25.8 million as the result of a $45.9$66.3 million declineincrease in tax-exempttaxable investments, partially offset by a $34.2$40.5 million increasedecrease in taxabletax-exempt investments during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The yield on taxable securities increased 153146 basis pointspoints, and the yield on tax-exempt securities yield increased 6046 basis points.

Average interest-bearing liabilitiesdeposits increasedwere by$1.98 $220.8 millionbillion for the three months ended MarchJune 31,30, 2026 fromand $1.80 billion for the three months ended MarchJune 31,30, 2025. The $185.0 million increase was primarily thedriven result ofby average balance increases of $206.4$223.4 million in money market checking accounts, $228.4$139.9 million in negotiable order of withdrawal accounts and $60.0$32.1 million in savingsavings accounts, partially offset by a decline of $263.8$209.6 million in certificates of deposit.CDs.

Average interest-bearing deposits were $1.96 billion for the three months ended March 31, 2026 and $1.73 billion for the three months ended March 31, 2025. Total interest expense declined by $0.2$0.3 million, primarily driven by a lower balance in certificatesCDs ofand deposit.lower interest rates. The cost of interest-bearing liabilities declined to 3.26%3.20% infor the three months ended MarchJune 31,30, 2026 from 3.71%3.55% infor the three months ended MarchJune 31,30, 2025.

The provision for credit losses totaled $1.9$6.5 million for the threethe six months ended MarchJune 31,30, 20262026, compared to $0.2$2.2 million infor the threethe six months ended MarchJune 31,30, 2025. This increase in provision is due primarily to an increase in loanLoan balances ofincreased $60.6$133.2 million during the threesix months ended MarchJune 31,30, 2026, resulting in ana additional$3.5 million provision. The individually analyzed provision ofalso $0.9increased million.by This$3.2 increasemillion, inthe provisionunallocated allowance was concentratedreduced inby the$1.1 Residential, Consumermillion and Industrialslight and Consumer segments. Slight improvementsdegradation in the adjusted allocation rates due to model updates resulted in aan reductionincrease of provision of $0.2 million and individually analyzed provision was also reduced by $0.1$0.7 million. The release of allowance for unfunded commitments totaled $0.4$0.3 million and $0.2was millionimmaterial during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Net charge-offs totaled $1.5$2.9 million and $0.9$1.0 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Noninterest income totaled $8.2$18.8 million for the three months ended MarchJune 31,30, 2026, an increase of $1.2$10.9 million from $7.0$7.9 million for the three months ended MarchJune 31,30, 2025. The increase was primarily the result of a $1.3 million increase in equity method investment income from our mortgage segment, a $0.9$10.7 million increase in holding gains on equity securitiessecurities, which primarily reflects a $10.0 million net gain on an existing Fintech investment, a $1.4 million increase in payment card and service charge income and a $0.3$0.8 million lossgain on saleequity of fixed assets in the three months ended March 31, 2025.securities. These increases were partially offset by declines of $0.5 million in compliance consulting income and $0.5 milliondecreases in other operating income andof a$0.8 $0.6million, loss on derivatives of $0.7 million gainand onequity divestituremethod activityinvestment related to the saleincome of Trabian$0.5 included in the prior year period.million.

Noninterest expense totaled $28.1$30.4 million for the three months ended MarchJune 31,30, 2026, aan declineincrease of $0.6$1.8 million from $28.7$28.6 million for the three months ended MarchJune 31,30, 2025. The declineincrease from the prior periodwas primarily reflectsdriven declinesby increases of $1.1$1.8 million in salaries and employee benefits, $0.5 million in software costs and $0.5 million in other operating expenses, partially offset by decreases of $0.8 million in professional fees,fees $0.4and $0.3 million in equipment depreciation and maintenance andexpense. $0.3Approximately million in salaries58.0% and employee benefits, partially offset by an increase of $0.7 million of software costs and $0.3 million in other operating expenses. Approximately 57.5% and 57.2%55.3% of noninterest expense for the three months ended MarchJune 31,30, 2026 and 2025, respectively, was related to personnel costs. Personnel costs are a significant part of our noninterest expense as such costs are critical to financial services organizations.

Our returnReturn on average assets was 0.6%1.4% for the three months ended MarchJune 31,30, 2026, compared to 0.4%0.3% for the three months ended MarchJune 31,30, 2025. The higher return for the three months ended March 31, 2026 iswas the result of a $1.6$10.2 million increase in earnings.net income, which primarily reflects the previously discussed net gain on an existing Fintech investment. The increase in earnings was partially offset by ana $342.2 million increase in average total assets of $138.1 million,assets, which was primarily thedriven resultby increases of a $282.5$313.2 million increase in average commercial loans, $34.2$89.6 million increasein average consumer loans and $66.3 million in average taxable investment securities and a $21.3 million increase in average consumer loans.securities. These increases were partially offset by adecreases $104.6of $79.3 million decline in average interest-bearing deposits with banks, a $58.3$48.6 million decline in average real estate loans and a $45.9$40.5 million declinein inaverage tax-exempt investment securities.

Our returnReturn on average stockholders’ equity was 6.1%14.3% for the three months ended MarchJune 31,30, 2026, compared to 4.7%2.6% for the three months ended MarchJune 31,30, 2025. The higher return forwas primarily driven by the three months ended March 31, 2026 is a result of the previously discussed $1.6$10.2 million increase in earnings, whilepartially offset by a $37.8 million increase in average equity increased by $34.4 million.equity.

Cash and cash equivalents totaled $177.6$312.6 million at MarchJune 31,30, 2026, compared to $244.1 million at December 31, 2025. We believe the current balance of cash and cash equivalents adequately serves our liquidity and performance needs. Total cash and cash equivalents fluctuate daily due to transactions in process and other liquidity demands.

Investment securities, including equity securities, totaled $473.2$492.1 million at MarchJune 31,30, 2026, compared to $461.2 million at December 31, 2025. The following table presents a summary of the investment securities portfolio as of the periods shown. The available-for-sale securities are reported at estimated fair value.

Our loan portfolio totaled $2.40$2.48 billion as of MarchJune 31,30, 2026 and $2.34 billion as of December 31, 2025. The Bank’s lending is primarily focused in North Central West Virginia, Northern Virginia, North CarolinaCarolina, South Carolina, Maryland and SouthNew Carolina.York. The portfolio consists principally of commercial lending, retail lending, which includes single-family residential mortgages, and consumer lending.

At MarchJune 31,30, 2026 and December 31, 2025, commercial and non-residential real estate loans comprised the largest component of the loan portfolio. A large portion of commercial loans are secured by real estate and are diverse in terms of geographical location and industry. Loans that are not secured by real estate are typically secured by accounts receivable, mortgages or equipment. While the loan concentration is in commercial loans, the commercial portfolio is comprised of loans to many different borrowers in numerous industries, generally located in our primary market areas. Additionally, within the commercial portfolio, loans within the healthcare industry, which include loans to physicians, nursing homes and pharmacies, represent 25%25.0% and 26%27.8% of our total loan portfolio as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

The ACL was $22.6$28.2 million, or 0.94%1.14% of loans receivable, at MarchJune 31,30, 2026, compared to $21.8 million, or 0.93% of loans receivable, at December 31, 2025. Over the threesix months ended MarchJune 31,30, 2026, changes to the loan portfolio balances, qualitative factor adjustments and expected loss forecasts within the expected credit loss calculations resulted in an increase of $3.2 million to specific reserves for individually analyzed loans, increases totaling $1.2$2.2 million in the allowanceACL attributable to the residential,purchased seasoned residential loans, as well as consumer, home equity lines of credit and consumerother segments andsegments, an increase of $0.2$1.6 million in the unallocatedresidential segment and a $1.0 million increase across the commercial real estate, owner occupied commercial real estate and commercial and industrial segments. The increases were partially offset by decreases of $0.5$1.1 million to the commercialunallocated business,segment, commercialdecreases realof estate$0.4 andmillion to the commercial acquisition, development and construction segmentssegment and a decrease of $0.1 million in the individuallyresidential analyzedconstruction segment. Bank management expects the markets in which it operates will experience potential economic volatility over the next one to two yearsyears. and forFor the threesix months ended MarchJune 31,30, 20262026, bank management has observed increases to loan balances and decreasesincreases to allocation rates within the pooled loan portfolio.

Borrowings represented 1.8%1.7% of funding sources at MarchJune 31,30, 2026, versuscompared to 2.5% at December 31, 2025. Repurchase agreements, which are available to large corporate customers, represented 0.1% and 0.2% of funding sources at MarchJune 31,30, 2026 and December 31, 2025.

At MarchJune 31,30, 2026, noninterest-bearing balances totaled $1.01$1.07 billion, comparedconsistent towith $1.14the billionbalance at December 31, 2025, or 34.9%34.4% and 40.3%, respectively, of total deposits. Interest-bearing deposits totaled $1.89$2.04 billion at MarchJune 31,30, 2026, compared to $1.70 billion at December 31, 2025.

Average interest-bearing deposits were $1.96 billion duringFor the three months ended MarchJune 31,30, 2026, comparedaverage tointerest-bearing $1.73deposits were $1.98 billion during the same time period in 2025 and average noninterest-bearing deposits were $1.01$1.03 billion, compared to $1.80 billion duringand $886.7 million, respectively, for the three months ended MarchJune 31, 2026 compared to $1.13 billion during the same time period in30, 2025.

We utilize a custodial deposit transference structure for certain deposit programs whereby we, acting as custodian of account holder funds, place a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a program bank). Accounts opened at program banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at program banks. We maintain the records of each account holder's deposits maintained at program banks. Program banks undergo robust due diligence prior to becoming a program bank and are also subject to continuous monitoring. These off-balance sheet deposits totaled $906.7$627.9 million at MarchJune 31,30, 2026 and $732.9 million at December 31, 2025, primarily representing the banking-as-a-service and gaming industries.

Three of our primary deposit verticals are payments, banking-as-a-service and gaming, with such deposits totaling $515.5$598.0 million, $355.1$342.4 million and $248.9$278.8 million as of MarchJune 31,30, 2026, respectively, compared to $660.3 million, $329.5 million and $184.3 million as of December 31, 2025, respectively. Of the gaming deposits, $208.9which primarily include clients engaged in online sports betting, $249.8 million is with our three largest gaming clients at MarchJune 31,30, 2026.

During the threesix months ended MarchJune 31,30, 2026, stockholders’ equity increased $1.0$10.6 million to $334.9$344.5 million. This increase primarily consists of net income of $5.2$17.4 million, common stock options exercised of $1.9$2.8 million and stock basedstock-based compensation expense of $0.7$1.5 million, partially offset by an increase in other comprehensive losses of $4.2 million andmillion, cash dividends paid of $2.2$4.4 million and stock repurchases of $1.2 million.

During the threesix months ended MarchJune 31,30, 2026, total assets increased $13.4$236.9 million. The equity to assets ratio wasdeclined consistent atfrom 10.1% for March 31, 2026 andat December 31, 2025.2025 to 9.7% at June 30, 2026. We paid dividends to common shareholders of $2.2$4.4 million during the threesix months ended MarchJune 31,30, 2026 and 2025, compared to earnings of $5.2$17.4 million and $3.6$5.6 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, resulting in the dividend payout ratio decreasing to 42.1%25.1% for the threesix months ended MarchJune 31,30, 2026 from 61.5%79.1% for the threesix months ended MarchJune 31,30, 2025.

The Bank's CBLR at MarchJune 31,30, 2026 was 10.1%,10.3%, which is above the minimum requirement of 9%.8%. Management believes that capital continues to provide a strong base for profitable growth.

OnIn April 23, 2026, the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC published a final rule to modify the CBLR. This final rule is unchanged from the proposal published in November of 2025, which lowers the CBLR from 9% to 8% and increases the grace period for falling under from two quarters to four quarters, subject to a limit of eight quarters in the previous five-year period. The rule isbecame effective July 1, 2026.

Maintenance of a sufficient level of liquidity is a primary objective of the ALCO. Liquidity, as defined by the ALCO, is the ability to meet anticipated operating cash needs, loan demand and deposit withdrawals, without incurring a sustained negative impact on net interest income. It is our policy to optimize the funding of the balance sheet, continually balancing the stability and cost factors of various funding sources. We believe liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources and the portions of the investment and loan portfolios that mature within one year. Our liquid assets totaled $436.4$443.3 million and $453.4 million as of MarchJune 31,30, 2026 and December 31, 2025. We expect that these sources of funds should enable us to meet cash obligations as they come due.

The main source of liquidity for the Bank comes through deposit growth. Liquidity is also provided from cash generated from investment maturities, principal payments from loans and income from loans and investment securities. For the threesix months ended MarchJune 31,30, 2026, cash provided by financing activities totaled $35.4$245.3 million, while cash used in operating and investing activities totaled $23.3$18.1 million and $78.6$158.7 million, respectively. Significant cash flows during the quarter included inflows of $55.3$269.3 million related to the net change in deposits, $22.8 million in maturities and paydowns of available-for-sale investment securities and $20.0 million of proceeds from the revolving line of credit and $14.3 million in maturities and paydowns of available-for-sale investment securities.credit. These inflows were partially offset by outflows of $62.1$134.6 million related to the net change in loans, $51.5 million to purchase available-for-sale investment securities and the $40.0 million redemption of subordinated debt and $30.5 million to purchase available-for-sale investment securities.debt.

We consider North Central West Virginia and Northern Virginia to be our primary market areas for CoRe banking services. We consider our Fintech banking market to be customers located throughout the entire United States.

We believe that the current economic climate in our primary market areas reflects economic climates that are consistent with the general national economic climate. Unemployment in the United States was 4.3%4.4% for MarchJune 2026 and 4.2% for MarchJune 2025.