Core Insights - BV Financial, Inc. reported a significant increase in net income for the fourth quarter of 2025, reaching 56 cents per share compared to 18 cents per share in the same period last year [1] - The company's stock has seen a decline of 2% since the earnings report, contrasting with a 0.9% increase in the S&P 500 index during the same timeframe [1] Financial Performance - Net income more than doubled year-over-year to $4.8 million from $2 million, with non-GAAP adjusted net income rising to $5.6 million from $2.4 million [2] - Full-year net income was reported at $13.5 million, or $1.43 per share, up from $11.7 million, or $1.10 per share in 2024 [2] - Adjusted net income grew to $16.3 million from $12.9 million, reflecting adjustments for expenses related to the 2024 Equity Incentive Plan [2] Key Business Metrics - Total assets as of December 31, 2025, were $912.2 million, a slight increase from $911.8 million the previous year [3] - Net loans increased by $19.2 million, or 2.6%, to $748.5 million, with growth in specific loan categories offsetting declines in others [3] Deposits and Debt Management - Total deposits rose by $24.6 million, or 3.8%, to $676.1 million, driven by a 6.7% increase in non-interest-bearing deposits [4] - The company repaid $35 million in subordinated debt, replacing it with lower-cost Federal Home Loan Bank advances [4] Shareholder Value Initiatives - BV Financial executed a stock buyback program, repurchasing 1.8 million shares during 2025 at an average price of $16.23, including 714,555 shares in the fourth quarter [4] Efficiency and Returns - Return on average assets (ROAA) improved to 2.1% from 0.9% year-over-year, while return on average equity (ROAE) surged to 10.5% from 3.8% [5] - The efficiency ratio improved to 51% in the fourth quarter from 64.3% in the prior-year period, indicating stronger operating leverage [5] Strategic Management Decisions - The company's strategic focus includes optimizing its capital structure and cost management, as evidenced by the replacement of subordinated debt and the share repurchase program [6] Earnings Drivers - A key contributor to the earnings upside was a $1.9 million recovery in provision for credit losses in the fourth quarter, reversing a provision of $0.6 million in the year-ago period [7] - Net interest income rose 8.2% year-over-year in the quarter to $9.8 million, driven by a higher net interest margin of 4.52%, up from 4.34% [8] Noninterest Income and Expenses - Noninterest income saw a modest increase to $0.8 million in the quarter from $0.6 million a year earlier [9] - Noninterest expense declined 13.4% year-over-year to $5.4 million, largely due to a drop in compensation and benefits expenses [9] Balance Sheet Maneuvers - The company retired its $35 million subordinated debt issued in 2020, replacing it with lower-cost Federal Home Loan Bank borrowings, expected to reduce interest expense going forward [10]

Financial Performance - Net income for the year ended December 31, 2025, was $13.5 million, or $1.43 per diluted share, representing a 15.4% increase from $11.7 million, or $1.10 per diluted share, for the year ended December 31, 2024[2] - Adjusted net income for the year ended December 31, 2025, was $16.3 million, up from $12.9 million in 2024, with adjusted net income for the quarter ended December 31, 2025, at $5.6 million compared to $2.4 million in the same quarter of 2024[3] - Basic earnings per share for the year ended December 31, 2025, increased to $1.44 from $1.10 in 2024, a rise of 30.9%[32] - Non-GAAP adjusted net income for Q4 2025 was $5,590 thousand, significantly higher than $2,393 thousand in Q4 2024, marking a growth of 133.5%[41] - Net income for the year ended December 31, 2025, was $13,495 thousand, compared to $11,723 thousand in 2024, reflecting a growth of 15.1%[32] Asset and Liability Management - Total assets increased to $912.2 million at December 31, 2025, a slight increase of $392,000 from $911.8 million at December 31, 2024, primarily due to a $19.2 million increase in net loans[7] - Total assets as of December 31, 2025, reached $912,213 thousand, slightly up from $911,821 thousand in 2024, indicating a growth of 0.04%[30] - Total assets reached $913,649 thousand in 2025, an increase from $890,458 thousand in 2024, showing a growth of 2.8%[36] - Total liabilities increased to $721,137 thousand in 2025 from $687,334 thousand in 2024, reflecting a growth of 4.9%[36] Loan and Deposit Growth - Net loans increased by $19.2 million, or 2.6%, to $748.5 million at December 31, 2025, compared to $729.2 million at December 31, 2024[5] - Net loans increased to $748,484 thousand as of December 31, 2025, from $729,238 thousand in 2024, marking a rise of 2.6%[30] - Total deposits rose by $24.6 million, or 3.8%, to $676.1 million at December 31, 2025, from $651.5 million at December 31, 2024[12] - Total deposits grew to $676,094 thousand as of December 31, 2025, compared to $651,491 thousand in 2024, an increase of 3.8%[30] Interest Income and Expense - Net interest income for the year ended December 31, 2025, was $36.9 million, compared to $35.2 million in 2024, with a net interest margin of 4.35% compared to 4.27% in the prior year[18] - Total interest income for the year ended December 31, 2025, increased to $49,707 thousand, up from $46,682 thousand in 2024, representing a growth of 6.5%[32] - Net interest income after provision for credit losses for the year ended December 31, 2025, was $39,330 thousand, compared to $35,390 thousand in 2024, reflecting an increase of 11.8%[32] - Net interest income for the year ended December 31, 2025, was $36,901 thousand, compared to $35,187 thousand in 2024, representing an increase of 4.9%[36] - The net interest margin improved to 4.35% in 2025 from 4.27% in 2024, reflecting enhanced asset yield management[36] - The net interest margin for the quarter ended December 31, 2025, was 4.52%, compared to 4.34% in the same quarter of 2024, indicating an improvement of 0.18 percentage points[34] - The net interest rate spread improved to 3.61% in 2025, compared to 3.50% in 2024, indicating better interest rate management[36] Non-Performing Assets and Credit Quality - Non-performing assets decreased to $2.3 million at December 31, 2025, down from $4.2 million at December 31, 2024, reflecting improved asset quality[15] - The company recorded recoveries in the provision for credit losses of $1.9 million for the quarter and $2.4 million for the year ended December 31, 2025[19] - The provision for credit loss on loans for the year-to-date 2025 was $(2,168) thousand, compared to $(2,429) thousand in 2024, indicating a decrease in provisions[38] - The ending balance of the allowance for credit loss for loans was $6,437 thousand as of December 31, 2025, down from $8,197 thousand at the beginning of the year[38] Expenses - Noninterest expense for the year ended December 31, 2025, totaled $23.2 million, an increase from $21.5 million in 2024, driven by higher compensation and benefits expenses[23] - Noninterest expense for the year ended December 31, 2025, was $23,187 thousand, up from $21,498 thousand in 2024, representing an increase of 7.9%[32]

BV Financial, Inc. (BVFL) shares have gained 23.2% in the past six months, outpacing the industry’s 17.2% growth. The company has outperformed other industry players, including Equity Bancshares, Inc. (EQBK) and Norwood Financial Corp. (NWFL) , which reported increases of 16.5% and 14.1%, respectively, in the same time frame. BV Financial’s growth is driven by strong loan demand, improved asset quality, rising interest income, and strategic share repurchases, enhancing earnings and shareholder value.Image S ...

Financial Position - Total assets decreased by $2.4 million, or 0.27%, to $909.4 million at September 30, 2025, from $911.8 million at December 31, 2024[176]. - Total liabilities increased by $2.8 million, or 0.4%, to $719.2 million at September 30, 2025, primarily due to an increase in deposits[180]. - The total assets as of September 30, 2025, were $909,794,000, up from $890,091,000 in 2024[190]. - The total liabilities as of September 30, 2025, were $714,410,000, with equity amounting to $195,384,000[190]. Loans and Credit - Loans receivable increased by $8.3 million, or 1.1%, to $746.1 million at September 30, 2025, driven by increases in owner-occupied 1-4 loans, commercial loans, and construction loans[178]. - The allowance for credit losses decreased by $325,000 to $8.2 million at September 30, 2025, with the ratio to total loans at 1.10%[179]. - The ratio of allowance for credit losses to non-performing loans was 233.5% at September 30, 2025, compared to 212.5% at December 31, 2024[179]. - The allowance for credit losses was $8.2 million at September 30, 2025, representing 1.10% of total loans, compared to 1.15% at December 31, 2024[206][211]. - The average outstanding balance of loans for the nine months ended September 30, 2025, was $745,001,000, with interest income from loans amounting to $33,594,000[190]. - The average balance of loans increased by $52.9 million, or 7.7%, to $743.1 million for the three months ended September 30, 2025[196]. Deposits - Total deposits increased by $12.3 million, or 1.9%, to $663.8 million at September 30, 2025, with interest-bearing deposits rising by $7.3 million, or 1.4%[181]. - At September 30, 2025, the Company had $50.3 million in brokered deposits, an increase from $10.0 million at September 30, 2024[214]. - The total interest-bearing deposits increased to $523,149,000, with an average yield of 2.03% for the nine months ended September 30, 2025[190]. Income and Expenses - Net income for the three months ended September 30, 2025, was $3.7 million or $0.41 per diluted share, a decrease from $3.8 million or $0.35 per diluted share for the same period in 2024[195]. - Interest income increased by $377,000, or 3.10%, to $12.5 million for the three months ended September 30, 2025, primarily due to a $1.0 million increase in interest income on loans[196]. - Non-interest income totaled approximately $684,000 for the three months ended September 30, 2025, a slight decrease from $696,000 for the same period in 2024[207]. - Non-interest expense increased to $5.9 million for the three months ended September 30, 2025, primarily due to a $570,000 increase in compensation and benefits[208]. - The effective tax rate for the nine months ended September 30, 2025, was 26.4%, down from 27.9% for the same period in 2024[210]. Interest and Yield - For the three months ended September 30, 2025, total interest-earning assets increased to $842,475,000, generating net interest income of $9,350,000, compared to $9,303,000 in the same period of 2024[185]. - The average yield on loans for the three months ended September 30, 2025, was 6.15%, up from 6.05% in 2024, with total loans amounting to $743,119,000[185]. - Total interest-bearing liabilities increased to $560,994,000, with a net interest rate spread of 3.65% for the three months ended September 30, 2025, compared to 3.71% in 2024[185]. - For the nine months ended September 30, 2025, net interest income was $27,149,000, an increase from $26,176,000 in 2024[190]. - The average yield on interest-earning assets for the nine months ended September 30, 2025, was 5.80%, compared to 5.64% in 2024[190]. - The change in net interest income for the three months ended September 30, 2025, was $47,000, reflecting a volume increase of $289,000 and a rate decrease of $242,000[189]. - Net interest income was $9.4 million for the three months ended September 30, 2025, compared to $9.3 million for the same period in 2024, with a net interest margin of 4.40%[204]. - Interest expense increased by $330,000, or 11.6%, to $3.2 million for the three months ended September 30, 2025, driven by a 13 basis point increase in the average rate on interest-bearing deposits[198][199].

Core Insights - BV Financial, Inc. (BVFL) shares increased by 13.9% following the earnings report for Q3 2025, outperforming the S&P 500's 1.4% growth during the same period [1] - The company reported a net income of $0.41 per share for Q3 2025, an increase from $0.35 per share a year earlier [1] Financial Performance - Net interest income rose slightly to $9.4 million from $9.3 million, while net income for Q3 2025 was $3.7 million, down from $3.8 million in the prior year [2] - Non-GAAP adjusted net income increased by 7.3% to $4.4 million from $4.1 million, primarily due to normalized equity plan expenses [2] Key Business Metrics - Net loans increased by $8.6 million, or 1.2%, to $737.9 million as of September 30, 2025, and deposits rose by 1.9% to $663.8 million [3] - Total assets decreased slightly to $909.4 million from $911.8 million at year-end 2024 [3] Profitability Ratios - Return on average assets (ROAA) decreased to 1.65% from 1.7% in Q3 2024, while return on average equity (ROAE) improved to 7.8% from 7.3% [4] - The net interest margin narrowed to 4.4% from 4.5% due to rising deposit costs, although higher yields on interest-earning assets provided some offset [4] Expense Management - Noninterest income remained stable at $0.68 million compared to $0.7 million a year ago, while non-interest expenses increased to $5.9 million from $5.5 million due to higher compensation costs [5] - Management is focused on tightening expenses outside of compensation to maintain asset quality metrics despite increased costs [6] Credit Quality - Non-performing assets decreased to $3.5 million from $4.2 million at year-end 2024, with a $1 million recovery in the provision for credit losses [7] - The allowance for credit losses now covers 233.5% of non-performing loans, up from 212.5% at year-end 2024, indicating enhanced credit reserves [7] Influencing Factors - Mixed results were influenced by a slight increase in net interest income due to rising loan balances and stronger yields, offset by increased deposit costs and compensation-related expenses [8] - The yield on loans increased to 6.2% from 6.1%, and overall yields on interest-earning assets rose to 5.9% from 5.86% [8] Operating Efficiency - Operating efficiency metrics declined, with the efficiency ratio rising to 58.6% from 54.7% in the prior year's quarter [9] - Non-interest expenses as a percentage of average assets increased to 2.6% from 2.5% [9] Strategic Developments - BV Financial received a non-objection from the Federal Reserve Bank of Richmond to initiate a new stock repurchase program, allowing the repurchase of up to 10% of outstanding shares [10] - During Q3, the company repurchased 782,324 shares at an average price of $16.14, totaling approximately $12.6 million, reflecting management's confidence in the company's financial health [11]

Financial Performance - Net income for Q3 2025 was $3.7 million, or $0.41 per diluted share, compared to $3.8 million, or $0.35 per diluted share in Q3 2024[1] - Adjusted net income for Q3 2025 was $4.4 million, up from $4.1 million in Q3 2024, and for the nine months ended September 30, 2025, it was $11.1 million compared to $10.0 million in the same period of 2024[2] - Net income for the three months ended September 30, 2025, was $3,730,000, a decrease from $3,798,000 in the same period of 2024[30] - Basic earnings per share for the three months ended September 30, 2025, were $0.41, up from $0.35 in 2024, reflecting an increase of approximately 17.1%[30] - Non-GAAP adjusted net income for the nine months ended September 30, 2025, was $11,105, up from $10,050 in 2024, indicating a growth of 10.5%[39] Assets and Liabilities - Total assets decreased by $2.4 million to $909.4 million as of September 30, 2025, from $911.8 million at December 31, 2024[4] - Total assets as of September 30, 2025, were $909,386,000, a slight decrease from $911,821,000 as of December 31, 2024[28] - Total liabilities increased to $719,176,000 as of September 30, 2025, compared to $716,322,000 as of December 31, 2024[28] - Total liabilities rose to $714,410 as of September 30, 2025, compared to $686,234 in 2024, reflecting an increase of 4.1%[34] Loans and Deposits - Net loans increased by $8.6 million, or 1.2%, to $737.9 million compared to $729.2 million on December 31, 2024[4] - Net loans increased to $737,875,000 from $729,238,000, reflecting a growth of approximately 1%[28] - Total deposits increased by $12.3 million, or 1.9%, to $663.8 million at September 30, 2025, from $651.5 million at December 31, 2024[8] - Total deposits increased to $663,790,000 as of September 30, 2025, from $651,491,000 as of December 31, 2024, marking a growth of about 1.9%[28] Income and Expenses - Total interest income for the three months ended September 30, 2025, was $12,527,000, up from $12,150,000 in the same period of 2024, representing an increase of about 3.1%[30] - Net interest income after provision for credit losses for the three months ended September 30, 2025, was $10,364,000, compared to $10,017,000 in 2024, indicating a growth of approximately 3.5%[30] - Noninterest income for the three months ended September 30, 2025, totaled $684,000, slightly down from $696,000 in 2024[30] - Non-interest expense for Q3 2025 totaled $5.9 million, an increase from $5.5 million in Q3 2024, primarily due to higher compensation expenses[15] Credit Losses and Asset Quality - The company recorded a recovery of provision for credit losses of $1.0 million for Q3 2025[4] - Non-performing assets decreased to $3.5 million at September 30, 2025, from $4.2 million at December 31, 2024[17] - The allowance for credit loss on loans decreased to $8,197 as of September 30, 2025, down from $9,159 at the beginning of the period, a reduction of 10.5%[36] - The provision for (recovery of) credit losses for the nine months ended September 30, 2025, was $(1,014), compared to $(539) in 2024, indicating a higher recovery[36] Stockholder Equity and Repurchase - Stockholders' equity decreased by $5.3 million, or 2.7%, to $190.2 million at September 30, 2025, due to stock repurchases totaling $17.7 million year-to-date[9] - The company has initiated a stock repurchase program for up to 10% of its outstanding shares, approximately 9,536,094 shares[18]

Core Viewpoint - Zacks Investment Research has initiated coverage of BV Financial, Inc. (BVFL) with a Neutral recommendation, highlighting a balanced mix of opportunities and risks in the evolving regional banking landscape [1] Financial Performance - BV Financial's loan portfolio reached $751.6 million by mid-2025, driven by commercial real estate and residential segments, while maintaining low non-accrual loans of $4.4 million and an allowance for credit losses of $9.2 million, indicating a disciplined credit expansion approach [3] - Interest income increased to $24.1 million in the first half of 2025, supporting a net income of $5 million, although profitability is pressured by a 22% rise in non-interest expenses, primarily due to compensation and operating costs [4] Capital Management - The management has launched a second stock repurchase program covering up to 10% of outstanding shares, aimed at enhancing earnings per share and providing greater capital allocation flexibility [2] - Total equity is nearing $198 million, and the repayment of Federal Home Loan Bank borrowings has improved liquidity, while deposits have grown modestly [5] Risks and Challenges - BV Financial faces challenges due to its heavy concentration in commercial real estate lending, which exposes it to regulatory scrutiny and economic downturns, compounded by geographic concentration in Maryland [6] - Liquidity has tightened, limiting the company's ability to absorb shocks or pursue opportunistic investments [6] Market Sentiment - The stock performance has been steady, reflecting a mix of investor optimism regarding shareholder-friendly actions and caution over profitability challenges, with valuation metrics appearing reasonable relative to peers [7] Summary of Outlook - While BV Financial has a solid foundation with shareholder returns, prudent credit growth, and strong capital, earnings headwinds and concentration risks may limit near-term upside potential [8]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents BV Financial, Inc.'s unaudited consolidated financial statements for Q2 2025, covering balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$908.3 million** at June 30, 2025, driven by cash reduction for FHLB repayment, while net loans and deposits increased Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $56,323 | $70,500 | -20.1% | | Net loans | $742,414 | $729,238 | +1.8% | | **Total assets** | **$908,327** | **$911,821** | **-0.4%** | | Total deposits | $658,891 | $651,491 | +1.1% | | FHLB borrowings | $0 | $15,000 | -100.0% | | **Total liabilities** | **$710,336** | **$716,322** | **-0.8%** | | **Total stockholders' equity** | **$197,991** | **$195,499** | **+1.3%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased compensation expenses and a shift to credit loss provisions Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $9,156 | $8,909 | $17,799 | $16,872 | | Provision (Recovery) for credit losses | $178 | ($111) | $475 | ($92) | | Total noninterest income | $714 | $596 | $1,243 | $1,174 | | Total noninterest expense | $5,755 | $4,897 | $11,932 | $9,820 | | **Net income** | **$2,861** | **$3,399** | **$4,960** | **$5,973** | | **Diluted earnings per share** | **$0.29** | **$0.32** | **$0.50** | **$0.52** | - Compensation and related benefits expense increased significantly to **$4.0 million** in Q2 2025 from **$3.1 million** in Q2 2024, and to **$8.5 million** for the six months of 2025 from **$6.2 million** in the prior year period[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income was **$2.9 million** for Q2 2025 and **$5.2 million** for the six months, including net income and unrealized gains on securities Comprehensive Income (in thousands) | Component | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,861 | $3,399 | $4,960 | $5,973 | | Other comprehensive income | $75 | $119 | $269 | $121 | | **Total comprehensive income** | **$2,936** | **$3,518** | **$5,229** | **$6,094** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to **$198.0 million** at June 30, 2025, driven by net income, partially offset by **$5.3 million** in stock repurchases - For the six months ended June 30, 2025, the company repurchased shares for a total cost of **$5.265 million**[17](index=17&type=chunk) - Net income of **$4.960 million** and other comprehensive income of **$269,000** contributed positively to equity, while stock repurchases were the primary offsetting factor[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by **$14.2 million** for the six months ended June 30, 2025, due to investing and financing activities, despite operating cash flow Net Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,148 | $6,068 | | Net cash (used in) provided by investing activities | ($10,520) | $5,353 | | Net cash (used in) provided by financing activities | ($10,805) | $5,476 | | **Net (decrease) and increase in cash** | **($14,177)** | **$16,897** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including loan and securities portfolios, credit loss allowances, deposit structure, and regulatory capital - The company's primary business is attracting public deposits to fund various loans, including one-to-four-family real estate, commercial real estate, and construction loans, mainly in the Baltimore metropolitan area and the Eastern Shore of Maryland[24](index=24&type=chunk)[28](index=28&type=chunk) - The Allowance for Credit Losses (ACL) on loans was **$9.2 million** as of June 30, 2025, up from **$8.5 million** at year-end 2024, with the methodology using historical loss rates adjusted for a 12-month GDP forecast[79](index=79&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) - Total loans increased to **$751.6 million**, with commercial investor real estate loans comprising the largest segment at **43.67%** of the portfolio[79](index=79&type=chunk) - As of June 30, 2025, the Bank exceeded all regulatory capital requirements to be considered 'well capitalized', with a Tier 1 leverage ratio of **19.75%** and a Total Capital ratio of **25.70%**[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, covering balance sheet changes, net interest income, credit losses, noninterest items, and asset quality [Comparison of Financial Condition at June 30, 2025 (unaudited) and December 31, 2024](index=40&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Total assets decreased to **$908.3 million** due to cash reduction for FHLB repayment, partially offset by increased loans, deposits, and stockholders' equity - Total assets decreased by **0.4%** to **$908.3 million** at June 30, 2025[176](index=176&type=chunk) - Loans receivable increased by **1.9%** to **$751.6 million**, while cash and cash equivalents decreased by **20.1%** to **$56.3 million**[177](index=177&type=chunk)[178](index=178&type=chunk) - Total liabilities decreased by **0.8%** to **$710.3 million**, primarily due to the repayment of FHLB borrowings, while total deposits increased by **1.1%**[180](index=180&type=chunk)[181](index=181&type=chunk) - Stockholders' equity increased by **1.3%** to **$198.0 million**, reflecting net income partially offset by **$4.3 million** in stock repurchases[182](index=182&type=chunk) [Comparison of Operating Results for the Three and Six Months Ended June 30, 2025 and 2024](index=41&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased credit loss provisions and higher non-interest expenses, despite net interest income growth Net Income and EPS Comparison | Period | Net Income (2025) | Net Income (2024) | Diluted EPS (2025) | Diluted EPS (2024) | | :--- | :--- | :--- | :--- | :--- | | **Three Months** | $2.9M | $3.4M | $0.29 | $0.32 | | **Six Months** | $5.0M | $6.0M | $0.50 | $0.52 | - Net interest income for Q2 2025 increased to **$9.2 million** from **$8.9 million** in Q2 2024, with the net interest margin rising slightly to **4.36%** from **4.33%**[204](index=204&type=chunk) - A provision for credit losses of **$178,000** was recorded in Q2 2025, compared to a recovery of **$111,000** in Q2 2024[206](index=206&type=chunk) - Non-interest expense for Q2 2025 rose to **$5.8 million** from **$4.9 million** in Q2 2024, primarily due to a **$927,000** increase in compensation and benefits, which included **$1.1 million** in costs for the 2024 Equity Incentive Plan[208](index=208&type=chunk) [Asset Quality](index=46&type=section&id=Asset%20Quality) Asset quality slightly deteriorated, with non-performing assets increasing to **$4.5 million**, and the allowance for credit losses rising to **$9.2 million** Asset Quality Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-performing assets | $4.5 million | $4.2 million | | Non-performing loans | $4.4 million | $4.0 million | | Allowance for credit losses (ACL) | $9.2 million | $8.5 million | | ACL to total loans | 1.22% | 1.15% | | ACL to non-performing loans | 208.6% | 212.5% | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with primary sources including deposits and FHLB borrowing capacity, exceeding all regulatory capital requirements - Primary sources of funds are deposits, loan and security payments, and FHLB borrowings[213](index=213&type=chunk) - At June 30, 2025, the company had a **$165.5 million** line of credit with the FHLB and a **$20.0 million** short-term unsecured facility from a correspondent bank[213](index=213&type=chunk) - Uninsured deposits were **$171.5 million** (**24.9%** of total deposits), of which **$53.2 million** were secured by collateral or FHLB letters of credit[215](index=215&type=chunk) - The Bank was categorized as **'well capitalized'** at June 30, 2025, exceeding all regulatory capital requirements[216](index=216&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the Company qualifies as a smaller reporting company - The company, as a smaller reporting company, is not required to provide these disclosures[217](index=217&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[218](index=218&type=chunk) - No material changes were identified in the company's internal controls over financial reporting during the quarter ended June 30, 2025[219](index=219&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions, with management expecting no material adverse effect on financial condition or results - The company is subject to routine legal actions but does not expect them to have a material financial impact[222](index=222&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - Risk factors remain consistent with those disclosed in the 2024 Annual Report on Form 10-K[223](index=223&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity) The company actively repurchases stock, completing one program in January 2025 and announcing a new 10% repurchase program in April 2025 - On April 4, 2025, the Company announced a new stock repurchase program for up to **10%** of its outstanding common stock (approximately **1,059,404 shares**)[224](index=224&type=chunk) Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 40,700 | $15.33 | | May 2025 | 116,300 | $15.85 | | June 2025 | 120,080 | $14.73 | | **Total** | **277,080** | **$15.29** | [Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - There were no defaults upon senior securities[227](index=227&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[228](index=228&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[229](index=229&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits include CEO and CFO certifications (302 and 906) and Inline XBRL financial data[231](index=231&type=chunk)

Financial Performance - Net income for Q2 2025 was $2.9 million, or $0.29 per diluted share, down from $3.4 million, or $0.32 per diluted share in Q2 2024, reflecting a decrease of 14.7%[2] - Noninterest income for Q2 2025 was approximately $714,000, up from $596,000 in Q2 2024, marking a 19.7% increase[16] - Noninterest expense for Q2 2025 totaled $5.8 million, an increase of 18.4% from $4.9 million in Q2 2024, driven by higher compensation and benefits[17] - The return on average assets for Q2 2025 was 1.26%, down from 1.52% in Q2 2024[24] - Net income for the three months ended June 30, 2025, was $2,861 thousand, down from $3,399 thousand in 2024, a decline of 15.9%[29] - Basic earnings per share for the three months ended June 30, 2025, was $0.29, compared to $0.32 in 2024, a decrease of 9.4%[29] - Non-GAAP adjusted net income for the six months ended June 30, 2025, reached $6,688 thousand, up from $5,973 thousand in 2024, indicating a growth of 11.9%[38] Asset and Liability Management - Total assets decreased by $3.5 million, or 0.4%, to $908.3 million as of June 30, 2025, primarily due to the repayment of $15.0 million in borrowings[5] - Total assets decreased slightly to $908,327 thousand as of June 30, 2025, from $911,821 thousand at December 31, 2024, representing a decline of 0.5%[27] - Total liabilities decreased to $710,336 thousand as of June 30, 2025, from $716,322 thousand at December 31, 2024, a reduction of 0.8%[27] - Total liabilities increased to $714,433 thousand in 2025, up from $686,326 thousand in 2024, reflecting a growth of 4.1%[33] Loan and Deposit Activity - Net loans increased by $13.2 million, or 1.8%, to $742.4 million compared to December 31, 2024[6] - Total deposits rose by $7.4 million, or 1.1%, to $658.9 million as of June 30, 2025, with noninterest-bearing deposits increasing by 3.7%[10] - Total deposits increased to $658,891 thousand as of June 30, 2025, from $651,491 thousand at December 31, 2024, an increase of 1.9%[27] - Non-performing loans increased to $4.4 million, representing 0.58% of total loans, compared to 1.17% in the previous year[19] Interest Income and Margin - The net interest margin for Q2 2025 was 4.36%, slightly up from 4.33% in Q2 2024, indicating improved efficiency in earning assets[13] - Total interest income for the three months ended June 30, 2025, was $12,266 thousand, an increase of 5.6% compared to $11,617 thousand for the same period in 2024[29] - Net interest income after provision for credit losses was $8,978 thousand for the three months ended June 30, 2025, slightly down from $9,020 thousand in 2024, a decrease of 0.5%[29] - The net interest margin improved to 4.36% for the three months ended June 30, 2025, compared to 4.33% in 2024[31] - Net interest income for the six months ended June 30, 2025, was $17,799 thousand, compared to $16,872 thousand in the same period of 2024, representing an increase of 5.5%[33] - The net interest margin improved to 4.24% in 2025 from 4.12% in 2024, showing a positive trend in profitability[33] - The net interest rate spread improved to 3.48% in 2025 from 3.10% in 2024, indicating enhanced efficiency in interest income generation[33] Credit Risk Management - The allowance for credit loss on loans increased to $9,159 thousand as of June 30, 2025, compared to $8,888 thousand at the beginning of the period, reflecting a proactive approach to credit risk management[35] - The provision for credit loss on loans for the six months ended June 30, 2025, was $593 thousand, compared to $178 thousand for the same period in 2024, highlighting increased provisions due to credit risk considerations[35]

Financial Position - Total assets increased by $10.1 million, or 1.1%, to $921.9 million at March 31, 2025, from $911.8 million at December 31, 2024[168]. - Total liabilities increased by $7.6 million, or 1.1%, to $723.9 million at March 31, 2025, primarily due to a $6.4 million increase in total deposits[173]. - Stockholders' equity increased by $2.6 million, or 1.3%, to $198.1 million at March 31, 2025, primarily due to $2.1 million net income[175]. - Cash and cash equivalents increased by $320,000, or 0.5%, to $70.8 million at March 31, 2025[169]. - At March 31, 2025, the company had a $165.6 million line of credit with the FHLB of Atlanta, with $15.0 million in advances outstanding against this line[195]. - As of March 31, 2025, the Company had $50.0 million in brokered deposits, an increase from $10.0 million at March 31, 2024[197]. - The Company had $57.0 million in municipal deposits, representing 8.7% of total deposits as of March 31, 2025[197]. - Uninsured deposits totaled $179.1 million, or 26.0% of total deposits, with $50.1 million secured by collateral or letters of credit[197]. - The Bank exceeded all regulatory capital requirements and was categorized as well capitalized as of March 31, 2025[198]. Loan and Credit Quality - Net loans receivable rose by $12.0 million, or 1.65%, to $741.3 million at March 31, 2025, driven by increases in commercial loans and investor commercial real estate loans[170]. - The allowance for credit losses increased by $366,000 to $8.9 million at March 31, 2025, with a ratio of 1.18% to total loans[171]. - The ratio of allowance for credit losses to non-performing loans was 183.87% at March 31, 2025, down from 212.51% at December 31, 2024[171]. - Provision for credit losses was $297,000 for the three months ended March 31, 2025, compared to $18,000 in 2024, with an allowance for credit losses of $8.9 million[190]. - Non-performing assets totaled $5.0 million at March 31, 2025, compared to $4.2 million at December 31, 2024, with an increase in non-performing loans[194]. Income Statement Highlights - Net income for the three months ended March 31, 2025, was $2.1 million, or $0.21 per diluted share, compared to $2.6 million, or $0.24 per diluted share, for the same period in 2024[183]. - Interest income increased by $877,000, or 8.0%, to $11.9 million for the three months ended March 31, 2025, from $11.0 million in 2024, primarily due to a $959,000 increase in loan interest income[184]. - Net interest income was $8.6 million for the three months ended March 31, 2025, compared to $8.0 million in the same period in 2024, with a net interest margin of 4.12% compared to 3.91%[189]. - Non-interest income totaled $530,000 for the three months ended March 31, 2025, down from $578,000 in the same period in 2024[191]. - Non-interest expense increased to $6.2 million for the three months ended March 31, 2025, from $4.9 million in 2024, with compensation and benefits expenses rising by $1.4 million, or 44.6%[192]. - The effective tax rate for the three months ended March 31, 2025, was 22.2%, down from 28.5% in 2024, due to an accrual adjustment[193]. Asset Management - Securities available for sale decreased by $2.1 million, or 5.6%, to $35.2 million at March 31, 2025, due to new purchases not fully replacing maturities[172]. - The average balance of loans increased by $31.3 million, or 4.4%, to $739.7 million for the three months ended March 31, 2025, compared to $708.4 million in 2024[184]. - The company performed its 2024 goodwill impairment qualitative assessment and determined its goodwill was not considered impaired[166].